Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 6050 units, but its actual level of activity was 6000 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:Data used in budgeting: Fixed element per monthVariable element per unitRevenue - $31.40? Direct labor$0 $7.10?Direct materials 0 10.10?Manufacturing overhead 38,500? 2.80?Selling and administrative expenses 25,700? 2.30?Total expenses$64,200? $22.30??Actual results for October: Revenue$183,595?Direct labor$39,010?Direct materials$57,300?Manufacturing
overhead$53,275?Selling and administrative expenses$39,170?The activity variance for selling and administrative expenses in October would be closest to:
A. $115 F
B. $445 U
C. $115 U
D. $445 F
Answer: A
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The group within an organization that is responsible for monitoring and evaluating the internal control system is called:
a. the audit committee. b. the internal audit staff. c. the board of directors. d. the accounting staff.
Creighton, Inc determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment which it purchased 2 years ago. When accounting for the change in its accounting estimates, Creighton must
a. correct the financial statements of prior years affected by the errors in the estimates. b. determine the book value at the point of change and depreciate that amount over the remaining useful life. c. add the amount of the error to the amount of the current year's depreciation expense. d. determine the effect of the error and report it as a loss on the income statement in Other Revenues and Expenses.
Horizontal analysis is analysis in which:
A) financial statement lines are expressed as a percent of the base (earliest) year. B) all items are presented as a percentage of one selected item on the financial statement. C) a statistic is calculated for the relationship between two items on a single financial statement or for two items on different financial statements. D) ratios are presented for the past two accounting periods.
Since depreciation and other noncash charges represent a scheduled write-off of an earlier cash outflow, they should not be included in a cash budget
Indicate whether the statement is true or false