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1. Devry ACCT 346 Week 4 Midterm 1
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ACCT 346 Week 4 Midterm 1
1. Question : (TCO 1) Managerial accounting
stresses accounting concepts and procedures that
are relevant to preparing reports for

2. 2. Question : TCO 1) Which of the following
statements regarding fixed costs is true?
3. Question : TCO 1) You own a car and are trying
to decide whether or not to trade it in and buy a
new car. Which of the following costs is an
opportunity cost in this situation?
4. Question :(TCO 1) Shula’s 347 Grill has budgeted
the following costs for a month in which 1,600
steak dinners will be produced and sold: materials,
$4,080; hourly labor (variable), $5,200; rent (fixed),
$1,700; depreciation, $800; and other fixed costs,
$600. Each steak dinner sells for $14.00 each. How
much is the budgeted variable cost per unit?

3. 5. Question : (TCO 1) Which of the following is an
example of a manufacturing overhead cost?
6. Question : (TCO 1) Which of the following is a
period cost?
7. Question : (TCO 1) If the balance in the Finished
Goods Inventory account increased by $30,000
during the period and the cost of goods
manufactured was $220,000, how much is cost of
goods sold?

4. 8. Question : (TCO 2) BCS Company applies
manufacturing overhead based on direct labor
cost. Information concerning manufacturing
overhead and labor for August follows:
Estimated
Actual
9.Question : (TCO 2) During 2011, Madison
Company applied overhead using a job-order
costing system at a rate of $12 per direct labor
hours. Estimated direct labor hours for the year
were 150,000, and estimated overhead for the
year was $1,800,000. Actual direct labor hours for
2011 were 140,000 and actual overhead was
$1,670,000.

5. What is the amount of under or over applied
overhead for the year?
10. Question : (TCO 3) Companies in which of the
following industries would not be likely to use
process costing?
11. Question : (TCO 3) The Blending Department
began the period with 45,000 units. During the
period the department received another 30,000
units from the prior department and completed
60,000 units during the period. The remaining
units were 75% complete. How much are
equivalent units in The Blending Department’s

6. work in process inventory at the end of the
period?
12. Question : (TCO 3) During March, the
varnishing department incurred costs of $90,250
for direct labor. The beginning inventory was 3,500
units and 10,000 units were transferred to the
varnishing department from the sanding
department during June. The direct labor cost in
the beginning inventory was $27,270. The ending
inventory consisted of 2,000 units, which were
25% complete with respect to direct labor. What is
the cost per equivalent unit for direct labor?

7. 13. Question : (TCO 4) Clearance Depot has total
monthly costs of $8,000 when 2,500 units are
produced and $12,400 when 5,000 units are
produced. What is the estimated total monthly
fixed cost?
1. Question : (TCO 4) The margin of safety is the
difference between
2. Question : (TCO 4) Allen Company sells
homework machines for $100 each. Variable costs
per unit are $75 and total fixed costs are $62,000.
Allen is considering the purchase of new
equipment that would increase fixed costs to

8. $84,000, but decrease the variable costs per unit
to $60. At that level Allen Company expects to sell
3,000 units next year. What is Allen’s break-even
point in units if it purchases the new equipment?
3.Question : (TCO 4) Paula Corporation sells a
single product at a price of $275 per unit. Variable
cost per unit is $135 and fixed costs total $356,860.
If sales are expected to be $825,000, what is
Paula’s margin of safety?
4. Question : (TCO 5) In variable costing, when
does fixed manufacturing overhead become an
expense?

9. 5. Question : (TCO 5) Variable costing income is a
function of:
6. Question : (TCO 5) Peak Manufacturing produces
snow blowers. The selling price per snow blower is
$100. Costs involved in production are:
Direct Material per unit
$20

10. Direct Labor per unit
12
Variable manufacturing overhead per unit
10
Fixed manufacturing overhead per year
$148,500
In addition, the company has fixed selling and
administrative costs of $150,000 per year. During

11. the year, Peak produces 45,000 snow blowers and
sells 30,000 snow blowers. How much is cost of
goods sold using full costing?
7.Question : (TCO 6) Costs may be allocated to
8. Question : (TCO 5) An allocation base
9. Question : (TCO 6) The building maintenance
department for Jones Manufacturing Company
budgets annual costs of $4,200,000 based on the

12. expected operating level for the coming year. The
costs are allocated to two production
departments. The following data relate to the
potential allocation bases:
Production Dept. 1
Production Dept. 2
Square footage
15,000
45,000
Direct labor hours

13. 25,000
50,000
If Jones assigns costs to departments based on
square footage, how much total costs will be
allocated to Production Department 1
10. Question : (TCO 7) A company is trying to
decide whether to sell partially completed goods
in their current state or incur additional costs to
finish the goods and sell them as complete units.
Which of the following is not relevant to the
decision?

14. 11. Question : (TCO 7) BigByte Company has 12
obsolete computers that are carried in inventory at
a cost of $13,200. If these computers are upgraded
at a cost of $7,500, they could be sold for $15,300.
Alternatively, the computers could be sold "as is"
for $9,000. What is the net advantage or
disadvantage of reworking the computers?
12. Question : (TCO 7) Olde Store has 12,000 cans
of crab meat just a week past the expiration date.
Each can cost $0.31. The cans could be sold as is
for $0.20 each, or relabeled and sold as gourmet
cat food. The cost of relabeling the cans would be

15. $0.04 per can and the cans would then sell for
$0.29 per can. What should be done with the cans
and why?
1. Question : (TCO 3) Describe a process costing
system, including the types of companies that
commonly use this system. How can process
costing information be used in incremental
analysis?
2. Question : (TCO 7) Each year, ACE Engines
surveys 7,600 former and prospective customers
regarding satisfaction and brand awareness. For
the current year, the company is considering

16. outsourcing the survey to RBG Associates, who
have offered to conduct the survey and summarize
results for $50,000. Robert Ace, the president of
ACE Engines, believes that RBG will do a higher-
quality job than his company has been doing, but
is unwilling to spend more than $12,000 above
current costs. The head of bookkeeping for ACE
has prepared the following summary of costs
related to the survey in the prior year.
Prepare an incremental analysis in good form to
determine the impact on profit of going outside
versus conducting the survey as in the past. Will
ACE accept the RBG offer? Why or why not?
3. Question : (TCO 4) The following monthly data
are available for RedEx, which produces only one

17. product that it sells for $84 each. Its unit variable
costs are $28 and its total fixed expenses are
$64,960. Sales during April totaled 1,600 units.