F2003 FINAL EXAM - Concordia University John Molson School of Business COMM 305/2 Fall 2003 Final Examination Question 1 MULTIPLE CHOICE(22 marks 1

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Concordia University COMM 305/2 Fall 2003 John Molson School of Business Final Examination 2 Question 1 MULTIPLE CHOICE (22 marks) 1. Utah Corporation has an after-tax operating income of $2,600,000 and a 10% weighted-average cost of capital. Assets total $8,000,000 and current liabilities total $400,000. On the basis of this information, Utah's economic value added is: (2 marks) A. $1,400,000 B. $1,800,000 C. $1,840,000 D. $1,980,000 2. More Company has two divisions: L and M. During July, the contribution margin in Division L was $60,000. The contribution margin ratio in Division M was 40%, and its sales were $250,000. Division M's segment margin was $60,000. The common fixed expenses were $50,000, and the company net income was $20,000. What was the segment margin for Division L? (2 marks) A. $0 B. $10,000 C. $50,000 D. $60,000. 3. Why may departmental overhead rates NOT correctly assign overhead costs? (1 mark) A. Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials. B. Because of the high correlation between direct labour hours and the incurrence of overhead costs. C. Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. D. Because of the difficulties associated with identifying cost pools for the first stage of the allocation process. 4. Sharp Company's records show that overhead was overapplied by $10,000 last year. This overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year. In trying to determine why overhead was overapplied by such a large amount, the company has discovered that $6,000 of amortization on factory equipment was charged to administrative expense in error. Given the above information, which of the following statements is true? (2 marks) A. Manufacturing overhead was actually overapplied by $16,000 for the year. B. The company's net income is understated by $6,000 for the year. C. Under the circumstances described above, the error in recording amortization would have no effect on net income for the year. D. The $6,000 in amortization should have been charged to Work in Process rather than to administrative expense.
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Concordia University COMM 305/2 Fall 2003 John Molson School of Business Final Examination 3 5. The income calculation for a division manager's ROI should be based on: (1 mark) A. divisional contribution margin. B. profit margin controllable by the division manager. C. profit margin traceable to the division. D. divisional net income before interest and taxes. 6. Monson Company has two products: G and P. The company uses activity-based costing and has prepared the following analysis, showing the estimated total cost and expected activity for each of its three activity cost pools: Activity Estimated Expected Activity Cost Pool Cost Product G Product P Total Activity 1
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This note was uploaded on 04/01/2010 for the course JMSB comm 305 taught by Professor Marivot during the Winter '10 term at Concordia Canada.

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F2003 FINAL EXAM - Concordia University John Molson School of Business COMM 305/2 Fall 2003 Final Examination Question 1 MULTIPLE CHOICE(22 marks 1

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