Devry ACCT346 Midterm Exam 2 ANSWERS

ACCT 346 Midterm Exam 2 ANSWERS

Question :

(TCO 1) Which of the following is not a difference between financial accounting and managerial accounting?

Points Received:

4 of 4

Question :

TCO 1) Which of the following statements regarding fixed costs is true?

Points Received:

4 of 4

Question :

(TCO 1) You own a car and are trying to decide whether or not to trade it in and buy a new car. Which of the following costs is an opportunity cost in this situation?

Points Received:

4 of 4

Question :

(TCO 1) Shulas 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $14.00 each. How much is the budgeted variable cost per unit?

Points Received:

4 of 4

Question :

(TCO 1) Which of the following is an example of a manufacturing overhead cost?

Points Received:

4 of 4

Question :

(TCO 1) Product costs

Points Received:

4 of 4

Question :

(TCO 1) At December 31, 2010, WDT Inc. has a balance in the Work in Process Inventory account of $62,000. At January 1, 2010, the balance was $55,000. Current manufacturing costs for the year are $292,000, and cost of goods sold is $284,000. How much is cost of goods manufactured?

Points Received:

4 of 4

Question :

(TCO 2) BCS Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for August follows:

Estimated

Actual

Overhead cost

$174,000

$171,000

Direct labor hours

5,800

5,900

Direct labor cost

$87,000

$89,975

How much overhead should be applied in total during August?

Points Received:

4 of 4

Question :

(TCO 2) Citrus Company incurred manufacturing overhead costs of $300,000. Total overhead applied to jobs was $306,000. What was the amount of overapplied or underapplied overhead?

Points Received:

4 of 4

10.

Question :

(TCO 3) Companies in which of the following industries would notbe likely to use process costing?

Points Received:

4 of 4

11.

Question :

(TCO 3) The Blending Department began the period with 20,000 units. During the period the department received another 80,000 units from the prior department and at the end of the period 30,000 units remained, which were 40% complete. How much are equivalent units in The Blending Departments work in process inventory at the end of the period?

Points Received:

4 of 4

12.

Question :

(TCO 3) Ranger Glass Company manufactures glass for French doors. At the start of May, 2,000 units were in-process. During May, 11,000 units were completed and 3,000 units were in process at the end of May. These in-process units were 90% complete with respect to material and 50% complete with respect to conversion costs. Other information is as follows:

Work in process, May 1:

Direct material

$36,000

Conversion costs

$45,000

Costs incurred during May:

Direct material

$186,000

Conversion costs

$255,000

Calculate the cost per equivalent unit for conversion costs.

Points Received:

4 of 4

13.

Question :

(TCO 4) Clearance Depot has total monthly costs of $8,000 when 2,500 units are produced and $12,400 when 5,000 units are produced. What is the estimated total monthly fixed cost?

Points Received:

4 of 4

Page:

Question :

(TCO 4) Which of the following will have no effect on the break-even point in units?

Points Received:

4 of 4

Question :

(TCO 4) Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break-even point?

Points Received:

4 of 4

Question :

(TCO 4) Randy Company produces a single product that is sold for $85 per unit. If variable costs per unit are $26 and fixed costs total $47,500, how many units must Randy sell in order to earn a profit of $100,000?

Points Received:

4 of 4

Question :

(TCO 5) In full costing, when does fixed manufacturing overhead become an expense?

Points Received:

4 of 4

Question :

(TCO 5) Variable costing income is a function of:

Points Received:

4 of 4

Question :

(TCO 5) Peak Manufacturing produces snow blowers. The selling price per snow blower is $100. Costs involved in production are:

Direct Material per unit

$20

Direct Labor per unit

Variable manufacturing overhead per unit

Fixed manufacturing overhead per year

$148,500
In addition, the company has fixed selling and administrative costs of $150,000 per year. During the year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much fixed manufacturing overhead is in ending inventory under full costing?

Points Received:

4 of 4

Question :

(TCO 6) Which of the following is not a reason that companies allocate costs?

Points Received:

4 of 4

Question :

(TCO 6) Which of the following statements about cost pools is not
true?

Points Received:

4 of 4

Question :

(TCO 6) The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases:

Production Dept. 1

Production Dept. 2

Square footage

15,000

45,000

Direct labor hours

25,000

50,000

If Jones assigns costs to departments based on square footage, how much total costs will be allocated to Production Department 1?

Points Received:

4 of 4

10.

Question :

(TCO 7) A company is currently making a necessary component in house (the company is producing the component for its own use). The company has received an offer to buy the component from an outside supplier. A machine is being rented to make the component. If the company were to buy the component, the machine would no longer be rented. The rent on the machine, in relation to the decision to make or buy the component, is:

Points Received:

4 of 4

11.

Question :

(TCO 7) Ricket Company has 1,500 obsolete calculators that are carried in inventory at a cost of $13,200. If these calculators are upgraded at a cost of $9,500, they could be sold for $22,500. Alternatively, the calculators could be sold as is for $9,000. What is the net advantage or disadvantage of reworking the calculators?

Points Received:

4 of 4

12.

Question :

(TCO 7) YXZ Companys market for the Model 55 has changed significantly, and YXZ has had to drop the price per unit from $275 to $135. There are some units in the work in process inventory that have costs of $160 per unit associated with them. YXZ could sell these units in their current state for $100 each. It will cost YXZ $10 per unit to complete these units so that they can be sold for $135 each.

When the incremental revenues and expenses are analyzed, what is the financial impact?

Points Received:

4 of 4

Question :

(TCO 3) What are transferred-in costs? Which departments will never have transferred-in costs?

Points Received:

20 of 20

right

Question :

(TCO 7) Computer Boutique sells computer equipment and home office furniture. Currently, the furniture product line takes up approximately 50% of the companys retail floor space. The president of Computer Boutique is trying to decide whether the company should continue offering furniture or just concentrate on computer equipment. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13%. Allocated fixed costs are assigned based on relative sales.

Computer

Home Office

Equipment

Furniture

Total

Sales

$1,200,000

$800,000

$2,000,000

Less cost of goods sold

700,000

500,000

1,200,000

Contribution margin

500,000

300,000

800,000

Less direct fixed costs:

Salaries

175,000

350,000

Other

60,000

120,000

Less allocated fixed costs:

Rent

14,118

9,882

24,000

Insurance

3,529

2,471

6,000

Cleaning

4,117

2,883

7,000

Presidents salary

76,470

53,350

130,000

Other

7,058

4,942

12,000

Total costs

340,292

380,708

649,000

Net Income

$159,708

($ 8,708)

$151,000

Prepare an incremental analysis to determine the incremental effect on profit of discontinuing the furniture line.

Points Received:

25 of 25

on target!

Question :

(TCO 4) The following monthly data are available for RedEx, which produces only one product that it sells for $84 each. Its unit variable costs are $28 and its total fixed expenses are $64,960. Sales during April totaled 1,600 units.

(a) How much is the breakeven point in sales dollars for RedEx?
(b) How many units must RedEx sell in order to earn a profit of $24,640?
(c) A new employee suggests that RedEx sponsor a company softball team as a form of advertising. The cost to sponsor the team is $1,792. How many more units must be sold to cover this cost?

Points Received:

25 of 25

perfect!

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