Spring 2008 - Exam 2, Part II - Answer Key

Spring 2008 - Exam 2, Part II - Answer Key - The University...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 8
Background image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The University of Texas at Austin ACC 359 - Spring 2008 Cost and Management Accounting Instructor — Mr. Brian Lendecky Exam II — Part II Test Form A Name: A ADA/8F Mex; ClassTime: 12:30 or 2:00 DO NOT OPEN until given instructions to do so Instructions: 1. Use a #2 pencil only; mark clearly and erase completely as needed. 2. Silence all cell phones, pagers, and other electronic devices, and do not access them during the exam. (note that cell phones are NOT permissible as calculators). In the space provided above, write your name and circle your class time. On your Scantron answer sheet, write and bubble in your name, UT EID, and Test Form letter. Questions 1-] 0 are worth 3 points each. Question 11 is worth 10 points. Question 12 is worth 8 points. FYI — Part c of question 12 is only worth 1 point. In total, Part II is worth 48 points. All multiple-choice answers must be marked on your Scantron answer sheet to be graded. You are reminded of the University’s academic honesty policy requiring you to do your own work and not give or receive assistance on this examination. Keep your eyes on your own work and prevent others from seeing your test responses. Bring your entire exam book (including the blank pages) and Scantron sheet to the front of the room when you have completed the exam. Turn your hat backwards (so I can see your eyes) during the exam and have only pencils and calculators available at your seat. Good Luck! 1. Products A and B each are assigned $50.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, A requires 45 minutes less setup time than B. According to an ABC system, B is b. c. d. e. under the traditional system. undercosted overcosted fairly costed accurately costed all of the above 2. One department indirect—cost rate is sufficient when: a. b. C? e. activities relate to more than one level of the cost hierarchy product costs are significantly cross-subsidized the same allocation base is appropriate for all departmental activities it is a service department all of the above 3. Which of the following is a sign that an ABC system may be useful? C. There are small amounts of indirect costs. Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity. Products a company is less suited to produce and sell show small profits. Operations staff agrees with accountants about the costs of manufacturing and marketing products and services. All of the above 4. Which of the following statements is TRUE? In an activity-based costing system. . .. a. b. output—unit-level costs should not be included because they occur with each unit of output. batch-level costs should not be included because they occur with each batch of units of outputs or inputs. product-sustaining costs should not be included because they are incurred for the product line regardless of the number of units or batches. facility-sustaining costs should not be included because they are organizational costs incurred that cannot be linked using a cause and effect relationship to an individual product or customer. None of the above is true. 5. In a noncompetitive environment, the key factor affecting pricing decisions is the: a customer’s willingness to pay . price charged for alternative products c. cost of producing and delivering the product d. All of these answers are correct. 6. Long-run pricing decisions: a. have a time horizon of less than one year b. include adjusting product mix in a competitive environment c. and short-run pricing decisions generally have the same relevant costs @ use prices that include a reasonable return on investment 7. Place the following steps for the implementation of target costing in order: A = Derive a target cost B = Develop a target price C = Perform value engineering D = Determine target operating income BDAC . BADC c. ADBC (1. ABCD 8. Value engineering may result in all of the following EXCEPT: a. improved product design b. changes in materials specifications ® increases in the quantity of nonvalue—added cost drivers the evaluation of all business functions within the value chain 9. Graphic analysis of incurred and locked-in costs provides several insights as to how the different concepts influence decisions. Which of the following statements is FALSE? a. Costs are generally locked in before they are incurred. b. After a product's design has been approved, costs are difficult to influence. c. When and how costs are locked in are more important than when and how costs are incurred. Most costs are locked in during the manufacturing process. 10. Collusive pricing occurs when: a. a company wants two products to sell for the same, or almost the same, amount b. a company wants a product to sell for the same as a competitor's product (6? two or more companies agree to sell a product at a price higher than should be expected d. competitors are part of the same large parent organization 11. Lisa Smith is the CFO of ABC Corporation and is examining the company’s March 2008 results. The company makes cables for cranes. Lisa Smith is concerned with manufacturing overhead costs. Both variable and fixed manufacturing overhead costs are allocated to the cables on the basis of machine hours used to make the cables. The following budget information is available: Budgeted variable manufacturing overhead rate Budgeted fixed manufacturing overhead rate Budgeted machine hours per cable Budgeted production and sales for March 2008 Budgeted fixed manufacturing overhead costs for March 2008 Actual results for March 2008 are: Cables produced and sold Machine hours used Variable manufacturing overhead costs Fixed manufacturing overhead costs 737,100 14m; W200 Required: $100 per hour $120 per hour 3 hours 2,500 cables $900,000 2,400 units 4,200 hours $739,200 $916,100 a. Compute the spending variance for variable manufacturing overhead. b. Compute the efficiency variance for variable manufacturing overhead. 0. Compute the production—volume variance for variable manufacturing overhead. d. Compute the spending variance for fixed manufacturing overhead. e. Compute the efficiency variance for fixed manufacturing overhead. f. Compute the production-volume variance for fixed manufacturing overhead. WRITE THIS ANSWER ON ONE OF THE BLANK PAGES ATTACHED TO THIS TEST $02 flaw gin \ #339. «sq any 03 99% ooimtuv #3:.6 48¢ r83; +3 Ewmwm‘ 2.2% Ewmwwbm $53 :fq \Wusuiob 6 W) ‘ ® ” \. ®\< g6) \A,v<m.»u\ufi.m~ \ddsoCO\/ 9:1;me 32:33 0213; 023:; Sign» is. 3 $5 32: ii Em €23 gag Em 35$ 33‘ 1% +5\:H fisflm TS fimV +SQ<H WBQ ho§ru1+5m-H 45¢ flooQQ LSQgh +£P5Q Jié Tans 394.8 figs» 13¢ #2::6 ;u¢ +5}pr 43¢ 383% + 3“ 3 SE 33 33¢ Kg) 12. Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to manufacture 1000-unit batches of brass, chrome and white faucets, respectively. The following budgeted data apply: BRASS M Budgeted sales in units 30,000 50,000 PER UNIT data: Selling price $40 $20 Direct materials 5% 8 $ 4 Direct labor $15 $ 3 Overhead cost based on direct labor hours (traditional system) $12 $ 3 Hours per 1000-unit batch: Direct labor hours 40 10 Machine hours 25 25 Setup hours 1.0 0.5 Inspection hours 30 20 WHITE 40,000 $30 $8 $9 $9 30 10 1.0 20 Total overhead costs: and activity levels for the year are budgeted as follows: Activity Overhead costs Direct labor hours 2,900 hours Machine hours 2,400 hours Setups $465,500 95 setup hours 2 JWOU/gyfop [bur Inspections $405,000 2,700 inspection hours : 41,5 . 370.500 O/’W*’0c hour Required: Activig levels a. Using the traditional system, determine the budgeted operating profit per unit for each style of faucet. (Round to the nearest penny.) b. Using the ABC system, determine the budgeted operating profit per unit for each style of faucet. (Round to the nearest penny.) c. Which system provides a better estimate of profitability? Why? WRITE THIS ANSWER ON ONE OF THE BLANK PAGES ATTACHED TO THIS TEST 8m 0w -8~W~112 Okra/M w‘b(‘3 "31 W0 W V 86'435 59 NM} Pug), SW0 M < $87 W57 0 L. 5€+~up Coij [(30 Ado/‘5) (I Mfr) (§7C100U/30)000 (y’ffl07 IMP—éohm C03” [(30 bah: (30 “CUIJ‘)(JIITO)-J /3&;OOU (5} L130» @ (/Af‘cm perQ’ #20 0M (“/7 02, US) 56* mp (957:; £00 may} (65mm) (¢%?00)j/y0>000 élflT7 jm/wcmn fig; use 1mm) («10 lbw) ( W) 3/ We m7 ‘ @ Wm PfICL “((30 137,. a» 561’ WP 561+; [NO beMwMI hour) (44900)] HOMO (“W/)7 IMPGHrOWCd‘U [J “0 finicky? (KM/WWI) C JHymj/ @000 3/05) > 5pm,) Cw o/Wk: Rm; (Wammow) : wzm carom (12w) (Sow) : {MA/3‘00 UM)ch Ulfléflww) : Jimmy : CzW/Yom 05(9) 1: 3 UMHUWCU) 1‘ {110,000 Maia W fLIDV’OOO / {H mow, 904mm ammuer ED ...
View Full Document

This note was uploaded on 09/26/2011 for the course ACC 359 taught by Professor Atiase during the Spring '07 term at University of Texas at Austin.

Page1 / 9

Spring 2008 - Exam 2, Part II - Answer Key - The University...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online