MIDTERM EXAM W2002 - Concordia University John Molson...

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Concordia University Comm 305/4 All Sections John Molson School of Business Midterm Examination 1 Question 1 – Multiple Choice (28 marks – 2 marks each) The following questions should be answered using the computerized multiple choice answer sheet provided for that purpose . L e e C o m p a n y b e g a n t h e y e a r w i t h n o i n v e n t o r i e s o f w o r k i n p r o c e s s o r f i n i s h e d g o o d s . B u d g e t e d a n d a c t u a l c o s t s f o r t h e y e a r w e r e a s f o l l o w s : V a r i a b l e c o s t s : D i r e c t m a t e r i a l $ 1 5 p e r u n i t D i r e c t l a b o u r $ 1 0 p e r u n i t M a n u f a c t u r i n g o v e r h e a d $ 7 p e r u n i t S e l l i n g e x p e n s e s $ 5 p e r u n i t F i x e d c o s t s : M a n u f a c t u r i n g o v e r h e a d $ 1 8 0 , 0 0 0 p e r m o n t h S e l l i n g a n d a d m i n i s t r a t i v e $ 5 0 , 0 0 0 p e r m o n t h D u r i n g t h e f i r s t t h r e e m o n t h s o f t h e y e a r , p r o d u c t i o n a n d s a l e s i n u n i t s w e r e a s f o l l o w s : P r o d u c t i o n S a l e s J a n u a r y 2 0 , 0 0 0 2 0 , 0 0 0 F e b r u a r y 2 0 , 0 0 0 1 8 , 0 0 0 M a r c h 2 0 , 0 0 0 2 2 , 0 0 0 T o t a l 6 0 , 0 0 0 6 0 , 0 0 0 F i g u r e 1 1. Refer to Figure 1. Lee company sells its product for $100 per unit. There were no work in process inventories at the end of any month and Lee uses FIFO costing. Lee's unit cost of pro- duction for March under absorption costing would be: A. $ 46 B. $ 41 C. $ 37 D. $ 32
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Concordia University Comm 305/4 All Sections John Molson School of Business Midterm Examination 2 2. The plant manager requested information to assist in estimating maintenance costs. The follow- ing computer printout was generated using the least squares method. Intercept 10980 Slope .95 Correlation coefficient .89 Activity variable Units of production What percentage change in maintenance costs can be explained by changes in production volume? A. 89% B. 79.21% C. 95% D. 84.55% 3. Firm A and Firm B are competitors within the same industry. Firm A produces its product us- ing large amounts of direct labour. Firm B has replaced direct labour with investment in ma- chinery. Projected sales for both firms are fifteen percent LESS than in the prior year. Which statement regarding projected profits is true? A. Firm A will lose more profit than Firm B. B. Firm B will lose more profit than Firm A. C. Firm A and Firm B will lose the same amount of profit. D. Neither Firm A nor Firm B will lose profit. 4. The plant supervisor receives an annual salary which is classified as a fixed cost. Because of poor economic conditions the firm produced fewer units than it originally planned to produce. As a result of the change in production level the: A. supervisor's salary will decrease B. supervisor's salary will increase C. fixed cost per unit will decrease D. fixed cost per unit will increase
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Concordia University Comm 305/4 All Sections John Molson School of Business Midterm Examination 3 5. Relevant range is a range of output over which: A. practical capacity remains constant B. cost-output relationship remains valid C. fixed costs per unit remain constant D. both b and c 6.
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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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MIDTERM EXAM W2002 - Concordia University John Molson...

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