Question 1.1. (TCO A) Wages paid to an assembly line worker in a factory are a (Points : 6)        Prime Cost YES.....Conversion Cost YES.        Prime Cost YES.....Conversion Cost NO.        Prime Cost NO....Conversion Cost NO.        Prime Cost NO.....Conversion Cost YES.  Question 2.2. (TCO A)  The costs of staffing and operating the accounting department at Central Hospital would be considered by the department of surgery to be (Points : 6)        indirect costs.        sunk costs.        incremental costs.        direct costs. Question 3.3. (TCO A) Property taxes on a company's factory building would be classified as a(n) (Points : 6)        variable cost.        opportunity cost.        period cost.        product cost. Question 4.4. (TCO C) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? (Points : 6)        Fixed costs per unit decrease and variable costs per unit do not change.        Fixed costs per unit increase and variable costs per unit do not change.        Fixed costs per unit do not change and variable costs per unit do not change.        Fixed costs per unit do not change and variable costs per unit increase.  Question 5.5. (TCO B) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to (Points : 6)        overstate the predetermined overhead rate.        understate the predetermined overhead rate.        have no effect on the predetermined overhead rate.        This cannot be determined from the information given.  Question 6.6. (TCO B) A job-order cost system is employed in those situations when (Points : 6)        many different products, jobs, or batches of production are being produced each period.        manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.        the product moves from department to department before being completed.        the unit cost of production is computed by dividing the total production costs by the number of units produced.  Question 7.7. (TCO B) The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method (Points : 6)        can be used under any cost-flow assumption.        does not require the use of predetermined overhead rates.        keeps costs in the beginning inventory separate from current period costs.        does not consider the degree of completion of units in the beginning work-in-process inventory when computing equivalent units of production.  Question 8.8. (TCO C) The contribution margin ratio always decreases when the (Points : 6)        fixed expenses increase.        fixed expenses decrease.        variable e ...

1. Question 1.1. (TCO A) Wages paid to an assembly line worker
in a factory are a (Points : 6)
Prime Cost YES.....Conversion Cost YES.
Prime Cost YES.....Conversion Cost NO.
Prime Cost NO....Conversion Cost NO.
Prime Cost NO.....Conversion Cost YES.
Question 2.2. (TCO A) The costs of staffing and operating the
accounting department at Central Hospital would be considered
by the department of surgery to be (Points : 6)
indirect costs.
sunk costs.
incremental costs.
direct costs.
Question 3.3. (TCO A) Property taxes on a company's factory
building would be classified as a(n) (Points : 6)
variable cost.
opportunity cost.
period cost.
product cost.
Question 4.4. (TCO C) When the activity level is expected
to increase within the relevant range, what effects would be
anticipated with respect to each of the following? (Points : 6)
Fixed costs per unit decrease and variable costs per unit do
not change.
Fixed costs per unit increase and variable costs per unit do
not change.
Fixed costs per unit do not change and variable costs per
unit do not change.

2. Fixed costs per unit do not change and variable costs per
unit increase.
Question 5.5. (TCO B) Emco Company uses direct labor cost as
a basis for computing its predetermined overhead rate. In
computing the predetermined overhead rate for last year, the
company included in direct labor cost a portion of indirect
labor. The effect of this misclassification will be to (Points : 6)
overstate the predetermined overhead rate.
understate the predetermined overhead rate.
have no effect on the predetermined overhead rate.
This cannot be determined from the information given.
Question 6.6. (TCO B) A job-order cost system is employed in
those situations when (Points : 6)
many different products, jobs, or batches of production are
being produced each period.
manufacturing involves a single, homogeneous product that
flows evenly through the production process on a continuous
basis.
the product moves from department to department before
being completed.
the unit cost of production is computed by dividing the
total production costs by the number of units produced.
Question 7.7. (TCO B) The weighted-average method of process
costing differs from the FIFO method of process costing in that
the weighted-average method (Points : 6)
can be used under any cost-flow assumption.
does not require the use of predetermined overhead rates.
keeps costs in the beginning inventory separate from
current period costs.
does not consider the degree of completion of units in the

3. beginning work-in-process inventory when computing
equivalent units of production.
Question 8.8. (TCO C) The contribution margin ratio always
decreases when the (Points : 6)
fixed expenses increase.
fixed expenses decrease.
variable expenses as a percentage of net sales increase.
variable expenses as a percentage of net sales decrease.
Question 9.9. (TCO C) Which of the following would not affect
the break-even point? (Points : 6)
Variable expense per unit
Number of units sold
Total fixed expenses
Selling price per unit
Question 10.10. (TCO D) In an income statement prepared using
the variable costing method, fixed manufacturing overhead
would (Points : 6)
not be used.
be used in the computation of the contribution margin.
be used in the computation of net operating income but not
in the computation of the contribution margin.
be treated the same as variable manufacturing overhead.

4. Page 2
Question 1.1. (TCO A) The following data (in thousands of
dollars) have been taken from the accounting records of Larden
Corporation for the just-completed year.
Sales
$950
Purchases of raw materials
$170
Direct labor
$225
Manufacturing overhead
$220
Administrative expenses
$180
Selling expenses
$140
Raw materials inventory, beginning
$90
Raw materials inventory, ending
$80
Work-in-process inventory, beginning

5. $30
Work-in-process inventory, ending
$20
Finished goods inventory, beginning
$100
Finished goods inventory, ending
$70
Prepare a Schedule of Cost of Goods Manufactured statement in
the text box below. (Points : 15)
Question 2.2. (TCO B) The Florida Company manufactures a
product that goes through three processing departments.
Information relating to activity in the first department during
June is given below.
Percentage Completed
Units
Materials
Conversion
Work in process, June 1
160,000
65%
45%
Work in process, Jun 30
130,000
75%
65%
The department started 650,000 units into production during the

6. month and transferred 680,000 completed units to the next
department.
Required: Compute the equivalent units of production for the
first department for June, assuming that the company uses the
weighted-average method of accounting for units and
costs. (Points : 20)
Question 3.3. (TCO C) Drake Company's income statement for
the most recent year appears below.
Sales (45,000 units)
$1,350,000
Less: variable expenses
750,000
Contribution margin
600,000
Less: fixed expenses
375,000
Net operating income
$225,000
Required:
Calculate the unit contribution margin.
Calculate the the break-even point in dollars.
If the company desires a net operating income of $290,000, how
many units must it sell? (Points : 25)
Question 4.4. (TCO D) Lincoln Company, which has only one
product, has provided the following data concerning its most
recent month of operations.
Selling price
$125

7. Units in beginning inventory
600
Units produced
3,000
Units sold
3,500
Units in ending inventory
100
Variable costs per unit:
Direct materials
$27
Direct labor
$18
Variable manufacturing overhead
$10
Variable selling and admin
$12
Fixed costs:
Fixed manufacturing overhead
$75,000
Fixed selling and admin
$30,000
Required:
What is the unit product cost for the month under variable
costing?
What is the unit product cost for the month under absorption
costing?
Prepare an income statement for the month using the variable
costing method.
Prepare an income statement for the month using the absorption

8. costing method. (Points : 30)