ACCT346 Midterm Exam v1 Complete Solution Answers

Question: #9284

ACCT346 Midterm Exam v.1 A++ Graded Answers 1. Question : (TCO 1) Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for taxing authorities. internal users of accounting information. external users of accounting information. the Securities and Exchange Commission (SEC). 2. Question : TCO 1) Which of the following statements regarding fixed costs is true? When production increases, fixed cost per unit increases. When production decreases, total fixed costs decrease. When production increases, fixed cost per unit decreases. When production decreases, total fixed costs increase. 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? 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. How much is the budgeted variable cost per unit? $5.80 $7.74 $6.68 $3.25 5. Question : (TCO 1) Which of the following is an example of a manufacturing overhead cost? security at the manufacturing plant fabric used to produce shirts cost of shipping product to customers the salary of the president of the company 6. Question : (TCO 1) Which of the following is a period cost? rent on a factory building depreciation on production equipment raw materials cost commissions paid on each unit sold 7. Question : (TCO 1) If the balance in the Finished Goods Inventory account increased by $30,000 during the period and the cost of goods manufactured was $220,000, how much is cost of goods sold? $110,000 $190,000 $220,000 $250,000 8. Question : (TCO 2) BCS Company applies manufacturing overhead based on direct labor cost. 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 is the predetermined overhead rate? 9. Question : (TCO 2) During 2011, Madison 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 $1,670,000. What is the amount of under or over applied overhead for the year? $10,000 underapplied $10,000 overapplied $130,000 underapplied $130,000 overapplied 10. Question : (TCO 3) Companies in which of the following industries would not be likely to use process costing? cereals paints cosmetics auto body shop 11. Question : (TCO 3) The Blending Department began the period with 45,000 units. During the period the department received another 30,000 units from the prior department and completed 60,000 units during the period. The remaining units were 75% complete. How much are equivalent units in The Blending Department’s work in process inventory at the end of the period? 30,000 22,500 15,000 11,250 12. Question : (TCO 3) During March, the varnishing department incurred costs of $90,250 for direct labor. The beginning inventory was 3,500 units and 10,000 units were transferred to the varnishing department from the sanding department during June. The direct labor cost in the beginning inventory was $27,270. The ending inventory consisted of 2,000 units, which were 25% complete with respect to direct labor. What is the cost per equivalent unit for direct labor? 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? $4,400 $6,580 $3,600 $8,800 1. Question : (TCO 4) The margin of safety is the difference between total revenue and total fixed costs. expected level of sales and the break-even point. budgeted fixed costs and actual fixed costs. selling price and variable cost per unit. 2. Question : (TCO 4) Allen Company sells homework machines for $100 each. Variable costs per unit are $75 and total fixed costs are $62,000. Allen is considering the purchase of new equipment that would increase fixed costs to $84,000, but decrease the variable costs per unit to $60. At that level Allen Company expects to sell 3,000 units next year. What is Allen’s break-even point in units if it purchases the new equipment? 2,480 units 36,000 units 2,100 units 3,650 units 3. Question : (TCO 4) Paula Corporation sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, what is Paula’s margin of safety? $468,140 $124,025 $700,975 $405,000 4. Question : (TCO 5) In variable costing, when does fixed manufacturing overhead become an expense? Never In the period when the product is sold In the period when the expense is incurred In the period when other expenses are at the lowest level 5. Question : (TCO 5) Variable costing income is a function of: Units sold only. Units produced only Both units sold and units produced. Neither units sold nor units. produced 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 is cost of goods sold using full costing? 1,359,000 $1,260,000 $2,038,500 $1,408,500 7. Question : (TCO 6) Costs may be allocated to products. services. departments. any of the above. 8. Question : (TCO 5) An allocation base is the minimum amount to be allocated to a cost object. coordinates the manufacturing overhead costs as they are incurred. will always be less than the variable costs for a product. relates the cost pool to the cost objectives. 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? $1,400,000 $1,050,000 $1,575,000 $2,100,000 10. Question : (TCO 7) A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units. Which of the following is not relevant to the decision? The selling price of the completed units. The costs incurred to process the units to this point. The selling price of the partially completed units. The costs that will be incurred to finish the units. 11. Question : (TCO 7) BigByte Company has 12 obsolete computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold as is for $9,000. What is the net advantage or disadvantage of reworking the computers? $6,300 advantage $1,200 disadvantage $5,400 disadvantage $3,000 advantage 12. Question : (TCO 7) Olde Store has 12,000 cans of crab meat just a week past the expiration date. Each can cost $0.31. The cans could be sold as is for $0.20 each, or relabeled and sold as gourmet cat food. The cost of relabeling the cans would be $0.04 per can and the cans would then sell for $0.29 per can. What should be done with the cans and why? 1. Question : (TCO 3) Describe a process costing system, including the types of companies that commonly use this system. How can process costing information be used in incremental analysis? 2. Question : (TCO 7) Each year, ACE Engines surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, who have offered to conduct the survey and summarize results for $50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a higher-quality job than his company has been doing, but is unwilling to spend more than $12,000 above current costs. The head of bookkeeping for ACE has prepared the following summary of costs related to the survey in the prior year. Mailing $27,000 Printing (done by Lester Print Shop) 9,000 Salary of Pat Fisher, part-time employee who stuffedenvelopes and summarized data when surveys were returned (130 x $16) 2,080 Share of depreciation of computer and software used to track survey responses and summarize results 1,200 Share of electricity/phone/etc. based on square feet of space occupied by Pat Fisher vs. entire company 600 Total $39,880 Prepare an incremental analysis in good form to determine the impact on profit of going outside versus conducting the survey as in the past. Will ACE accept the RBG offer? Why or why not? 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?

Solution: #9321

ACCT346 Midterm ExamGraded Answers

A+ Please look at the attach...