ACC 349 Final Exam 2021 Top Grade

I. Which of the following represents the correct order in which inventories are reported on a manufacturer’s balance sheet? A. Work in process, finished goods raw materials B. RAW MATERIALS, WORK IN PROCESS, FINISHED GOODS C. Finished goods, work in process, raw materials D. Work in process, raw materials, finished goods II. In traditional costing systems, overhead is generally applied based on A. machine hours B. DIRECT LABOR C. direct material dollars D. units of production III. An activity that has a direct cause­effect relationship with the resources consumed is a(n) A. overhead rate B. product activity C. COST DRIVER D. cost pool IV. A well­designed activity­based costing system starts with A. computing the activity­based overhead rate B. ANALYZING THE ACTIVITIES PERFORMED TO MANUFACTURE A PRODUCT C. identifying the activity­cost pools D. assigning manufacturing overhead costs for each activity cost pool to products V. Which of the following factors would suggest a switch to activity­based costing? A. OVERHEAD COSTS CONSTITUTE A SIGNIFICANT PORTION OF TOTAL COSTS B. Production managers use data provided by the existing system. C. Product lines similar in volume and manufacturing complexity D. The manufacturing process has been stable VI. All of the following statements are correct EXCEPT that A. THE OBJECTIVE OF INSTALLING ABC IN SERVICE FIRMS IS DIFFERENT THAN IT IS IN A MANUFACTURING FIRM B. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company C. activity­based costing has been widely adopted in service industries D. a larger proportion of overhead costs are company­wide costs in service industries What sometimes makes implementation of activity­based costing difficult in service industries is A. identifying activities, activity cost plus, and cost drivers B. attempting to reduce or eliminate nonvalue­added activities C. the labeling of activities as value­added D. THAT A LARGER PROPORTION OF OVERHEAD COSTS ARE COMPANY­WIDE COSTS VII. One of Astro Company's activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers? A. $60,000 B. $90,000 C. $150,000 D. $75,000 VIII. Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Overhead applied to Mini A using activity­based costing is A. $1,536,000 B. $1,664,000 C. $1,920,000 D. $1,200,000 IX. Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is: Overhead applied to Maxi B using activity­based costing is A. $1,536,000 B. $1,664,000 C. $2,000,000 D. $1,280,000 X. Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should Truckel make or buy the wickets? A. Buy; savings = $10,000 B. Make; savings = $20,000 C. Make; savings = $10,000 D. Buy; savings = $25,000 XI. Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a cost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (for parts). If they are repackaged, at a cost of $15,000, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why? A. Repackage; revenue is $5,000 greater than cost B. Scrap; incremental loss is $9,000 C. Repackage; receive profit of $10,000 D. Scrap; profit is $1,000 greater XII. The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make­or­buy decision A. incremental costs are $1 per unit B. net relevant costs are $1 per unit C. differential costs are $2 per unit D. incremental revenues are $2 per unit XIII. Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley’s contribution margin ratio? A. 37.5% B. 150% C. 266.6% D. 62.5%. 23. Which statement describes a fixed cost? A. The amount per unit varies depending on the activity level B. It varies in total at every level of activity C. It remains the same per unit regardless of activity level D. Its total varies proportionally to the level of activity I. Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase? A. $28,000 B. $18,000 C. $6,000 D. $12,000 II. Variable costing A. is required under GAAP B. is used for external reporting purposes C. is also known as full costing D. treats fixed manufacturing overhead as a period cost III. Which cost is NOT charged to the product under variable costing? A. Direct labor B. Direct materials C. Fixed manufacturing overhead D. Variable manufacturing overhead IV. Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is A. $18 B. $16 C. $27 D. $26 V. Which of the following is NOT considered an advantage of using standard costs? A. Standard costs can be useful in setting prices for finished goods B. Standard costs can reduce clerical costs C. Standard costs can make employees "cost­conscious." D. Standard costs can be used as a means of finding fault with performance VI. The difference between a budget and a standard is that A. a budget expresses management's plans, while a standard reflects what actually happened B. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system C. a budget expresses a total amount while a standard expresses a unit amount D. a budget expresses what costs were, while a standard expresses what costs should be VII. If a company is concerned with the potential negative effects of establishing standards, they should A. offer wage incentives to those meeting standards B. set tight standards in order to motivate people C. not employ any standards D. set loose standards that are easy to fulfill VIII. The per­unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was A. $2,400 favorable B. $5,600 unfavorable C. $3,200 unfavorable D. $3,200 favorable IX. The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour, what was the actual rate of pay for direct labor? A. $15 per direct labor hour B. $18 per direct labor hour C. $19 per direct labor hour D. $17 per direct labor hour X. The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance? A. $2,000 B. $4,000 C. $3,000 D. $1,000 XI. Manufacturing overhead costs are applied to work in process on the basis of A. standard hours allowed B. actual overhead costs incurred C. ratio of actual variable to fixed costs D. actual hours worked XII. The overhead volume variance relates only to A. variable overhead costs B. both variable and fixed overhead costs C. all manufacturing costs D. fixed overhead costs XIII. If the standard hours allowed are less than the standard hours at normal capacity A. the overhead volume variance will be unfavorable B. the overhead controllable variance will be favorable C. variable overhead costs will be overapplied D. variable overhead costs will be underapplied XIV. Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April? A. $12,500 B. $25,000 C. $27,500 D. $13,750 XV. Lewis Hats is planning to sell 600 straw hats. Each hat requires a half pound of straw and a quarter hour of direct labor. Straw costs $0.20 per pound and employees of the company are paid $22 per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and wants to have 50 pounds of straw and 60 hats in ending inventory. How many units should Lewis Hats produce in April? A. 600 B. 580 C. 630 D. 620 XVI. At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004? A. $57,525 B. $63,525 C. $42,350 D. $63,000 XVII. In most cases, prices are set by the A. customers B. largest competitor C. selling company D. competitive market XVIII. A company must price its product to cover its costs and earn a reasonable profit in A. all cases B. its early years C. the long run D. the short run XIX. The cost­plus pricing approach's major advantage is A. it considers customer demand B. that sales volume has no effect on per unit costs C. it is simple to compute D. it can be used to determine a product’s target cost XX. What does cost accounting measure, record, and report A. Future costs B. Product costs C. Managerial accounting decisions D. Manufacturing processes XXI. Why is factory overhead applied to products and jobs by manufacturing companies? A. Because indirect costs are easy to trace to products and jobs B. It provides a more accurate cost of the job or products being processed C. Total actual overhead costs can never be accurately determined for production D. It allows managers more timely determination of product costs during the manufacturing process XXII. In a job order cost accounting system, the Work in Process account is A. a period cost B. a control account C. closed at year end D. an expense XXIII. Managerial accounting A. is governed by generally accepted accounting principles B. places emphasis on special­purpose information C. is concerned with costing products D. pertains to the entity as a whole and is highly aggregated XXIV. A well­designed activity­based costing system starts with A. computing the activity­based overhead rate B. assigning manufacturing overhead costs for each activity cost pool to products C. identifying the activity­cost pools D. analyzing the activities performed to manufacture a product XXV. Which of the following is a value­added activity? A. Machinery repair B. Inventory storage C. Engineering design D. Inspections XXVI. Which of the following is a nonvalue­added activity? A. Machining B. Inspection C. Engineering design D. Packaging XXVII. Each of the following is a limitation of activity­based costing EXCEPT A. It is more complex than traditional costing B. More cost pools are used C. It can be expensive to use D. Some arbitrary allocations continue