Acc 400 final exam answer

1. ACC 400 Final Exam Answer
https://homeworklance.com/downloads/acc-400-final-exam-answer/
ACC 400 Final Exam Answer
ACC/400 FINAL EXAM
1.
Which of the following is not a characteristic of managerial accounting?
A.
Reports
are used
primarily
by
insiders
rather
than by
persons
outside
of the
business
entity.
B.
Its purpose
is to assist
managers
in
planning
and
controlling
business
operations.
C.
Information
must be
developed
in
conformity
with
generally
accepted
accounting
principles
or with
income tax
regulations.

2. D.
Information
may be
tailored to
assist in
specific
managerial
decisions.
2.
In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a
managerial accounting report is less likely to:
A.
Focus upon
the entire
organization
as the
accounting
entity.
B.
Focus
upon
future
accounting
periods.
C.
Make use
of
estimated
amounts.
D.
Be
tailored to
the
specific
needs of
an
individual
decision
maker.
3.
Alton Company produces metal belts. During the current month, the company incurred the following product
costs:Raw materials $100,000
Direct labor $75,000
Electricity used in the Factory $25,000
Factory foreperson salary $3,750
Maintenance of factory machinery $2,000Alton Company’s total product costs:
A.$175,000.
B.$30,750.

3.
C.$205,750.
D.$28,750.
4.
Objectives of a cost accounting systemWhat are the major
objectives of a cost accounting system in a manufacturing
company?
Sue’s Soup Products uses a process costing system with two processing departments: the Mixing and Cooking
Department and the Canning Department. Work in process inventories are reduced to zero each month. In
March, the Mixing and Cooking Department incurred manufacturing costs of $63,000 to mix 42,000 gallons of
soup. The Canning Department incurred manufacturing costs of $9,000. A total of 170,000 cans of soup were
transferred to the finished goods warehouse during the month.
5.
Refer to the information above. The journal entry to record
the transfer of soup out of the Mixing and Cooking
Department during March would include:
A.
A debit to
Work in
Process
Inventory,
Mixing and
Cooking
Department
of $63,000.
B.
A credit to
Work in
Process
Inventory,
Canning
Department
of $72,000.
C.
A debit
to
Finished
Goods
Inventory
of
$72,000.
D. A credit to

4. Work in
Process
Inventory,
Mixing and
Cooking
Department
of $63,000.
6.
Refer to the information above. The journal entry to record
the transfer of soup out of the Canning Department during
March would include:
A.
A credit to
Work in
Process
Inventory,
Canning
Department
of $9,000.
B.
A credit to
Work in
Process
Inventory,
Canning
Department
of $63,000.
C.
A debit
to
Finished
Goods
Inventory
of
$72,000.
D.
A credit to
Finished
Goods
Inventory,
Mixing and
Cooking
Department
of $72,000.
7.
Refer to the information above. The unit cost per gallon of
soup transferred to the Canning Department during March
was:

5. A. $1.50.
B. $1.62.
C. $1.71.
D. $1.83.
Summit Products, Inc. is interested in producing and selling
an improved widget. Market research indicates that
customers would be willing to pay $90 for such a widget and
that 50,000 units could be sold each year at this price. The
current cost to produce the widget is estimated to be $65.
40.
8. Refer to the information above. If Summit Products
requires a 25% return on sales to undertake production,
what is the target cost for the new widget?
A. $65.00.
B. $67.50.
C. $80.00.
D.
Some
other
amount.
41.
9. Refer to the information above. Summit has learned that
a competitor plans to introduce a similar widget at a price of
$80. In response, Summit may reduce its selling price to
$80. If Summit requires a 25% return on sales, what is the
target cost for the new widget?
A. $80.00.
B. $60.00.
C. $23.75.
D. $20.00.
42.
10. Refer to the information above. At a price of $80,
Summit’s market research indicates that it can sell 60,000
units per year. Assuming Summit can reach its new target
cost, how will Summit’s profit at the $80 price compare to
what it would have earned in the absence of the competitor’s
product?

6. A.
Profit
will be
$75,000
higher.
B.
Profit
will be
$75,000
lower.
C.
Profit will
be
unaffected
if Summit
can reach
the
revised
target
cost.
D.
None
of
these.
37.
11. A 45% contribution margin ratio means that:
A.
The
company
should
contribute
45% of
its
operating
income to
qualified
charities
for
maximum
tax
benefits.
B.
55% of the
company’s
revenue is
consumed
by fixed
and
variable

7. costs.
C.
The
company’s
revenue
has
increased
by 45%
during the
current
accounting
period.
D.
45% of the
company’s
revenue is
available
to cover
fixed costs
and to
contribute
toward
operating
income.
41.12.
12. If the monthly sales volume required to break even is
$190,000 and monthly fixed costs are $55,900, the
contribution margin ratio is closest to:
A. 29%.
B. 71%.
C. 23%.
D. 340%.
Mitchell Corporation manufactures a single product. The selling price is $85 per unit, and variable costs
amount to $68 per unit. The fixed costs are $16,500 per month.
13.
Refer to the information above. What is the contribution margin ratio of Mitchell’s product?
A. 65%.
B. 80%.
C. 72%.

8. D. 20%.
14.
Refer to the information above. What is the monthly sales volume in dollars necessary to break-even?
A. $82,500.
B. $66,500.
C. $97,059.
D. $77,500.
15.
Refer to the information above. How many units must be sold each month to earn a monthly operating income
of $8,000? (Round your final answer to the next whole number.)
A.
971
units.
B.
1,442
units.
C.
122,500
units.
D.
353
units.
16.
Refer to the information above. What will be Mitchell’s monthly operating income if 1,800 units are sold each
month?
A. $153,000.
B. $136,500.
C. $30,600.
D. $14,100.
17.
Which factor is not relevant in deciding whether or not to accept a special order?
A.
Incremental
revenue
that will be
earned.
B.
Additional
costs that
will be
incurred.
C. The effect

9. that the
order will
have on
the
company’s
regular
sales
volume
and selling
prices.
D.
The
average
cost of
production
if the
special
order is
accepted.
18.
The primary difference between profit centers and cost centers is that:
A.
Profit
centers
generate
revenue.
B.
Cost
centers
incur
costs.
C.
Profit
centers are
evaluated
using
return on
investment
criteria.
D.
Profit
centers
provide
services to
other centers
in the
organization.
19. An investment center:

10. A.
Is a profit
center for
which
management
is able to
objectively
measure the
cost of the
assets used
in the
center’s
operations.
B.
Is a cost
center for
which
management
is able to
identify the
original
amount
invested.
C.
May
be
either
a cost
center
or a
profit
center.
D.
Is a subunit
of the
organization
that provides
services to
other centers
within the
organization.
20.
Which of the following is not considered an operating budget?
A.
Manufacturing
cost budget.
B.
Production
schedule.

11.
C.
Capital
expenditures
budget.
D.
Sales
forecast.
21.
A budget that can be easily adjusted to show budgeted revenues, costs, and cash flows at different levels of
activity is known as:
A.
A
flexible
budget.
B.
A
master
budget.
C.
A
production
budget.
D.
A
multi-
level
budget.
22.
Explain what is meant by “profit rich, yet cash poor”.
23.
There will be a favorable materials price variance if:
A.
The
standard
price
per unit
is less
than the
actual
price
per unit.
B.
The
standard
price
per unit
is

12. greater
than the
actual
price
per unit.
C.
The
actual
quantity
purchased
is greater
than
expected.
D.
The
actual
quantity
purchased
is less
than
expected.
24.
Greenleaf’s flexible budget for June, based on actual output, called for the use of 10,000 square feet of
materials at a standard cost of $9.90 per square foot. Company records show that the actual price paid for the
materials used in June was $9.70 per square foot, and that the direct materials price variance for the month
was $2,090 favorable. The materials quantity variance for Greenleaf’s June operations was:
A.
$1,000
favorable.
B.
$4,455
unfavorable.
C.
$4,365
favorable.
D.
Impossible
to
determine
from the
data given.
Maple Company’s flexible budget, based upon the number of equivalent units produced, called for the use of
5,000 square yards of fabric at a standard cost of $2.45 per square yard. The Production Department actually
used 5,200 square yards costing $2.35 per square yard during June.
25.
Refer to the information above. The materials price variance for Maple Company for June is:
A. $520

13. favorable.
B.
$990
favorable.
C.
$30
unfavorable.
D.
$520
unfavorable.
Eagle Company uses a standard cost system which has provided the following data:
26.
Refer to the information above. The direct labor rate variance for the period was:
A.
$425
favorable.
B.
$360
favorable.
C.
$360
unfavorable.
D.
$425
unfavorable.
27.
Identify the criticisms of using ROI (Return on investment) as the only performance measure.
28.
Explain the importance of incentive systems for motivating performance.
29.
Capital budget auditBriefly discuss the reasons that a company’s management
would conduct a regular capital budget audit.

14.
30.
Accounting terminologyListed below are nine technical accounting terms introduced or emphasized in this
chapter:
Each of the following statements may (or may not) describe one of these technical terms. In the space
provided beside each statement, indicate the accounting term described, or answer “None” if the statement
does not correctly describe any of the terms.
____ (a) The amount by which sales revenue exceeds total variable cost expressed as a percentage of sales.
____ (b) The amount by which sales volume exceeds the break-even point.
____ (c) The study of financial statements by a potential investor or creditor as a means of evaluating the
profitability and solvency of a business.
____ (d) A type of activity that has a causal effect in the occurrence of a particular cost.
____ (e) The level of sales at which revenue equals operating expenses.
____ (f) A cost that responds to changes in sales volume by less than a proportionate amount.
____ (g) A mathematical technique used to determine the fixed and variable elements of a mixed or semi-
variable cost.