Another Test 3 - Accounting 203 Test 3 Chapters 8,9,11...

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Accounting 203 Test 3 Chapters 8,9,11 Name__________________________ 1. Jordan Company budgeted sales of 400,000 calculators at $40 per unit last year. Variable manufacturing costs were budgeted at $16 per unit, and fixed manufacturing costs at $10 per unit. A special order for 40,000 calculators at $23 each was received by Jordan in March. Jordan has sufficient plant capacity to manufacture the additional quantity without incurring any additional fixed manufacturing costs; however, the production would have to be done on an overtime basis at an estimated additional cost of $3 per calculator. Acceptance of the special order would not affect Jordan's normal sales and no selling expenses would be incurred. What would be the effect on net operating income if the special order were accepted? A) $120,000 decrease B) $160,000 increase C) $240,000 decrease D) $280,000 increase 2. A major disadvantage of static budgets is: A) the difficulty in developing such budgets due to the high cost of gathering the necessary information. B) the cost behavior pattern of manufacturing overhead, which is primarily fixed. C) that the variances between actual and budget on a static budget result from comparing actual costs at one level of activity to budgeted costs at a different level of activity. D) their length and complexity. 3. The following materials standards have been established for a particular raw material used in the company's sole product: The following data pertain to operations for the last month: What is the materials price variance for the month? A) $1,820 U B) $1,760 U C) $3,420 F D) $352 U Version 2 Page 1
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4. The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor efficiency variance for the month? A) $10,600 U B) $11,080 U C) $11,080 F D) $10,480 U 5. The following direct labor information pertains to the manufacture of product Glu: What is the standard direct labor cost per unit of product Glu? A) $30 B) $24 C) $15 D) $12 6. Buff Corp. is considering replacing an old machine with a new machine. Which of the following items is relevant to Buff's decision? (Ignore income tax considerations.) A) A Above B) B Above C) C Above D) D Above 7. The fixed overhead budget variance is measured by: A) the difference between budgeted fixed overhead cost and actual fixed overhead cost. B) the difference between actual fixed overhead cost and applied fixed overhead cost. C) the difference between budgeted fixed overhead cost and applied fixed overhead cost. D) none of these. Version 2 Page 2
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8. Part S00 is used in one of Morsey Corporation's products. The company makes 6,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: An outside supplier has offered to produce this part and sell it to the company for $16.10 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special
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This note was uploaded on 04/28/2008 for the course ACG 203 taught by Professor Appleton during the Spring '08 term at University of North Carolina Wilmington.

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Another Test 3 - Accounting 203 Test 3 Chapters 8,9,11...

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