Posted: September 16th, 2017

devry acct346 midterm exam

(TCO 1) The goal of managerial accounting is to provide information that managers need for

Student Answer: planning.

control.

decision making.

All of the above

Question 2. Question :

(TCO 1) Which of the following statements regarding fixed costs is true?

Student Answer: 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.

Question 3. Question :

(TCO 1) You own a car and are trying to decide whether or not to trade it in and buy a new car. Which of the following costs is an opportunity cost in this situation?

Student Answer: The trip to Cancun that you will not be able to take if you buy the car

The cost of the car you are trading in

The cost of your books for this term

The cost of your car insurance last year

Question 4. Question :

(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. Which is the budgeted fixed cost per unit?

Student Answer: $1.06

$1.44

$4.49

$1.94

:

(TCO 1) Which of the following is an example of a manufacturing overhead cost?

Security at the manufacturing plant

Fabric used to produce shirts

Cost of shipping product to customers

The salary of the president of the company

Question 6. Question :

(TCO 1) Which of the following is a period cost?

Rent on a factory building

Depreciation on production equipment

Raw materials cost

Commissions paid on each unit sold

Question 7. Question :

(TCO 1) At December 31, 2010, WDT Inc. has a balance in the Work in Process Inventory account of $62,000. At January 1, 2010, the balance was $55,000. Current manufacturing costs for the year are $292,000, and cost of goods sold is $284,000. How much is cost of goods manufactured?

$292,000

$299,000

$277,000

$285,000

:

Question 8. Question :

(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?

177,000

179,950

171,100

168,200

Question 9. Question :

(TCO 2) Citrus Company incurred manufacturing overhead costs of $300,000. Total overhead applied to jobs was $306,000. What was the amount of overapplied or underapplied overhead?

$7,000 overapplied

$6,000 overapplied

$6,000 underapplied

$13,000 underapplied

:

Question 10. Question :

(TCO 3) Companies in which of the following industries would not be likely to use process costing?

Cereals

Paints

Cosmetics

Auto body repairs

Question 11. Question :

(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?

12,000

28,000

40,000

52,000

Question 12. Question :

(TCO 3) Ranger Glass Company manufactures glass for French doors. At the start of May, 2,000 units were in process. During May, 11,000 units were completed and 3,000 units were in process at the end of May. These in-process units were 90% complete with respect to material and 50% complete with respect to conversion costs. Other information is as follows.

Work in process, May 1:

Direct material $36,000

Conversion costs $45,000

Costs incurred during May:

Direct material $186,000

Conversion costs $255,000

Calculate the cost per equivalent unit for conversion costs.

$24.00

$4.09

$21.43

$20.40

Question 13. Question :

(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.

$80,115

$76,000

CORRECT $79,800

$91,800

Question 14. Question :

(TCO 4) The margin of safety is the difference between

total revenue and total fixed costs.

expected level of sales and the break-even point.

budgeted fixed costs and actual fixed costs.

selling price and variable cost per unit.

Question 15. Question :

(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. Which is Allen’s break-even point in units if it purchases the new equipment?

2,480 units

36,000 units

2,100 units

3,650 units

Question 16. Question :

(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, which is Paula’s margin of safety?

$468,140

$124,025

$700,975

$405,000

Question 17. Question :

(TCO 5) Which of the following is treated differently in full costing than in variable costing?

Direct materials

Fixed manufacturing overhead

Direct labor

Variable manufacturing overhead

:

Question 18. Question :

(TCO 5) Variable costing income is a function of

units sold only.

units produced only.

both units sold and units produced.

neither units sold nor units produced.

Question 19. Question :

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

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?

$0

$49,500

$148,500

$99,000

Question 20. Question :

(TCO 6) Which of the following is not a reason why companies allocate costs?

To calculate the full cost of products for financial reporting purposes

To discourage managers from using external suppliers

To reduce the frivolous use of company resources

To provide information needed by managers to make appropriate decisions

:

Question 21. Question :

(TCO 5) An allocation base

is the minimum amount to be allocated to a cost object.

coordinates the manufacturing overhead costs as they are incurred.

will always be less than the variable costs for a product.

relates the cost pool to the cost objectives.

Question 22. Question :

(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?

$1,400,000

$1,050,000

$1,575,000

$2,100,000

Question 23. Question :

(TCO 7) A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the manager will be fired. The manager’s salary, in relation to the decision to keep or drop the sporting goods department, is

avoidable and therefore relevant.

not avoidable and therefore relevant.

sunk and therefore not relevant.

the same for all alternatives and therefore not relevant.

:

Question 24. Question :

(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. Which is the net advantage or disadvantage of reworking the computers?

$1,200 advantage

$1,200 disadvantage

$9,200 disadvantage

$9,700 advantage

: 4 of 4

Comments:

Question 25. Question :

(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.

When the incremental revenues and expenses are analyzed, which is the financial impact?

$25 per-unit profit if the units are completed

$125 per-unit profit if the units are completed

$65 per-unit loss if the units are completed

$150 per-unit loss if the units are completed

Question 26. Question :

(TCO 3) Describe a process costing system, including the types of companies that commonly use this system. How can process costing information be used in incremental analysis?

Question 27. Question :

(TCO 7) Each year, ACE Engines surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, who have offered to conduct the survey and summarize results for $50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a higher quality job than his company has been doing but is unwilling to spend more than $12,000 above current costs. The head of bookkeeping for ACE has prepared the following summary of costs related to the survey in the prior year.

Mailing

$27,000

Printing (done by Lester Print Shop)

$9,000

Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130 × $16)

$2,080

Share of depreciation of computer and software used to track survey responses and summarize results

$1,200

Share of electricity, phone, and so forth based on square feet of space occupied by Pat Fisher versus entire company

$600

Total

$39,880

Prepare an incremental analysis in good form to determine the impact on profit of going outside versus conducting the survey as in the past. Will ACE accept the RBG offer? Why or why not?v

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