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Exam 1 Spring 2011 - Pew—“Hoe Exam#1 max epfl'flg l 1...

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Unformatted text preview: Pew—“Hoe. Exam #1 max epfl'flg \ l 1. The fixed portion of the cost of maintenance for a manufacturing factory is a: Period cost Product cost A) Yes No B) Yes Yes C) No Yes D) No No 2. Which of the following statements about product costs is true? A. Product costs are deducted from revenue when the production process is completed. B. Product costs are deducted from revenue as expenditures are made. C. Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets. D. Product costs appear on financial statements only when products are sold. 3. Which of the following is an example of a period cost? A. Sales commissions to marketing staff. B. Fabric used to produce men's pants. C. Factory supervisor's salary. D. Annual depreciation of production equipment. 4. Which of the following is correct concerning reactions to DECREASES in the level of activity? Total Variable Cost Variable Cost Per Unit A) Increases Decreases B) Constant Decreases C) Decreases Constant D) Increase s Constant 5. Consider the following costs: Direct materials .............................. $ 63,000 Depreciation on factory equipment ........ $ 22,000 Factory janitor’s salary ...................... $ 13,000 Direct labor .................................... $ 18,000 Factory utilities ............................... $ 9,000 Selling expenses .............................. $ 16,000 Factory supervisor salary ......................... $ 84,000 Administrative expenses ..................... $ 21,000 What is the total amount of manufacturing overhead included above? A. $108,000 B. $118,000 C. $128,000 D. $138,000 SPO90218091 - Page 1 6. The information below relates to Picken Manufacturing Company's operations for a recent month. (Assume that all raw materials are direct materials): Purchases ofraw materials ........................ $91,000 Direct labor cost ......................................... $122,000 Selling costs {total} .................................... $42,000 Administrative costs (total) ........................ $56,000 Manufacturing overhead costs (total) ........ $340,000 Raw materials inventory, beginning .......... $22,000 Work in proce ss inventory, beginning ....... $27,000 Finished goods inventory, beginning ......... $42,000 Raw materials inventory, ending ............... $7,000 Work. in process inventory, ending ............ $35,000 Finished goods inventory, ending .............. $15,000 What was Picken’s cost of goods manufactured for the month? A. $545,000 B. $560,000 C. $568,000 D. $587,000 7. The following inventory balances have been provided for the most recent year: Beginning Ending Raw materials .................... $21,000 $15,000 Work in process ................. $18,000 $29,000 Finished goods ................... $57,000 $33,000 The cost of goods manufactured was $714,000. What was the cost of goods sold? A. $738,000 B. $693,000 C. $714,000 D. $733,000 8. In a job-order costing system, applying manufacturing overhead to production would be recorded as a debit to: A. Raw Materials inventory. B. Finished Goods inventory. C. Work in Process inventory. D. Cost of Goods Sold. 9. In a job-order costing system, the cost of a completed but unsold job is: A. closed to Cost of Goods Sold. B. part of the Work in Process inventory balance. C. adjusted to exclude any applied overhead. D. part of the Finished Goods inventory balance. SP090218091 — Page 2 10. If overhead is overapplied, then: A. the amount of overhead cost applied to Work in Process is the same as the actual overhead cost incurred. B. the amount of overhead cost applied to Work in Process is less than the actual overhead cost incurred. C. the amount of overhead cost applied to Work in Process is greater than the actual overhead cost incurred. D. the manufacturing overhead account will have a debit balance at the end of the year. 11. SmithCo Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1555: Direct materials used ....................................................... $4,200 Dire ct labor—hours worked ............................................... 300 Direct labor rate per hour ................................................. $8.00 Machine—hours used ......................................................... 200 Predetermined overhead rate per machine-hour .............. $15.00 What is the total manufacturing cost recorded on Job 1555? A. $8,800 B. $9,600 C. $10,300 D. $11,100 12. Job 910 was recently completed. The following data have been recorded on its job cost sheet: Direct materials .............................. $3,193 Dire ct lab or-ho urs .......................... 21 lab or—ho urs Direct labor wage rate .................... $12 per labor—hour Machine-hours ............................... 166 machine—hours The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $15 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be: A. $3,220 B. $3,760 C. $5,935 D. $3,445 13. Avery Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. For the month of October, Avery's estimated manufacturing overhead cost was $600,000 based on an estimated activity level of 100,000 direct labor-hours. Actual overhead amounted to $525,000 with actual direct labor-hours totaling 110,000 for the month. How much was the overapplied or underapplied overhead? A. $125,000 overapplied B. $13 5 ,000 underapplied C. $135,000 overapplied a. D. $l25,000 underapplied SP090218091 - Page 3 l4. Woodman Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Estimated and actual data for direct labor and manufacturing overhead for last year are as follows: Estimated Actual Dire ct labor—hours .......................... 600,000 550,000 Manufacturing overhead ................ $220,000 $680,000 The manufacturing overhead for Woodman Company for last year was: A. overapplied by $20,000 B. overapplied by $40,000 C. underapplied by $20,000 D. underapplied by $40,000 15. A is a fixed cost; B is a variable cost. During the current year the level of activity (level of the cost driver) has increased. We would expect that: A. The cost per unit of A has remained unchanged. B. The cost per unit of B has decreased. C. The cost per unit of A has increased. D. The cost per unit of B has remained unchanged. 16. Which costs will change with an decrease in activity (decreased level of the cost driver)? A. Unit fixed cost and total fixed cost B. Unit variable cost and total variable cost C. Unit fixed cost and total variable cost D. Unit fixed cost and unit variable cost 17. Iacono Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two/levels of monthly sales volume. The company sells the product for $127.20 per unit. £34,000 153,100 7 $7760 Sales volume (units) .................................. 5,000 6,000 L55 (JOE Z\ . C, Cost ofsales ........................... T ................... $419,000 $502,800 ‘Selling and administrative costs ................ 133,186,500 $202,200 The best estimate of the total contribution margin when 5800 units are sold is: A. $230,020 Q we , W, 2 fl W... ,. - 9 , ‘1 D. $132,330 {174) {353? 6m 2 “$8940 (Egg) Hfl . 3.500; (“,0“) 2,, 4,. —»-—-\ 2'7 f7 - 5800 :@ ./”\-._ . (:3) (561.34%) + 101,100} ‘(fl “1,009 ‘w‘ofiwi 2. 7056360 _, {a (35,5304) a“ 32?) H m" “ ' «wwwm wwwv‘ 'flm £30200 -' 522%? “1,00 g 0:)». r§’<g::l {”730 '. 701ml was ’ J I W .. C015 - 65.3200» a) 715% 59990213091 - Page 4,, “:3! gee = £0,311: 32:73am} 18. Bakeman Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume ..................... 2,000 units 3,000 units Direct materials ......................... $36.10 per unit $36.10 per unit Direct labor .............................. $48.00 per unit $48.00 per unit Manufacturing overhead ............... $51.00 per unit $40.90 per unit The best estimate of the total variable manufacturing cost per unit is: A. $ 36.10 B. $ 84.10 C. $ 104.80 D. $ 129.10 19. At a volume of 20,000 direct labor hours, Tirso Company incurs $50,000 in factory overhead costs, including $10,000 in fixed costs. Assuming that this activity is within the relevant range, if volume increases to 25,000 direct labor hours, Tirso Company would expect to incur total factory overhead costs of: A. $50,000 B. $60,000 C. $62,500 D. $72,500 20. Vicuna Wool Company manufactures and sells sweaters. Last year, Vicuna operated at 100% of capacity and had the following cost formula for total manufacturing costs: Y = $50,000 + $400X Assuming no change in cost structure, what would Vicuna's cost formula have been last year if they only operated at 85% of production capacity? A. Y = $45,000 + $360X B. Y = $45,000 + $400K C. Y = $50,000 + $360X D. Y = $50,000 + $400X 21. You are applying the scattergraph method and find that the regression line you have drawn passes through a data point with the following coordinates: 7,500 units and $10,000. The regression line passes through the Y axis at the $4,000 point. Which of the following is the cost formula that represents the slope of this line? A. Y=$4,000+$1.25X B. Y=$4,000+$0.80X C. Y=$10,000+$1.33X D. Y=$10,000+$1.99X SP090218091 - Page 5 22. Contribution margin can be defined as: A. the amount of sales revenue necessary to cover variable expenses. B. sales revenue minus fixed expenses. C. the amount of sales revenue necessary to cover fixed and variable expenses. D. sales revenue minus variable expenses. 23. If a company is operating at the break-even point: A. its contribution margin will be equal to its variable expenses. B. its margin of safety will be equal to zero. C. its fixed expenses will be equal to its variable expenses. D. its selling price will be equal to its variable expense per unit. 24. At the break-even point: A. sales would be equal to contribution margin. B. contribution margin would be equal to fixed expenses. C. contribution margin would be equal to net operating income. D. sales would be equal to fixed expenses. 25. Break-even analysis assumes that: A. Total revenue is constant. B. Unit variable expense is constant. C. Unit fixed expense is constant. D. Selling prices must fall in order to generate more revenue. 26. Escareno Corporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales {8,400 units) ......................... $T64,400 Variable expenses .......................... 445,200 Contribution margin ...................... 319,200 Fixed expenses .............................. 250,900 Net operating income .................... $ 68,300 If the company sells 8,100 units, its total contribution margin should be closest to: A. $301,000 B. $307,800 C. $309,200 D. $311,400 SPO90218091 - Page 6 /\. 27. Data concerning Kardas Corporation's single product appear below: Per Unit Percent of Sales Selling price ........................... $ 140 100 % Variable expenses ..................... i8 20 % Contribution margin .................. $ 112 80 % The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $30,000 increase in the monthly advertising budget would result in a 280 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? A. decrease of $1,360 B. increase of $20,160 C. decrease of $20,000 D. increase of$l,360 28. Borich Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit ..................... $150.00 1ifariable expense per unit .............. $73.50 Fixed expense per month ............... $308,295 The break-even in monthly unit sales is closest to: A. 2,055 B. 4,030 C. 4,194 D. 3,426 29. Cancer Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit ..................... $240.00 Tal’ariable expense per unit .............. $81.60 Fixed expense per month ............... $997,920 The unit sales to attain the company's monthly target profit of $84,000 is closest to: A. 6,830 B. 7,769 C. 8,830 D. 10,341 30. The official mascot of Oklahoma State University is: A. Pistol Pete SPO90218091 - Page 7 ...
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