UTK Accounting 200 Exam 4/ Final Exam Questions and
Answers
Question 1.
Chapter 11 Video 1 Units Produced 2 3 4 5 a.Cost Per Unit of Materials 500 500 500 500
b.Total Labor Cost 3,000 4,500 6,000 7,500 c.Total Utilities Cost 4,500 4,500 4,500 4,500
Based on the behavior shown in the following table, which of the following is a variable
cost? a.) Cost per unite b.) Total Labor Cost c.) Total Utilities Cost d.) Both Material and
Labor costs are variable costs
Correct Answer: D.) both materials and labor costs are variable costs
Explanation: When volume increases, variable cost per unit remains constant.
Since the per unit cost of materials remains constant regardless of the number
of units produced, it is a variable cost. Also, when volume increases, total
variable cost increases. Since the total labor cost increases in proportion to
increases in the number of units produced, it is a variable cost.
Question 2.
Chapter 14 Video 2 Cash receipts for January are expected to total $171,000. Cash
disbursements for January are expected to be $158,000. The company's minimum desired
cash balance is $10,000. It started the period with $35,000. What is the expected cash
balance at the end of January?
Correct Answer: $48,000 Explanation: Beg. Cash Balance $35,000 Cash Receipts
171,000 Cash Available 206,000 Cash Payments (158,000) Ending Cash Balance
$48,000
Question 3.
Chapter 10 Video 1 Which of the following statements is true? a.) Managerial accounting
standards are established by the federal government. b.) Managerial accounting data are
prepared for external users. c.) Managerial accounting reports are less regulated than
financial accounting reports. d.) Managerial accounting is characterized by its objectivity,
reliability, consistency and historical nature.
Correct Answer: c.) Managerial accounting reports are less regulated than
financial accounting reports. Explanation: Managerial accounting focuses on
preparing information for internal users. The types and quality of information
are dictated by the management of the reporting entity and are not subject to
regulatory requirements. Therefore, they are less regulated,.
Question 4.
Chapter 11 Video 1 Which of the following statements is true? a.) A mixed cost structure
(part fixed and part variable) has the least risk of volatile changes in net income. b.) The
risk of volatile changes in net income is not affected by a company's cost structure (fixed
or variable). c.) A fixed cost structure has more risk of volatile changes in net income than
a company with a variable cost structure. d.) A fixed cost structure has less risk of volatile
changes in net income than a company with a variable cost structure.
Correct Answer: c.) A fixed cost structure has more risk of volatile changes in
net income than a company with a variable cost structure. Explanation: Fixed
cost causes operating leverage. A cost structure that is strictly fixed generates
the highest level of operating leverage and highest risk of income volatility. A
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, cost structure that is strictly variable has no operating leverage. Leverage in a
mixed cost structure depends on the relative portion of fixed versus variable
components. Those with a greater proportion of fixed cost will have a higher
level of risk of income volatility. Those with a greater portion of variable cost
will have less risk of income volatility.
Question 5.
Chapter 11 Video 1 Find Operating Leverage: Income Statement Sales Revenue (250 @
$600 per unit) $150,000 Cost of Goods Sold: Variable (250 @ $300 per unit) (75,000) Fixed
(8,000) Gross Margin 67,000 Sales Commissions (250 @ $20) (5,000) Depreciation (1,000)
Net Income $61,000
Correct Answer: Revenue - Variable Cost = Contribution Margin $150,000 −
$75,000 − $5,000 = $70,000 Magnitude of Operating Leverage: Contribution
Margin ÷ Net Income $70,000 ÷ $61,000 = 1.15 times.
Question 6.
Chapter 11 Video 1 Green Manufacturing Company produces a product that has a variable
cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is
$36. The contribution margin per unit is:
Correct Answer: Contribution Margin = Sales Price - Variable cost = $36 - $30 =
$6.
Question 7.
Chapter 14 Video 2 Overhead expenses are budgeted at $2,000 per month. Included in the
$2,000 are $500 of monthly depreciation expense and $200 of allocated expenses related
to the insurance premium that is paid in September. What is the cash outflow for overhead
for the month of May?
Correct Answer: $1,300 Explanation: Total Overhead Expense $2,000 Less:
Depreciation (500) Noncash expense Less: Insurance (200) Noncash expense
Cash Outflow $1,300
Question 8.
Chapter 11 What is a Variable Cost?
Correct Answer: A variable cost is a corporate expense that changes in
proportion to production output. Variable costs increase or decrease depending
on a company's production volume; they rise as production increases and fall as
production decreases. Examples of variable costs include the costs of raw
materials and packaging, labor, and commissions.
Question 9.
Chapter 10 Video 2 Which of the following is not a cost associated with holding inventory?
a.) The cost of warehouse space. b.) The cost of theft c.) The cost of customizing products.
d.) The cost of obsolescence.
Correct Answer: c.) The cost of customizing products. Explanation: Customizing
products normally suggests that a company is making the inventory to meet the
specifications of a buyer who is ready to take delivery of the product(s)
immediately upon its completion. Therefore normally there are not finished
goods inventory costs associated with product customization.
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Answers
Question 1.
Chapter 11 Video 1 Units Produced 2 3 4 5 a.Cost Per Unit of Materials 500 500 500 500
b.Total Labor Cost 3,000 4,500 6,000 7,500 c.Total Utilities Cost 4,500 4,500 4,500 4,500
Based on the behavior shown in the following table, which of the following is a variable
cost? a.) Cost per unite b.) Total Labor Cost c.) Total Utilities Cost d.) Both Material and
Labor costs are variable costs
Correct Answer: D.) both materials and labor costs are variable costs
Explanation: When volume increases, variable cost per unit remains constant.
Since the per unit cost of materials remains constant regardless of the number
of units produced, it is a variable cost. Also, when volume increases, total
variable cost increases. Since the total labor cost increases in proportion to
increases in the number of units produced, it is a variable cost.
Question 2.
Chapter 14 Video 2 Cash receipts for January are expected to total $171,000. Cash
disbursements for January are expected to be $158,000. The company's minimum desired
cash balance is $10,000. It started the period with $35,000. What is the expected cash
balance at the end of January?
Correct Answer: $48,000 Explanation: Beg. Cash Balance $35,000 Cash Receipts
171,000 Cash Available 206,000 Cash Payments (158,000) Ending Cash Balance
$48,000
Question 3.
Chapter 10 Video 1 Which of the following statements is true? a.) Managerial accounting
standards are established by the federal government. b.) Managerial accounting data are
prepared for external users. c.) Managerial accounting reports are less regulated than
financial accounting reports. d.) Managerial accounting is characterized by its objectivity,
reliability, consistency and historical nature.
Correct Answer: c.) Managerial accounting reports are less regulated than
financial accounting reports. Explanation: Managerial accounting focuses on
preparing information for internal users. The types and quality of information
are dictated by the management of the reporting entity and are not subject to
regulatory requirements. Therefore, they are less regulated,.
Question 4.
Chapter 11 Video 1 Which of the following statements is true? a.) A mixed cost structure
(part fixed and part variable) has the least risk of volatile changes in net income. b.) The
risk of volatile changes in net income is not affected by a company's cost structure (fixed
or variable). c.) A fixed cost structure has more risk of volatile changes in net income than
a company with a variable cost structure. d.) A fixed cost structure has less risk of volatile
changes in net income than a company with a variable cost structure.
Correct Answer: c.) A fixed cost structure has more risk of volatile changes in
net income than a company with a variable cost structure. Explanation: Fixed
cost causes operating leverage. A cost structure that is strictly fixed generates
the highest level of operating leverage and highest risk of income volatility. A
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, cost structure that is strictly variable has no operating leverage. Leverage in a
mixed cost structure depends on the relative portion of fixed versus variable
components. Those with a greater proportion of fixed cost will have a higher
level of risk of income volatility. Those with a greater portion of variable cost
will have less risk of income volatility.
Question 5.
Chapter 11 Video 1 Find Operating Leverage: Income Statement Sales Revenue (250 @
$600 per unit) $150,000 Cost of Goods Sold: Variable (250 @ $300 per unit) (75,000) Fixed
(8,000) Gross Margin 67,000 Sales Commissions (250 @ $20) (5,000) Depreciation (1,000)
Net Income $61,000
Correct Answer: Revenue - Variable Cost = Contribution Margin $150,000 −
$75,000 − $5,000 = $70,000 Magnitude of Operating Leverage: Contribution
Margin ÷ Net Income $70,000 ÷ $61,000 = 1.15 times.
Question 6.
Chapter 11 Video 1 Green Manufacturing Company produces a product that has a variable
cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is
$36. The contribution margin per unit is:
Correct Answer: Contribution Margin = Sales Price - Variable cost = $36 - $30 =
$6.
Question 7.
Chapter 14 Video 2 Overhead expenses are budgeted at $2,000 per month. Included in the
$2,000 are $500 of monthly depreciation expense and $200 of allocated expenses related
to the insurance premium that is paid in September. What is the cash outflow for overhead
for the month of May?
Correct Answer: $1,300 Explanation: Total Overhead Expense $2,000 Less:
Depreciation (500) Noncash expense Less: Insurance (200) Noncash expense
Cash Outflow $1,300
Question 8.
Chapter 11 What is a Variable Cost?
Correct Answer: A variable cost is a corporate expense that changes in
proportion to production output. Variable costs increase or decrease depending
on a company's production volume; they rise as production increases and fall as
production decreases. Examples of variable costs include the costs of raw
materials and packaging, labor, and commissions.
Question 9.
Chapter 10 Video 2 Which of the following is not a cost associated with holding inventory?
a.) The cost of warehouse space. b.) The cost of theft c.) The cost of customizing products.
d.) The cost of obsolescence.
Correct Answer: c.) The cost of customizing products. Explanation: Customizing
products normally suggests that a company is making the inventory to meet the
specifications of a buyer who is ready to take delivery of the product(s)
immediately upon its completion. Therefore normally there are not finished
goods inventory costs associated with product customization.
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