ACCT 526 FINAL EXAM ACTUAL QUESTIONS AND
SOLUTIONS RATED A+
✔✔In a decision to retain or replace equipment, the book value of the old equipment is
a: - ✔✔sunk cost
✔✔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. - ✔✔$10,000 decrease
✔✔Which of the following are risks of outsourcing the production of a part?
a. unscheduled price increases
b. unreliable delivery
c. all of these are risks of outsourcing
d. unpredictable quality - ✔✔c. all of these are risks of outsourcing
✔✔If a plant is operating at full capacity and receives a one-time opportunity to accept
an order at a special price below its usual price, then - ✔✔the order will likely be
rejected
✔✔A job order cost system traces direct materials cost to a particular job by means of: -
✔✔materials requisitions
✔✔In a manufacturing company, the Cost of Goods Manufactured (COGM) is equal to:
- ✔✔the beginning inventory of work in process, plus total manufacturing costs, less the
ending inventory of work in process
✔✔Harrell Company uses a predetermined overhead rate based on direct labor-hours
to apply manufacturing overhead to jobs. At the beginning of the year the company
estimated its total manufacturing overhead would be $150,000 and direct labor hours
would be 10,000. The actual figures for the year were $186,000 for manufacturing
overhead and 12,000 direct labor hours. The cost records for the year will show: -
✔✔under applied overhead of $6,000
✔✔The following information is available for completed Job No. 402:
, Direct materials - $80,000; direct labor - $120,000; manufacturing overhead applied -
$60,000; units produced - 5,000 units; units sold, 4,000 units. The cost of the finished
goods on hand from this job is - ✔✔$52,000
✔✔The flow of costs in job order costing: - ✔✔parallels the physical flow of materials as
they are converted into finished goods
✔✔In a job order cost system, the amount of overhead cost that has been applied to a
job that remains incomplete at the end of a period: - ✔✔is part of the ending balance of
the Work in Process inventory account
✔✔Archer Company uses a job order cost system. During the month of September, the
company worked on Job B. The information contained on the cost sheet is as follows:
Job B
Beg Balance $1,500
Direct Material $800
Direct Labor $2,300
The company applied overhead at 120% of direct labor cost. During September Job B
was completed and sold in October. If Job B sold for $8,000, what was the amount of
gross profit for this job? (Ignore any consideration of over/under applied overhead) -
✔✔$640
✔✔At the end of the accounting period, applied overhead was larger than actual
overhead by a material amount. The over applied overhead should be: - ✔✔apportioned
among Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold
✔✔At December 31, 2017, Stand Still Industries had $2,500 of raw material inventory.
At the beginning of 2017, there was $2,000 of materials on hand. During the year, the
company purchased $305,000 of materials; however, it paid for only $292,500. How
much inventory was used of jobs during 2017? - ✔✔$304,500
✔✔In the year-end financial statements, the Manufacturing Overhead account should
have: - ✔✔a zero balance, since all overhead costs incurred during the year should be
assigned to the production of the year
✔✔ABC Company budgeted the following transactions for April:
Sales (75% collected in month of sale) $200,000
Cash operating expense $105,000
Cash purchases of capital investments $75,000
Cash payment of debt $20,000
Depreciation on operating assets $15,000
SOLUTIONS RATED A+
✔✔In a decision to retain or replace equipment, the book value of the old equipment is
a: - ✔✔sunk cost
✔✔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. - ✔✔$10,000 decrease
✔✔Which of the following are risks of outsourcing the production of a part?
a. unscheduled price increases
b. unreliable delivery
c. all of these are risks of outsourcing
d. unpredictable quality - ✔✔c. all of these are risks of outsourcing
✔✔If a plant is operating at full capacity and receives a one-time opportunity to accept
an order at a special price below its usual price, then - ✔✔the order will likely be
rejected
✔✔A job order cost system traces direct materials cost to a particular job by means of: -
✔✔materials requisitions
✔✔In a manufacturing company, the Cost of Goods Manufactured (COGM) is equal to:
- ✔✔the beginning inventory of work in process, plus total manufacturing costs, less the
ending inventory of work in process
✔✔Harrell Company uses a predetermined overhead rate based on direct labor-hours
to apply manufacturing overhead to jobs. At the beginning of the year the company
estimated its total manufacturing overhead would be $150,000 and direct labor hours
would be 10,000. The actual figures for the year were $186,000 for manufacturing
overhead and 12,000 direct labor hours. The cost records for the year will show: -
✔✔under applied overhead of $6,000
✔✔The following information is available for completed Job No. 402:
, Direct materials - $80,000; direct labor - $120,000; manufacturing overhead applied -
$60,000; units produced - 5,000 units; units sold, 4,000 units. The cost of the finished
goods on hand from this job is - ✔✔$52,000
✔✔The flow of costs in job order costing: - ✔✔parallels the physical flow of materials as
they are converted into finished goods
✔✔In a job order cost system, the amount of overhead cost that has been applied to a
job that remains incomplete at the end of a period: - ✔✔is part of the ending balance of
the Work in Process inventory account
✔✔Archer Company uses a job order cost system. During the month of September, the
company worked on Job B. The information contained on the cost sheet is as follows:
Job B
Beg Balance $1,500
Direct Material $800
Direct Labor $2,300
The company applied overhead at 120% of direct labor cost. During September Job B
was completed and sold in October. If Job B sold for $8,000, what was the amount of
gross profit for this job? (Ignore any consideration of over/under applied overhead) -
✔✔$640
✔✔At the end of the accounting period, applied overhead was larger than actual
overhead by a material amount. The over applied overhead should be: - ✔✔apportioned
among Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold
✔✔At December 31, 2017, Stand Still Industries had $2,500 of raw material inventory.
At the beginning of 2017, there was $2,000 of materials on hand. During the year, the
company purchased $305,000 of materials; however, it paid for only $292,500. How
much inventory was used of jobs during 2017? - ✔✔$304,500
✔✔In the year-end financial statements, the Manufacturing Overhead account should
have: - ✔✔a zero balance, since all overhead costs incurred during the year should be
assigned to the production of the year
✔✔ABC Company budgeted the following transactions for April:
Sales (75% collected in month of sale) $200,000
Cash operating expense $105,000
Cash purchases of capital investments $75,000
Cash payment of debt $20,000
Depreciation on operating assets $15,000
