DeVry ACCT 344 Week 8 Final Exam

(TCO 2) Which cost is NOT a period cost? (Points : 5)
         Lumber for furniture
         Executive administrative assistant salary
         Depreciation on sales staff’s cars
         Sales commission

Question 2.2. (TCO 2) Which product would use job-order costing? (Points : 5)
         Ink pens
         Custom boot maker
         Soda pop
         Horse saddles

Question 3.3. (TCO 3) As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in (Points : 5)
         cost of goods sold.
         work-in-process.
         materials.
         finished goods.

Question 4.4. (TCO 8) A company keeps 60 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 30 days of inventory on hand, and the competitor’s carrying costs average $2,000 per day. The value-added costs are (Points : 5)
         $300,000.
         $150,000.
         $60,000.
         $0.

Question 5.5. (TCO 8) Which is a value-added activity? (Points : 5)
         Moving
         Inspection
         Processing
         Waiting

Question 6.6. (TCO 1) The break-even point is (Points : 5)
         the volume of activity where all fixed costs are recovered.
         where fixed costs equal total variable costs.
         where total revenues equal total costs.
         where total costs equal total contribution margin.

Question 7.7. (TCO 1) The Kringel Company provides the following information.
 
Sales (200,000 units)                                               $500,000
Manufacturing costs
Variable                                                                  $170,000
Fixed                                                                      $30,000
Selling and administrative costs
Variable                                                                  $80,000
Fixed                                                                      $20,000
Which is the break-even point in units for Kringel? (Points : 5)
         33,334 units
         100,000 units
         40,000 units
         200,000 units

Question 8.8. (TCO 7) Which would be the most appropriate base for allocating the costs of the maintenance department? (Points : 5)
         Machine hours
         Direct labor hours
         Number of employees
         Square feet

Question 9.9. (TCO 7) Yo Department Store incurred $8,000 of indirect advertising costs for its operations. The following data have been collected for 2013 for its three departments.
 
  Shoes   Cosmetics   Crafts
Sales $120,000 $100,000 $100,000
Direct advertising costs   $9,000 $7,000  $4,000
Newspaper ad space 60% 20%    20%
 
How much of the indirect advertising costs will be allocated to the Cosmetics Department if newspaper ad space is the activity driver?(Points : 5)
         $8,000
         $1,600
         $1,400
         $6,400

Question 10.10. (TCO 5) Which best describes zero-base budgeting? (Points : 5)
         A budget that is developed for a single level of activity
         A budget that analyzes existing activities (and continuation of that activity must be justified and resources needed must be justified by each manager)
         A budget that is based solely on prior period information, adjusted for inflation
         A budget that is continuous or rolling

Question 11.11. (TCO 5) Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next 2 months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next 2 months, and the steel inventory is expected to increase 5 units in each of the next 2 months.
How many units of wood are expected to be used in production during the second month? (Points : 5)
         12,500 units
         10,000 units
         15,000 units
         12,000 units

Question 12.12. (TCO 4) Which statement is true? (Points : 5)
         Absorption costing net income exceeds variable costing net income when units produced and sold are equal.
         Variable costing net income excee
ds absorption costing net income when units produced exceed units sold.
         Absorption costing net income exceeds variable costing net income when units produced are less than units sold.
         Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.

Question 13.13. (TCO 6) Using more highly skilled direct laborers might affect which variance? (Points : 5)
         Direct materials usage variance
         Direct labor efficiency variance
         Variable manufacturing overhead efficiency variance
         All of the above

Question 14.14. (TCO 6) Which equation measures the total budget variance? (Points : 5)
         AQ x (AP – SP).
         SP x (AQ – SQ).
         SQ x (AP – SP).
         (AQ x AP) – (SQ x SP).

 

(TCO 1) George Corporation has an estimated monthly sales of 12,000 units for $80 per unit. Variable costs include manufacturing costs of $50 and distribution costs of $20. Fixed costs are $60,000 per month.
 
Required:
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume    
 
Create a contribution margin-based income statement. (Points : 30)
     
     

Question 2.2. (TCO 7) Darling Manufacturing Inc. manufactures two products, A and B, from a joint process. A single production costs $5,000 and results in 200 units of A and 800 units of B. To be ready for sale, both products must be processed further, incurring seperable costs of $3 per unit for A and $4 per unit for B. The market price for Product A is $15 and for Product B is $10.
 
Required: Allocate joint production costs to each product using the net realizable value method. (Points : 30)
     
     

Question 3.3. (TCO 6) Santa Inc. manufactures toys based on the following information.
  Standard costs     
    Materials (4 ounces at $4)      $16
    Direct labor (1 hour per unit)      $7
    Variable overhead (based on direct labor hours)      $3.50
  Fixed overhead budget $16,000    
            
  Actual results and costs     
    Materials purchased     
      Units 10,000    
      Cost $38,500    
    Materials used in production     
      Finished product units 2,200    
      Raw material (ounces) 9,500    
      Direct labor hours 2,200    
      Direct labor cost $18,000    
      Variable overhead costs $8,400    
      Fixed overhead costs $16,200    
            
Required:       
Compute the following variances (show calculations).     
  a. Materials usage variance     
  b. Labor rate variance     
  -c. Fixed overhead budget variance     
(Points : 30)
     
     

Question 4.4. (TCO 4) Toshi Company incurred the following costs in manufacturing desk calculators.
 
Direct materials                                     $14
Indirect materials (variable)                     4
Direct labor                                           8
Indirect labor (variable)                           6
Other variable factory overhead               10
Fixed factory overhead                           28
Variable selling expenses                      20
Fixed selling expenses                          14
 
During the period, the company produced and sold 1,000 units.
a. What is the inventory cost per unit using absorption costing?
b. What is the inventory cost per unit using variable costing? (Points : 30)
     
     

Question 5.5. (TCO 8) Musical Instruments Company manufactures two products (trumpets and trombones). Overhead costs ($175,000) have been divided into three cost pools that use the following activity drivers.
  Product Number of setups Machine hours Packing orders 
  Trumpets 50 1,500 150 
  Trombones 50 4,500 250 
  Cost per pool $60,000  $90,000  $25,000  
          
Required (show all calculations)     
a. What is the allocation rate for trumpets per setup using activity-based costing? 
b. What is the allocation rate for trumpets per machine hours using activity-based costing?
c. What is the allocation rate for trumpets per packing order using activity-based costing?
(Points : 30)
          

Question 6.6. (TCO 5) The Baxter Corporation has the following budgeted and actual results.
Budgeted data     Actual results 
Unit sales 35,000    Unit sales   36,000
Unit production 35,000    Unit production 37,000
Fixed overhead     Fixed overhead 
  Supervision  $25,000      Supervision  $23,500
  Depreciation  $40,000      Depreciation  $40,000
  Rent  $20,000      Rent  $20,000
Variable costs per unit     Variable costs 
  Direct materials  $25.00      Direct materials  $900,000
  Direct labor  $26.00      Direct labor  $950,000
  Supplies  $0.25      Supplies  $9,000
  Indirect labor  $1.30      Indirect
labor  $50,000
  Electricity  $0.20      Electricity  $7,500
Required:         
Prepare a performance report for all costs, showing flexible budget variances (indicate F or U).

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