devry acct 505 week 4 midterm



(TCO A) The following data (in thousands of dollars) have
been taken from the accounting records of Larden Corporation for the
just-completed year.



Purchases of raw


Direct labor






Selling expenses


Raw materials
inventory, beginning


Raw materials
inventory, ending


inventory, beginning


inventory, ending


Finished goods
inventory, beginning


Finished goods
inventory, ending


Required: Prepare a Schedule of Cost of Goods Manufactured
statement in the text box below.

Question 2. Question

(TCO F) The Indiana Company manufactures a product that goes
through three processing departments. Information relating to activity in the first
department during June is given below.

Percentage completed

Units Materials Conversion

Work in process, June 1 70,000 65% 45%

Work in process, Jun 30 60,000 75% 65%

The department started 290,000 units into production during
the month and transferred 300,000 completed units to the next department.

Required: Compute the equivalent units of production for the
first department for June, assuming that the company uses the weighted-average
method of accounting for units and costs.


Question 3. Question

(TCO B) A tile manufacturer has supplied the following data:

Boxes of tile produced and sold 625,000

Sales revenue

Variable manufacturing expense $1,720,000

Fixed manufacturing expense

Variable selling and admin expense $152,000

Fixed selling and admin expense $133,000

Net operating income


a. Calculate the company’s unit contribution margin.

b. Calculate the company’s contribution margin ratio.

c. If the company increases its unit sales volume by 5%
without increasing its fixed expenses, what would the company’s net operating
income be?

Question 4. Question

(TCO E) Lehne Company, which has only one product, has
provided the following data concerning its most recent month of operations:

Selling price

$ 125

Units in beginning inventory


Units oroduced


Units sold


Units in ending inventory


Variable costs per unit:

Direct materials

$ 15

Direct labor

$ 50

Variable manufacturing overhead

$ 8

Variable selling and admin

$ 12

Fixed costs:

Fixed manufacturing overhead

$ 75,000

Fixed selling and admin

$ 20,000

The company produces the same number of units every month,
although the sales in units vary from month to month. The company’s variable
costs per unit and total fixed costs have been constant from month to month.


a. What is the unit product cost for the month under
variable costing?

b. What is the unit product cost for the month under
absorption costing?

c. Prepare an income statement for the month using the
variable costing method.

d. Prepare an income statement for the month using the
absorption costing method.

Time (US & Canada)

(TCO A) The variable portion of advertising costs is a

Conversion YES… Period NO.

Conversion YES …. Period YES.

Conversion NO…. Period YES.

Conversion NO…. Period NO.

Question 2. Question

(TCO A) The costs of
staffing and operating the accounting department at Central Hospital would be
considered by the Department of Surgery to be

direct costs.

sunk costs.

incremental costs.

None of the above

Question 3. Question

(TCO A) Property
taxes on a company’s factory building would be classified as a(n)

sunk cost.

opportunity cost.

period cost.

variable cost.

manufacturing cost.


Question 4. Question

(TCO A) When the activity level is expected to increase
within the relevant range, what effects would be anticipated with respect to
each of the following?

Fixed cost per unit Variable cost per unit

Increase No change

Increase Increase

Decrease No change

No change Increase

Question 5. Question

(TCO F) Which of the
following statements is true?

I. Overhead application may be made slowly as a job is
worked on.

II. Overhead application may be made in a single application
at the time of completion of the job.

III. Overhead application should be made to any job not
completed at year end in order to properly value the work in process inventory.

Only statement I is true.

Only statement II is true.

Both statements I and II are true.

Statements I, II, and III are all true.

Question 6. Question

(TCO F) Under a
job-order costing system, the product being manufactured

is homogeneous.

passes from one manufacturing department to
the next before being completed.

can be custom manufactured.

has a unit cost that is easy to calculate by
dividing total production costs by the units produced.

Question 7. Question

(TCO F) Equivalent
units for a process costing system using the FIFO method would be equal to

units completed during the period, plus equivalent units in the ending
work-in-process inventory.

units started and completed during the period,
plus equivalent units in the ending work-in-process inventory.

units completed during the period and
transferred out.

units started and
completed during the period, plus equivalent units in the ending
work-in-process inventory, plus work needed to complete units in the beginning
work-in-process inventory.

Question 8. Question

(TCO B) The
contribution margin equals

sales – expenses.

sales – cost of goods sold.

sales – variable costs.

sales – fixed costs.

Question 9. Question

(TCO B) To obtain the
break-even point in terms of dollar sales, total fixed expenses are divided by
which of the following?

Variable expense per unit

Variable expense per unit/Selling price per

Fixed expense per unit

(Selling price per unit – Variable expense per
unit) /Selling price per unit.

Question 10. Question

(TCO E) Under
variable costing

net operating income will tend to move up and
down in response to changes in levels of production.

inventory costs will be lower than under
absorption costing.

net operating income will tend to vary
inversely with production changes.



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