D196 Principles of Financial and Managerial Accounting - Set 4 - Part 3

Correct Answer: Factory rent

Factory rent is a fixed cost, as it remains the same regardless of production levels.

Correct Answer: Income statement

The income statement shows a companys revenues and expenses over a specific period, resulting in net income or loss.

Correct Answer: $10 per machine hour

The predetermined overhead rate is calculated by dividing estimated overhead by estimated machine hours. ($250,000 / 25,000 hours = $10 per machine hour).

Correct Answer: Paying employees

Paying employees is an operating activity because it is related to the companys day-to-day business operations.

Correct Answer: Manufacturing overhead budget

The manufacturing overhead budget includes all indirect production costs, such as factory maintenance and utilities.

Correct Answer: $15

Contribution margin is calculated by subtracting variable costs from the sales price. ($40 - $25 = $15).

Correct Answer: Balance sheet

The balance sheet presents a companys financial position, including assets, liabilities, and equity, at a specific point in time.

Correct Answer: Accounts payable

Accounts payable is a current liability because it is expected to be paid within one year.

Correct Answer: Debit accounts receivable; credit sales

When goods are sold on credit, accounts receivable is debited (increased), and sales are credited (increased).

Correct Answer: $4,000

Total variable cost is calculated by multiplying the number of units by the variable cost per unit. (500 units x $8 = $4,000).