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Mas - 4

The document contains 4 multiple choice questions about accounting concepts. Question 18 asks about flexible budgets and their characteristics. Question 19 provides information about changes to an equipment account and asks to calculate proceeds from the sale of used equipment. Question 20 asks to identify the correct combination of liquidity, profitability, and solvency ratios. Question 21 provides overhead budget information at different activity levels and asks to calculate the total overhead costs allowed at 90,000 machine hours using a flexible budget.

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Rosemarie Cruz
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72 views2 pages

Mas - 4

The document contains 4 multiple choice questions about accounting concepts. Question 18 asks about flexible budgets and their characteristics. Question 19 provides information about changes to an equipment account and asks to calculate proceeds from the sale of used equipment. Question 20 asks to identify the correct combination of liquidity, profitability, and solvency ratios. Question 21 provides overhead budget information at different activity levels and asks to calculate the total overhead costs allowed at 90,000 machine hours using a flexible budget.

Uploaded by

Rosemarie Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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18.

A flexible budget

a. is also called a static budget.

b. can be considered a series of related static budgets.

c. can be prepared for sales or production budgets, but not for an operating expense budget.

d. typically uses an activity index different from that used in developing the predetermined overhead
rate.

____ 19. Carey Company's equipment account increased $800,000 during the period; the related
accumulated depreciation

increased $60,000. New equipment was purchased at a cost of $1,400,000 and used equipment was sold
at a loss of

$40,000. Depreciation expense was $200,000. Proceeds from the sale of the used equipment were

a. $420,000.

b. $500,000.

c. $560,000.

d. $640,000.

____ 20. Which of the following combinations presents correct examples of liquidity, profitability, and
solvency ratios, respectively?

Liquidity Profitability Solvency

a. Inventory turnover Inventory turnover Times interest earned

b. Current ratio Inventory turnover Debt to total assets

c. Receivables turnover Return on assets Times interest earned

d. Quick ratio Payout ratio Return on assets

____ 21. A company’s planned activity level for next year is expected to be 100,000 machine hours. At
this level of activity, the

company budgeted the following manufacturing overhead costs:

Variable Fixed

Indirect materials $60,000 Depreciation $25,000

Indirect labor 80,000 Taxes 5,000

Factory supplies 10,000 Supervision 20,000

A flexible budget prepared at the 90,000 machine hours level of activity would allow total manufacturing
overhead costs of
a. $135,000.

b. $180,000.

c. $185,000.

d. $150,000

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