Midterm Part I & II

1. 2- No 1

Actual costs are:

Student Response

Value Correct Answer Feedback

A. the costs incurred

100%

B. budgeted costs

C. estimated costs

D. forecasted costs

Score: 4/4

Comments:

2. 2- No 2

Cost assignment is:

Student Response


A. always arbitrary

B. includes tracing and allocating

100%

C. the same as cost accumulation

D. finding the difference between budgeted and actual costs

Score: 4/4

Comments:

3. 2- No 3

Cost tracing is:

Student Response


A. the assignment of direct costs to the chosen cost object

100%

B. a function of cost allocation

C. the process of tracking both direct and indirect costs associated with a cost object

D. the process of determining the actual cost of the cost object

Score: 4/4

Comments:

4. 2- No 4

Cost behavior refers to:

Student Response


A. how costs react to a

100%

change in the level of activity

B. whether a cost is incurred in a manufacturing, merchandising, or service company

C. classifying costs as either inventoriable or period costs

D. whether a particular expense has been ethically incurred

Score: 4/4

Comments:

5. 2- No 5

If each furnace requires a hose that costs $20 and 2,000 furnaces are produced for the month, the total cost for hoses is:

Student Response


A. considered to be a direct fixed cost

0%

B. considered to be a direct variable cost

C. considered to be an

indirect fixed cost

D. considered to be an indirect variable cost

Score: 0/4

Comments:

6. 3- No 6

Cost-volume-profit analysis assumes all of the following EXCEPT:

Student Response


A. all costs are variable or fixed

B. units manufactured equal units sold

C. total variable costs remain the same over the relevant range

100%

D. total fixed costs remain the same over the relevant range

Score: 4/4

Comments:

7. 3- No 7

Contribution margin equals:

Student Response


A. revenues minus period costs

B. revenues minus product costs

C. revenues minus variable costs

100%

D. revenues minus fixed costs

Score: 4/4

Comments:

8. 3- No 8

The breakeven point is the activity level where:

Student Response


A. revenues equal fixed costs

B. revenues equal variable costs

C. contribution margin equals variable costs

D. revenues equal the sum of variable and fixed costs

100%

Score: 4/4

Comments:

9. 3- No 9

To determine the effect of income tax on a decision, managers should evaluate:

Student Response


A. target operating income

B. contribution margin

C. target net income

100%

D. selling price

Score: 4/4

Comments:

10.

3- No 10

(CPA adapted, November 1992) The strategy MOST likely to reduce the breakeven point would be to:

Student Response


A. increase both the fixed costs and the contribution

margin

B. decrease both the fixed costs and the contribution margin

C. decrease the fixed costs and increase the contribution margin

100%

D. increase the fixed costs and decrease the contribution margin

Score: 4/4

Comments:

11.

4- No 11

For a given job the direct costs associated with the job are:

Student Response


A. actual overhead

B. direct material

C. direct manufacturing labor

D. Both b and c are correct.

100%

Score: 4/4

Comments:

12.

4- No 12

The basic source document for direct manufacturing labor is the:

Student Response


A. job-cost record

B. materials-requisition record

C. labor-time record

D. All of these answers are correct.

0%

Score: 0/4

Comments:

13.

4- No 13

If indirect-cost rates are calculated monthly, distortions might occur because of:

Student Response


A. rental costs paid monthly

0%

B. property tax payments made in July and December

C. routine monthly

preventive-maintenance costs that benefit future months

D. Both B and C are correct.

Score: 0/4

Comments:

14.

4- No 14

In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.

Student Response


A. direct labor

B. manufacturing overhead costs

100%

C. total costs

D. direct materials

Score: 4/4

Comments:

15.

4- No 15

The budgeted indirect-cost rate is calculated:

Student Response


A. during the year

B. at the beginning of the year

C. at the end of each quarter

D. at the end of the year

0%

Score: 0/4

Comments:

16.

5- No16

The UNIQUE feature of an ABC system is the emphasis on:

Student Response


A. department indirect-cost rates

B. individual activities

100%

C. costing individual jobs

D. multiple-cost pools

Score: 4/4

Comments:

17.

5- No 17

Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called:

Student Value Correct Answer Feedback

Response

A. undercosting

B. overcosting

C. peanut-butter costing

100%

D. department costing

Score: 4/4

Comments:

18.

5- No 18

Design of an ABC system requires:

Student Response


A. that the job bid process be redesigned

B. that a cause-and-effect relationship exists between resource costs and individual activities

100%

C. an adjustment to product mix


Score: 4/4

Comments:

19.

5- No 19

Traditional cost systems distort product costs because:

Student Response


A. they emphasize financial accounting requirements

B. they apply average support costs to each unit of product

100%

C. competitive pricing is ignored

D. they do not know how to identify the appropriate units

Score: 4/4

Comments:

20.

5- No 20

Each of the following statements is true EXCEPT:

Student Response


A. traditional product costing systems are more refined than an ABC system

100%

B. ABC product costing systems seek to assign all manufacturing costs to products

C. cost distortions occur when a mismatch (incorrect association) occurs between the way indirect costs are incurred and the basis for their assignment to individual products

D. traditional product costing systems seek to assign all manufacturing costs to products

Score: 4/4

Comments:

21.

17- No 21

Which one of the following statements is true?

Student Response


A. In a job-costing system, individual jobs use different quantities of production resources.

B. In a process-costing system each unit uses approximately the same amount of resources.

C. An averaging process is used to calculate unit costs in a job-costing system.

D. Both A and B are correct.

100%

Score: 4/4

Comments:

22.

17- No 22

The purpose of the equivalent-unit computation is to:

Student Response


A. convert completed units into the amount of partially completed output units that could be made with that quantity of input

0%

B. assist the business in determining ending inventory

C. convert partially completed units into the amount of completed output units that could be made with that quantity of input


Score: 0/4

Comments:

23.

17- No 23

The weighted-average process-costing method calculates the equivalent units by:

Student Value Correct Answer Feedback

Response

A. the units started during the current period plus the units in ending inventory

B. considering only the work done during the current period

C. the units started during the current period minus the units in ending inventory

D. the equivalent units completed during the current period plus the equivalent units in ending inventory

100%

Score: 4/4

Comments:

2 17- No 24

4.

Under the weighted-average method, the stage of completion of beginning work in process:

Student Response


A. is relevant in determining the equivalent units

B. must be combined with the work done during the current period to determine the equivalent units

0%

C. is irrelevant in determining the equivalent-unit calculation

D. can almost always be determined with a high degree of precision

Score: 0/4

Comments:

25.

17- No 25

A major advantage of using the FIFO process-costing method is that:

Student Response


A. FIFO makes the unit cost calculations simpler

B. in contrast with the weighted-average method, FIFO is considered GAAP

C. FIFO provides managers with information about changes in the costs per unit from one period to the next

100%


Score: 4/4

Comments:

26.

1- No 26

Financial accounting:

Student Response


A. focuses on the future and includes activities such as preparing next year's operating budget

B. must comply with GAAP (generally accepted accounting principles)

100%

C. reports include detailed information on the various operating segments of the business such as product lines or departments

D. is prepared for the use of department heads and other employees

Score: 4/4

Comments:

2 1- No 27

7.

Cost accounting:

Student Response


A. provides information on the efficiency of factory labor

B. provides information on the cost of servicing commercial customers

C. provides information on the performance of an operating division


100%

Score: 4/4

Comments:

28.

1- No 28

The act of simply measuring and reporting information:

Student Response


A. focuses the attention of employees on those

100%

processes

B. diverts employee's attention to other activities

C. disproves the saying "What gets measured gets managed."

D. has no effect on employee behavior

Score: 4/4

Comments:

29.

1- No 29

A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a:

Student Response


A. strategic plan

B. management forecast

C. performance report

100%

D. revised plan

Score: 4/4

Comments:

3 1- No 30

0.

Which of the following statements about the cost-benefit approach is TRUE?

Student Response


A. Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources.

100%

B. In a cost-benefit analysis, both costs and benefits are easy to obtain.

C. Resources should be spent if the costs of a decision outweigh the benefits of the decision.

D. A cost-benefit approach would not be appropriate for a decision to

install a budget system or not.

Score: 4/4

Comments:

Practice Test

1. No 1-2

Joseph Davis worked 44 hours last week for Breakgood Manufacturing. Of the 44 hours 4 hours were considered overtime, and also Davis was idle for 5 of the 44 hours due to an equipment malfunction. Davis makes $20 per hour and is paid $30 an hour (time and a half) for overtime. Davis' total compensation for that week would be ________, and assuming Breakgood charges overtime premium and idle time to indirect labor, the amount of this compensation credited to indirect labor would be ________.

Student Response


A. $840; $40

B. $840; $140

C. $920; $40

D. $920; $140 100% total compensation (40 x $20) + (4 x $30) = $920;indirect labor (5 x $20) + (4 x $10) = $140

Score: 4/4

Comments:

2. No 2-2

Steve's Bridal Shop sell wedding dresses. The average selling price is $1,000. Variable cost is $400 and the Fixed cost is $90,000. How many dresses must the bridal shop sell to yield an after tax net income of $18,000 assuming the tax rate is 40%.

Student Response


A. 110

B. 150

C. 200 100% 1000N - 400N - 90,000 = $18,000/(1-0.4) 600N - $90,000 = $30,000 N= 200

D. 146

Score: 4/4

Comments:

3. No 3-3

Answer the following questions using the information below:

Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs.

The number of units that must be sold to achieve $60,000 of operating income is:

Student Response


A. 10,000 units

B. 11,666 units

C. 12,000 units 100% 10X - 4X - 12,000 = 60,000; X = 12,000 units

D. None of these answers are correct.

Score: 4/4

Comments:

4. No 4-3


Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs.

The number of hams that must be sold to achieve $75,000 of operating income is:

Student Response


A. 6,600 hams 100% 20X -5X - 24,000 = 75,000; X = 6,600 hams

B. 7,500 hams

C. 8,400 hams

D. None of these answers are correct.

Score: 4/4

Comments:

5. No 5-3

Sales total $200,000 when variable costs total $150,000 and fixed costs total $30,000. The breakeven point in sales dollars is:

Student Response


A. $200,000

B. $120,000 100% ($200,000 - $150,000) / $200,000 = 25% CM%; $30,000 / 0.25 = $120,000 BE sales

C. $ 40,000

D. $ 30,000

Score: 4/4

Comments:

6. No 6-3


Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,000 in advertising costs.

For every $25,000 of ticket packages sold, operating income will increase by:

Student Response


A. $6,250 100% $25,000 x [($200 - $150 / $200)] = $6,250

B. $12,500

C. $18,750

D. an indeterminable amount

Score: 4/4

Comments:

7. No 7-2

Amber Manuafacturing provided the following information for July 2011:Sales - $20,000Variable Costs 6,000Fixed Costs 9,000Operating Income 5,000If sales double next month, what is the projected operating income?

Student Response


1. $10,000

2. $25,000

3. $19,000 100% ($20,000 x 2) - ($6,000 x 2) - $9,000 = $19,000

4. $12,000

Score: 4/4

Comments:

8. No 8-2

The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows:Direct Material $50Direct Manufacturing Labor 8Variable Manuacturing Overhead 10Fixed Manuacturing Overhead 23Sales Commissions (2% Sales) 5Administrative Salaries 9Total $105

What are the variable costs per unit associated with Product ORD203?

Student Response


1. $60

2. $82

3. $73 100% $50 + $8 + $10 + $5 = $73

4. $105

Score: 4/4

Comments:

9. No 9-4


For 20X5, Marcotte's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information:

Estimated ActualManufacturing overhead costs $100,000 $120,000Machine-hours 20,000 25,000

Using job costing, the 20X5 budgeted manufacturing overhead rate is:

Student Response


A. $4.80 per machine-hour

B. $6.00 per machine-hour

C. $5.00 per machine-hour

100%

D. $4.00 per machine-hour

Score: 4/4

Comments:

10.

N0 10-4


Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 20X2:

Direct materials $280,000Direct labor (7,000 hours @ $11/hour) $ 77,000Indirect labor $ 20,000Plant facility rent $ 60,000Depreciation on plant machinery and equipment $ 30,000Sales commissions $ 40,000Administrative expenses $ 50,000

The amount of manufacturing overhead allocated to all jobs during June 20X2 totals:

Student Response


A. $105,000 100%

B. $200,000

C. $77,000

D. $110,000

Score: 4/4

Comments:

11.

N0 11-4


Wayland Manufacturing uses a normal cost system and had the following data available for 20X5:

Direct materials purchased on account $ 74,000Direct materials requisitioned 41,000

Direct labor cost incurred 65,000

Factory overhead incurred 73,000Cost of goods completed 146,000Cost of goods sold 128,000

Beginning direct materials inventory 13,000 Beginning WIP inventory 32,000Beginning finished goods inventory 29,000Overhead application rate, as a percent of direct-labor costs 125 percent

The ending balance of direct materials inventory is:

Student Response


A. $54,000

B. $41,000

C. $46,000 100% $13,000 + $74,000 - $41,000 = $46,000

D. $87,000

Score: 4/4

Comments:

12.

No 12-4


Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:

Department A Department BDirect materials $700,000 $100,000Direct manufacturing labor $200,000 $800,000Manufacturing overhead $600,000 $400,000

The actual material and labor costs charged to Job #432 were as follows:

TotalDirect materials: $25,000Direct labor:

Department A $ 8,000Department B $12,000$20,000

Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.

Manufacturing overhead costs allocated to Job #432 total:

Student Response


A. $30,000 100% [($8,000 × $600,000 / $200,000)] + [$12,000 × $400,000/$800,000] = $30,000

B. $24,000

C. $36,000

D. $12,000

Score: 4/4

Comments:

13.

No 13-4

Normandeau Company's actual manufacturing overhead is $1,400,000. Overhead is allocated on the basis of direct labor hours. The direct labor hours were 25,000 for the period. What is the manufacturing overhead rate?

Student Response


A. $47.00

B. $56.00 100%

C. $75.00

D. None of the above are correct.

Score: 4/4

Comments:

14.

No 14-5


Mayan Potters manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:

Cost Pool Overhead Costs Activity-cost driverMaterials handling $ 45,000 90,000 ordersMachine maintenance $300,000 15,000 maintenance hoursSetups $270,000 45,000 setupsInspections $105,000 21,000 inspectionsTotal support costs $720,000

Production Estimates Production units:Regular = 8,000,000 unitsJumbo = 16,000,000 unitsMachine-hours = 200,000 mhLabor-hours = 400,000 dlh

Mayan Potters uses an ABC system and assigns overhead costs based on the overhead activity information provided above.

The materials handling activity-cost driver rate is:

Student Response


A. $0.50 100%

B. $20.00

C. $5.00

D. $2.00

Score: 4/4

Comments:

15.

No 15-5


Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

Cost Pool Overhead Costs Cost driver Activity levelSupervision of direct labor $320,000 Direct labor-hours 800,000Machine maintenance $120,000 Machine-hours 960,000Facility rent $200,000 Square feet of area 100,000Total overhead costs $640,000

The accounting records show the Mossman Job consumed the following resources:

Cost driver Actual levelDirect labor-hours 200Machine-hours 1,600Square feet of area 50

If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Gregory Enterprises?

Student Response


A. $0.50 per direct labor-hour

B. $0.80 per direct labor-hour

100%

C. $1.20 per direct labor-hour

D. $0.40 per direct labor-hour

Score: 4/4

Comments:

16.

No 16-5


Wallace Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.

For 20X5 Wallace Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

Cost pool Manufacturing overhead costs Activity levelDesign changes $ 60,000 200 design changesSetups 320,000 4,000 setupsInspections 40,000 16,000 inspectionsTotal manufacturing overhead costs $420,000

During 20X5, two customers, Wealth Managers and Health Systems, are expected to use the following printing services:

Activity Wealth Managers Health SystemsPages 60,000 76,000Design changes 10 2Setups 20 10Inspections 30 38

Using the activity-cost driver rates determined in the previous question, what is the manufacturing overhead cost estimate for Health Systems during 20X5?

Student Response


A. $1,495.00 100%

B. $2,068.00

C. $3,113.75

D. $3,412.50

Score: 4/4

Comments:

17.

No 17-17

Ampco Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for June 20X5:

Work in process, beginning inventory 50,000 unitsTransferred-in costs (100% complete)Direct materials (0% complete)Conversion costs (90% complete)

Transferred in during current period 150,000 unitsCompleted and transferred out 175,000 units

Work in process, ending inventoryTransferred-in costs (100% complete)Direct materials (0% complete)Conversion costs (65% complete)

How many units must be accounted for during the period?

Student Response


A. 179,500 units

B. 150,000 units

C. 225,000 units

D. 200,000 units

100%

Score: 4/4

Comments:

18.

No 18-17


The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing.

Data for the Assembly Department for June 20X5 are:Work in process, beginning inventory 250 unitsDirect materials (100% complete)Conversion costs (50% complete)

Units started during June 800 unitsWork in process, ending inventory: 150 unitsDirect materials (100% complete)Conversion costs (75% complete)

Costs for June 20X5:Work in process, beginning inventory:Direct materials $180,000Conversion costs $270,000Direct materials costs added during June $1,000,000Conversion costs added during June $1,000,000

What are the equivalent units for direct materials and conversion costs, respectively, for June?

Student Response


A. 1,050 units; 1,050 units

B. 1,200.5 units; 1,160.64 units

C. 962 units; 990 units

D. 1,050 units; 1,012.5 units

100%

Score: 4/4

Comments:

19.

No 19-17


The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Swiss Clock Shop uses weighted-average costing.

Data for the Assembly Department for June 20X5 are:Work in process, beginning inventory 250 unitsDirect materials (100% complete)Conversion costs (50% complete)

Units started during June 800 unitsWork in process, ending inventory: 150 unitsDirect materials (100% complete)Conversion costs (75% complete)

Costs for June 20X5:Work in process, beginning inventory:Direct materials $180,000Conversion costs $270,000Direct materials costs added during June $1,000,000Conversion costs added during June $1,000,000

What amount of conversion costs are assigned to the ending Work-in-Process account for June?

Student Response


A. $188,148.00

B. $101,956.64

C. $126,450.50

D. $141,111.00 100%

Score: 4/4

Comments:

20.

No 20-17


The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:Direct materials $24,000Conversion costs $35,000

Manufacturing costs added during the accounting period:Direct materials $168,000Conversion costs $278,000

What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February?

Student Response


A. $19,200

B. $22,500

C. $22,400 100%

D. $25,600

Score: 4/4

Comments:

Midterm Part I & II

Documents

Transcript of Midterm Part I & II