FinalExamWinter2004

FinalExamWinter2004 - Concordia University John Molson...

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Concordia University COMM 305/ACCO 240  John Molson School of Business Final Examination Winter 2004 Question 1 (18 marks) MULTIPLE CHOICE 1. Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance? (2 marks) A. The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid, experienced individuals. B. The mix of workers assigned to the particular job was heavily weighted towards the use of new, relatively low-paid, unskilled workers. C. Because of the production schedule, workers from other production areas were assigned to assist this particular process. D. Defective materials caused more labour to be used in order to produce a standard unit. 2. The standards for direct labour for a product are 2.5 hours at $8 per hour. Last month, 9,000 units of the product were made, and the labour efficiency variance was $8,000 favourable. What was the actual number of hours worked during the past period? (2 marks) A. 20,500 hours B. 21,500 hours C. 22,500 hours D. 23,500 hours. 3. The performance of the manager of Division A is evaluated by residual income. Which of the following would improve the manager's performance? (1 mark) A. Increase in average operating assets. B. Increase in minimum required return C. Decrease in average operating assets D. Decrease in net operating income. 1
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Concordia University COMM 305/ACCO 240  John Molson School of Business Final Examination Winter 2004 4. The Madison Company produces three products with the following costs and selling prices: A B C Selling Price per Unit $16 $21 $21 Variable Cost per Unit $ 7 $11 $13 Contribution Margin per Unit $ 9 $10 $ 8 Direct Labour Hours per Unit 1 1.5 2 Machine Hours per Unit 4.5 2 2.5 If the number of machine hours is the production constraint, in which order should Madison produce the three products? (2 marks) A. A, B, C B. A, C, B C. B, C, A D. C, A, B. 5. Products A, B, and C are produced from a single raw material input. The raw material costs are $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split-off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit. What is the correct course of action regarding Product A? (2 marks) A. It should be sold at the split-off point, since further processing would result in a loss of $0.50 per unit. B. It should be processed further, since this will increase profits by $2,500 each period. C. It should be sold at the split-off point, since further processing will result in a loss of $2,500 each period. D. It should be processed further, since this will increase profits by $12,500 each period.
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FinalExamWinter2004 - Concordia University John Molson...

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