Positive And Negative Variance – Quiz – Accounting & Finance
The key terms in these Accounting chapters include Sales Price Variance, Ending Inventory, Positive And Negative Variance, Quiz, Bad Debts, Variance, Cost of Goods Sold, Inventory, Cowboy Ice Cream Accounting & Finance
Favors Publishing has the following budgeted and actual amounts
Budgeted | Actual | |
Sales price / book | $90.00 | $87.00 |
Book sales | 30,000 books | 32,000 books |
Calculate Favor’s Publishing’s sales price variance. Enter a favorable variance as positive and a negative variance as negative.
-96,000
What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?
13,150
A company had the following purchases and sales during its first year of operations:
Purchases | Sales | |
January: | 28 units at $210 | 19 units |
February: | 38 units at $215 | 18 units |
May: | 33 units at $220 | 22 units |
September: | 30 units at $225 | 21 units |
November: | 28 units at $230 | 35 units |
On December 31, there were 42 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
$14,174.
$9,060. – Correct
$13,596.
$14,751.
$20,945.
Explanation
Ending Inventory
9 | @ | $210 | = | $ | 1,890 |
20 | @ | $215 | = | 4,300 | |
11 | @ | $220 | = | 2,420 | |
2 | @ | $225 | = | 450 | |
0 | @ | $230 | = | 0 | |
42 units | $ | 9,060 | |||
Cushman Company had $846,000 in sales, sales discounts of $12,690, sales returns and allowances of $19,035, cost of goods sold of $401,850, and $291,025 in operating expenses. Net income equals:
$814,275.
$153,125.
$412,425.
$121,400. – Correct
$184,850.
Explanation
Net Income = $846,000 – $12,690 – $19,035 – $401,850 – $291,025 = $121,400
Favors Publishing has the following budgeted and actual amounts
Budgeted | Actual | |
Sales price / book | $90.00 | $87.00 |
Book sales | 30,000 books | 32,000 books |
Calculate Favor’s Publishing’s sales volume variance. Enter a favorable variance as positive and a negative variance as negative.
180,000
A company has sales of $742,600 and cost of goods sold of $297,600. Its gross profit equals:
$(445,000).
$742,600.
$297,600.
$445,000. – Correct
$1,040,200.
Explanation
Gross Margin = Sales – Cost of Goods Sold
Gross Margin = 742,600 – $297,600 = $445,000
Favors Publishing has the following budgeted and actual amounts
Budgeted | Actual | |
Sales price / book | $90.00 | $87.00 |
Book sales | 30,000 books | 32,000 books |
Calculate Favor’s Publishing’s sales price variance. Enter a favorable variance as positive and a negative variance as negative.
-96,000
A company purchased $4,600 worth of merchandise. Transportation costs were an additional $405. The company returned $315 worth of merchandise and then paid the invoice within the 1% cash discount period. The total cost of this merchandise is:
$4,510.00.
$4,476.00.
$4,644.00.
$4,647.15. – Correct
$4,690.00.
Explanation
Cash Paid = [($4,600 – $315) x 0.99] + $405 = $4,647.15 No discount may be taken on the transportation costs.
Bedrock Company reported a December 31 ending inventory balance of $416,000. The following additional information is also available:
- The ending inventory balance of $416,000 included $72,800 of consigned inventory for which Bedrock was the consignor.
- The ending inventory balance of $416,000 included $23,600 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year.
Based on this information, the correct balance for ending inventory on December 31 is:
$247,000
$392,400 – Correct
$309,000
$363,600
$343,400
Explanation
Start with beginning inventory of $416,000. The information in the first bullet point was handled correctly since inventory should include consigned goods for which the subject company is the consignor. No adjustment. With respect to the second bullet point, inventory should not include office supplies held for use. Subtract $23,600. Ending inventory should be $416,000 − $23,600 = $392,400.
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 |
Favors Publishing has the following budgeted and actual amounts
Budgeted | Actual | |
Sales price / book | $90.00 | $87.00 |
Book sales | 30,000 books | 32,000 books |
Calculate Favor’s Publishing’s sales volume variance. Enter a favorable variance as positive and a negative variance as negative.
180,000
Cushman Company had $846,000 in sales, sales discounts of $12,690, sales returns and allowances of $19,035, cost of goods sold of $401,850, and $291,025 in operating expenses. Net income equals:
$814,275.
$153,125.
$412,425.
$121,400. – Correct
$184,850.
Explanation
Net Income = $846,000 – $12,690 – $19,035 – $401,850 – $291,025 = $121,400
A company has sales of $742,600 and cost of goods sold of $297,600. Its gross profit equals:
$(445,000).
$742,600.
$297,600.
$445,000. – Correct
$1,040,200.
Explanation
Gross Margin = Sales – Cost of Goods Sold
Gross Margin = 742,600 – $297,600 = $445,000
Favors Publishing has the following budgeted and actual amounts
Budgeted | Actual | |
Sales price / book | $90.00 | $87.00 |
Book sales | 30,000 books | 32,000 books |
Calculate Favor’s Publishing’s sales price variance. Enter a favorable variance as positive and a negative variance as negative.
-96,000
Positive And Negative Variance Quiz – Accounting & Finance