Positive And Negative Variance Quiz – Accounting & Finance

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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

BudgetedActual
Sales price / book$90.00$87.00
Book sales30,000 books32,000 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:
 

 PurchasesSales
January:28 units at $21019 units
February:38 units at $21518 units
May:33 units at $22022 units
September:30 units at $22521 units
November:28 units at $23035 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

BudgetedActual
Sales price / book$90.00$87.00
Book sales30,000 books32,000 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

BudgetedActual
Sales price / book$90.00$87.00
Book sales30,000 books32,000 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 Expense24,750 
Allowance for Doubtful Accounts 24,750
Bad Debts Expense24,075 
Allowance for Doubtful Accounts 24,075
Bad Debts Expense25,425 
Allowance for Doubtful Accounts 25,425

Correct

Accounts Receivable24,750 
Bad Debts Expense675 
Sales 25,425
Accounts Receivable25,425 
Allowance for Doubtful Accounts 25,425
Explanation
    
Desired balance in allowance account:$24,750credit
Current balance: 675debit
Required: adjustment to allowance$25,425credit

Favors Publishing has the following budgeted and actual amounts

BudgetedActual
Sales price / book$90.00$87.00
Book sales30,000 books32,000 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

BudgetedActual
Sales price / book$90.00$87.00
Book sales30,000 books32,000 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


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