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sample_AFM102_final_exam_winter2006_with

sample_AFM102_final_exam_winter2006_with - Question 1(20...

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1 Question 1 (20 marks: 30 minutes) Questions with an “*” are worth 2 marks, all others are worth 1 mark. 1. *McGraw Company’s 2005 flexible budget for manufacturing overhead indicates that fixed overhead should be $60,000 at the denominator level of 4,000 machine hours. In 2005, the actual fixed overhead cost incurred was $66,000. McGraw uses a standard costing system with 1 machine hour allowed per unit of good output. In 2005 the company produced 3,800 units using 3,900 machine hours. The fixed overhead volume variance for 2005 is: a. $6,000 unfavourable b. $6,000 favourable c. $3,000 favourable d. $3,000 unfavourable: ($60,000/4,000)(4,000 – 3,800) 2. *Lessing Company used 2.0 square meters of material for each wetsuit they produced in April 2005. Data from the past 36 months indicates average actual usage of 1.8 square meters of material per wetsuit with a standard deviation of .20. How many standard deviations apart is 2.0 square metres from the average usage of 1.8 square metres, and should a variance investigation be conducted? 3. Which of the following statements is (are) true? i. If a division’s net operating income is positive, it’s residual income will also be positive. ii. Residual income should be used to evaluate profit center managers. iii. ROI can be used to compare divisions of different sizes. 4. *Vision Inc. reported actual return on investment of 24% and average operating assets of $1,500,000 for the month of September. If the required rate of return is 20%, what was Vision’s residual income in September?
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2 5. *Last month the welding department of Eager Company started 8,000 units into production. The department had 2,000 units in process at the beginning of the month, which were 60% complete with respect to conversion costs, and 3,000 units in process at the end of the month, which were 30% complete with respect to conversion costs. A total of 7,000 units were completed and transferred to the next department during the month. Using the weighted-average method, the equivalent units of production for conversion costs for the month would be: Not relevant: Chapter 4 a. 7,900 b. 8,500 c. 9,200 d. 9,500 6. The cost of warranty repairs is an example of a(n): Not relevant: Appendix 2A
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