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
2.
Question :
TCO 1) Which of the following statements regarding fixed costs is
true?
Points Received:
4 of 4
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?
Points Received:
4 of 4
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. How
much is the budgeted variable cost per unit?
Points Received:
4 of 4
5.
Question :
(TCO 1) Which of the following is an example of a manufacturing
overhead cost?
Points Received:
4 of 4
6.
Question :
(TCO 1) Product costs
Points Received:
4 of 4
7.
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
8.
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
9.
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 Department’s 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:
Page:
1.
Question :
(TCO 4) Which of the following will have no effect on the
break-even point in units?
Points Received:
4 of 4
2.
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
3.
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
4.
Question :
(TCO 5) In full costing, when does fixed manufacturing overhead
become an expense?
Points Received:
4 of 4
5.
Question :
(TCO 5) Variable costing income is a function of:
Points Received:
4 of 4
6.
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
12
Variable manufacturing overhead per unit
10
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
7.
Question :
(TCO 6) Which of the following is not a reason that
companies allocate costs?
Points Received:
4 of 4
8.
Question :
(TCO 6) Which of the following statements about cost pools is not
true?
Points Received:
4 of 4
9.
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 Company’s 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
1.
Question :
(TCO 3) What are transferred-in costs? Which departments will
never have transferred-in costs?
Points Received:
20 of 20
right
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
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
175,000
350,000
Other
60,000
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
President’s 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!
3.
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!