Devry ACCT505 Midterm Week 4 Midterm set 1

ACCT 505 Midterm Week 4 Midterm
Midterm Page 1
1. (TCO A) Direct
material cost is a part of:(Points : 6)
Conversion Cost
YES…. Prime Cost NO
Conversion Cost
NO…. Prime Cost YES
Conversion Cost
YES…. Prime Cost YES
Conversion Cost
NO…. Prime Cost NO |
2. (TCO A) A cost
incurred in the past that is not relevant to any current decision is classified
as a(n): (Points : 6)
period cost.
incremental
cost.
opportunity
cost.
none of the
above. |
3. (TCO A) The cost of lubricants used to grease a
production machine in a manufacturing company is an example of a(n): (Points :
6)
period cost
direct material
cost
indirect
manufacturing cost
direct labor
cost
none of the
above |
4. (TCO A) When the activity level is expected to increase
within the relevant range, what effects would be anticipated with respect to
each of the following?
Fixed Cost Per Unit Variable Cost Per Unit(Points : 6)
Increase No Change
Increase Increase
decrease No Change
No Change Increase |
5. (TCO F) Emco Company uses direct labor cost as a basis
for computing its predetermined overhead rate. In computing the predetermined
overhead rate for last year, the company included in direct labor cost a
portion of indirect labor. The effect of this misclassification will be to:
(Points : 6)
understate the
predetermined overhead rate
overstate the predetermined
overhead rate
have no effect
on the predetermined overhead rate
cannot be
determined from the information given |

6. (TCO F) Which of the following statements about process
costing system is incorrect?(Points : 6)
In a process
costing system, each processing department has a work in process account
In a process
costing system, equivalent units are separately computed for materials and for
conversion costs
In a process
costing system, overhead can be under- or overapplied just as in job-order
costing
In a process
costing system, materials costs are traced to units of products |
7. (TCO F) The weighted-average method of process costing
differs from the FIFO method of process costing in that the weighted-average
method: (Points : 6)
can be used
under any cost flow assumption
does not require
the use of predetermined overhead rates
keepscosts in
the beginning inventory separate from current period costs
does not
consider the degree of completion of units in the beginning work in process
inventory when computing equivalent units of production |

8. (TCO B) The contribution margin ratio always increases
when the:(Points : 6)
break-even point
increases
break-even point
decreases
variable
expenses as a percentage of net sales decreases
variable
expenses as a percentage of net sales increases |
9. (TCO B) The unit
sales needed to attain the target profit is found by: (Points : 6)
dividing fixed costs by the contribution
margin.
adding variable
expenses to fixed expenses and dividing the total by the contribution margin.
adding target
profit to the fixed expenses and then dividing the total by the unit
contribution margin.
adding target
profit to the fixed expenses and then dividing the total by the contribution
margin. |
10. (TCO E) In an income statement prepared using the
variable costing method, variable selling and administrative expenses would:
(Points : 6)
be used in the
computation of the contribution margin
be used in the
computation of net operating income but not in the computation of the
contribution margin
be treated
differently from variable manufacturing expenses not be used |
Midterm Page 2
The following data
(in thousands of dollars) have been taken from the accounting records of
Larklin Corporation for the just completed year.
1. (TCO
A).
| Sales | $820 |
| Purchases of raw materials | $195 |
| Direct labor | $170 |
| Manufacturing overhead | $250 |
| Administrative expenses | $180 |
| Selling expenses | $140 |
| Raw materials inventory, beginning | $80 |
| Raw materials inventory, ending | $35 |
| Work in process inventory, beginning | $65 |
| Work in process inventory, ending | $30 |
| Finished goods inventory, beginning | $130 |
| Finished goods inventory, ending | $165 |
Required: Prepare a
Schedule of Cost of Goods Manufactured statement in the text box below.(Points
: 15)

2. (TCO F) The Indiana Company manufactures a product that
goes through three processing departments.
Information relating to activity in the first department during June is
given below:
Percent completed

Units Materials Conversion
Work in process, June 1 70,000 65% 45%
Work in process, Jun 30 60,000 75% 65%The department started
290,000 units into production during the month and transferred 300,000 completed
units to the next department.REQUIRED:
Compute the equivalent units of production for the first department for
June, assuming that the company uses the weighted-average method of accounting
for units and costs.(Points : 20)

3. (TCO B) A tile manufacturer has supplied the following
data:
Boxes of tile produced and sold 625,000
Sales revenue
$2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense
$790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Net operating income
$180,000Required:
a. Calculate the company’s unit contribution marginb.
Calculate the
company’s unit contribution ratioc. If the company increases its unit sales
volume by 5% without increasing its fixed expenses, what would the company’s
net operating income be? (Points : 25)

4. | (TCO E) Lehne Company, which has only one product, has
provided the following data concerning its most recent month of operations:
Selling Price | |
$ 125 |
Units in beginning Inventory | | 600 |
Units Produced | | 3000 |
Units sold | | 3500 |
Units in ending Inventory | | 100 |
| | |
Variable Costs per unit: | | |
Direct materials | |
$ 15 |
Direct labor | |
$ 50 |
Variable manufacturing overhead | | $
8 |
Variable selling and admin | | $
12 |
| | |
Fixed Costs: | | |
Fixed manufacturing overhead | | $
75,000 |
Fixed selling and admin | |
$ 20,000 |
The company produces the same number of units every month,
although the sales in units vary from month to month. The company’s variable
costs per unit and total fixed costs have been constant from month to
month.Required:
a. What is the unit product cost for the month under
variable costing?
b. What is the unit product cost for the month under
absorption costing?
c. Prepare an income statement for the month using the
variable costing method.
d. Prepare an income statement for the month using the
absorption costing method. |
(Points : 30)
Lehne Company,
which has only one product, has provided the following data concerning its most
recent month of operations:

Selling
price $125

Units
in beginning inventory 600
Units
produced 3,000
Units
sold 3,500
Units
in ending inventory 100

Variable
costs per unit:
Direct
materials $15
Direct
labor $50
Variable
manufacturing overhead $8
Variable
selling and administrative $12

Fixed
costs:
Fixed
manufacturing overhead $75,00
Fixed
selling and administrative $20,000

The
company produces the same number of units every month, although the sales in
units vary from month to month. The company’s variable costs per unit and total
fixed costs have been constant from month to month.

Required:

a. What is
the unit product cost for the month under variable costing?
b. What is
the unit product cost for the month under absorption costing?
c. Prepare
an income statement for the month using the variable costing method.
d. Prepare
an income statement for the month using the absorption costing method