ACCT 526 FINAL EXAM STUDY GUIDE
2026/2027 ACCURATE QUESTIONS WITH
CORRECT DETAILED SOLUTIONS ||
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<NEWEST VERSION>
1. Overhead costs are assigned to production using an overhead application
rate, whereas no such application rate is used to assign the costs of direct
materials and direct labor to production. The reason for this difference in
procedures is that: - ANSWER ✔ overhead is an indirect cost which cannot
be traced easily and directly
to specific units of product
2. An advantage of using regression analysis over the high-low and
scattergraph methods is that - ANSWER ✔ regression analysis is a more
precise approach than the high-low or scattergraph methods
3. An example of a discretionary fixed cost is: - ANSWER ✔ management
training
4. Tucker, Inc collected the following production data for the past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost equation? -
ANSWER ✔ Total cost = $4,400 + $11/unit
5. Roddy Company has the following cost formulas for overhead:
Cost
Indirect materials Maintenance Machine setup Utilities Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour $0.30/machine
hour$200 + $0.10/machine hour $800
, Based on these cost formulas, the total overhead cost at 600 machine hours
is expected to be: - ANSWER ✔ $5,340
6. Seagram Corporation makes all sales on account. The June 30th balance
sheet balance in its accounts receivable is $200,000, of which $120,000
pertain to sales that were made during June. Budgeted sales for July are
$1,000,000. Seagram collets 70% of sales in the month of sale; 20% in the
following month; and the final 10% in the second month after the sale.
What are Seagram's budget collections for July? - ANSWER ✔ $732,000
7. A production budget includes separate schedules for - ANSWER ✔
materials, labor and overhead
8. Which one of the following items would never appear on a cash budget? -
ANSWER ✔ depreciation expense
9. The cash budget must be prepared before you can complete the: - ANSWER
✔ budgeted balance sheet
10.For the next year, Miller Company has budgeted sales of 20,000 units, target
ending finished goods inventory of 1,000 units, and a beginning finished
goods inventory of 600 units. All other inventories are zero. How many of
units should be produced? - ANSWER ✔ 20,400 units
11.The segment margin represents the business segment's - ANSWER ✔
income
12.The advantages of a decentralized management style include all of the
following except for - ANSWER ✔ decision made by manager who is less
experienced
13.Overhead costs are assigned to production using an overhead application
rate, whereas no such application rate is used to assign the costs of direct
materials and direct labor to production. The reason for this difference in
procedures is that: - ANSWER ✔ overhead is an indirect cost which cannot
be traced easily and directly
to specific units of product
,14.An advantage of using regression analysis over the high-low and
scattergraph methods is that - ANSWER ✔ regression analysis is a more
precise approach than the high-low or scattergraph methods
15.An example of a discretionary fixed cost is: - ANSWER ✔ management
training
16.Tucker, Inc collected the following production data for the past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost equation? -
ANSWER ✔ Total cost = $4,400 + $11/unit
17.Roddy Company has the following cost formulas for overhead:
Cost
Indirect materials Maintenance Machine setup Utilities Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour $0.30/machine
hour$200 + $0.10/machine hour $800
Based on these cost formulas, the total overhead cost at 600 machine hours
is expected to be: - ANSWER ✔ $5,340
18.When comparing a traditional income statement to a contribution margin
income statement: - ANSWER ✔ net income will always be identical on
both
19.Kendra Corporation sells 100,000 wrenches for $12 a unit. Fixed costs are
$300,000, and net income is $200,000. What should be reported as variable
expenses in the CVP income statement? - ANSWER ✔ $700,000
20.Snyder Corporation, which produces and sells a single product, recently
experienced an increase in fixed costs relating to depreciation on new
equipment. If variable costs and sales price remain unchanged, what will
happen to contribution margin and the break-even point? - ANSWER ✔
contribution margin will be unchanged and the break-even point will
increase
21.The following is last month's contribution format (CVP) income statement:
, Sales (10,000 units) Less: variable expenses Contribution margin Less: fixed
expenses Net income
$1,200,000 800,000 400,000 240,000 $160,000
What is the company's break-even sales in units? - ANSWER ✔ 6,000
units
22.A 45% contribution margin ratio means that: - ANSWER ✔ 45% of the
company's revenue is available to cover fixed costs and to contribute toward
operating income.
23.Suppose Motel 6 has annual fixed costs applicable to its rooms of $1.2
million for its 300-room motel, average daily room rents of $50, and average
variable costs of $10 for each room rented. It operates 365 days per year.
How much net income on rooms will be generated if the motel is completely
full throughout the entire year? - ANSWER ✔ $3,180,000
24.Brant Company manufactures a part for its production cycle. The costs per
unit for 5,000 units of this part are as follows:
Direct materials $3 Direct labor 5 Variable factory overhead 4 Fixed factory
overhead 2 Total costs $14
The fixed factory overhead costs are unavoidable.
Assuming no other use of their facilities, the highest price that Brant
Company should be willing to pay for the part is - ANSWER ✔ $12
25.In a decision to retain or replace equipment, the book value of the old
equipment is a: - ANSWER ✔ sunk cost
26.A segment of Duke Inc has the following data:
Sales $200,000
Variable expenses $140,000
Fixed expenses $100,000
If this segment is eliminated, what will be the effect on the remaining
company? Assume that 50% of the fixed expenses will be eliminated and the
rest will be allocated to the segments of the remaining company. - ANSWER
✔ $10,000 decrease
27.Which of the following are risks of outsourcing the production of a part?
2026/2027 ACCURATE QUESTIONS WITH
CORRECT DETAILED SOLUTIONS ||
100% GUARANTEED PASS
<NEWEST VERSION>
1. Overhead costs are assigned to production using an overhead application
rate, whereas no such application rate is used to assign the costs of direct
materials and direct labor to production. The reason for this difference in
procedures is that: - ANSWER ✔ overhead is an indirect cost which cannot
be traced easily and directly
to specific units of product
2. An advantage of using regression analysis over the high-low and
scattergraph methods is that - ANSWER ✔ regression analysis is a more
precise approach than the high-low or scattergraph methods
3. An example of a discretionary fixed cost is: - ANSWER ✔ management
training
4. Tucker, Inc collected the following production data for the past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost equation? -
ANSWER ✔ Total cost = $4,400 + $11/unit
5. Roddy Company has the following cost formulas for overhead:
Cost
Indirect materials Maintenance Machine setup Utilities Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour $0.30/machine
hour$200 + $0.10/machine hour $800
, Based on these cost formulas, the total overhead cost at 600 machine hours
is expected to be: - ANSWER ✔ $5,340
6. Seagram Corporation makes all sales on account. The June 30th balance
sheet balance in its accounts receivable is $200,000, of which $120,000
pertain to sales that were made during June. Budgeted sales for July are
$1,000,000. Seagram collets 70% of sales in the month of sale; 20% in the
following month; and the final 10% in the second month after the sale.
What are Seagram's budget collections for July? - ANSWER ✔ $732,000
7. A production budget includes separate schedules for - ANSWER ✔
materials, labor and overhead
8. Which one of the following items would never appear on a cash budget? -
ANSWER ✔ depreciation expense
9. The cash budget must be prepared before you can complete the: - ANSWER
✔ budgeted balance sheet
10.For the next year, Miller Company has budgeted sales of 20,000 units, target
ending finished goods inventory of 1,000 units, and a beginning finished
goods inventory of 600 units. All other inventories are zero. How many of
units should be produced? - ANSWER ✔ 20,400 units
11.The segment margin represents the business segment's - ANSWER ✔
income
12.The advantages of a decentralized management style include all of the
following except for - ANSWER ✔ decision made by manager who is less
experienced
13.Overhead costs are assigned to production using an overhead application
rate, whereas no such application rate is used to assign the costs of direct
materials and direct labor to production. The reason for this difference in
procedures is that: - ANSWER ✔ overhead is an indirect cost which cannot
be traced easily and directly
to specific units of product
,14.An advantage of using regression analysis over the high-low and
scattergraph methods is that - ANSWER ✔ regression analysis is a more
precise approach than the high-low or scattergraph methods
15.An example of a discretionary fixed cost is: - ANSWER ✔ management
training
16.Tucker, Inc collected the following production data for the past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost equation? -
ANSWER ✔ Total cost = $4,400 + $11/unit
17.Roddy Company has the following cost formulas for overhead:
Cost
Indirect materials Maintenance Machine setup Utilities Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour $0.30/machine
hour$200 + $0.10/machine hour $800
Based on these cost formulas, the total overhead cost at 600 machine hours
is expected to be: - ANSWER ✔ $5,340
18.When comparing a traditional income statement to a contribution margin
income statement: - ANSWER ✔ net income will always be identical on
both
19.Kendra Corporation sells 100,000 wrenches for $12 a unit. Fixed costs are
$300,000, and net income is $200,000. What should be reported as variable
expenses in the CVP income statement? - ANSWER ✔ $700,000
20.Snyder Corporation, which produces and sells a single product, recently
experienced an increase in fixed costs relating to depreciation on new
equipment. If variable costs and sales price remain unchanged, what will
happen to contribution margin and the break-even point? - ANSWER ✔
contribution margin will be unchanged and the break-even point will
increase
21.The following is last month's contribution format (CVP) income statement:
, Sales (10,000 units) Less: variable expenses Contribution margin Less: fixed
expenses Net income
$1,200,000 800,000 400,000 240,000 $160,000
What is the company's break-even sales in units? - ANSWER ✔ 6,000
units
22.A 45% contribution margin ratio means that: - ANSWER ✔ 45% of the
company's revenue is available to cover fixed costs and to contribute toward
operating income.
23.Suppose Motel 6 has annual fixed costs applicable to its rooms of $1.2
million for its 300-room motel, average daily room rents of $50, and average
variable costs of $10 for each room rented. It operates 365 days per year.
How much net income on rooms will be generated if the motel is completely
full throughout the entire year? - ANSWER ✔ $3,180,000
24.Brant Company manufactures a part for its production cycle. The costs per
unit for 5,000 units of this part are as follows:
Direct materials $3 Direct labor 5 Variable factory overhead 4 Fixed factory
overhead 2 Total costs $14
The fixed factory overhead costs are unavoidable.
Assuming no other use of their facilities, the highest price that Brant
Company should be willing to pay for the part is - ANSWER ✔ $12
25.In a decision to retain or replace equipment, the book value of the old
equipment is a: - ANSWER ✔ sunk cost
26.A segment of Duke Inc has the following data:
Sales $200,000
Variable expenses $140,000
Fixed expenses $100,000
If this segment is eliminated, what will be the effect on the remaining
company? Assume that 50% of the fixed expenses will be eliminated and the
rest will be allocated to the segments of the remaining company. - ANSWER
✔ $10,000 decrease
27.Which of the following are risks of outsourcing the production of a part?
