GSB 610 - Accounting
Professor Fanney
Final Exam
1) A company prepared a master budget assuming sales of 10,000 units, but
actual sales were 8,000 units. When evaluating the production manager,
which type of variance analysis provides a fairer assessment, and why?
Multiple Choice
Planning-budget variances, because they ignore changes in activity levels.
Flexible-budget variances, because they measure total profits.
Planning-budget variances, because they compare actual results to the
original plan.
Flexible-budget variances, because they adjust expected costs to the
actual level of activity.
2) MegaFlex Industries produces two products. The products' identified costs are as
follows:
Product A Product B
Direct materials $25,000 $20,000
Direct labor 11,000 29,000
The company's overhead costs of $59,000 are allocated based on labor cost. Assume 9,000
units of product A and 10,000 units of Product B are produced. What amount of production
costs would be assigned to Product A?
Note: Do not round intermediate calculations.
Multiple Choice
$49,000
$108,000
$52,225
Correct
,
None of these answers are correct.
3) The Rod Squad Company manufactures and sells two lines of fishing rods.
During the most recent accounting period, the Pro line and the Novice line sold
15,400 and 2,400 units, respectively. The company's most recent financial
statements are shown below:
Pro Novice
Sales $924,000 $288,000
Less cost of goods sold:
Unit-level production cost 616,000 162,000
Depreciation, production equipment 131,000 60,000
Gross margin $177,000 $66,000
Less operating expenses:
Unit-level selling and administrative costs 41,000 78,000
Corporate-level facility expenses (fixed) 36,960 36,960
Net income (loss) $99,040 $(48,960)
Based on this information, the company should:
Multiple Choice
keep the Novice line because it contributes $48,000 to total profitability.
Correct
keep the Novice line because it contributes $66,000 to total profitability.
eliminate the Novice line because it is operating at a loss.
It is impossible to determine with the given information.
4) Cheugy Chic Company declared and paid a cash dividend. Which of the following
choices accurately reflects how this event would affect the company's financial
statements?
, Balance Sheet Income Statement
Stockhol
ders’ Revenu Expense Net Statement of Cash
Assets = Liabilities + Equity es − s = Income Flows
A. NA = + + − NA − + = − NA
B. − = NA + − NA − NA = NA −FA
C. − = NA + − NA − NA = NA −OA
D. NA = + + − NA − NA = NA NA
Multiple Choice
Choice A
Choice B
Correct
Choice C
Choice D
5) Select the incorrect statement regarding costs and expenses.
Multiple Choice
Expenses are incurred when assets are used to generate revenue.
Some costs are initially recorded as expenses while others are initially
recorded as assets.
Manufacturing-related costs are initially recorded as expenses.
Correct
Non-manufacturing costs should be expensed in the period in which they are
incurred
6) Which of the following is (are) source(s) of assets to a business?
Multiple Choice
Creditors
Investors
Operations
All the answers represent sources of assets.
Professor Fanney
Final Exam
1) A company prepared a master budget assuming sales of 10,000 units, but
actual sales were 8,000 units. When evaluating the production manager,
which type of variance analysis provides a fairer assessment, and why?
Multiple Choice
Planning-budget variances, because they ignore changes in activity levels.
Flexible-budget variances, because they measure total profits.
Planning-budget variances, because they compare actual results to the
original plan.
Flexible-budget variances, because they adjust expected costs to the
actual level of activity.
2) MegaFlex Industries produces two products. The products' identified costs are as
follows:
Product A Product B
Direct materials $25,000 $20,000
Direct labor 11,000 29,000
The company's overhead costs of $59,000 are allocated based on labor cost. Assume 9,000
units of product A and 10,000 units of Product B are produced. What amount of production
costs would be assigned to Product A?
Note: Do not round intermediate calculations.
Multiple Choice
$49,000
$108,000
$52,225
Correct
,
None of these answers are correct.
3) The Rod Squad Company manufactures and sells two lines of fishing rods.
During the most recent accounting period, the Pro line and the Novice line sold
15,400 and 2,400 units, respectively. The company's most recent financial
statements are shown below:
Pro Novice
Sales $924,000 $288,000
Less cost of goods sold:
Unit-level production cost 616,000 162,000
Depreciation, production equipment 131,000 60,000
Gross margin $177,000 $66,000
Less operating expenses:
Unit-level selling and administrative costs 41,000 78,000
Corporate-level facility expenses (fixed) 36,960 36,960
Net income (loss) $99,040 $(48,960)
Based on this information, the company should:
Multiple Choice
keep the Novice line because it contributes $48,000 to total profitability.
Correct
keep the Novice line because it contributes $66,000 to total profitability.
eliminate the Novice line because it is operating at a loss.
It is impossible to determine with the given information.
4) Cheugy Chic Company declared and paid a cash dividend. Which of the following
choices accurately reflects how this event would affect the company's financial
statements?
, Balance Sheet Income Statement
Stockhol
ders’ Revenu Expense Net Statement of Cash
Assets = Liabilities + Equity es − s = Income Flows
A. NA = + + − NA − + = − NA
B. − = NA + − NA − NA = NA −FA
C. − = NA + − NA − NA = NA −OA
D. NA = + + − NA − NA = NA NA
Multiple Choice
Choice A
Choice B
Correct
Choice C
Choice D
5) Select the incorrect statement regarding costs and expenses.
Multiple Choice
Expenses are incurred when assets are used to generate revenue.
Some costs are initially recorded as expenses while others are initially
recorded as assets.
Manufacturing-related costs are initially recorded as expenses.
Correct
Non-manufacturing costs should be expensed in the period in which they are
incurred
6) Which of the following is (are) source(s) of assets to a business?
Multiple Choice
Creditors
Investors
Operations
All the answers represent sources of assets.
