Saylor BUS105 Exam With Confidence Using Practice Dumps

Bethel Bakery uses multiple departments (blending, cutting, baking, decorating, packaging) to produce a standardized product—frosted sugar cookies—in a continuous, repetitive flow. This is a textbook example of a business that uses process costing.

According to Saylor Academy BUS105:

“Process costing is used when the production process is continuous, and the units of output are indistinguishable from each other. Separate work-in-process (WIP) accounts are typically maintained for each department.”

Let’s evaluate the options:

A. Job costing is used for customized or unique products (e.g., custom furniture).

B. Process costing is used for mass-produced items through multiple production departments.✅

C. Departmental costing refers to applying overhead by department, not necessarily tied to production cost method.

D. Activity-based costing focuses on cost allocation based on activities but does not define how WIP is tracked across departments.

Answer: B

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.”

Target cost is a pricing strategy that starts with the selling price and subtracts the desired profit to determine the maximum allowable cost.

Formula:

Target Cost = Selling Price − Desired Profit

Desired Profit = Selling Price × Profit Percentage

= $350 × 0.40 = $140

Target Cost = $350 − $140 = $210

Answer: C