ACC 346 Mid-Term Questions v2
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ACC 346 Mid-Term Questions v2

Course Number: ACC 346, Spring 2012

College/University: DeVry Houston

Word Count: 1515

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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...

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(TCO 1. 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: Overhead cost Direct labor hours Direct labor cost Estimated $174,000 5,800 $87,000 Actual $171,000 5,900 $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 joborder 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 highlow 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 breakeven 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 the when 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 Direct Labor per unit $20 12 10 $148,500 Variable manufacturing overhead per unit Fixed manufacturing overhead per year 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 costbenefit 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: Square footage Direct labor hours Production Dept. 1 15,000 25,000 Production Dept. 2 45,000 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. Sales Less cost of goods sold Contribution margin Less direct fixed costs: Salaries Other Less allocated fixed costs: Rent Insurance Cleaning President's salary Other Total costs Net Income Computer Equipment $1,200,000 700,000 500,000 175,000 60,000 14,118 3,529 4,117 76,470 7,058 340,292 $159,708 Home Office Furniture $800,000 500,000 300,000 175,000 60,000 9,882 2,471 2,883 53,350 4,942 380,708 ($ 8,708) Total $2,000,000 1,200,000 800,000 350,000 120,000 24,000 6,000 7,000 130,000 12,000 649,000 $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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