week_4_Quiz.docx _118K_ - Student Of Fortune by suchenfz

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									(TCO 1) The goal of managerial accounting is to provide information that managers need for
(Points: 4)


         decision making.

         All of the above answers are correct.

2. (TCO 1) Which of the following costs does not change when the level of business activity
changes? (Points: 4)

         total fixed costs

         total variable costs

         total direct materials costs

         fixed costs per unit

3. (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: 4)

         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. (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. What is the budgeted fixed cost per unit? (Points: 4)





5. (TCO 1) Which of the following costs is not part of manufacturing overhead? (Points: 4)
         electricity for the factory

         depreciation of factory equipment
        salaries for the production supervisors

        health insurance for sales staff

6. (TCO 1) Which of the following is a period cost? (Points: 4)
        rent on a factory building

        depreciation on production equipment

        raw materials cost

        commissions paid on each unit sold

7. (TCO 1) Red Runner’s Work in Process Inventory account has a beginning balance of
$50,000 and an ending balance of $40,000. Direct materials used are $70,000 and direct
labor used totals $35,000. Cost of goods sold totals $135,000. Manufacturing overhead
applied is $20,000. How much is cost of goods manufactured? (Points: 4)





8. (TCO 2) Lanking Company applies manufacturing overhead based on direct labor hours.
Information concerning manufacturing overhead and labor for August follows:

                                       Estimated            Actual
                Overhead cost           $160,000          $161,000
                Direct labor hours          8,000            8,200
                Direct labor cost       $120,000          $115,800

How much is the predetermined overhead rate?      (Points: 4)




9. (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: 4)
         $7,000 overapplied

         $6,000 overapplied

         $6,000 underapplied

         $13,000 underapplied

10. (TCO 3) Companies in which of the following industries would not be likely to use
process costing? (Points: 4)




         auto body shop

11. (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: 4)




12. (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

How much is the cost per equivalent unit for direct materials?   (Points: 4)



13. (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: 4)





1. (TCO 4) The three elements of the profit margin are: (Points: 4)
         Selling price per unit, variable cost per unit, and fixed cost per unit.

         Total revenues, total variable costs, and total fixed cost.

         Selling price per unit, variable cost per unit, and total fixed costs.

         Selling price per unit, total variable costs, and fixed cost per unit.

2. (TCO 4) Werth Company produces tie racks. The estimated fixed costs for the year are
$288,000, and the estimated variable costs per unit are $14. Werth expects to produce and
sell 60,000 units at a price of $20 per unit. How much is the break-even point in units?
(Points: 4)




3. (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: 4)




4. (TCO 5) Which of the following is treated differently in full costing than in variable
costing? (Points: 4)

        Direct materials

        Fixed manufacturing overhead

        Direct labor

        Variable manufacturing overhead

5. (TCO 5) Variable costing income is a function of: (Points: 4)
        Units sold only.

        Units produced only

        Both units sold and units produced.

        Neither units sold nor units. produced

6. (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? (Points: 4)





7. (TCO 6) Costs may be allocated to (Points: 4)



        any of the above.

8. (TCO 5) An allocation base (Points: 4)
        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. (TCO 6) AC Consulting Company has purchased a new $18,038 copier. This overhead cost
will be shared by the purchasing, accounting, and information technology departments since
those are the only departments which will be able to access the machine. The company has
decided to allocate the cost based on the number of copies made by each department. Each
department has estimated the number of copies which will be made over the life of the

              Department              Copies
              Purchasing              250,000
              Accounting              300,000
              Information Tech        425,000

If cost allocations are computed to four significant digits and the purchasing department
makes 58,000 copies this year, how much overhead will be allocated to purchasing? (Points:




10. (TCO 7) A company is trying to decide whether to keep or drop the sporting goods
department in its department store. If the segment is dropped, the manager will be fired.
The manager's salary, in relation to the decision to keep or drop the sporting goods
department, is (Points: 4)
         avoidable and therefore relevant.

         not avoidable and therefore relevant.

         sunk and therefore not relevant.

         the same for all alternatives and therefore not relevant.

11. (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: 4)

         $13,000 advantage

         $4,000 advantage

         $9,200 disadvantage

         $200 disadvantage

12. (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: 4)
         $25 per unit profit if the units are completed

         $125 per unit if the units are completed

         $65 per unit loss if the units are completed

         $150 per unit loss if the units are completed

Why is it necessary to use equivalent units in a process costing system?
 (TCO 7) Maxley Markets Company sells logo sports merchandise and does custom
embroidery. They are trying to decide whether or not to continue embroidery. The following
information is available for the segments. Assume that all direct fixed costs could be
avoided if a segment is dropped and that the total common fixed costs would remain
unchanged if the embroidery were dropped.

                                     Embroidery     Apparel Sales
Sales                                  $120,000         $420,000
Variable Costs                          $90,000         $220,000
Contribution Margin                     $30,000         $200,000
Direct Fixed Costs                      $18,000           $70,000
Allocated Common Fixed Costs            $20,000           $70,000
Net Income                             ($ 8,000)         $ 60,000

(a) What would be the impact on profits if embroidery was dropped?
(b) Assume that if embroidery was dropped, apparel sales would increase 20%. What is the
impact on contribution margin and net income?
(c) Give an example of a cost that is not relevant in this analysis.

(TCO 4) Beach Rentals has estimated that fixed costs per month are $79,200 and variable
cost per dollar of sales is $0.52.

(a) What is the break-even point per month in sales?
(b) What level of sales is needed for a monthly profit of $24,000?
(c) For the month of July, the company anticipates sales of $240,000. What is the expected
level of profit

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