Flexible Budget Variance – Final Test – Accounting & Finance
The key terms in these Accounting chapters include Flexible Budget Variance, Contribution Margin, Favorable Variance, Cowboy Ice Cream, Bad Debts, Quiz Packets, Final Test.
What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?
$33,750; favorable
$1,750; favorable
500; unfavorable
$32,000; unfavorable
$2,250; favorable
$1,750; unfavorable
$2,250; unfavorable
$32,000; favorable
500; favorable
$4,000; favorable
$4,000; unfavorable
$33,750; unfavorable
What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?
13,150
What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?
6,937
What price would you recommend that Cowboy Ice Cream charge for the ice cream bars in order to maximize their profit?
$3.75
$4.25
$4.00
A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $24,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $675. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
| Bad Debts Expense | 24,750 | |
| Allowance for Doubtful Accounts | 24,750 |
| Bad Debts Expense | 24,075 | |
| Allowance for Doubtful Accounts | 24,075 |
| Bad Debts Expense | 25,425 | |
| Allowance for Doubtful Accounts | 25,425 |
Correct
| Accounts Receivable | 24,750 | |
| Bad Debts Expense | 675 | |
| Sales | 25,425 |
| Accounts Receivable | 25,425 | |
| Allowance for Doubtful Accounts | 25,425 |
Explanation
| Desired balance in allowance account: | $ | 24,750 | credit |
| Current balance: | 675 | debit | |
| Required: adjustment to allowance | $ | 25,425 | credit |
What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?
6,937
What price would you recommend that Cowboy Ice Cream charge for the ice cream bars in order to maximize their profit?
$3.75
$4.25
$4.00
How many of the following variances are unfavorable?
| Item | Budget | Actual |
| Sales price | $350 | $380 |
| Sales revenue | $15,000 | $12,500 |
| Cost of goods sold | $10,000 | $9,000 |
| Selling and administrative expenses | $3,200 | $3,500 |
| Labor costs | $1,800 | $1,680 |
| Production volume | 1,300 units | 1,260 units |
2
5
1
0
4
3
6
On September 12, Vander Company sold merchandise in the amount of $7,100 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,300. Vander uses the periodic inventory system and the gross method of accounting for sales. The journal entry or entries that Vander will make on September 12 is:
| Sales | 7,100 | |
| Accounts receivable | 7,100 |
| Sales | 7,100 | |
| Accounts receivable | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 7,100 | |
| Sales | 7,100 |
Correct
| Accounts receivable | 7,100 | |
| Sales | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 5,300 | |
| Sales | 5,300 |
What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?
$33,750; favorable
$1,750; favorable
500; unfavorable
$32,000; unfavorable
$2,250; favorable
$1,750; unfavorable
$2,250; unfavorable
$32,000; favorable
500; favorable
$4,000; favorable
$4,000; unfavorable
$33,750; unfavorable
What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?
13,150
What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?
$33,750; favorable
$1,750; favorable
500; unfavorable
$32,000; unfavorable
$2,250; favorable
$1,750; unfavorable
$2,250; unfavorable
$32,000; favorable
500; favorable
$4,000; favorable
$4,000; unfavorable
$33,750; unfavorable
What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?
13,150
What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?
6,937