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ACCT 505 Entire Course (New)
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ACCT 505 Week 1-7 All Discussion Questions
ACCT 505 Week 1 Case Study
ACCT 505 Week 2 Quiz Job Order and Process Costing Systems
ACCT 505 Week 2 Quiz Set 2

ACCT 505 Week 3 Case Study II
ACCT 505 Week 4 Midterm Exam
ACCT 505 Week 5 Course Project 1 LBJ Company (New)
ACCT 505 Week 5 Measuring Performance - Course Project A
ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs
for Decisions

ACCT 505 Week 7 Capital Budgeting Course Project
ACCT 505 Week 7 Course Project 2 Capital Budgeting Decision
(New)
ACCT 505 Final Exam Guide (New) Set 1

ACCT 505 Midterm Exam (New) Set 1
*************************************
ACCT 505 Final Exam (New) All 3 Set
Score 248/250

Multiple Choice 2
Short 2
Essay 7
Question 1 : (TCO E) Designing a new product is a(n)
2. Question : (TCO G) Given the following data, what would ROI
be?
Sales $70,000
Net operating income $10,000
Contribution margin $20,000
Average operating assets $50,000
Stockholder's equity $25,000

1. Question : (TCO C) Longiotti Corporation produces and sells a
single product. Data
concerning that product appear below.
Selling price per unit $375.00
Variable expense per unit $144.00
Fixed expense per month $1,686,300
Required:
Determine the monthly breakeven in units or dollar sales. Show
your work!
2. Question : (TCO B) Maverick Corporation uses the weighted-
average method in its
process costing system. Data concerning the first processing
department for

the most recent month are listed below.
Work in process, beginning:
Units in beginning work in process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,600
Materials costs added during the month $112,500
Conversion costs added during the month $210,300

1. Question : (TCO D) Topple Company produces a single product.
Operating data for the
company and its absorption costing income statement for the last
year are
presented below.
Units in beginning inventory 2,000
Units produced 9,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000

Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Cost of goods sold 60,000
Gross margin 40,000
Less selling and admin. expenses 28,000
2. Question : (TCO I) (Ignore income taxes in this problem.) Bill
Anders retires in 8 years.
He has $650,000 to invest and is considering a franchise for a fast-
food
outlet. He would have to purchase equipment costing $500,000 to
equip the

outlet and invest an additional $150,000 for inventories and other
working
capital needs. Other outlets in the fast-food chain have an annual
net cash
inflow of about $160,000. Mr. Anders would close the outlet in 8
years. He
estimates that the equipment could be sold at that time for about
10% of its
original cost. Mr. Anders' required rate of return is 16%.
Required:
Part A: What is the investment's net present value when the
discount rate is
16%?

Part B: Refer to your calculations. Is this an acceptable
investment? Why or
why not?
3. Question : (TCO A) The following data (in thousands of dollars)
have been taken from the accounting records of the Maroon
Corporation for the just-completed
year.
Sales 1,300
Raw materials inventory, beginning 25
Raw materials inventory, ending 30
Purchases of raw materials 250
Direct labor 350
Manufacturing overhead 500

Administrative expenses 300
Selling expenses 250
Work in process inventory, beginning 150
Work in process inventory, ending 100
Finished goods inventory, beginning 80
Finished goods inventory, ending 110
Use the above data to prepare (in thousands of dollars) a schedule
of Cost
of Goods Manufactured and a Schedule of Cost of Goods Sold for
the year.
In addition, what is the impact on the financial statements if the
ending

finished goods inventory is overstated or understated?
4. Question : (TCO F) Walker Corporation is preparing its cash
budget for November. The
budgeted beginning cash balance is $43,000. Budgeted cash
receipts total $117,000 and budgeted cash disbursements total
$122,000. The desired
ending cash balance is $55,000. The company can borrow up to
$100,000 at
any time from a local bank, with interest not due until the
following month.
Required:
Prepare the company's cash budget for November in good form.
Make sure
to indicate what borrowing, if any, would be needed to attain the
desired

ending cash balance
5. Question : (TCO F) Bella Lugosi Holdings, Inc. (BLH), has
collected the following
operating information for its current month's activity. Using this
information,
prepare a flexible budget analysis to determine how well BLH
performed in
terms of cost control.
Static Budget
Activity level (in units) 5,250 5,178
Variable costs:

Indirect materials $24,182 $23,476
Utilities $22,356 $22,674
Fixed costs:
Administration $63,450 $65,500
Rent $65,317 $63,904
6. Question : (TCO H) Lindon Company uses 7,500 units of Part Y
each year as a
component in the assembly of one of its products. The company is
presently
producing Part Y internally at a total cost of $119,000 as follows.
Direct

materials
$26,000
Direct labor 28,000
Variable
manufacturing
overhead
20,000
Fixed
manufacturing
overhead
45,000

Total costs $119,000
An outside supplier has offered to provide Part Y at a price of $12
per unit. If
Lindon stops producing the part internally, one third of the fixed
manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual
advantage or
disadvantage of accepting the outside supplier's offer. Please state
clearly
whether the part should be made or bought and share your work.
7. Question : (TCO B) Sandler Corporation bases its predetermined
overhead rate on the

estimated machine hours for the upcoming year. Data for the
upcoming year
appear below.
Estimated machine hours 75,000
Estimated variable manufacturing
overhead $4.50 per machine hour
Estimated total fixed manufacturing
overhead $825,000
The actual machine hours for the year turned out to be 77,000.
Required:
Compute the company's predetermined overhead rate.

Set 2
1. (TCO C) Madlem, Inc., produces and sells a single product
whose selling price is $120.00 per unit and whose variable expense
is $46.20 per unit. The company's fixed expense is $405,900 per
month.
Required: Determine the monthly breakeven in either unit or total
dollar sales. Show your work! (Points : 25)
Question 2.2. (TCO B) Industrial Supply Corporation uses the
weighted-average method in its process costing system. Data
concerning the first processing department for the most recent
month are listed below.

Ending work in process:
Units in ending work-in-process inventory 1,200
Percentage complete for materials 75%
Percentage complete for conversion 30%

Required: Calculate the equivalent units for conversion for the
month in the first processing department. (Points : 25)
Question 1.1. (TCO D) The following absorption costing income
statement and additional data are available from the accounting
records of Bernon Co. for the month ended May 31, XXXX.
During the accounting period, 17,000 units were manufactured and
sold at a price of $60 per unit. There were no beginning
inventories.
Bernon Co.
Absorption Costing Income Statement
for the Month Ended May 31, XXXX
Sales (17,000 @ $60) $1,020,000
Gross profit $ 408,000
Selling and administrative expenses 66,000

Income from operations $ 342,000
Additional Information:
Cost Total Cost Number of Units Unit Cost
Manufacturing costs:
Variable $442,000 17,000 $26
Fixed 170,000 17,000 10
Total $612,000 $36
Selling and administrative expenses:
Variable ($2 per unit sold) $34,000
Fixed 32,000

Total $66,000
Required: Prepare a new income statement for the year using
variable costing. Comment on the differences, if any, between the
absorption costing and the variable costing income statements.
(Points : 30)
Question 2.2. (TCO I) (Ignore income taxes in this problem.)
Simpson Beauty Products Corporation is considering the
production of a new conditioning shampoo that will require the
purchase of new mixing machinery. The machinery will cost
$700,000, is expected to have a useful life of 10 years, and is
expected to have a salvage value of $70,000 at the end of 10 years.
The machinery will also need a $45,000 overhaul at the end of
Year 5. A $60,000 increase in working capital will be needed for
this investment project. The working capital will be released at the
end of the 10 years. The new shampoo is expected to generate net
cash inflows of $150,000 per year for each of the 10 years.
Simpson's discount rate is 18%.
Items Year(s) Amount 18% Factor Present Value
Cost of machinery Now ($700,000) 1 ($700,000)
Working capital increase Now ($60,000) 1 ($60,000)

Annual cash inflows 1–10 $150,000 4.494 674,100
Overhaul 5 ($45,000) 0.437 ($19,665)
Salvage value 10 $70,000 0.191 13,370
Working capital release 10 $60,000 0.191 11,460
Net present value ($80,735)
Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Simpson go ahead
with the new conditioning shampoo? (Points : 30)
Question 3.3. (TCO A) The following data (in thousands of
dollars) have been taken from the accounting records of the
Maroon Corporation for the just-completed year.

Sales 1,700
Direct labor 360
Work-in-process inventory, beginning 120
Work-in-process inventory, ending 150

of Cost of Goods Manufactured and a Schedule of Cost of Goods
Sold for the year. In addition, what is the impac on the financial
statements if the ending finished goods inventory is overstated or
understated? (Points : 25)
Question 4.4. (TCO F) Walker Corporation is preparing its
cash budget for November. The budgeted beginning cash balance
is $43,000. Budgeted cash receipts total $117,000 and budgeted
cash disbursements total $122,000. The desired ending cash
balance is $55,000. The company can borrow up to $100,000 at
following month.
Required:Prepare the company's cash budget for November in
good form. Make sure to indicate what borrowing, if any, would be
needed to attain the desired ending cash balance(Points : 25)
Question 5.5. (TCO F) The following overhead data are for a
department of a large company.
Actual Costs Incurred Static Budget

Activity level (in units) 360 340
Variable costs:
Electricity $2,536 $2,414
Fixed costs:
Rent $6,310 $6,400
Required: Construct a flexible budget performance report that
would be useful in assessing how well costs were controlled in this
department. (Points : 25)
Question 6.6. (TCO H) McMullen Co. uses 10,000 units of Part
X each year as a component in the assembly of one of its products.
The company is presently producing Part X internally at a total
cost of $125,000 as follows.

Direct materials $40,000
Direct labor 30,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 30,000
An outside supplier has offered to provide Part X at a price of $10
per unit. If McMullen stops producing the part internally, one third
of the fixed manufacturing overhead would be eliminated.
advantage or disadvantage of accepting the outside supplier's offer.
Please state clearly whether the part should be made or bought and
share your work. (Points : 30)
Question 7.7. (TCO B) Buckhorn Corporation bases its
predetermined overhead rate on the estimated machine hours for
the upcoming year. Data for the upcoming year appear below.

Estimated variable manufacturing overhead $7.77 per machine
hour
Estimated total fixed manufacturing overhead $888,000
Required: Compute the company's predetermined overhead rate.
(Points : 25)
Set 3
(TCO E) Preparing purchase orders is a(n) (Points : 5)
batch-level activity.

product-level activity.
unit-level activity.
organization sustaining activity.
2. (TCO G) Given the following data, what would ROI be?
Sales $70,000
(Points : 5)

28.6%
20.0%
40.0%
50.0%
3. (TCO C) Heckaman Corporation produces and sells a single
product. Data concerning that product appear below.
Fixed expense per month $299,115
4. TCO B) Industrial Supply Corporation uses the weighted-
average method in its process costing system. Data concerning the
first processing department for the most recent month are listed
below.

5. (TCO D) Topple Company produces a single product.
Operating data for the company and its absorption costing income
statement for the last year are presented below.
Units in beginning inventory 0

Units sold 7,000
Sales $100,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing
overhead totals $18,000 for the year. The fixed manufacturing
overhead was applied at a rate of $2 per unit. Variable selling and
administrative expenses were $1 per unit sold.
variable costing. Comment on the differences between the
(Points : 30)
6. (TCO I) (Ignore income taxes in this problem.) Simpson Beauty
Products Corporation is considering the production of a new
conditioning shampoo that will require the purchase of new mixing
machinery. The machinery will cost $700,000, is
Required:
Part A: What is the net present value of this investment
opportunity?

Part B: Based on your answer to (a) above, should Simpson go
ahead with the new conditioning shampoo? (Points : 30)
PART B:
Simpson should not go ahead and purchase the shampoo machine
since the NPV is negative.
7. (TCO A) The following data (in thousands of dollars) have been
taken from the accounting records of Karmana Corporation for the
just-completed year.
8. (TCO F) Matuseski Corporation is preparing its cash budget for
October. The budgeted beginning cash balance is $54,000.
Budgeted cash receipts total $127,000 and budgeted cash
disbursements total $99,000. The desired ending cash balance is
$100,000. The company can borrow up to $150,000 at any time
from a local bank, with interest not due until the following month.
Required: Prepare the company's cash budget for October in good
form. Make sure to indicate what borrowing, if any, would be
needed to attain the desired ending cash balance. (Points : 25)
9. (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the
following operating information for its current month's activity.

Using this information, prepare a flexible budget analysis to
determine how well BLH performed in terms of cost control.
Variable costs:
Utilities $22,356 $22,674
Fixed costs:
Rent $65,317 $63,904

(Points : 25)
10. (TCO H) Lindon Company uses 10,000 units of Part Y each
year as a component in the assembly of one of its products. The
company is presently producing Part Y internally at a total cost of
$100,000 as follows.
Direct materials............................................... $20,000
Direct labor...................................................... 40,000
Variable manufacturing overhead...................... 16,000
Fixed manufacturing overhead.......................
24,000
Total costs.......................................................100,000

per unit. If Lindon stops producing the part internally, one third of
the fixed manufacturing overhead would be eliminated.
11. (TCO B) Wahr Corporation bases its predetermined overhead
rate on the estimated labor hours for the upcoming year. At the
beginning of the most recently completed year, the company
estimated the labor hours for the upcoming year at 35,000. The
estimated variable manufacturing overhead was $7.25 per labor
hour and the estimated total fixed manufacturing overhead was
$585,000. The actual labor hours for the year turned out to be
33,000.
*************************************
Score 248/250

Multiple Choice 2
Short 2
Essay 7
Question 1 : (TCO E) Designing a new product is a(n)
2. Question : (TCO G) Given the following data, what would ROI
be?
Sales $70,000

1. Question : (TCO C) Longiotti Corporation produces and sells a
single product. Data
concerning that product appear below.
Fixed expense per month $1,686,300
Required:
Determine the monthly breakeven in units or dollar sales. Show
your work!

2. Question : (TCO B) Maverick Corporation uses the weighted-
average method in its
process costing system. Data concerning the first processing
department for
the most recent month are listed below.

1. Question : (TCO D) Topple Company produces a single product.
Operating data for the
company and its absorption costing income statement for the last
year are
presented below.
Units in beginning inventory 2,000
Units sold 10,000

Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Gross margin 40,000
Less selling and admin. expenses 28,000

2. Question : (TCO I) (Ignore income taxes in this problem.) Bill
Anders retires in 8 years.
He has $650,000 to invest and is considering a franchise for a fast-
food
outlet. He would have to purchase equipment costing $500,000 to
equip the
outlet and invest an additional $150,000 for inventories and other
working
capital needs. Other outlets in the fast-food chain have an annual
net cash
inflow of about $160,000. Mr. Anders would close the outlet in 8
years. He
estimates that the equipment could be sold at that time for about
10% of its
original cost. Mr. Anders' required rate of return is 16%.

Required:
Part A: What is the investment's net present value when the
discount rate is
16%?
Part B: Refer to your calculations. Is this an acceptable
investment? Why or
why not?
3. Question : (TCO A) The following data (in thousands of dollars)
have been taken from the accounting records of the Maroon
Corporation for the just-completed
year.
Sales 1,300

Direct labor 350
Work in process inventory, beginning 150
Work in process inventory, ending 100

of Cost
of Goods Manufactured and a Schedule of Cost of Goods Sold for
the year.
In addition, what is the impact on the financial statements if the
ending
finished goods inventory is overstated or understated?
4. Question : (TCO F) Walker Corporation is preparing its cash
budget for November. The
budgeted beginning cash balance is $43,000. Budgeted cash
receipts total $117,000 and budgeted cash disbursements total
$122,000. The desired
ending cash balance is $55,000. The company can borrow up to
$100,000 at
following month.

Required:
Make sure
to indicate what borrowing, if any, would be needed to attain the
desired
ending cash balance
5. Question : (TCO F) Bella Lugosi Holdings, Inc. (BLH), has
collected the following
operating information for its current month's activity. Using this
information,

prepare a flexible budget analysis to determine how well BLH
performed in
terms of cost control.
Static Budget
Variable costs:
Utilities $22,356 $22,674
Fixed costs:
Rent $65,317 $63,904

6. Question : (TCO H) Lindon Company uses 7,500 units of Part Y
each year as a
component in the assembly of one of its products. The company is
presently
producing Part Y internally at a total cost of $119,000 as follows.
Direct
materials
$26,000
Direct labor 28,000
Variable
manufacturing
overhead

20,000
Fixed
manufacturing
overhead
45,000
per unit. If
Lindon stops producing the part internally, one third of the fixed
manufacturing overhead would be eliminated.

advantage or
disadvantage of accepting the outside supplier's offer. Please state
clearly
whether the part should be made or bought and share your work.
7. Question : (TCO B) Sandler Corporation bases its predetermined
overhead rate on the
estimated machine hours for the upcoming year. Data for the
upcoming year
appear below.
Estimated variable manufacturing
overhead $4.50 per machine hour

Estimated total fixed manufacturing
overhead $825,000
Required:
Compute the company's predetermined overhead rate.
*************************************
Set 2
1. (TCO C) Madlem, Inc., produces and sells a single product
whose selling price is $120.00 per unit and whose variable expense

is $46.20 per unit. The company's fixed expense is $405,900 per
month.
Required: Determine the monthly breakeven in either unit or total
dollar sales. Show your work! (Points : 25)
Question 2.2. (TCO B) Industrial Supply Corporation uses the
weighted-average method in its process costing system. Data
concerning the first processing department for the most recent
month are listed below.

Ending work in process:
Units in ending work-in-process inventory 1,200
Percentage complete for materials 75%
Percentage complete for conversion 30%

Income from operations $ 342,000
Additional Information:
Cost Total Cost Number of Units Unit Cost
Manufacturing costs:
Variable $442,000 17,000 $26
Fixed 170,000 17,000 10
Total $612,000 $36
Selling and administrative expenses:

Variable ($2 per unit sold) $34,000
Fixed 32,000
Total $66,000
variable costing. Comment on the differences, if any, between the
(Points : 30)
Question 2.2. (TCO I) (Ignore income taxes in this problem.)
Simpson Beauty Products Corporation is considering the
production of a new conditioning shampoo that will require the
purchase of new mixing machinery. The machinery will cost
$700,000, is expected to have a useful life of 10 years, and is
expected to have a salvage value of $70,000 at the end of 10 years.
The machinery will also need a $45,000 overhaul at the end of
Year 5. A $60,000 increase in working capital will be needed for
this investment project. The working capital will be released at the
end of the 10 years. The new shampoo is expected to generate net
cash inflows of $150,000 per year for each of the 10 years.
Simpson's discount rate is 18%.

Items Year(s) Amount 18% Factor Present Value
Cost of machinery Now ($700,000) 1 ($700,000)
Working capital increase Now ($60,000) 1 ($60,000)
Annual cash inflows 1–10 $150,000 4.494 674,100
Overhaul 5 ($45,000) 0.437 ($19,665)
Salvage value 10 $70,000 0.191 13,370
Working capital release 10 $60,000 0.191 11,460
Net present value ($80,735)
Required:
(a) What is the net present value of this investment opportunity?

(b) Based on your answer to (a) above, should Simpson go ahead
with the new conditioning shampoo? (Points : 30)
Question 3.3. (TCO A) The following data (in thousands of
dollars) have been taken from the accounting records of the
Maroon Corporation for the just-completed year.
Sales 1,700
Direct labor 360

Work-in-process inventory, beginning 120
Work-in-process inventory, ending 150
of Cost of Goods Manufactured and a Schedule of Cost of Goods
Sold for the year. In addition, what is the impact on the financial
statements if the ending finished goods inventory is overstated or
understated? (Points : 25)
Question 4.4. (TCO F) Walker Corporation is preparing its cash
budget for November. The budgeted beginning cash balance is
$43,000. Budgeted cash receipts total $117,000 and budgeted cash
Required:

Make sure to indicate what borrowing, if any, would be needed to
attain the desired ending cash balance(Points : 25)
Question 5.5. (TCO F) The following overhead data are for a
department of a large company.
Activity level (in units) 360 340
Variable costs:
Electricity $2,536 $2,414
Fixed costs:

Rent $6,310 $6,400
Required: Construct a flexible budget performance report that
would be useful in assessing how well costs were controlled in this
department. (Points : 25)
Question 6.6. (TCO H) McMullen Co. uses 10,000 units of Part X
each year as a component in the assembly of one of its products.
The company is presently producing Part X internally at a total
cost of $125,000 as follows.
Direct labor 30,000

Variable manufacturing overhead 25,000
Fixed manufacturing overhead 30,000
An outside supplier has offered to provide Part X at a price of $10
per unit. If McMullen stops producing the part internally, one third
of the fixed manufacturing overhead would be eliminated.
advantage or disadvantage of accepting the outside supplier's offer.
Please state clearly whether the part should be made or bought and
share your work. (Points : 30)
Question 7.7. (TCO B) Buckhorn Corporation bases its
predetermined overhead rate on the estimated machine hours for
the upcoming year. Data for the upcoming year appear below.

Estimated variable manufacturing overhead $7.77 per machine
hour
Estimated total fixed manufacturing overhead $888,000
Required: Compute the company's predetermined overhead rate.
(Points : 25)
*************************************
(TCO E) Preparing purchase orders is a(n) (Points : 5)

batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
2. (TCO G) Given the following data, what would ROI be?
Sales $70,000

(Points : 5)
28.6%
20.0%
40.0%
50.0%
3. (TCO C) Heckaman Corporation produces and sells a single
product. Data concerning that product appear below.
Fixed expense per month $299,115
4. TCO B) Industrial Supply Corporation uses the weighted-
average method in its process costing system. Data concerning the

first processing department for the most recent month are listed
below.
5. (TCO D) Topple Company produces a single product. Operating
data for the company and its absorption costing income statement
for the last year are presented below.

Units sold 7,000
Sales $100,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing
overhead totals $18,000 for the year. The fixed manufacturing
overhead was applied at a rate of $2 per unit. Variable selling and
administrative expenses were $1 per unit sold.
variable costing. Comment on the differences between the
(Points : 30)
6. (TCO I) (Ignore income taxes in this problem.) Simpson Beauty
Products Corporation is considering the production of a new
conditioning shampoo that will require the purchase of new mixing
machinery. The machinery will cost $700,000, is
Required:

Part A: What is the net present value of this investment
opportunity?
Part B: Based on your answer to (a) above, should Simpson go
ahead with the new conditioning shampoo? (Points : 30)
PART B:
Simpson should not go ahead and purchase the shampoo machine
since the NPV is negative.
taken from the accounting records of Karmana Corporation for the
8. (TCO F) Matuseski Corporation is preparing its cash budget for
October. The budgeted beginning cash balance is $54,000.
Budgeted cash receipts total $127,000 and budgeted cash

Required: Prepare the company's cash budget for October in good
form. Make sure to indicate what borrowing, if any, would be
needed to attain the desired ending cash balance. (Points : 25)
9. (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the
following operating information for its current month's activity.
Using this information, prepare a flexible budget analysis to
determine how well BLH performed in terms of cost control.
Variable costs:
Utilities $22,356 $22,674
Fixed costs:

Rent $65,317 $63,904
(Points : 25)
10. (TCO H) Lindon Company uses 10,000 units of Part Y each
year as a component in the assembly of one of its products. The
company is presently producing Part Y internally at a total cost of
$100,000 as follows.
Direct materials............................................... $20,000
Direct labor...................................................... 40,000
Variable manufacturing overhead...................... 16,000
Fixed manufacturing overhead.......................
24,000
Total costs.......................................................100,000

per unit. If Lindon stops producing the part internally, one third of
the fixed manufacturing overhead would be eliminated.
11. (TCO B) Wahr Corporation bases its predetermined overhead
rate on the estimated labor hours for the upcoming year. At the
beginning of the most recently completed year, the company
estimated the labor hours for the upcoming year at 35,000. The
estimated variable manufacturing overhead was $7.25 per labor
hour and the estimated total fixed manufacturing overhead was
$585,000. The actual labor hours for the year turned out to be
33,000. *************************************
ACCT 505 Final Exam Guide
ACCT 505 Final Exam Guide
*************************************
ACCT 505 Midterm Exam (New) 6 Sets

This Tutorial contains 6 Sets of Midterm Exam
1. (TCO A) Direct material cost is a part of (Points : 6)
Conversion Cost NO.... Prime Cost NO.
Conversion Cost YES.... Prime Cost NO.
Conversion Cost YES.... Prime Cost YES.
Conversion Cost NO.... Prime Cost YES.
Question 2.2. (TCO A) Total fixed costs (Points : 6)
will increase with increases in activity.
will decrease with increases in activity.
are not affected by activity.
should be ignored in making decisions because they can
never change.

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.
increase.
Question 5.5. (TCO B) Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the
time of completion of the job.
III. Overhead application should be made to any job not completed
at year end in order to properly value the work in process
inventory. (Points : 6)
Only statement I is true.
Only statement II is true.
Both statements I and II are true.
Statements I, II, and III are true.
Question 6.6. (TCO B) Under a job-order costing system, the
product being manufactured (Points : 6)
is homogeneous.
passes from one manufacturing department to the next before
being completed.
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total
production costs by the units produced.

Question 7.7. (TCO F) Equivalent units for a process costing
system using the FIFO method would be equal to (Points : 6)
units completed during the period, plus equivalent units in
the ending work-in-process inventory.
units started and completed during the period, plus equivalent
units in the ending work-in-process inventory.
units completed during the period and transferred out.
units in the ending work-in-process inventory, plus work needed to
complete units in the beginning work-in-process inventory.
Question 8.8. (TCO C) The contribution margin equals (Points : 6)
sales - expenses.
sales - variable costs.
sales - cost of goods sold.
sales - fixed costs.
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) Under variable costing, (Points : 6)
inventory costs will be lower than under absorption costing.
inventory costs will be higher than under absorption costing.
net operating income will always be lower than under
absorption costing.
net operating income will always be higher than under
absorption costing.
taken from the accounting records of Larop Corporation for the
Sales $950
Purchases of raw materials $225
Direct labor $250
Manufacturing overhead $295
Administrative expenses $150

Selling expenses $140
Raw materials inventory, beginning $30
Raw materials inventory, ending $45
Work-in-process inventory, beginning $20
Work-in-process inventory, ending $55
Finished goods inventory, beginning $100
Finished goods inventory, ending $135
Prepare a Schedule of Cost of Goods Manufactured statement in
the text box below. (Points : 15)
Schedule of cost of goods manufactured
Direct materials:
Question 2.2. (TCO B) The Nebraska 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 1 140,000 65% 45%
Work in process, Jun 30 120,000 75% 65%
The department started 580,000 units into production during the
month and transferred 600,000 completed units to the next
department.
Question 3.3. (TCO C) A tile manufacturer has supplied the
following data.
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000

Question 4.4. (TCO D) The Hampton Company produces and sells
a single product. The following data refer to the year just
completed.
Selling price $450
Units sold 22,000
Variable costs per unit:
Direct materials $150
Direct labor $75
Variable manufacturing overhead $25
Variable selling and admin $15
Fixed costs:
Fixed manufacturing overhead $275,000
Fixed selling and admin $200,000

Required:
Compute the cost of a single unit of product under both the
absorption costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing.
(Points : 30)
Question 1. Question : (TCO A) The variable portion of
advertising costs is a
Student Answer: Conversion YES... Period NO.
Conversion YES .... Period YES.
Conversion NO.... Period NO.
Conversion NO.... Period YES.
Question 2. Question : (TCO A) A cost incurred in the past that is
not relevant to any current decision is classified as a(n)

Student Answer: period cost.
incremental cost.
opportunity cost.
None of the above
Question 3. Question : (TCO A) Property taxes on a company's
factory building would be classified as a(n)
Student Answer: variable cost.
opportunity cost.
period cost.
product cost.
Question 4. Question : (TCO C) Within the relevant range, variable
costs can be expected to
Student Answer: vary in total in direct proportion to changes in
the activity level.

remain constant in total as the activity level changes.
increase on a per-unit basis as the activity level increases.
increase on a per-unit basis as the activity level decreases.
None of the above
Question 5. Question : (TCO B) Which of the following statements
is true?
inventory.
Student Answer: Only statement I is true.

Question 6. Question : (TCO B) A job-order cost system is
employed in those situations when
Student Answer: 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. Question : (TCO B) The FIFO method only provides a
major advantage over the weighted-average method in that
Student Answer: the calculation of equivalent units is less
complex under the FIFO method.
the FIFO method treats units in the beginning inventory as if they
were started and completed during the current period.
the FIFO method provides measurements of work done during
the current period.
the weighted-average method ignores units in the beginning and
ending work-in-process inventories.

Question 8. Question : (TCO C) The contribution margin ratio
always increases when the
Student Answer: 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. Question : (TCO C) Which of the following would not
affect the break-even point?
Student Answer: Variable expense per unit
Question 10. Question : (TCO D) Under variable costing,

Student Answer: inventory costs will be lower than under
absorption costing.
net operating income will always be lower than under absorption
costing.
net operating income will always be higher than under absorption
costing.
Question 1. Question : (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
Direct labor $225

the text box below.
Question 2. Question : (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.
Question 3. Question : (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
Question 4. Question : (TCO D) The Hampton Company produces
and sells a single product. The following data refer to the year just
completed.
Selling price $450
Units sold 22,000
Direct labor $75

Fixed costs:
*************************************
Score 144/150
Multiple Choice 10
Essay 4
1. (TCO A) Direct material cost is a part of (Points : 6)

Conversion Cost NO.... Prime Cost NO.
Conversion Cost YES.... Prime Cost NO.
Conversion Cost YES.... Prime Cost YES.
Conversion Cost NO.... Prime Cost YES.
Question 2.2. (TCO A) Total fixed costs (Points : 6)
will increase with increases in activity.
will decrease with increases in activity.
are not affected by activity.
should be ignored in making decisions because they can
never change.

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.

do not change.
increase.
Question 5.5. (TCO B) Which of the following statements is true?
inventory. (Points : 6)
Only statement I is true.

Question 6.6. (TCO B) Under a job-order costing system, the
product being manufactured (Points : 6)
is homogeneous.
passes from one manufacturing department to the next before
being completed.
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total
production costs by the units produced.
Question 7.7. (TCO F) Equivalent units for a process costing
system using the FIFO method would be equal to (Points : 6)
units completed during the period, plus equivalent units in
the ending work-in-process inventory.

units in the ending work-in-process inventory.
units completed during the period and transferred out.
units in the ending work-in-process inventory, plus work needed to
complete units in the beginning work-in-process inventory.
Question 8.8. (TCO C) The contribution margin equals (Points : 6)
sales - expenses.
sales - variable costs.
sales - cost of goods sold.
sales - fixed costs.
Question 9.9. (TCO C) Which of the following would not affect
the break-even point? (Points : 6)

Variable expense per unit
Question 10.10. (TCO D) Under variable costing, (Points : 6)
inventory costs will be lower than under absorption costing.
net operating income will always be lower than under
absorption costing.
net operating income will always be higher than under
absorption costing.

Sales $950
Direct labor $250

the text box below. (Points : 15)
Schedule of cost of goods manufactured
Direct materials:
Question 2.2. (TCO B) The Nebraska Company manufactures a
product that goes through three processing departments.
Information relating to activity in the first department during June
is given below.

department.
Question 3.3. (TCO C) A tile manufacturer has supplied the
following data.

Question 4.4. (TCO D) The Hampton Company produces and sells
a single product. The following data refer to the year just
completed.
Selling price $450

Units sold 22,000
Direct labor $75
Fixed costs:

Required:
Compute the cost of a single unit of product under both the
absorption costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing.
(Points : 30)
Extra questions
*************************************
Multiple Choice 10 9

Essay 4
Question 1. Question : (TCO A) The variable portion of
advertising costs is a
Student Answer: Conversion YES... Period NO.
Conversion YES .... Period YES.
Conversion NO.... Period NO.
Conversion NO.... Period YES.
Question 2. Question : (TCO A) A cost incurred in the past that is
not relevant to any current decision is classified as a(n)
Student Answer: period cost.
incremental cost.

opportunity cost.
None of the above
Question 3. Question : (TCO A) Property taxes on a company's
factory building would be classified as a(n)
Student Answer: variable cost.
opportunity cost.
period cost.
product cost.
Question 4. Question : (TCO C) Within the relevant range, variable
costs can be expected to

Student Answer: vary in total in direct proportion to changes in
the activity level.
remain constant in total as the activity level changes.
increase on a per-unit basis as the activity level increases.
increase on a per-unit basis as the activity level decreases.
None of the above
Question 5. Question : (TCO B) Which of the following
statements is true?

inventory.
Student Answer: Only statement I is true.
Question 6. Question : (TCO B) A job-order cost system is
employed in those situations when
Student Answer: 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. Question : (TCO B) The FIFO method only provides
a major advantage over the weighted-average method in that
Student Answer: the calculation of equivalent units is less
complex under the FIFO method.
the FIFO method treats units in the beginning inventory as if they
were started and completed during the current period.
the FIFO method provides measurements of work done during
the current period.
the weighted-average method ignores units in the beginning and
ending work-in-process inventories.

Question 8. Question : (TCO C) The contribution margin ratio
always increases when the
Student Answer: 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. Question : (TCO C) Which of the following would
not affect the break-even point?
Student Answer: Variable expense per unit

Question 10. Question : (TCO D) Under variable costing,
Student Answer: inventory costs will be lower than under
absorption costing.
net operating income will always be lower than under absorption
costing.
net operating income will always be higher than under absorption
costing.
Question 1. Question : (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

Direct labor $225

the text box below.
Question 2. Question : (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.
Question 3. Question : (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

Question 4. Question : (TCO D) The Hampton Company produces
and sells a single product. The following data refer to the year just
completed.
Selling price $450
Units sold 22,000

Direct labor $75
Fixed costs:
*************************************
ACCT 505 Week 1 Case Study

Top Switch Inc. designs and manufactures switches used in
telecommunications. Serious flooding throughout the state of
Tennessee affected Top Switch’s facilities. Inventory was
completely ruined, and the company’s computer system, including
all accounting records, was destroyed.
Before the unfortunate incident, recovery specialists cleaned the
buildings. The company controller is very nervous and anxious to
recover whatever records he can to support the insurance claim for
the destroyed inventory. After consulting with the cost accountant,
they decide to retrieve the previous year’s annual report for the
beginning inventory numbers. In addition, they also agreed that
they need first quarter cost data.
The cost accountant was working on the first quarter results before
the storm hit, and to his surprise, the report was still in his desk
drawer. After reviewing the data , the information shows the
following information: Material purchases were $ 325,000; Direct
Labor was $ 220,000. Further discussions between the controller
and the cost accountant revealed that sales were $ 1,350,000 and
the gross margin was 30% of sales. The cost accountant also
discovered, while sifting through the information, that cost of
goods available for sale was $ 1,020,000 at cost. While assessing
the damage, the controller determined that the prime costs were $
545,000 up to the time of the damage and that manufacturing
overhead is 65% of conversion cost. The cost accountant is not
sure about all of this, but he decides to see what he can do with the
information.

The beginning inventory numbers are as follows:
Raw Materials, $ 41,000
Work in Process, $ 56,000
Finished Goods, $ 35,000
Required:
Determine the amount of cost in the Raw Materials, Work in
Process, and Finished Goods Inventory as of the date of the storm.
( Hint: You may wish to reconstruct the various schedules and
statements that would have been affected by the company’s
accounts during the period.)
Grading Rubric for Case Study I:
Category
Points
%

Description
Documentation &
Formatting
10
22%
Worksheet will be done in Excel and will contain formulas to
receive maximum credit
Organization and Cohesiveness
15
33%

Calculations for all parts should be organized and correctly
labeled.
Content
20
45%
A quality case study will have all required work completed and
will be correct.
Total
45
100%
A quality project will meet or exceed all of the above
requirements.
*************************************
ACCT 505 Week 1-7 All Discussion Questions

Week 1DQ 1 Cost Terms, Classifications, and Behavior
Week 1DQ 2 Research and Application
Week 2DQ 1 Job Order and Process Costing Systems
Week 3DQ 1 Variable Costing and CVP Concepts
Week 4DQ 1 Budgeting Case Study
Week 4DQ 2 Exam Review

Week 5DQ 1 Standards, Variances, Flexible Budgets
Week 6DQ 1 Segment Reporting and Relevant Costs
Week 7DQ 1 Capital Budgeting
Week 7DQ 2 Exam Review
*************************************
ACCT 505 Week 2 Case 3-29 Ethics and the Manager
CASE 3–29 Ethics and the Manager [Course Objective B] Terri
Ronsin had recently been transferred to the Home Security
Systems Division of National Home Products. Shortly after taking

over her new position as divisional controller, she was asked to
develop the division’s predetermined overhead rate for the
upcoming year. The accuracy of the rate is important because it is
used throughout the year and any overapplied or underapplied
overhead is closed out to Cost of Goods Sold at the end of the
year. National Home Products uses direct labor-hours in all of its
divisions as the allocation base for manufacturing overhead.
To compute the predetermined overhead rate, Terri divided her
estimate of the total manufacturing overhead for the coming year
by the production manager’s estimate of the total direct labor-
hours for the coming year. She took her computations to the
division’s general manager for approval but was quite surprised
when he suggested a modification in the base. Her conversation
with the general manager of the Home Security Systems Division,
Harry Irving, went like this:
Ronsin: Here are my calculations for next year’s predetermined
overhead rate. If you approve, we can enter the rate into the
computer on January 1 and be up and running in the job-order
costing system right away this year.
Irving: Thanks for coming up with the calculations so quickly, and
they look just fine. There is, however, one slight modification I
would like to see. Your estimate of the total direct labor-hours for
the year is 440,000 hours. How about cutting that to about 420,000
hours?

Ronsin: I don’t know if I can do that. The production manager says
she will need about 440,000 direct labor-hours to meet the sales
projections for the year. Besides, there are going to be over
430,000 direct labor-hours during the current year and sales are
projected to be higher next year.
Irving: Teri, I know all of that. I would still like to reduce the
direct labor-hours in the base to some- thing like 420,000 hours.
You probably don’t know that I had an agreement with your
predecessor as divisional controller to shave 5% or so off the
estimated direct labor-hours every year. That way, we kept a
reserve that usually resulted in a big boost to net operating income
at the end of the fiscal year in December. We called it our
Christmas bonus. Corporate headquarters always seemed as
pleased as punch that we could pull off such a miracle at the end of
the year. This system has worked well for many years, and I don’t
want to change it now.
Required:
Assume the following information:
Direct Materials

$40
per unit
Direct Labor
$20
per unit
Total Estimated Manufacturing Overhead
$8,400,000
Manufacturing overhead is allocated based on estimated direct-
labor hours.

Each unit of product requires 1 direct labor hour.
1. Calculate the cost of one unit of product, assuming that the
overhead per unit is based on Terri Ronson’s estimate of 440,000
hours. (Round all dollar figures to two decimal places.)
a. If 441,000 units were produced, how much overhead was
applied to work in process.
2. Calculate the cost of one unit of product, assuming that the
overhead per unit is based on her supervisors preferred estimate of
420,000 hours. (Round all dollar figures to two decimal places.)

a. If 441,000 units were produced, how much overhead was
applied to work in process.
3. During the year, the company produced and sold 441,000
units, and incurred actual overhead of $8,500,000, what is the
under/overapplied overhead if:
a. The estimated Direct Labor Hours is 440,000.
b. The estimated Direct Labor Hours is 420,000.
c. All over-applied and under-applied overhead applied directly
to cost of goods sold. Assume that the company had $1,000,000 in
net operating income before the over/under applied overhead
adjustment is made. What is the revised net income after the
over/underapplied overhead adjustment?
4. Should Terri Ronson go along with the general manager’s
request to reduce the direct labor hours in the predetermined
overhead rate computation to 420,000 hours? Be sure to discuss
the operational and ethical issues related to this decision.

Deliverables:
1. Submit an Excel spreadsheet that documents the calculations
made for steps 1-3 above. All items should be clearly labeled, and
appropriate formulas should be used to perform your calculations.
2. For step 4, submit a 5-7 minute narrated PowerPoint
(preferably using VoiceThread) that highlights your discussion of
the operational and ethical issues that Teri is facing as a result of
the request to reduce the direct labor hours. Be sure to make a
recommendation in regard to making this decision. The
presentation should be 3-4 slides.
3. Post your PowerPoint and workbook on behalf of your team
to the Week 2 Dropbox for the case study.
4. NOTE: as a team project, a team collaboration tool (such as
Cisco Spark) should be used for the students to collaborate on the
project!
*************************************
ACCT 505 Week 2 Quiz Job Order and Process Costing
Systems

1.Question :
(TCO F) For which situation(s) below would an organization be
more likely to use a job-order costing system of accumulating
product costs rather than a process costing system?
2.Question :
(TCO F) Process costing would be appropriate for each of the
following except:
3.Question :
(TCO F) Lucas Company uses the weighted-average method in its
process costing system. The company adds materials at the
beginning of the process in the Forming Department, which is the
first of two stages in its production process. Information

concerning operations in the Forming Department in October
follows:
Units
Material Cost
Work in process on October 1
6,000
$3,000
Units started in October
50,000
$25,560
Units completed and transferred to next Department during
October

44,000
What was the materials cost of work in process at on October 31?
4.Question :
(TCO F) In a job-order costing system, the use of direct materials
that have been previously purchased is recorded as a debit to:
5.Question :
(TCO F) During December at Ingrim Corporation, $74,000 of raw
materials were requisitioned from the storeroom for use in
production. These raw materials included both direct and indirect
materials. The indirect materials totaled $6,000. The journal entry
to record the requisition from the storeroom would include a:
6.Question :
(TCO F) Valles Corporation had $22,000 of raw materials on hand
on February 1. During the month, the company purchased an

additional $75,000 of raw materials. The journal entry to record the
purchase of raw materials would include a:
1.Question :
(TCO F) Whether a company uses process costing or job-order
costing depends on its industry. A number of companies in
different industries are listed below:
i. Brick manufacturer
ii. Contract printer that produces posters, books, and pamphlets to
order
iii. Natural gas production company
iv. Dairy farm
v. Coal mining company
vi. Specialty coffee roaster (roasts small batches of specialty coffee
beans)
For each company, indicate whether the company is most likely to
use job-order costing or process costing.
i. Brick manufacturer Process Costing ii. Contract printer that
produces posters, books, and pamphlets to order Job Order Costing

iii. Natural gas production company Process Costing iv. Dairy
farm Process Costing v. Coal mining company Process Costing vi.
Specialty coffee roaster (roasts small batches of specialty coffee
beans) Job Order Costing
2.Question :
(TCO F) Job 484 was recently completed. The following data have
been recorded on its job cost sheet:
Direct materials
$57,240
Direct labor hours
1,692 DLHs
Direct labor wage rate
$12 per DLHS

Number of units completed
3,600 units
The company applies manufacturing overhead on the basis of
direct labor-hours. The predetermined overhead rate is $24 per
direct labor-hour.
Compute the unit product cost that would appear on the job cost
sheet for this job.
3.Question :
(TCO F) Miller Company manufactures a product for which
materials are added at the beginning of the manufacturing process.
A review of the company's inventory and cost records for the most
recently completed year revealed the following information:
Units
Materials

Conversion
Work in process. Jan. 1 (80% complete with respect to conversion
costs)
100,000
$100,000
$157,500
Units started into production
500,000
Costs added during the year:
Materials
$650,000

Conversion
$997,500
Units completed during the year
450,000
The company uses the weighted-average cost method in its process
costing system. The ending inventory is 50% complete with
respect to conversion costs.
Required:
i. Compute the equivalent units of production and the cost per
equivalent units for materials and for conversion costs.
ii. Determine the cost transferred to finished goods.

iii. Determine the amount of cost that should be assigned to the
ending work in process inventory.
4.Question :
(TCO F) Weisinger Corporation has provided the following data
for the month of January:
Inventories
Beginning
Ending
Raw materials
$28,000
$29,000
Work In process

$16,000
$14,000
Finished goods
$42,000
$54,000
Additional Information
Raw material purchases
$56,000
Direct labor costs
$87,000

Manufacturing overhead cost incurred
$51,000
Indirect materials included in manufacturing overhead costs
incurred
$3,000
Manufacturing overhead cost applied to work in process
$55,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule
of Cost of Goods Sold in good form.
*************************************

Essay 4
Multiple Choice 6
Question 1. Question : (TCO B) Assume there is no beginning
work in process inventory and the ending work in process
inventory is 100% complete with respect to materials costs. The
number of equivalent units with respect to materials costs under
the weighted average method is
Student Answer: the same as the number of units completed.
less than the number of units put into production.
the same as the number of units put into production.

less than the number of units completed.
Question 2. Question : (TCO B) For which situation(s) below
would an organization be more likely to use a job-order costing
system of accumulating product costs rather than a process costing
system?
Student Answer: A steel factory that processes iron ore into steel
bars
A computer consulting firm
A factory that processes sugar and other ingredients into candy
All of the above

Question 3. Question : (TCO B) Luft Company uses the weighted-
average method in its process costing system. Operating data for
the first processing department for the month of June appear
below.
Units Percent Complete With Respect to Conversion
Beginning work in process inventory 11,000 90%
Started in production during June 58,000
Ending work in process inventory 17,000 10%
According to the company’s records, the conversion cost in
beginning work in process inventory was $79,893 at the beginning

of June. Additional conversion costs of $343,830 were incurred in
the department during the month.
What was the cost per equivalent unit for conversion costs for the
month? (Round to three decimal places.)
Student Answer: $7.891
$8.070
$5.928
$4.584

Question 4. Question : (TCO B) In a job-order costing system, the
use of direct materials that have been previously purchased is
recorded as a debit to
Student Answer: raw materials.
finished goods.
work in process.
manufacturing overhead.

Question 5. Question : (TCO B) During October, Crusan
Corporation incurred $62,000 of direct labor costs and $4,000 of
indirect labor costs. The journal entry to record the accrual of these
wages would include a
Student Answer: debit to work in process of $66,000.
credit to work in process of $66,000.
debit to work in process of $62,000.
Question 6. Question : (TCO B) During February, Degan Inc.
transferred $60,000 from work in process to finished goods and
recorded a cost of goods sold of $65,000. The journal entries to
record these transactions would include a

Student Answer: debit to finished goods of $65,000.
credit to cost of goods sold of $65,000.
credit to finished goods of $60,000.
* Times are displayed in (GMT-07:00) Mountain Time (US &
Canada)
Grading Summary

These are the automatically computed results of your exam. Grades
for essay questions, and comments from your instructor, are in the
“Details” section below. Date Taken: 5/15/2016
Time Spent: 1 h , 27 min , 22 secs
Points Received: 71 / 90 (78.9%)
Grade Details – All Questions
Page: 1 2
Question 1. Question : (TCO B) Some companies use process
costing and some use job-order costing. Which method a company
uses depends on its industry. Several companies in different
industries are listed below.

5. Frozen cranberry juice processor
ii. Custom boat builder
iii. Concrete block manufacturer
iv. Winery that produces a number of specialty wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
vi. External auditing firm
For each company, indicate whether the company is most likely to
use job-order costing or process costing.

Question 2. Question : (TCO B) Job 728 was recently completed.
The following data have been recorded on its job cost sheet.
Direct labor hours 1,220 labor hours
Direct labor wage rate $15 per labor hour
Machine hours 1,550 machine hours
Number of units completed 4,500 units

The company applies manufacturing overhead on the basis of
machine hours. The predetermined overhead rate is $18 per
machine hour.
Compute the unit product cost that would appear on the job cost
sheet for this job.
Question 3. Question : (TCO B) Harmon Company uses the
weighted average method in its process costing system. The Curing
Department of Harmon Company reported the following
information for the month of November.

Units Percent complete with respect to materials Percentage
complete with respect to conversion
Work in process, November 1 10,000 100% 80%
Units started 28,000
Completed and transferred out 30,000
Work in process, November 30 8,000 100% 30%
Costs for November Materials Conversion
Work in process, November 1 $34,500 $48,600
Added during the month $146,000 $194,400

All materials are added at the beginning of the process.
Required: Compute the following items using the weighted
average method.
5. The equivalent units of production for materials
ii. The cost per equivalent unit for conversion
iii. The total cost assigned to units transferred out of the curing
department during November
iv. The cost assigned to work in process inventory as of November
30

Question 4. Question : (TCO A) Hunsicker Corporation has
provided the following data for the month of January.
Inventories Beginning Ending
Raw materials $30,000 $33,000
Work in process $20,000 $18,000
Finished goods $52,000 $50,000
Additional Information

Raw material purchases $63,000
Direct labor costs $92,000
Manufacturing overhead cost incurred $75,000
Indirect materials included in manufacturing overhead costs
incurred $6,000
Manufacturing overhead cost applied to work in process $72,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule
of Cost of Goods Sold in good form.
*************************************
ACCT 505 Week 3 Case Study 4–20 Ethics and the
Manager

CASE 4–20 Ethics and the Manager, Understanding the Impact of
Percentage Completion on Profit—Weighted-Average Method
[Course Objective B] Gary Stevens and Mary James are
production managers in the Consumer Electronics Division of
General Electronics Company, which has several dozen plants
scattered in locations throughout the world. Mary manages the
plant located in Des Moines, Iowa, while Gary manages the plant
in El Segundo, California. Production managers are paid a salary
and get an additional bonus equal to 5% of their base salary if the
entire division meets or exceeds its target profits for the year. The
bonus is determined in March after the company’s annual report
has been prepared and issued to stockholders.
Shortly after the beginning of the New Year, Mary received a
phone call from Gary that went like this:
Gary: How’s it going, Mary?
Mary: Fine, Gary. How’s it going with you?
Gary: Great! I just got the preliminary profit figures for the
division for last year and we are within $200,000 of making the
year’s target profits. All we have to do is pull a few strings, and
we’ll be over the top!
Mary: What do you mean? Gary: Well, one thing that would be
easy to change is your estimate of the percentage completion of
your ending work in process inventories. Mary: I don’t know if I

can do that, Gary. Those percentage completion figures are
supplied by Tom
Winthrop, my lead supervisor, who I have always trusted to
provide us with good estimates.
Besides, I have already sent the percentage completion figures to
corporate headquarters. Gary: You can always tell them there was
a mistake. Think about it, Mary. All of us managers are doing as
much as we can to pull this bonus out of the hat. You may not want
the bonus check, but the rest of us sure could use it.
The final processing department in Mary’s production facility
began the year with no work in process inventories. During the
year, 210,000 units were transferred in from the prior processing
department and 200,000 units were completed and sold. Costs
transferred in from the prior department totaled $39,375,000. No
materials are added in the final processing department. A total of
$20,807,500 of conversion cost was incurred in the final
processing department during the year.
Required:
1. Tom Winthrop estimated that the units in ending inventory in
the final processing department were 30% complete with respect to
the conversion costs of the final processing department. If this
estimate of the percentage completion is used, what would be the
Cost of Goods Sold for the year? (Note: Since all units completed
were sold, the cost of goods transferred out = Cost of Goods Sold.)
2. Gary is recommending that the completion percentage by
adjusted by 10 percentage points in order to assist the team in
making their bonus.

a. Calculate the cost of goods sold if the ending inventory is 20%
complete in regard to conversion costs. Would net income increase
or decrease if this option was chosen over the 30% completion
percentage? How much is the increase?
b. Calculate the cost of goods sold if the ending inventory is 40%
complete in regard to conversion costs. Would net income increase
or decrease if this option was chosen over the 30% completion
percentage? How much is the increase?
c. Based on your calculations, which percentage is Gary suggesting
that Mary use for her ending inventory calculations.
3. Do you think Mary James should go along with the request to
alter estimates of the percentage completion? Why or why not?
*************************************
ACCT 505 Week 3 Case Study II
Springfield Express is a luxury passenger carrier in Texas. All
seats are first class, and the following data are available:
Number of seats per passenger train car

90
Average load factor (percentage of seats filled)
70%
Average full passenger fare
$160
Average variable cost per passenger
$70
Fixed operating cost per month
$3,150,000
What is the break-even point in passengers and revenues per
month? What is the break-even point in number of passenger train

cars per month? If Springfield Express raises its average passenger
fare to $ 190, it is estimated that the average load factor will
decrease to 60 percent. What will be the monthly break-even point
in number of passenger cars? (Refer to original data.) Fuel cost is a
significant variable cost to any railway. If crude oil increases by $
20 per barrel, it is estimated that variable cost per passenger will
rise to $ 90. What will be the new break-even point in passengers
and in number of passenger train cars? Springfield Express has
experienced an increase in variable cost per passenger to $ 85 and
an increase in total fixed cost to $ 3,600,000. The company has
decided to raise the average fare to $ 205. If the tax rate is 30
percent, how many passengers per month are needed to generate an
after-tax profit of $ 750,000? (Use original data). Springfield
Express is considering offering a discounted fare of $ 120, which
the company believes would increase the load factor to 80 percent.
Only the additional seats would be sold at the discounted fare.
Additional monthly advertising cost would be $ 180,000. How
much pre-tax income would the discounted fare provide
Springfield Express if the company has 50 passenger train cars per
day, 30 days per month? Springfield Express has an opportunity to
obtain a new route that would be traveled 20 times per month. The
company believes it can sell seats at $ 175 on the route, but the
load factor would be only 60 percent. Fixed cost would increase by
$ 250,000 per month for additional personnel, additional passenger
train cars, maintenance, and so on. Variable cost per passenger
would remain at $ 70. Should the company obtain the route? How
many passenger train cars must Springfield Express operate to earn
pre-tax income of $ 120,000 per month on this route? If the load
factor could be increased to 75 percent, how many passenger train
cars must be operated to earn pre-tax income of $ 120,000 per

month on this route? What qualitative factors should be considered
by Springfield Express in making its decision about acquiring this
route?
Grading Rubric for Case Study II:
Category
Points
%
Description
Documentation & Formatting
5
11%
Case Study will be completed in Word or Excel and contain
necessary formulas to receive maximum credit

Organization & Cohesiveness
5
11%
Calculations for all parts should be organized and correctly
labeled. In a quality case study, all questions should be addressed
in a clear, concise manner.
Editing
5
11%
Quality work will be free of any spelling, punctuation or
grammatical errors. Sentences and paragraphs ( where appropriate)
will be clear, concise and factually correct
Content

30
67%
A quality project will have all of the required work completed and
will be correct.
Total
45
100%
A quality project will meet or exceed all of the above
requirements.
*************************************
ACCT 505 Week 4 Midterm Exam

1.Question :
(TCO A) Wages paid to an assembly line worker in a factory are a
2.Question :
(TCO A) A cost incurred in the past that is not relevant to any
current decision is classified as a(n)
3.Question :
(TCO A) Depreciation of office buildings and office equipment is
also known as
4.Question :
(TCO A) When the activity level is expected to increase within the
relevant range, what effects would be anticipated with respect to
each of the following?
5.Question :

(TCO F) Which of the following statements is true?
inventory.
6.Question :
(TCO F) A job-order cost system is employed in those situations
where
7.Question :
(TCO F) The FIFO method only provides a major advantage over
the weighted-average method in that

8.Question :
(TCO B) The contribution margin ratio always decreases when the
9.Question :
(TCO B) Which of the following would not affect the break-even
point?
10.Question :
(TCO E) In an income statement prepared using the variable
costing method, variable selling and administrative expenses
would
1.Question :
(TCO A) The following data (in thousands of dollars) have been
just-completed year:
Sales.................................................................................

$910
Purchases of raw materials................................................
$225
Direct labor.......................................................................
$245
Manufacturing overhead....................................................
$265
Administrative expenses....................................................
$150
Selling expenses................................................................

$140
Raw materials inventory, beginning.....................................
$15
Raw materials inventory, ending.........................................
$45
Work-in-process inventory, beginning.................................
$20
Work-in-process inventory, ending.....................................
$55
Finished goods inventory, beginning...................................
$100

Finished goods inventory, ending.......................................
$135
Required: Prepare a Schedule of Cost of Goods Manufactured in
the text box below.
2.Question :
(TCO F) The Illinois Company manufactures a product that goes
through three processing departments. Information relating to
activity in the first department during June is given below.
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.
3.Question :
(TCO B) A tile manufacturer has supplied the following data:

Required:
a. Calculate the company's unit contribution margin.
b. Calculate the company's unit contribution ratio.
c. If the company increases its unit sales volume by 5% without
increasing its fixed expenses, what would the company's net
operating income be?
4.
Question :
(TCO E) Lehne Company, which has only one product, has
provided the following data concerning its most recent month of
operations:
Selling price

$ 125
Units in beginning inventory
600
Units oroduced
3000
Units sold
3500
Units in ending inventory
100
Direct materials

$ 15
Direct labor
$ 50
Variable manufacturing overhead
$ 8
Variable selling and admin
$ 12
Fixed costs:
Fixed manufacturing overhead
$ 75,000

Fixed selling and admin
$ 20,000
The company produces the same number of units every month,
although the sales in units vary from month to month. The
company's variable costs per unit and total fixed costs have been
constant from month to month.
Required:
a. What is the unit product cost for the month under variable
costing?
b. What is the unit product cost for the month under absorption
costing?
c. Prepare an income statement for the month using the variable
costing method.
d. Prepare an income statement for the month using the absorption
costing method.
*************************************
ACCT 505 Week 5 Course Project 1 LBJ Company
(New)

COURSE PROJECT 1 INSTRUCTIONS
You have just been contracted as a budget consultant by LBJ
Company, a distributor of bracelets to various retail outlets across
the country. The company has done very little in the way of
budgeting and at certain times of the year has experienced a
shortage of cash.
You have decided to prepare a cash budget for the upcoming
fourth quarter in order to show management the benefits that can
be gained from proper cash planning. You have worked with
accounting and other areas to gather the information assembled
below.
The company sells many styles of bracelets, but all are sold for the
same $10 price. Actual sales of bracelets for the last three months
and budgeted sales for the next six months follow:

The concentration of sales in the fourth quarter is due to the
Christmas holiday. Sufficient inventory should be on hand at the
end of each month to supply 40% of the bracelets sold in the
following month.
Suppliers are paid $4 for each bracelet. Fifty-percent of a month's
purchases is paid for in the month of purchase; the other 50% is
paid for in the following month. All sales are on credit with no
discounts. The company has found, however, that only 20% of a
month's sales are collected in the month of sale. An additional 70%
is collected in the following month, and the remaining 10% is
collected in the second month following sale. Bad debts have been
negligible.
Monthly operating expenses for the company are given below:
Variable expenses:
Sales commissions 4% of sales
Fixed expenses:
Advertising $220,000

Rent $20,000
Salaries $110,000
Utilities $10,000
Insurance $5,000
Depreciation $18,000
Insurance is paid on an annual basis, in January of each year.
The company plans to purchase $22,000 in new equipment during
October and $50,000 in new equipment during November; both
purchases will be for cash. The company declares dividends of
$20,000 each quarter, payable in the first month of the following
quarter.
Other relevant data is given below:
Cash balance as of September 30 $74,000

Inventory balance as of September 30 $112,000
Merchandise purchases for September $200,000
The company maintains a minimum cash balance of at least
$50,000 at the end of each month. All borrowing is done at the
beginning of a month; any repayments are made at the end of a
month.
The company has an agreement with a bank that allows the
company to borrow the exact amount needed at the beginning of
each month. The interest rate on these loans is 1% per month and
for simplicity we will assume that interest is not compounded. At
the end of the quarter, the company will pay the bank all of the
accrued interest on the loan and as much of the loan as possible
while still retaining at least $50,000 in cash.
Required:
Prepare a cash budget for the three-month period ending December
31. Include the following detailed budgets:

1.
a. A sales budget, by month and in total.
b. A schedule of expected cash collections from sales, by month
and in total.
c. A merchandise purchases budget in units and in dollars. Show
the budget by month and in total.
d. A schedule of expected cash disbursements for merchandise
purchases, by month and in total.
2. A cash budget. Show the budget by month and in total.
Determine any borrowing that would be needed to maintain the
minimum cash balance of $50,000.
*************************************
ACCT 505 Week 6 Case Study Balanced Scorecard Case
(700 words Paper)

ACCT505 – Managerial Accounting
Team Case Study 3 – Week 6
Balanced Scorecard Case
(Course Objective G)
Many companies are using the Balanced Scorecard System to
assist in their performance management. According to Garrison,
Noreen, and Brewer (2015) a balanced scorecard “consists of
integrated set of performance measures that are derived from and
support a company’s strategy” (p. 490). In a Balanced Scorecard
System the company’s strategy is translated into a system of
performance measures that are used to monitor the company’s
performance in meeting its strategic objectives.
As part of a two-member team, your task is to identify and discuss
the key performance measures of a balanced scorecard. Then, find
three companies that are currently using a Balanced Scorecard
System by doing an internet and library database search. Internet

searches as well searches of financial databases, such as Yahoo
Finance, should help you in your efforts. Then discuss in as much
detail as possible the specifics of the balanced scorecard that is
being used by these companies.
Deliverable
Your team should prepare a 700 words Paper, explaining the
specifics of the balanced scorecard system of the three companies
you selected in your research. This presentation should include
your analysis of the advantages and disadvantages of each
company’s Balanced Scorecard System. Be sure to clearly
document the performance measures being used by each of the
three companies.
Your PowerPoint presentation should be narrated using Voice
Thread or similar technology. All team members must participate
in the narration of the PowerPoint presentation.
APA standards are required to be followed for this presentation.
Reference

Garrison, R.H., Noreen, E.C, & Brewer, Brewer, P.C. (2015).
Managerial Accounting (15th ed.). New York, NY: McGraw-Hill.
*************************************
ACCT 505 Week 6 Quiz Segment Reporting and Relevant
Costs for Decisions
Question :
(TCO D) Return on investment (ROI) is equal to the margin
multiplied by
2.Question :
(TCO D) For which of the following decisions are opportunity
costs relevant?
The decision to make or buy a needed part

The desision to keep or drop a product line
(A)
Yes
Yes
(B)
Yes
No
(C)
No
Yes

(D)
No
No
3.Question :
(TCO D) Last year, the House of Orange had sales of $826,650,
net operating income of $81,000, and operating assets of $84,000
at the beginning of the year and $90,000 at the end of the year.
What was the company's turnover, rounded to the nearest tenth?
1.Question :
(TCO D) Data for December concerning Dinnocenzo Corporation's
two major business segments-Fibers and Feedstocks-appear below:
Sales revenues, Fibers
$870,000

Sales revenues, Feedstocks
$820,000
Variable expenses, Fibers
$426,000
Variable expenses, Feedstocks
$344,000
Traceable fixed expenses, Fibers
$148,000
Traceable fixed expenses, Feedstocks
S156,000

Common fixed expenses totaled $314,000 and were allocated as
follows: $129,000 to the Fibers business segment and $185,000 to
the Feedstocks business segment.
Required:
Prepare a segmented income statement in the contribution format
for the company. Omit percentages; show only dollar amounts.
2.Question :
(TCO D) Wryski Corporation had net operating income of
$150,000 and average operating assets of $500,000. The company
requires a return on investment of 19%.
Required:
i. Calculate the company's current return on investment and
residual income.
ii. The company is investigating an investment of $400,000 in a
project that will generate annual net operating income of $78,000.
What is the ROI of the project? What is the residual income of the
project? Should the company invest in this project?

3.Question :
(TCO D) Tjelmeland Corporation is considering dropping product
S85U. Data from the company's accounting system appear below.
Sales
$360,000
Variable Expenses
$158,000
Fixed Manufacturing Expenses
$119,000
Fixed Selling and Administrative Expenses
$94,000

All fixed expenses of the company are fully allocated to products
in the company's accounting system. Further investigation has
revealed that $55,000 of the fixed manufacturing expenses and
$71,000 of the fixed selling and administrative expenses are
avoidable if product S85U is discontinued.
Required:
i. According to the company's accounting system, what is the net
operating income earned by product S85U? Show your work!
ii. What would be the effect on the company's overall net operating
income of dropping product S85U? Should the product be
dropped? Show your work!
4.Question :
(TCO D) Fouch Company makes 30,000 units per year of a part it
uses in the products it manufactures. The unit product cost of this
part is computed as follows.
Direct Materials

$15.70
Direct Labor
$17.50
Variable Manufacturing Overhead
$4.50
Fixed Manufacturing Overhead
$14.60
Unit Product Cost
$52.30

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