ACC 346 MIDTERM EXAM,WELL EXPLAINED.

ACC 346 MIDTERM EXAM (TCO 1) Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for (Points : 4) taxing authorities. external users of accounting information. the Securities and Exchange Commission (SEC). 2. (TCO 1) Variable cost per unit ( Points : 4) increases when the number of units produced increases. does not change when the number of units produced increases. decreases when the number of units produced increases. decreases when the number of units produced decreases. 3. (TCO 1) A retailer purchased some trendy clothes that have gone out of style and must be marked down to 40% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation? (Points : 4) the current selling price the original selling price the original purchase price the anticipated profit 4. (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. What is the budgeted total variable cost? (Points : 4) $5,200 $9,280 $10,080 $2,300 5. (TCO 1) Which of the following is an example of a manufacturing overhead cost? (Points : 4) security at the manufacturing plant fabric used to produce shirts cost of shipping product to customers the salary of the president of the company 6. (TCO 1) Which of the following is a period cost? (Points : 4) rent on a factory building depreciation on production equipment raw materials cost commissions paid on each unit sold 7. (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? (Points : 4) $110,000 $190,000 $220,000 $250,000 8. (TCO 2) BCS Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for August follows: Estimated Actual Overhead cost $174,000 $171,000 Direct labor hours 5,800 5,900 Direct labor cost $87,000 $89,975 How much overhead should be applied in total during August? (Points : 4) $177,000 $179,950 $171,100 $168,200 9. (TCO 2) During 2011, Magus Company applied overhead using a job­order costing system at a rate of $12 per direct labor hour. 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 $1,700,000. What is the amount of under or over applied overhead for the year? (Points : 4) $100,000 underapplied $20,000 underapplied $100,00 overapplied $120,000 underapplied 10. (TCO 3) Companies in which of the following industries would not be likely to use process costing? (Points : 4) cereals paints cosmetics auto body shop 11. (TCO 3) The Blending Department began the period with 20,000 units. During the period the department received another 80,000 units from the prior department and at the end of the period 30,000 units remained, which were 40% complete. How many equivalent units are in The Blending Department’s work in process inventory at the end of the period? (Points : 4) 12,000 28,000 40,000 52,000 12. (TCO 3) Ranger Glass Company manufactures glass for French doors. At the start of May, 2,000 units were in­process. During May, 11,000 units were completed and 3,000 units were in process at the end of May. These in­process units were 90% complete with respect to material and 50% complete with respect to conversion costs. Other information is as follows: Work in process, May 1: Direct material $36,000 Conversion costs $45,000 Costs incurred during May: Direct material $186,000 Conversion costs $255,000 Calculate the cost per equivalent unit for conversion costs. (Points : 4) $24.00 $4.09 $21.43 $20.40 13. (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? (Points : 4) $4,400 $6,580 $3,600 $8,800 Page 2 1. (TCO 4) The margin of safety is the difference between (Points : 4) total revenue and total fixed costs. expected level of sales and the break­even point. budgeted fixed costs and actual fixed costs. selling price and variable cost per unit. 2. (TCO 4) Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break­even point? (Points : 4) $1,105,000 $282,880 $1,060,800 $208,476 3. (TCO 4) The president of Jackson Corporation will not receive a bonus next year unless the company’s profits are at least $435,000. Jackson sells a single product at a price of $27 per unit. If variable costs are $12 per unit and fixed costs total $150,000, what amount of sales must Jackson generate in order for the president to receive a bonus? (Points : 4) 48,750 units 39,000 units 29,000 units 21,167 units 4. (TCO 5) In variable costing, when does fixed manufacturing overhead become an expense? (Points : 4) Never In the period when the product is sold In the period when the expense is incurred In the period when other expenses are at the lowest level 5. (TCO 5) Variable costing income is a function of: (Points : 4) Units sold only. Units produced only Both units sold and units produced. Neither units sold nor units. produced 6. (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 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 the year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much fixed manufacturing overhead is in ending inventory under full costing? (Points : 4) $0 $49,500 $148,500 $99,000 7. (TCO 5) The cost objective is the (Points : 4) reason for allocating the cost. calculation based on budgeted amounts. product, service, or department that is to receive the allocation. maximum amount to be allocated to any single department. 8. (TCO 6) The overriding concern in forming a cost pool is to ensure that (Points : 4) there are no variable costs in the cost pool. the total amount in the cost pool is less than the direct costs for the product. only costs that have been budgeted are included in the cost pool. the costs in the pool are homogeneous or similar. 9. (TCO 6) The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the 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 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? (Points : 4) $1,400,000 $1,050,000 $1,575,000 $2,100,000 10. (TCO 7) A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the manager will be fired. The manager's salary, in relation to the decision to keep or drop the sporting goods department, is (Points : 4) avoidable and therefore relevant. not avoidable and therefore relevant. sunk and therefore not relevant. the same for all alternatives and therefore not relevant. 11. (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? (Points : 4) $6,300 advantage $1,200 disadvantage $5,400 disadvantage $3,000 advantage 12. (TCO 7) YXZ Company’s market for the Model 55 has changed significantly, and YXZ has had to drop the price per unit from $275 to $135. There are some units in the work in process inventory that have costs of $160 per unit associated with them. YXZ could sell these units in their current state for $100 each. It will cost YXZ $10 per unit to complete these units so that they can be sold for $135 each. When the incremental revenues and expenses are analyzed, what is the financial impact? (Points : 4) $25 per unit profit if the units are completed $125 per unit if the units are completed $65 per unit loss if the units are completed $150 per unit loss if the units are completed Page 3 1. (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? (Points : 20) 2. (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 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 higher­quality 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.