Devry ACCT505 Midterm Week 4 Midterm set 2

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1. Question
: (TCO A) The variable portion
of advertising costs is a

Conversion YES… Period NO.

Conversion YES …. Period YES.

Conversion NO…. Period YES.

Conversion NO…. Period NO.

2. Question
: (TCO A) The costs of staffing
and operating the accounting department at Central Hospital would be considered
by the Department of Surgery to be

direct costs.

sunk costs.

incremental costs.

None of the above

3. Question
: (TCO A) The cost of lubricants
used to grease a production machine in a manufacturing company is an example of
a(n):

period cost.

direct material cost.

indirect manufacturing cost.

direct labor cost.

None of the above

4. Question
: (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 costs per unit increase and variable
costs per unit increase.
Fixed costs per unit decrease and variable
costs per unit do not change.
Fixed costs per unit do not change and
variable costs per unit do not change.
Fixed costs per unit do not change and
variable costs per unit increase.

5. Question
: (TCO F) Which of the following
statements is true?
I. Overhead application may be made slowly as a job is
worked on.
II. Overhead application may be made in a single application
at the time of completion of the job.
III. Overhead application should be made to any job not
completed at year end in order to properly value the work in process inventory.

Only statement I is true.

Only statement II is true.

Both statements I and II are true.

Statements I, II, and III are all true.

6. Question
: (TCO F) Which of the following
statements about the process-costing system is incorrect?

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. Question
: (TCO F) The weighted-average
method of process costing differs from the FIFO method of process costing in
that the weighted-average method

can be used under any cost-flow assumption.

does not require the use of predetermined
overhead rates.

keeps costs 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. Question
: (TCO B) The contribution
margin equals

sales – expenses.

sales – cost of goods sold.

sales – variable costs.

sales – fixed costs.

9. Question
: (TCO B) Which of the following
would not affect the break-even point?

Total variable expenses

Selling price per unit

Variable expenses per unit

Total fixed expenses

10. Question : (TCO E) In an income statement
prepared using the variable costing method, variable selling and administrative
expenses would

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.

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1. Question
: (TCO A) The following data (in
thousands of dollars) have been taken from the accounting records of Larden
Corporation for the just-completed year.
Sales $950
Purchases
of raw materials $170
Direct
labor $210
Manufacturing
overhead $220
Administrative
expenses $180
Selling
expenses $140
Raw
materials inventory, beginning $70

Raw
materials inventory, ending $80

Work-in-process
inventory, beginning $30
Work-in-process
inventory, ending $20
Finished
goods inventory, beginning $100
Finished
goods inventory, ending $70
Required: Prepare a Schedule of Cost of Goods Manufactured
statement in the text box below.

2. Question
: (TCO F) The Illinois Company
manufactures a product that goes through three processing departments. Information
relating to activity in the first department during June is given below.
Percentage Completed
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
The department started 475,000 units into production during
the month and transferred 480,000 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.

3. Question
: (TCO B) Drake Company’s income
statement for the most recent year appears below.
Sales (45,000 units) $1,350,000
Less: variable expenses 750,000
Contribution margin 600,000
Less: fixed expenses 375,000
Net operating income $225,000
Required:
a. Calculate the unit contribution margin.
b. Calculate the break-even point in dollars.
c. If the company desires a net operating income of
$290,000, how many units must it sell?

4. Question
: (TCO E) Maffei Company, which
has only one product, has provided the following data concerning its most
recent month of operations:
Selling price $
175

Units in beginning inventory 0
Units produced 9,500
Units sold 8,000
Units in ending Inventory 1,500

Variable costs per unit:
Direct materials $
55
Direct labor $
38
Variable manufacturing overhead $ 2
Variable selling and admin $
10

Fixed costs:
Fixed manufacturing overhead $
300,000
Fixed selling and admin $
125,000
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.