MIDTERM EXAM - Concordia University John Molson School of...

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Concordia University COMM 305/4 Winter 2004 John Molson School of Business Midterm Examination 1 Question 1 (20 marks) MULTIPLE CHOICE 1. Garry Industries applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 70,000; however, a lengthy strike resulted in actual machine hours being worked of only 55,000. Budgeted and actual manufacturing overhead figures for the year were $2,800,000 and $2,150,000, respectively. On the basis of this information, the company's year-end overhead was: (2 marks) A. overapplied by $50,000. B. underapplied by $50,000 C. overapplied by $600,000 D. underapplied by $600,000 2. Costs incurred at which of the following activity levels should NOT be allocated to products for decision-making purposes? (1 mark) A. Unit-level activities. B. Batch-level activities. C. Product-level activities D. Organization-sustaining activities 3. Last year, Ben Company's income under absorption costing was $4,400 lower than its income under variable costing. The company sold 8,000 units during the year, and its variable costs were $8 per unit, of which $3 was variable selling expense. Fixed manufacturing overhead was $1 per unit in beginning inventory under absorption costing. How many units did the company produce during the year? (2 marks) A. 3,600 units B. 7,120 units C. 7,450 units D. 12,400 units.
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Concordia University COMM 305/4 Winter 2004 John Molson School of Business Midterm Examination 2 4. Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: Standard Deluxe Selling Price per Unit $150 $ 165 Variable Production Costs per Unit $120 $ 126 Variable Selling Expense per Unit $ 16 $ 13 Expected Monthly Sales in Units 600 1,200 Total Monthly Fixed Cost (Common to Both) $15,000 The break-even in sales dollars for the expected sales mix is closest to which of the following? (2 marks) A. $ 160,772 B. $ 95,178 C. $ 109,091 D. $ 175,644 5. Young Company has a margin of safety percentage of 20%. The break-even point is $400,000 and the variable costs are 40% of sales. Given this information, what is the net income? (2 marks) A. $ 48,000 B. $ 80,000 C. $ 60,000 D. $ 0 6. Which of the following would be considered a product cost for external financial reporting purposes? (1 mark) A. Cost of a warehouse used to store finished goods B. Cost of guided public tours through the company's facilities C. Cost of travel necessary to sell the manufactured product D. Cost of sand spread on the factory floor to absorb oil from manufacturing machines
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Concordia University COMM 305/4 Winter 2004 John Molson School of Business Midterm Examination 3 7. Green Company's variable expenses are 75% of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses equal which of the following? (2 marks) A. $ 100,000
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MIDTERM EXAM - Concordia University John Molson School of...

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