A2301FA08 Final Exam

A2301FA08 Final Exam - Managerial Accounting Fall 2008...

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Managerial Accounting Fall 2008 Final Exam Version 1 Name __________________________ 1. On January 1, 2007, the managers at Bandolier Manufacturing Company estimated that they would incur $600,000 of manufacturing overhead and use 120,000 direct labor hours. At the end of the year the company had actual overhead of $535,000 and used 110,000 direct labor hours. What was the amount of over or underapplied overhead for the year? a. Overapplied by $15,000 b. Underapplied by $50,000 c. Overapplied by $65,000 d. Underapplied by $65,000 e. None of the above 2. During its first year of operations, the DeRawls, Inc. paid $11,000 for direct materials, paid production employees $7,000 and paid general, selling, and administrative expenses of $3,000. Assuming the average product cost per unit is $14 and 2,000 units were produced during the period, how much overhead was applied? a. $1,000 b. $4,000 c. $10,000 d. $22,000 e. None of the above 3. Toys for Tykes has not reported a profit in five years. This year the company would like to narrow its loss to $10,000. Assuming its selling price is $36.50 per unit and its variable costs per unit are $24, how many units must be sold to achieve its target given that total fixed costs are $60,000? a. 6,000 b. 5,600 c. 4,800 d. 4,000 e. None of the above 4. Which of the following is the approximate internal rate of return for an investment that cost $24,580 and provides a $4,000 annuity for 10 years? a. 6% b. 8% c. 10% d. 12% e. None of the above 5. During 2007, Fort Bennington Corporation mistakenly classified a production salary of $30,000 as a selling salary. The company produced 5,000 units and sold 5,000 units during that year. The company had some beginning inventory, which had a lower value than current year inventory (due to inflation). The company records inventory sales on a FIFO basis (older inventory is ‘sold’ before newer inventory). In the year the mistake was made a. Product costs are overstated b. The company’s net income is overstated.
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c. The company’s net income is understated. d. The mistake did not cause the net income to be over or understated. e. None of the above 6. Honolulu Company has a per unit sales price of $50. The company’s fixed costs are $60,000 and the variable cost per unit is $20. The company has current sales of $350,000. What is the company’s margin of safety in sales dollars? a. $350,000 b. $250,000 c. $100,000 d. $ 0 e. None of the above 7. Comet Cleaners Inc. cleans and waxes floors for commercial customers. The company is presently working under capacity (equipment and workers are sometimes idle). The company recently received an order from a nonregular customer outside the company’s normal geographical service region for a price of $90,000. The size of the proposed job is 22,000 square feet. The company’s normal service costs are as follows: Unit – level (materials) $1.75 per square foot Unit – level (labor) $2.25 per square foot Unit – level (variable overhead)
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A2301FA08 Final Exam - Managerial Accounting Fall 2008...

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