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Acc 349 final exam

Acc 349 final exam






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    Acc 349 final exam Acc 349 final exam Document Transcript

    • ACC/349 Final Exam Answers are HERE!1) What is the best way to handle manufacturing overhead costs in order toget the most timely job cost information?A. The company should add actual manufacturing overhead costs to jobs as soonas the overhead costs are incurred.B. The company should determine an allocation rate as soon as the actual costsare known, and then apply manufacturing overhead to jobs.C. The company should apply overhead using an estimated rate throughout theyear. D. The company should account for only the direct production costs.2) At the end of the year, manufacturing overhead has been overapplied.What occurred to create this situation?A. The company incurred more manufacturing overhead costs than the manufacturingoverhead assigned to jobsB. The actual manufacturing overhead costs were less than the manufacturing overheadassigned to jobsC. The company incurred more total job costs than the amount budgeted for the jobD. Estimated manufacturing overhead was less than actual manufacturing overhead costs3) Luca Company overapplied manufacturing overhead during 2006. Whichone of the following is part of the year end entry to dispose of theoverapplied amount assuming the amount is materialA. A decrease to work in process inventoryB. A decrease to applied overheadC. An increase to finished goods
    • D. An increase to cost of goods sold4) Which of the following would be accounted for using a job order costsystem?A. The production of textbooksB. The production of town homesC. The pasteurization of milkD. The production of cans of spinach5) Which one of the following is NEVER part of recording the issuance ofraw materials in a job order cost system?A. Debit Manufacturing OverheadB. Debit Finished Goods InventoryC. Debit Work in Process InventoryD. Credit Raw Materials InventoryFinished Goods Inventory is debited when goods are transferred from work in process to finished goods, not when raw materials are issued for a job.6. What is unique about the flow of costs in a job order cost system?A. It involves accumulating material, labor, and manufacturing overhead costs asthey are incurred in order to determine the job costB. Each job is costed separately in a Work in Process subsidiary ledgerC. Job costs cannot be measured until all overhead costs are determinedD. There are no costs remaining in Work in Process at year end7) Which one of the following costs would be included in manufacturingoverhead of a lawn mower manufacturer?A. The cost of the fuel lines that run from the motor to the gas tankB. The cost of the wheelsC. Depreciation on the testing equipmentD. The wages earned by motor assemblers Depreciation on testing equipment would be included in manufacturing overhead because it is indirectly associated with the finished product.
    • 8) What broad functions do the management of an organization perform?A. Planning, directing, and controllingB. Directing, manufacturing, and controllingC. Planning, directing, and sellingD. Planning, manufacturing, and controlling9) Which of the following represents the correct order in which inventoriesare reported on a manufacturer’s balance sheet?A. Work in process, finished goods raw materialsB. Raw materials, work in process, finished goodsC. Finished goods, work in process, raw materialsD. Work in process, raw materials, finished goods10) In traditional costing systems, overhead is generally applied based onA. machine hoursB. direct laborC. direct material dollarsD. units of production11) An activity that has a direct cause-effect relationship with the resourcesconsumed is a(n)A. overhead rateB. product activityC. cost driverD. cost pool12) A well-designed activity-based costing system starts withA. computing the activity-based overhead rateB. analyzing the activities performed to manufacture a productC. identifying the activity-cost poolsD. assigning manufacturing overhead costs for each activity cost pool to products
    • 13) Which of the following factors would suggest a switch to activity-basedcosting?A. Overhead costs constitute a significant portion of total costsB. Production managers use data provided by the existing system.C. Product lines similar in volume and manufacturing complexityD. The manufacturing process has been stable14) All of the following statements are correct EXCEPT thatA. the objective of installing ABC in service firms is different than it is in amanufacturing firmB. the general approach to identifying activities and activity cost pools is the samein a service company as in a manufacturing companyC. activity-based costing has been widely adopted in service industriesD. a larger proportion of overhead costs are company-wide costs in serviceindustries15) What sometimes makes implementation of activity-based costing difficultin service industries isA. identifying activities, activity cost plus, and cost driversB. attempting to reduce or eliminate nonvalue- added activitiesC. the labeling of activities as value-addedD. that a larger proportion of overhead costs are company-wide costs16) One of Astro Companys activity cost pools is machine setups, withestimated overhead of $150,000. Astro produces sparklers (400 setups) andlighters (600 setups). How much of the machine setup cost pool should beassigned to sparklers?A. $60,000B. $90,000C. $150,000D. $75,000 17) Poodle Company manufactures two products, Mini A and Maxi B. Poodles overhead costs consist of setting up machines, $800,000;
    • machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Mini A Maxi B Direct labor 15,000 25,000 hours Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Mini A using activity-based costing isA. $1,536,000B. $1,664,000C. $1,920,000D. $1,200,000 18) Poodle Company manufactures two products, Mini A and Maxi B. Poodles overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Mini A Maxi B Direct labor 15,000 25,000 hours Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Maxi B using activity-based costing isA. $1,536,000
    • B. $1,664,000C. $2,000,000D. $1,280,00019) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000of the wickets for $18 each. If Truckel makes the wickets, variable costs are$11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable.Should Truckel make or buy the wickets?A. Buy; savings = $10,000B. Make; savings = $20,000C. Make; savings = $10,000D. Buy; savings = $25,00020) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at acost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (forparts). If they are repackaged, at a cost of $15,000, they could be sold to toy storesfor $2.50 per unit. What alternative should be chosen, and why?A. Repackage; revenue is $5,000 greater than costB. Scrap; incremental loss is $9,000C. Repackage; receive profit of $10,000D. Scrap; profit is $1,000 greater21) The cost to produce Part A was $10 per unit in 2005. During 2006, it hasincreased to $11 per unit. In 2006, Supplier Company has offered to supplyPart A for $9 per unit. For the make-or-buy decisionA. incremental costs are $1 per unitB. net relevant costs are $1 per unitC. differential costs are $2 per unitD. incremental revenues are $2 per unit22) Hartley, Inc. has one product with a selling price per unit of $200, theunit variable cost is $75, and the total monthly fixed costs are $300,000.How much is Hartley’s contribution margin ratio?A. 37.5%B. 150%C. 266.6%D. 62.5%.
    • 23. Which statement describes a fixed cost?A. The amount per unit varies depending on the activity levelB. It varies in total at every level of activityC. It remains the same per unit regardless of activity levelD. Its total varies proportionally to the level of activity24) Disney’s variable costs are 30% of sales. The company is contemplatingan advertising campaign that will cost $22,000. If sales are expected toincrease $40,000, by how much will the companys net income increase?A. $28,000B. $18,000C. $6,000D. $12,00025) Variable costingA. is required under GAAPB. is used for external reporting purposesC. is also known as full costingD. treats fixed manufacturing overhead as a period cost26) Which cost is NOT charged to the product under variable costing?A. Direct laborB. Direct materialsC. Fixed manufacturing overheadD. Variable manufacturing overhead27) Orbach Company sells its product for $40 per unit. During 2005, itproduced 60,000 units and sold 50,000 units (there was no beginninginventory). Costs per unit are: direct materials $10, direct labor $6, andvariable overhead $2. Fixed costs are: $480,000 manufacturing overhead,and $60,000 selling and administrative expenses. The per unitmanufacturing cost under absorption costing is
    • A. $18B. $16C. $27D. $2628) Which of the following is NOT considered an advantage of usingstandard costs?A. Standard costs can be useful in setting prices for finished goodsB. Standard costs can reduce clerical costsC. Standard costs can make employees "cost-conscious."D. Standard costs can be used as a means of finding fault with performance29) The difference between a budget and a standard is thatA. a budget expresses managements plans, while a standard reflects what actuallyhappenedB. standards are excluded from the cost accounting system, whereas budgets are generallyincorporated into the cost accounting systemC. a budget expresses a total amount while a standard expresses a unit amountD. a budget expresses what costs were, while a standard expresses what costs should be30) If a company is concerned with the potential negative effects ofestablishing standards, they shouldA. offer wage incentives to those meeting standardsB. set tight standards in order to motivate peopleC. not employ any standardsD. set loose standards that are easy to fulfill31) The per-unit standards for direct materials are 2 gallons at $4 pergallon. Last month, 11,200 gallons of direct materials that actually cost$42,400 were used to produce 6,000 units of product. The direct materialsquantity variance for last month wasA. $2,400 favorableB. $5,600 unfavorableC. $3,200 unfavorableD. $3,200 favorable
    • 32) The standard number of hours that should have been worked for theoutput attained is 8,000 direct labor hours and the actual number of directlabor hours worked was 8,400. If the direct labor price variance was $8,400unfavorable, and the standard rate of pay was $18 per direct labor hour,what was the actual rate of pay for direct labor?A. $15 per direct labor hourB. $18 per direct labor hourC. $19 per direct labor hourD. $17 per direct labor hour33) The total variance is $10,000. The total materials variance is $4,000.The total labor variance is twice the total overhead variance. What is thetotal overhead variance?A. $2,000B. $4,000C. $3,000D. $1,00034) Manufacturing overhead costs are applied to work in process on thebasis ofA. standard hours allowedB. actual overhead costs incurredC. ratio of actual variable to fixed costsD. actual hours worked35) The overhead volume variance relates only toA. variable overhead costsB. both variable and fixed overhead costsC. all manufacturing costsD. fixed overhead costs36) If the standard hours allowed are less than the standard hours at normalcapacityA. the overhead volume variance will be unfavorable
    • B. the overhead controllable variance will be favorableC. variable overhead costs will be overappliedD. variable overhead costs will be underapplied37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugsduring April. Each mug requires 2 pounds of resin and a half hour of directlabor. Resin costs $1 per pound and employees of the company are paid$12.50 per hour. Manufacturing overhead is applied at a rate of 120% ofdirect labor costs. Gottberg has 2,000 pounds of resin in beginninginventory and wants to have 2,400 pounds in ending inventory. How much isthe total amount of budgeted direct labor for April?A. $12,500B. $25,000C. $27,500D. $13,75038) Lewis Hats is planning to sell 600 straw hats. Each hat requires a halfpound of straw and a quarter hour of direct labor. Straw costs $0.20 perpound and employees of the company are paid $22 per hour. Lewis has 80pounds of straw and 40 hats in beginning inventory and wants to have 50pounds of straw and 60 hats in ending inventory. How many units shouldLewis Hats produce in April?A. 600B. 580C. 630D. 62039) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000widgets. Barry estimates it will sell 35,000 units during the first quarter of2004 with a 10% increase in sales each quarter. Barry’s policy is to maintainan ending inventory equal to 25% of the next quarter’s sales. Each widgetcosts $1 and is sold for $1.50. How much is budgeted sales revenue for thethird quarter of 2004?A. $57,525
    • B. $63,525C. $42,350D. $63,00040) In most cases, prices are set by theA. customersB. largest competitorC. selling companyD. competitive market41) A company must price its product to cover its costs and earn areasonable profit inA. all casesB. its early yearsC. the long runD. the short run42) The cost-plus pricing approachs major advantage isA. it considers customer demandB. that sales volume has no effect on per unit costsC. it is simple to computeD. it can be used to determine a product’s target cost43) What does cost accounting measure, record, and reportA. Future costsB. Product costsC. Managerial accounting decisionsD. Manufacturing processes44) Why is factory overhead applied to products and jobs by manufacturingcompanies?A. Because indirect costs are easy to trace to products and jobsB. It provides a more accurate cost of the job or products being processed
    • C. Total actual overhead costs can never be accurately determined for productionD. It allows managers more timely determination of product costs during themanufacturing process45) In a job order cost accounting system, the Work in Process account isA. a period costB. a control accountC. closed at year endD. an expense46) Managerial accountingA. is governed by generally accepted accounting principlesB. places emphasis on special-purpose informationC. is concerned with costing productsD. pertains to the entity as a whole and is highly aggregated47) A well-designed activity-based costing system starts withA. computing the activity-based overhead rateB. assigning manufacturing overhead costs for each activity cost pool to productsC. identifying the activity-cost poolsD. analyzing the activities performed to manufacture a product48) Which of the following is a value-added activity?A. Machinery repairB. Inventory storageC. Engineering designD. Inspections49) Which of the following is a nonvalue-added activity?A. MachiningB. InspectionC. Engineering design
    • D. Packaging50) Each of the following is a limitation of activity-based costing EXCEPTA. It is more complex than traditional costingB. More cost pools are usedC. It can be expensive to useD. Some arbitrary allocations continue51) Ace Company sells office chairs with a selling price of $25 and acontribution margin per unit of $15. It takes 3 machine hours to produce onechair. How much is the contribution margin per unit of limited resource?A. $3.33B. $45C. $10D. $552) Walton, Inc. is unsure of whether to sell its product assembled orunassembled. The unit cost of the unassembled product is $16, while thecost of assembling each unit is estimated at $17. Unassembled units can besold for $55, while assembled units could be sold for $71 per unit. Whatdecision should Walton make?A. Sell before assembly; the company will save $15 per unitB. Process further; the company will save $1 per unitC. Process further; the company will save $16 per unitD. Sell before assembly; the company will save $1 per unit53) Which cost is charged to the product under variable costing?A. Fixed manufacturing overheadB. Variable manufacturing overheadC. Fixed administrative expensesD. Variable administrative expenses54) Which of the following statements is FALSE?A. A standard is a unit amount
    • B. A standard cost is more accurate than a budgeted costC. The standard cost of a product is equivalent to the budgeted cost per unit ofproductD. In concept, standards and budgets are essentially the same55) If standard costs are incorporated into the accounting systemA. it can eliminate the need for the budgeting processB. it may simplify the costing of inventories and reduce clerical costsC. approval of the stockholders is requiredD. the accounting system will produce information which is less relevant than thehistorical cost accounting system56) A standard cost isA. the average cost in an industryB. a cost which is paid for a group of similar productsC. the historical cost of producing a product last yearD. a predetermined cost57) The per-unit standards for direct labor are 2 direct labor hours at $12per hour. If in producing 2,400 units, the actual direct labor cost was$51,200 for 4,000 direct labor hours worked, the total direct labor varianceisA. $6,400 favorableB. $6,400 unfavorableC. $1,920 unfavorableD. $4,000 unfavorable58) If the standard hours allowed are less than the standard hours at normalcapacity, the volume varianceA. will be favorableB. will be greater than the controllable varianceC. cannot be calculatedD. will be unfavorable59) Which of the following statements is FALSE?
    • A. The costs that cause the overhead volume variance are usually controllablecostsB. The overhead volume variance is favorable if standard hours allowed for outputis greater than the standard hours at normal capacityC. The overhead volume variance indicates whether plant facilities were usedefficiently during the periodD. The overhead volume variance relates solely to fixed costs60) Looker Hats is planning to sell 600 felt hats, and 700 will be producedduring June. Each hat requires a half yard of felt and a quarter hour ofdirect labor. Felt costs $3.00 per yard and employees of the company arepaid $20 per hour. How much is the total amount of budgeted direct labor forJune?A. $48,000B. $3,500C. $3,000D. $2,40061) In cost-plus pricing, the markup percentage is computed by dividing thedesired ROI per unit by theA. total cost per unitB. total manufacturing cost per unitC. fixed cost per unitD. variable cost per unit62) Which would be an appropriate cost driver for the ordering and receivingactivity cost pool?A. Purchase ordersB. InspectionsC. Machine setupsD. Machine hours63) The first step in activity-based costing is toA. identify the cost driver that has a strong correlation to the activity cost pool
    • B. compute the activity-based overhead rate per cost driverC. assign manufacturing overhead costs for each activity cost pool to productD. identify and classify the major activities involved in the manufacture of specificproducts64) Which one of the following is required in order for an activity base to beuseful in cost behavior analysis?A. The activity should always be based on the number of units producedB. There should be a correlation between changes in the level of activity andchanges in costs.C. The activity should always be a fixed amountD. The activity level should be an approved GAAP activity base65) Which cost is NOT charged to the product under absorption costing?A. Fixed administrative expensesB. Variable manufacturing overheadC. Direct laborD. Direct materials66) A company developed the following per-unit standards for its product: 2pounds of direct materials at $6 per pound. Last month, 2,000 pounds ofdirect materials were purchased for $11,400. The direct materials pricevariance for last month wasA. $600 unfavorableB. $11,400 favorableC. $300 favorableD. $600 favorable67) The standard rate of pay is $5 per direct labor hour. If the actual directlabor payroll was $19,600 for 4,000 direct labor hours worked, the directlabor price (rate) variance isA. $500 favorableB. $400 unfavorableC. $500 unfavorable
    • D. $400 favorable68) Waco’s Widgets plans to sell 22,000 widgets during May, 19,000 units inJune, and 20,000 during July. Waco keeps 10% of the next month’s sales asending inventory. How many units should Waco produce during June?A. 19,000B. 18,900C. 19,100D. 21,00069) In cost-plus pricing, the target selling price is computed asA. variable cost per unit + fixed manufacturing cost per unit + desired ROI per unitB. variable cost per unit + desired ROI per unitC. total unit cost + desired ROI per unitD. fixed cost per unit + desired ROI per unit70) Which one of the following is an important feature of a job order costsystem?A. Each must be completed before a new product order is acceptedB. Each job uses similar processes to produceC. Each consists of features which distinguish it from the nextD. Each job has characteristics similar to the next71) Which of the following represents the two basic types of cost accountingsystems?A. Job order and process cost systemsB. Job order and batch systemsC. Job order and job accumulation systemsD. Process cost and batch systems72) Which one of the following is indirect labor considered?A. Product costB. Period cost
    • C. Nonmanufacturing costD. Raw material cost73) Which of the following is an element of manufacturing overhead?A. Factory workers wagesB. Plant manager’s salaryC. Components used in calculators during productionD. Flour used in manufactured cake mixes74) Which of the following is NOT typical of traditional costing systems?A. Use of a single predetermined overhead rateB. Assumption of correlation between direct labor and incurrence of overhead costC. Use of direct labor hours or direct labor cost to assign overheadD. Use of multiple cost drivers to allocate overhead75) Max Company uses 10,000 units of Part A in producing its products. Asupplier offers to make Part A for $7. Max Company has relevant costs of $8a unit to manufacture Part A. If there is excess capacity, the opportunitycost of buying Part A from the supplier isA. $80,000B. $70,000C. $0D. $10,00076) H55 Company sells two products, beer and wine. Beer has a 10 percentprofit margin and wine has a 12 percent profit margin. Beer has a 27 percentcontribution margin and wine has a 25 percent contribution margin. If otherfactors are equal, which product should H55 push to customers?A. It should sell an equal quantity of bothB. Selling either results in the same additional income for the COMPANYC. BeerD. Wine
    • 77) During December, the capital budget indicates a $280,000 purchase ofequipment. The ending November cash balance is budgeted to be $40,000.Cash receipts are $840,000, and cash disbursements are $610,000 duringDecember. The company wants to maintain a minimum cash balance of$20,000. What is the minimum cash loan that must be planned to beborrowed from the bank during December?A. $0B. $50,000C. $10,000D. $30,00078) Prices are set by the competitive market whenA. a product is not easily distinguished from competing productsB. a company can effectively differentiate its product from othersC. there are no other producers capable of manufacturing a similar itemD. the product is specially made for a customer79) The standards and rules that are recognized as a general guide forfinancial reporting are called __________.A. standards of financial reportingB. generally accepted accounting principlesC. generally accepted accounting standardsD. operating guidelines80) Hess, Inc. sells a single product with a contribution margin of $12 perunit and fixed costs of $74,400 and sales for the current year of $100,000.How much is Hess’s break even point?A. 2,133 unitsB. 6,200 unitsC. $25,600D. 4,600 units81) In what situations will a static budget be most effective in evaluating amanagers effectiveness?
    • A. The company has no fixed costs.B. The planned activity levels match actual activity levels.C. The company has substantial variable costs.D. The company has substantial fixed costs.82) The primary purpose of the statement of cash flows is to __________.A. facilitate banking relationshipsB. provide information about the cash receipts and cash payments during a periodC. prove that revenues exceed expenses if there is a net incomeD. provide information about the investing and financing activities during a period83) The category that is generally considered to be the best measure of acompanys ability tocontinue as a going concern isA. cash flows from operating activities.B. cash flows from investing activities.C. cash flows from financing activities.D. usually different from year to year.84) Of the items below, the one that appears first on the statement of cashflows isA. noncash investing and financing activities.B. net increase (decrease) in cash.C. cash at the end of the period.D. cash at the beginning of the period.85) Which of the following transactions does not affect cash during aperiod?A. Write-off of an uncollectible accountB. Collection of an accounts receivableC. Sale of treasury stockD. Exercise of the call option on bonds payable86) One of Lara Dole Companys activity cost pools is machine setups, withestimated overhead of $300,000. Dole produces flares (400 setups) and
    • health packs (600 setups). How much of the machine setup cost pool shouldbe assigned to flares?A. $0.B. $120,000.C. $150,000.D. $180,00087) As compared to a high-volume product, a low-volume productA. usually requires less special handling.B. is usually responsible for more overhead costs per unit.C. requires relatively fewer machine setups.D. requires use of direct labor hours as the primary cost driver to ensureproper allocationof overhead