Acc334F2010-MT#2C-solution

Acc334F2010-MT#2C-solution - ACCOUNTING 3334 - Fall 2010...

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ACCOUNTING 3334 - Fall 2010 MID-TERM EXAM # 2C Dr. Jeff Power Suggested Solutions NOTES: ANSWER ALL QUESTIONS IN THE SPACE PROVIDED (Back of page if necessary) DO NOT SEPARATE THE PAGES OF THE EXAM. YOU HAVE 75 MINUTES TO COMPLETE THE EXAM SHOW ALL OF YOUR CALCULATIONS FOR POSSIBLE PART MARKS PART I: Multiple Choice (Circle the most correct response) {2 points each} 1. Absorption costing enables managers to increase operating income in the short run by changing production schedules. Which statement is true regarding such action? a. The reason for increased operating income is the deferral of fixed manufacturing overhead contained in unsold inventory. b. A desirable effect of these changes in production is “cherry picking” the production line. c. This is done through decreases in the production schedule as customer demand for product falls. d. None of the above statements are true regarding manager’s action to increase operating income through changes in the production schedule. 2. The proponents of throughput costing a. argue that only direct materials and direct labour are “truly variable” and all indirect manufacturing costs be written off in the period in which they are incurred. b. treat all costs except those related to variable direct materials as costs of the period in which they are incurred. c. maintain that variable costing undervalues inventories. d. maintain that it provides more incentive to produce for inventory than do either variable or absorption costing. 3. Under an absorption costing system, the breakeven point is a function of Sales Volume Production Volume a. Yes Yes b. No Yes c. No No d. Yes No 4. Under a variable costing system, the breakeven point is a function of Sales Volume Production Volume a. Yes Yes b. No Yes c. Yes No d. No No 5. Bundling of products creates the need for revenue allocation for each of the following except a. when the manager is responsible for profitability on a product-by-product basis. b. when the manager’s bonus is based upon product profitability. c. when persons involved with product development are compensated by percentage of revenues realized. d. when selling prices for the bundle are set to recoup the stand-alone prices of each product in the bundle.
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6. When the high-low method is used to estimate a cost function, the variable cost per unit is found by a. performing regression analysis on the associated cost and cost driver data base. b. dividing the difference between the highest and lowest observations of the cost driver by the difference between costs associated with the highest and lowest observations of the cost driver. c. dividing the difference between costs associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver. d.
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This note was uploaded on 03/30/2011 for the course ACG 333 taught by Professor Farrington during the Summer '10 term at Texas State.

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Acc334F2010-MT#2C-solution - ACCOUNTING 3334 - Fall 2010...

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