Saylor BUS105 Dumps

The Statement of Cash Flows shows how cash is generated and used by a business over a period of time. It breaks down cash flows into:

Operating activities

Investing activities

Financing activities

This financial statement explains the change in cash and cash equivalents from the beginning to the end of the period.

As per Saylor Academy BUS105:

“The statement of cash flows helps users understand how a company’s cash position changed during a specific time period. It ties together the beginning and ending cash balances.”

Let’s assess the options:

A. This describes a balance sheet.

B. This describes the income statement.

C. This describes the statement of retained earnings or statement of changes in equity.

D. Correct — this describes the purpose of the statement of cash flows.

Answer: D

Internal audit reports related to internal controls are typically reviewed by senior management because they involve organization-wide compliance, governance, and financial integrity.

As per Saylor Academy BUS105 – Unit 13: Ethics and Corporate Governance:

“The chief financial officer (CFO) is responsible for financial planning, risk management, and ensuring proper internal controls. The CFO often reviews internal audit reports and communicates results to the board.”

A payroll clerk (A) and plant manager (B) would be responsible for their functional areas but would not be the main recipient of an internal audit committee report.

A managerial accountant (D) may be involved in preparing internal data but does not typically oversee internal control reporting.

Therefore:

Answer: C

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A credit balance in the manufacturing overhead account means overhead was overapplied (i.e., more overhead was applied than actually incurred).

If the balance is immaterial, it should be closed directly to COGS.

Journal Entry:

Debit Manufacturing Overhead $1,250

Credit Cost of Goods Sold $1,250

→ This decreases COGS because more overhead was applied than used.

Answer: A

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To determine the gross profit before and after closing the Manufacturing Overhead account, we must analyze the journal entries and compute:

Total production cost (Cost of Goods Manufactured, or COGM)

Gross profit = Sales Revenue − COGS

Impact of closing overhead account

Step 1: Identify and sum all costs recorded in Work in Process (WIP):

From journal entries:

Direct materials added to WIP:WIP Dr 19 (from: Materials Cr 19)

Direct labor added to WIP:WIP Dr 26 (from: Wages Payable Cr 26)

Manufacturing overhead applied to WIP:WIP Dr 30 (from: Manufacturing Overhead Cr 30)

Total product cost (COGM):

= 19 (materials) + 26 (labor) + 30 (overhead applied)

= $75

Step 2: Record transfer to Finished Goods and then to COGS:

WIP Cr 75 → Finished Goods Dr 75

Then, Finished Goods Cr 75 → COGS Dr 75 (once sold)

Step 3: Calculate gross profit before closing overhead:

Revenue from sale = $150

COGS = $75Gross Profit = $150 − $75 = $75

Step 4: Check the Manufacturing Overhead account:

From journal entries:

Overhead actual incurred:Manufacturing Overhead Dr 31 (from Materials 10 and Wages Payable 21)

Overhead applied to WIP:Manufacturing Overhead Cr 30

Remaining balance in overhead account:

= 31 (debits) − 30 (credits) = 1 (debit balance → underapplied overhead)

Since the underapplied overhead is considered immaterial, it is closed to COGS:

Entry: COGS Dr 1 / Manufacturing Overhead Cr 1

New COGS = $75 (original) + $1 (underapplied) = $76

New Gross Profit = $150 − $76 = $74

Thus:

Gross profit before closing overhead: $75

Gross profit after closing overhead: $74→ Decreased by $1

However, this matches the description in option A (Gross profit was $44; decreased by $1). Wait — there's a conflict here.

Let’s double-check.

The gross profit we calculated is $75, not $44.

Let’s test the logic again.

WIP includes:

Materials: 19

Labor: 26

Overhead: 30→ Total = 75

Sale = $150

→ Gross profit = $150 − $75 = $75

Underapplied overhead = $1 → added to COGS

New gross profit = $74

So the answer should say: Gross profit was $75; decreased by $1 → that would match option C.

But option C says: Gross profit was $75; gross profit decreased by $1.00 after closing manufacturing overhead. That matches our calculation.

So, correct answer: C

CORRECTION: The earlier answer marked as A was misaligned with the actual computed values. Based on this revised and verified calculation:

Answer: C

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Final Calculations Summary:

Direct Materials: $19

Direct Labor: $26

Applied Overhead: $30

Total Cost (COGS before adjustment): $75

Revenue: $150

Gross Profit (before adjustment): $75

Overhead underapplied by $1 → Increases COGS to $76

Gross Profit (after adjustment): $74

Gross Profit Decreased by $1.00 after closing overhead

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Working Capital = Current Assets − Current Liabilities

This measures a company's short-term liquidity and ability to pay current obligations.

Cash collections and payments for purchases are cash inflows and outflows that must be captured in the Cash Budget. The Cash Budget is a critical component of the master budget and is used to estimate the cash position of the company at various points during the budgeting period. This includes timing of cash collections from sales (accounts receivable) and cash disbursements for purchases, wages, overhead, and other expenses.

As per Saylor Academy BUS105: Managerial Accounting, Unit 9 – How Do Managers Use Budgets?, Section 9.3: Preparing a Cash Budget:

“The cash budget shows the company's expected cash inflows and outflows over a period of time. This includes all cash collected from sales and all payments made for expenses, purchases of direct materials, and other disbursements.”

Therefore:

Option A (Cash budget) is correct.

Option B (Budgeted income statement) records revenues and expenses, not timing of actual cash flows.

Option C (Manufacturing overhead budget) focuses on estimating overhead costs but not cash flow.

Option D (Direct materials purchases budget) estimates how much material to buy but does not directly reflect actual payments.

Comprehensive and Detailed Explanation:

Let’s examine the correct formula to calculate standard cost for each component:

Standard Cost for Direct Materials = Standard Quantity × Standard Price

Standard Cost for Direct Labor = Standard Hours × Standard Rate

Standard Cost for Overhead = Standard Hours × Standard Rate

Reviewing the table:

Row 3 uses:Direct Materials → Standard Quantity × Standard PriceDirect Labor → Standard Hours × Standard RateOverhead → Standard Hours × Standard Rate

This matches the standard costing formulas.

Answer: C

The Statement of Cash Flows is divided into three sections:

Operating Activities

Investing Activities

Financing Activities

Financing activities include transactions related to:

Issuing or repurchasing stock

Borrowing or repaying debt

Paying dividends (including to noncontrolling interests)

Let’s review the choices:

A. Cash receipts from customers → Operating activity

B. Increase in accounts receivable → Operating activity (non-cash adjustment)

C. Purchase of property and equipment → Investing activity

D. Cash dividends paid to noncontrolling interests → Financing activity✅

Per Saylor Academy – Managerial Accounting (BUS105), Unit 11:

“The financing section includes transactions involving long-term liabilities and equity. Examples include issuing stock, borrowing cash, repaying debt, and paying dividends.”

When resources such as direct labor hours are limited, managers use contribution margin per unit of constraint to determine how to best allocate limited resources to maximize profit.

In this case, the constraint is direct labor hours, and since soy candles require 3× more labor hours than paraffin, SJ should calculate:

Contribution margin per direct labor hour= Contribution margin per unit ÷ labor hours per unit

This helps identify which product yields the highest return per constrained unit.

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The Inventory Turnover Ratio measures how many times a company's inventory is sold and replaced over a period, and it is calculated using the following formula:

Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory

Step 1: Identify the values:

Cost of Goods Sold (COGS) = $1,525,000

Beginning Inventory (Year 1 ending) = $300,000

Ending Inventory (Year 2) = $350,000

Step 2: Compute Average Inventory:

Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2

= ($300,000 + $350,000) ÷ 2 = $650,000 ÷ 2 = $325,000

Step 3: Compute Inventory Turnover Ratio:

Inventory Turnover = COGS ÷ Average Inventory

= $1,525,000 ÷ $325,000 ≈ 4.692 → Rounded to one decimal = 4.7

Therefore:

Answer: C

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We are given the following data:

Selling price per Paraffin candle: $7.00

Variable cost per Paraffin candle: $2.00

Contribution margin per Paraffin = $7 - $2 = $5

Selling price per Soy candle: $18.00

Variable cost per Soy candle: $8.00

Contribution margin per Soy = $18 - $8 = $10

Sales mix: 80% Paraffin, 20% Soy

Fixed costs = $120,000

To determine the weighted-average contribution margin per unit:

= (0.80 × $5) + (0.20 × $10)

= $4.00 + $2.00 = $6.00

Break-even units = Fixed Costs ÷ Weighted Avg. CM per Unit

= $120,000 ÷ $6.00 = 20,000 candles

Wycliff Corporation usescost pools for assembly and shipping to calculate a predetermined overhead rate for each department. This means the company calculates separate overhead rates for different departments (in this case, assembly and shipping) rather than using a single rate for the entire plant or allocating overhead based on individual activities.

According to Saylor Direct Credit Courses in Managerial Accounting (BUS105),Departmental Overhead Rate Methodis defined as follows:

"When a company has more than one department that incurs manufacturing overhead costs, it may be more accurate to use a departmental overhead rate for each department. Each department establishes its own overhead rate by dividing the total overhead costs for that department by the total amount ofits allocation base (such as machine hours or direct labor hours)."

(Reference: Saylor Academy BUS105, Unit 3: How Is Job Costing Used to Track Production Costs? Section 3.4 “Departmental and Plantwide Overhead Rates”)

This isdifferentfrom:

Activity-Based Costing (A), which uses multiple cost pools based on different activities, not necessarily departments.

Plantwide Rate (C), which uses a single overhead rate for the entire plant.

Process Costing (D), which is used for mass production of similar products, not overhead allocation per department.

Wycliff’s system fits theDepartmentalmethod, as they allocate costs bydepartment(assembly and shipping) rather than by activity (activity-based) or across the whole plant (plantwide).

Comprehensive and Detailed Explanation:

Management by Exception is a management style that focuses attention and resources on areas where actual results deviate significantly from expected results.

According to Saylor Academy BUS105:

“Management by exception is a principle where managers focus only on significant variances between actual and budgeted results.”

Only Option D reflects a significant unfavorable variance that exceeds a predefined threshold—this is exactly the kind of situation where management by exception would trigger action.

Answer: D

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To compute the total current period manufacturing costs, we use the formula:

Total Manufacturing Costs =

Direct Materials Used + Direct Labor + Manufacturing Overhead Applied

Let’s break it down step-by-step.

Step 1: Compute Direct Materials Used

Direct Materials Used =

Beginning Raw Materials Inventory + Raw Materials Purchases − Ending Raw Materials Inventory

= $9,000 + $150,000 − $5,000 = $154,000

Step 2: Add Direct Labor and Manufacturing Overhead

Direct Labor = $50,000

Manufacturing Overhead Applied = $400,000

Step 3: Compute Total Manufacturing Costs

Total Manufacturing Costs =

Direct Materials Used + Direct Labor + Manufacturing Overhead

= $154,000 + $50,000 + $400,000 = $604,000

Note:

Selling and General & Administrative expenses are period costs and are excluded from the Schedule of Cost of Goods Manufactured.

Beginning and ending work-in-process inventories are used to compute the total cost of goods manufactured, not the total current period manufacturing costs.

Therefore:

Answer: B. $604,000

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