Final Fall 2005 - MUM Final Exam Name_‘='FVl...

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Unformatted text preview: MUM Final Exam - Name__‘='FVl_ _ MSE140f240Fa1105 _ . '- 150Poiins(Qmstions 1—30atépointseadialdqnestion31'at30poilns) 1) The use of a single indirect-cost rate is more likely to: A) undercost bigh—volume simple products B) undercost lower—priced products -- ©mdercost low—volume complex products D) BothB'and C are correct 2) A single indirect-cost rate may distort product costs because: A) costs are not'consistently recorded .here is an assumption that all support activities affect all products C) it recognizes specific activities that are required to produce a product D) it fails to measure the correct amount of total costs _ Answer the following questions using the information below". Merriman company provides the following ABC costing informatiom Activities Total Costs . Activigg—cost drivers Account inquiry hours $400,000 T 10,000 hours 1‘- 'fb _ Account billing lines $280,000 —1 4,000,000 lines : . 0'1 Account Verification accounts _ $150,000 .5- 40,000 accounts a 5:1 {/4 “—7- Correspondence letters $ 50,000 4,000 letters : 1')... {D Total costs $880,000 ' The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,000 hours 4,000 hours K 5'0 "1 ”70: O “DOD- Account billing lines 400,000 lines 200,000 lines x . o '1 “4 .0 Account verification accounts 10,000 accounts 3,000 accounts K 3 ."l 5/ 1’ 3 01 9 ‘70 Correspondence letters 1,000 letters 1,600 letters K 17.. 15—9 1' go If: 0'0 3. a Li 1.0 020 3) How much of account verification costs will be assigned to Department A? A) $150,000 13) $10,000 C) $30,000 @032500 om R “3,000 ’t 335’? 4) How inuch of the total costs will be assigted to Department B? A) $80,000 .5qu C) $158,000 D) $880,000 1) 2) 3) 4) ‘65 lo Answer the following questions using the informatiOn below: Tiger Pride produces two product lines: T—shirts and Sweatshirts. Product profitability is analyzed as follows: 'r—smii'rs SWEATSHIRTS _ _ Production and sales volume 60,000 units 35,000 units 1 ‘J .3, I 3 n J - Selling price $16.00 $29.00 (2. .7. ,5 /. Direct material s 2.00 $ 5.00 -_ -*'_ j__’_'_'_ _ as - Direct labor $ 4.50 $ 7.20 Manufacturing overhead $ 2.00 § 3.00 Gross profit $ 7.50 $13.80 1 ,1 X 6 a _I 0’ x .3 Selling and administrative g 4.00 $ 7.00 _,_ __ V v - Operating profit $ 3.50 s 6.80 i ='- "3’ ‘ Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: _ ‘59 'l So Activity Activig: cost Activity-cost driver ‘ 0 I‘m. 3‘ ,Supervision . $100,920 Direct labor hours (our) 3'1 000%"?6 :— bl b H inspection $124,000 Inspections 7 7, 5:013 21.06 ‘3 L ' ST) WU” L’l . gal Activities demanded G P , T—SHJRTS SWEA‘I'SI-IIRTS __ b ._ it "Lnuio £11.75 DUIfunit-g qo’wooiw 2.509312 DLHfunit 1 Limo“ ghoumm 5 +13, 14 a e . '_4§,000DLH5 42,000DLHs e‘flopoomfib ' - ‘ -- _60,000in5pections 17,500inspections 511,300 wwfimmk 0? hit 5) Using an ABC system, next year's estimates show manufacturing overhead costs will total $228,300 5) Q) - for 52,000 T—shirts. If all other T—shirt costs and sales prices remain the same, the profitability that can be expected is: ' _ ' A) ($0.81) per t-shirt.$1.11 per t—shirt C) $5.41 per t-shirt D) $4.39 per t—shirt o) Productionisprimarily based or..- 6) fl @Dlie revenues budget B) the administrative costs budget C) projected inventory levels D) the capital expenditures budget . D err t5 7) Schultz Company expects to manufacture/and sell 30,000 baskets in 20X4 for $6 each. There are 7) 3,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. The company keeps no workgirl-prooess inventory“. What amount of sales revenue will be reported on the 20x4 budgeted income statement? ' A) $186,000 @174,000 C) $204,000 @0180300 3 t» 30,060 it L, -:. Roget-yo Answer the following questions using the information below: Daniel, Inc, expects to sell 6,000 ceramic vases for $20 each. Direct materials costs are $2, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 20x4: Beginning inventgy Ending inventory Direct materials 1,000 units 1,000 units Work—in—prooess inventory 0 units 0 units Finished goods inventory 400 units ' 500 units as 3) on the 20X5 budgeted income statement, what amount will be reported for sales? A) $113,000 0) $140,000 - C) $122,000 .s120,000 M MM. 1—} Answer the following questions using the information below: . . . . . . {5% Mrs H V95 33’ The followmg mformatton pertains to Tiffany CompanY- CflLL— M M 5’9Wfl1gk3‘k‘m Month we 1am me. WWWZ tic: crew“? _' January $30,000 . $16,000 M - '0le fiwoi‘fiZ} C t-\ {berth I February $40,000 $20,000 Feb I“; q x - March . $50,000 $23,000 a” Kg?" {1 ”PT" More , tom‘s; - _Cash is collected from customers in the following manner. Month of sale 30% - Month following the sale 70% - - 40% of purchases are paid for in cash in the month of purchase, and the balance ispaid the following month. . -__Labor costs are 20% of sales. Other operating costs are $15 000 per month (including $4, 000 of depreciation). Both of these are paid in the month incurred. . The cash balance on March 1'15 $4,000. A minimum cash balance of $3,000 is required at the end of the month. Money can be Borrowed in multiples of $1,000. . . 9) What is the ending cash balance for March? 9) g $33,200 63.800 0553000 D) ($25,000) ' Answer the following questions using the information below: Northwoods manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has W available. Itis Northwoods' policy to add a 50% markup to full costs. 10) Northwoods is invited to bid on a one-time—only special order to supply 100 rustic tables. What is. 10) l 2 the lowest price Northwoods should bid on this special order? A) $9,000 B) $13,500 ' c, 361300.7200 gain 3,71%}; Xi?!) fflég‘ :2; :5 raga}. __. w 5 D r E! ”a Answer the following questions using the information below: Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Directrnaterials $45000 33- 3‘30 Direct labor 65,000 €95,399 Variable factory overhead 30, 000 3‘93 Fixed factory overhead 70 one €9,059 Total costs $_,_210 000 {4,31ng Of the fixed factory overhead costs, $30,000 is avoidable. 11) Assuming no other use of their facilitia, the highest price that Schmidt should be willing to pay for 11) B 10,000 units of the part is: A) $140,000 ® $170,000 C) $180,000 D) $210,000 12) Relevant costs in a make- or-buy decision of a part include: - 12) I Z A) setup overhead for the manufacture of the product using the outsourced part B) corporate office costs that will be allocated differently C) annual plantin‘suranoe costs that will remain the suite .currently used manufacturing capacity that has alternative uses 13) In product-mix decisions: 13) ‘3 A) focus on the product with the greatest contribution margin per machine—hour B) focus on the full costs of the product @lways focus on maidmizing total contribution margin D) never focus on the short-term, but include only long—term considerations Answer the following questions using the information below: Braun's Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply: M______odel X Mode___l Y M_odel Z Selling price $50 50 $60 by $70 ‘7 9 Direct materials 6 1 - 6 6 Directlabor ($12perhour) 12 3- 12 113 24 33 Variable support costs ($4 per machine—hour) 4 8 8 Fixed support costs 10 10 10 d'W‘x, '53 5‘3 “i 3,"; 14) Which model has the greatest contribution margin per unit? 14) 5 A) Model x '.Mot1e1 Y C) Model Z D) Models X and Y 15) Which capital budgeting technique(s) measure all expected future cash inflows and outflows as if 15) 5 they occurred at a single point in time? A) internal rate of return 13) net present value _C) payback . @Both A and B are correct 16) All oi the following are methods that aid management in analyzing the expected results of capital - 16) 6 budgeting decisions EXCEPT: . A)_discounted cash-flow method @iture-value cash—flow method C) payback method D) accrual accounting rate-of-retum method Answer the following questions using the information below: Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing machine is operable for three more years and will have a zero disposal price. If the machine is disposed now, it may be sold for $60,000. The new machine will cost $200,000 and an additional cash investment in working capital of $60,000 will be required. The new machine will reduce the average amount of time required to wash clothing and will decrease labor costs. The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use. The new machine has a three-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem The working capital investment will not be recovered at the end of the asset‘s life. __,_= 17) What is the net present value of the investment, assuming the required rate of return is 24%? 17) C i Would the company want to purchase the new machine? A) $(32,800); yes B) $32,800,- no @16AOD; yes D) $06,400); no 18) If the net present value for a projectis zero or positive, this means that the: 18) C A) expected rate of return is below the required rate of return B) project should not he accepted @roject should be accepted D) BothAandCarecorrect. 19) The capital budgeting method that calculates the discount rate at‘which the present value of 15)) _ E eXpected cash inflows from a project equals the present value of expected cash outflows is the: ‘1th rate of return B) payback method C) net present value method D) accrual accounting rate—of—retum method 20) A “what-it" technique that examines how a result will change if the original predicted data are not 20) B achieved or if an underlying assumption changes is called: A) internal rate- of-retum analysis .sensitivity analysis C) adjusted rate-of—retum analysis D) net present value analysis 21) A plant manufactures several different products. The wages of the plant supervisor can be 21) A classified as a(n): Q inventoriable cost B) variable cost C) directcost . ' D) period cost . . . . . Q- 22) Costs expensed on the income statement in the accounting period mcurred are called: 22) A) direct costs B) inventoriable costs @Jeriod costs D) indirect costs 23) The following inflammation pertains to the Duggan Corporation: 23) D Beginning work-in—process inventory 5 20,000 Ending work—in—prooess inventory _ 23,000 Beginning finished goods inventory 36, e. 10 0‘0 Ending finished goods inventory 34,000 411369 Cost of goods manufactured 246,000 g—u—Fg' _ 2.435" Whatis cost of goods sold? A) $244,000 13) $249,000 C) $243,000 .3248,000 - t\nswer the following questions using the information below: I PIC 55'!) 5,an _ _ r I Beginning finished goods, mam $40,000 cages ' g—F—MU‘MD Ending finished goods, Imlnoxs 33,000 6 r? 9WD Cost of goods sold 250,000 c? f; 1 REM Sales revenue 600,000 “i 50) m Operating expenses 120,000 ‘0 5-"- ' ' 24) What is operating income for 2096'? . 24) C. A) $123,000 B) $157,000 . @230300 D) $107,000 25) Assume only the Specified parameters change in a cost—volume-profit analysis. If the contribution 25) C- margin increases by $2 per unit, then operating profits will: A) decrease by $2 per unit B) increase by less than $2 per unit @150 increase by $2 per unit D) be indeterminable Answer the following questions using the information below: Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1, 000. His fixed costs are $20 ,003, while his variable costs are $500 per procedure. Dr Hunter currently plans to perform 200 procedures this month. 94"“ _ 74:. 10-032? 26) What is the budgeted operating income for the month assuming that Dr. Hunter plans to perform 26) ,9 [bob the procedure 200 times? A) $200,000 B) $100,000 C) $40,000 .330,000 27) What is the breakeven point for the month assuming that Dr. Hunter plans to perform the 2'7) A --ure200times? 30903 ; in; _ 40 times 13) 30 times C) 20 times $590 D) 10 times 28) What 15 the margin of safety assuming 100 procedures are budgeted? 28) A @50, 000 or60times B) $50,000 or50fimes C) $100,000 or 100 times D) $40,000 orwfimfii‘aw g 30!) fi‘eimagb Que; D 55;) Answer the folloWiIlg quESfions 115013 the information below: W 1: 810 gal-m Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20, 000 of variable costs, and $10,000 of fixed costs. _ 5/“: {Jig} 101); 09?} v2; 29) The contribution margin percentage is: a, rift A) 25.0% ' B) 125% C) 37.5% 30) Trailhound Company operates on a contribution margin of 30% and currently has fixed costs of 30) C- $200,000. Next year, sales are projected to be $1,000,000. An advertising campaign is being evaluated that costs an additional $30,000. How much would sales have to increase to justify the additional expenditure? A) $300,000 B) $60 000 @100000 D) $90,000 30 3 0-0-2: in H W)W 3:62, 31) Gilley, Inc, sells a single product. The company's most recent income statement is given below. ' 1:! Sales (4,000 units) $120,000 3 0 Less variable expenses 168,000) 1‘? Contribution margin 52,000 } 3 Less fixed expenses (40.009). Net income 3 12,000 Required: a. Contributionmargin per unitis 30 '17 $ ’3 perunit 5” b. If sales are doubled to $240,000, 63604 K 2, total variable costswillequal ' S /5’ém 3}" c. If sales are doubled to $240,000, _ total fixed costs wfllequal $ fim g! 3 d. If 10 more units are sold, profits $131 glareage by 3; 1“! 310 g g _ if I . e. - Compute how many units niust be sold to break even 3 3 077 f if . W00 :13 cm f. Compute how- many units must be sold - f - ' to achieve profits of $20,000. I? g 1/ ‘4’ f (7’ %,m 1"}0} 505? .- .- —_- Vé ls . 33 Z 3 ...
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