DeVry Chicago ACCT 346 MidTerm (Graded)

1. Question : (TCO 1) The goal of managerial accounting is to provide information that managers need for Student Answer: planning. control. decision making. All of the above answers are correct. 2. Question : (TCO 1) Which of the following costs does not change when the level of business activity changes? Student Answer: total fixed costs total variable costs total direct materials costs fixed costs per unit 3. 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? Student Answer: the trip to Cancun that you will not be able to take if you buy the car the cost of the car you are trading in the cost of your books for this term the cost of your car insurance last year 4. Question : (TCO 1) Shula’s 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. What is the budgeted fixed cost per unit? Student Answer: $1.06 $1.44 $4.49 $1.94 5. Question : (TCO 1) Which of the following costs is part of manufacturing overhead? Student Answer: indirect labor direct labor salaries for the accounting personnel wages for the janitorial staff for the sales offices 6. Question : (TCO 1) Which of the following is a period cost? Student Answer: rent on a factory building depreciation on production equipment raw materials cost commissions paid on each unit sold 7. Question : (TCO 1) Red Runner’s Work in Process Inventory account has a beginning balance of $50,000 and an ending balance of $40,000. Direct materials used are $70,000 and direct labor used totals $35,000. Cost of goods sold totals $135,000. Manufacturing overhead applied is $20,000. How much is cost of goods manufactured? Student Answer: $145,000 $115,000 $125,000 $135,000 8. Question : (TCO 2) BCS Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for August follows: Estimated ActualOverhead cost $174,000 $171,000Direct labor hours 5,800 5,900Direct labor cost $87,000 $89,975How much overhead should be applied in total during August? Student Answer: 177,000 179,950 171,100 168,200 9. Question : (TCO 2) During 2011, Magus Company applied overhead using a job-order costing system at a rate of $12 per direct labor hours. Estimated direct labor hours for the year were 150,000, and estimated overhead for the year was $1,800,000. Actual direct labor hours for 2011 were 140,000 and actual overhead was $1,700,000.What is the amount of under or over applied overhead for the year? Student Answer: $100,000 underapplied $20,000 underapplied $100,00 overapplied $120,000 underapplied 10. Question : (TCO 3) Which of the following describes the differences between job-order and process costing? Student Answer: Job-order costing is used in financial accounting while process costing is used in managerial accounting. Job-order costing can only be used by manufacturers; service enterprises must use process costing. Job-order costing is voluntary while process costing is mandatory. Job-order costing traces costs to jobs while process costing traces costs to departments and averages the costs among the units worked on during the period. 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 Department’s work in process inventory at the end of the period? Student Answer: 12,000 28,000 40,000 52,000 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 $36,000Conversion costs $45,000Costs incurred during May: Direct material $186,000Conversion costs $255,000Calculate the cost per equivalent unit for conversion costs. Student Answer: $24.00 $4.09 $21.43 $20.40 13. Question : (TCO 4) Duradyne, Inc. has total costs of $18,000 when 2,000 units are produced and $26,000 when 5,200 units are produced. During March, 4,000 units were produced and sold for $8 each. What is the variable cost per unit? Student Answer: $2.50 $0.40 $2.00 $4.00 1. Question : (TCO 3) What are transferred-in costs? Which departments will never have transferred-in costs? 2. Question : (TCO 7) Computer Boutique sells computer equipment and home office furniture. Currently, the furniture product line takes up approximately 50% of the company’s 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 TotalSales $1,200,000 $800,000 $2,000,000Less cost of goods sold 700,000 500,000 1,200,000Contribution margin 500,000 300,000 800,000Less direct fixed costs: Salaries 175,000 175,000 350,000Other 60,000 60,000 120,000Less allocated fixed costs: Rent 14,118 9,882 24,000Insurance 3,529 2,471 6,000Cleaning 4,117 2,883 7,000President’s salary 76,470 53,350 130,000Other 7,058 4,942 12,000Total costs 340,292 380,708 649,000Net Income $159,708 ($ 8,708) $151,000 Prepare an incremental analysis to determine the incremental effect on profit of discontinuing the furniture line. 3. Question : (TCO 4) Beach Rentals has estimated that fixed costs per month are $79,200 and variable cost per dollar of sales is $0.52.(a) What is the break-even point per month in sales?(b) What level of sales is needed for a monthly profit of $24,000?(c) For the month of July, the company anticipates sales of $240,000. What is the expected level of profit?