devry ACC346 Mid-Term Questions

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1.(TCO
1) Managerial accounting stresses accounting concepts and procedures that
are relevant to preparing reports for(Points : 4)
taxing
authorities.
internal users of accounting
information.
external
users of accounting information.
the
Securities and Exchange Commission (SEC).

2.TCO
1) Which of the following statements regarding fixed costs is true? (Points : 4)
When
production increases, fixed cost per unit increases.
When
production decreases, total fixed costs decrease.
When production increases, fixed
cost per unit decreases.
When
production decreases, total fixed costs increase.

3.(TCO
1) Which of the following is a direct cost in relation to the cost of
teaching the managerial accounting course you are currently taking? (Points : 4)
the cost of the paper that you
receive as handouts for the class
the
cost of the room you are using for the class
the
cost of the registration system that allowed you to enroll in the class
the
cost of the financial aid department that helps you fund the cost of taking
the class

4.(TCO
1) Shula’s 347 Grill has budgeted the following costs for a month in which
1,600 steak dinners will be produced and sold: materials, $4,080; hourly
labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and
other fixed costs, $600. Each steak dinner sells for $14.00 each. What is
the budgeted total variable cost? (Points
: 4)
$5,200
$9,280
$10,080
$2,300

5.(TCO
1) Which of the following costs is part of manufacturing overhead? (Points : 4)
indirect
labor
direct
labor
salaries
for the accounting personnel
wages for the janitorial staff for
the sales offices

6.(TCO
1) Which of the following is not a period cost? (Points : 4)
advertising
costs
accounting
staff salaries
direct materials
depreciation
of accounting office equipment

7.(TCO
1) Red Runner’s Work in Process Inventory account has a beginning balance
of $50,000 and an ending balance of $40,000. Direct materials used are
$70,000 and direct labor used totals $35,000. Cost of goods sold totals
$135,000. Manufacturing overhead applied is $20,000. How much is cost of
goods manufactured? (Points
: 4)
$145,000
$115,000
$125,000
$135,000

8.(TCO
2) BCS Company applies manufacturing overhead based on direct labor hours.
Information concerning manufacturing overhead and labor for August follows:

Estimated

Actual

Overhead cost

$174,000

$171,000

Direct labor hours

5,800

5,900

Direct labor cost

$87,000

$89,975



How much overhead should be applied in total during August? (Points : 4)
177,000
179,950
171,100
168,200

9.(TCO
2) During 2011, Madison Company applied overhead using a job-order costing
system at a rate of $12 per direct labor hours. Estimated direct labor
hours for the year were 150,000, and estimated overhead for the year was $1,800,000.
Actual direct labor hours for 2011 were 140,000 and actual overhead was
$1,670,000.

What is the amount of under or over applied overhead for the year? (Points : 4)
$10,000 underapplied
$10,000
overapplied
$130,000 underapplied
$130,000
overapplied

10.(TCO
3) Which of the following companies is most likely to use a process costing
system? (Points : 4)
a law
office
a
custom home builder
a car
repair business
a food manufacturer

11.(TCO
3) The Blending Department began the period with 20,000 units. During the
period the department received another 80,000 units from the prior
department and at the end of the period 30,000 units remained, which were
40% complete. How much are equivalent units in The Blending Department’s
work in process inventory at the end of the period? (Points : 4)
12,000
28,000
40,000
52,000

12.(TCO
3) During March, the varnishing department incurred costs of $90,250 for direct
labor. The beginning inventory was 3,500 units and 10,000 units were
transferred to the varnishing department from the sanding department during
June. The direct labor cost in the beginning inventory was $27,270. The
ending inventory consisted of 2,000 units, which were 25% complete with
respect to direct labor. What is the cost per equivalent unit for direct
labor? (Points : 4)
$8.71
$7.84
$11.19
$9.79

13.(TCO
4) Total costs were $75,800 when 30,000 units were produced and $95,800
when 40,000 units were produced. Use the high-low method to find the
estimated total costs for a production level of 32,000 units. (Points : 4)
$80,115
$76,000
$79,800
$91,800

1.(TCO 4)
The three elements of the profit margin are: (Points : 4)
Selling
price per unit, variable cost per unit, and fixed cost per unit.
Total revenues, total variable costs,
and total fixed cost.
Selling
price per unit, variable cost per unit, and total fixed costs.
Selling
price per unit, total variable costs, and fixed cost per unit.

2.(TCO 4)
Allen Company sells homework machines for $100 each. Variable costs per unit
are $75 and total fixed costs are $62,000. Allen is considering the purchase
of new equipment that would increase fixed costs to $84,000, but decrease the
variable costs per unit to $60. At that level Allen Company expects to sell
3,000 units next year. What is Allen’s break-even point in units if it
purchases the new equipment?(Points
: 4)
2,480
units
36,000
units
2,100 units
3,650
units

3.(TCO 4)
Paula Corporation sells a single product at a price of $275 per unit.
Variable cost per unit is $135 and fixed costs total $356,860. If sales are
expected to be $825,000, what is Paula’s margin of safety? (Points : 4)
$468,140
$124,025
$700,975
$405,000

4.(TCO 5)
In variable costing, when does fixed manufacturing overhead become an
expense? (Points : 4)
Never
In the
period when the product is sold
In the period when the expense is
incurred
In the
period when other expenses are at the lowest level

5.(TCO 5)
Variable costing income is a function of: (Points : 4)
Units
sold only.
Units
produced only
Both units sold and units produced.
Neither
units sold nor units. produced

6.(TCO 5)
Peak Manufacturing produces snow blowers. The selling price per snow blower
is $100. Costs involved in production are:

Direct Material per unit

$20

Direct Labor per unit

12

Variable manufacturing overhead per
unit

10

Fixed manufacturing overhead per
year

$148,500

In addition, the company has fixed selling and administrative costs of
$150,000 per year. During the year, Peak produces 45,000 snow blowers and
sells 30,000 snow blowers. How much fixed manufacturing overhead is in ending
inventory under full costing?(Points
: 4)
$0
$49,500
$148,500
$99,000

7.(TCO 5)
The cost objective is the (Points
: 4)
reason for allocating the cost.
calculation
based on budgeted amounts.
product,
service, or department that is to receive the allocation.
maximum
amount to be allocated to any single department.

8.(TCO 6)
Which of the following statements about cost pools is not
true? (Points : 4)
The
costs in each of the cost pools should be homogeneous or similar.
Managers
must make a cost-benefit decision when determining how many cost pools are
appropriate.
Only four different kinds of costs
may be included in a single cost pool.
More
cost pools usually provide more accurate information, but are more expensive.

9.(TCO 6)
The building maintenance department for Jones Manufacturing Company budgets
annual costs of $4,200,000 based on the expected operating level for the
coming year. The costs are allocated to two production departments. The
following data relate to the potential allocation bases:

Production Dept.
1

Production Dept.
2

Square footage

15,000

45,000

Direct labor hours

25,000

50,000

If Jones assigns costs to departments based on square footage, how much total
costs will be allocated to Production Department 1?(Points : 4)
$1,400,000
$1,050,000
$1,575,000
$2,100,000

10.(TCO 7)
A company is trying to decide whether to sell partially completed goods in
their current state or incur additional costs to finish the goods and sell
them as complete units. Which of the following is not relevant
to the decision? (Points
: 4)
The
selling price of the completed units.
The costs incurred to process the
units to this point.
The
selling price of the partially completed units.
The
costs that will be incurred to finish the units.

11.(TCO 7)
BigByte Company has 20 obsolete computers that are carried in inventory at a
cost of $15,000. If these computers are upgraded at a cost of $8,000, they
could be sold for $17,700. Alternatively, the computers could be sold
“as is” for $8,500. What is the net advantage or disadvantage of
reworking the computers? (Points
: 4)
$1,200
advantage
$1,200 disadvantage
$9,200
disadvantage
$9,700
advantage

12.(TCO 7)
YXZ Company’s market for the Model 55 has changed significantly, and YXZ has
had to drop the price per unit from $275 to $135. There are some units in the
work in process inventory that have costs of $160 per unit associated with
them. YXZ could sell these units in their current state for $100 each. It
will cost YXZ $10 per unit to complete these units so that they can be sold
for $135 each.

Which of the following is the amount of sunk costs in this problem? (Points : 4)
$160 per unit
$10 per
unit
$125
per unit
$100
per unit

1.(TCO
3) Why is it necessary to use equivalent units in a process costing system? (Points : 20)

2.(TCO
7) Computer Boutique sells computer equipment and home office furniture.
Currently, the furniture product line takes up approximately 50% of the
company’s retail floor space. The president of Computer Boutique is trying
to decide whether the company should continue offering furniture or just
concentrate on computer equipment. If furniture is dropped, salaries and
other direct fixed costs can be avoided. In addition, sales of computer
equipment can increase by 13%. Allocated fixed costs are assigned based on
relative sales.

Computer

Home
Office

Equipment

Furniture

Total

Sales

$1,200,000

$800,000

$2,000,000

Less cost of goods sold

700,000

500,000

1,200,000

Contribution margin

500,000

300,000


800,000

Less direct fixed costs:

Salaries

175,000

175,000

350,000

Other

60,000

60,000

120,000

Less allocated fixed costs:

Rent

14,118

9,882

24,000

Insurance

3,529

2,471

6,000

Cleaning

4,117

2,883

7,000

President’s salary

76,470

53,350

130,000

Other


7,058


4,942


12,000

Total costs

340,292

380,708

649,000

Net Income

$159,708

($ 8,708)

$151,000

Prepare an incremental analysis to determine the incremental effect on profit
of discontinuing the furniture line.
(Points : 25)

3.(TCO
4) The following monthly data are available for RedEx, which produces only
one product that it sells for $84 each. Its unit variable costs are $28 and
its total fixed expenses are $64,960. Sales during April totaled 1,600
units.

(a) How much is the breakeven point in sales dollars for RedEx?
(b) How many units must RedEx sell in order to earn a profit of $24,640?
(c) A new employee suggests that RedEx sponsor a company softball team as a
form of advertising. The cost to sponsor the team is $1,792. How many more
units must be sold to cover this cost?
(Points
: 25)

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