ACCT 526 Final Exam

Question 1 Correct Mark 3.00 out of 3.00 Overhead costs are assigned to production using an overhead application rate, whereas no such application rate is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that: Select one: a. overhead is an indirect cost which cannot be traced easily and directly to specific units of product b. independent of both the number and the type of products manufactured and also independent of the amount of overhead costs incurred c. traceable directly to the products manufactured but independent of the amount of overhead costs incurred d. independent of the type and number of units manufactured but a casual factor in the amount of overhead cost incurred Your answer is correct. The correct answer is: overhead is an indirect cost which cannot be traced easily and directly to specific units of product Comprehensive Final Exam Page 2 of 27 Question 2 Correct Mark 3.00 out of 3.00 Question 3 Correct Mark 3.00 out of 3.00 An advantage of using regression analysis over the high-low and scattergraph methods is that Select one: a. neither: regression analysis is less costly to implement than high-low or scattergraph methods or is a more precise approach than the high-low or scattergraph methods b. regression analysis is less costly to implement than high-low or scattergraph methods c. regression analysis is a more precise approach than the high-low or scattergraph methods d. both: regression analysis is less costly to implement than high-low or scattergraph methods and is a more precise approach than the high-low or scattergraph methods Your answer is correct. The correct answer is: regression analysis is a more precise approach than the high-low or scattergraph methods An example of a discretionary fixed cost is: Select one: a. depreciation of buildings and equipment b. insurance c. management training d. taxes on real estate Your answer is correct. The correct answer is: management training Comprehensive Final Exam Page 3 of 27 Question 4 Correct Mark 3.00 out of 3.00 Tucker, Inc collected the following production data for the past month: Units Produced Total Cost 1,600 $22,000 1,300 19,000 1,500 22,500 1,100 16,500 If the high-low method is used, what is the monthly total cost equation? Select one: a. Total cost = $5,500 + $10/unit b. Total cost = $0 + $15/unit c. Total cost = $4,400 + $11/unit d. Total cost = $3,300 + $12/unit Your answer is correct. The correct answer is: Total cost = $4,400 + $11/unit Comprehensive Final Exam Page 4 of 27 Question 5 Correct Mark 3.00 out of 3.00 Roddy Company has the following cost formulas for overhead: Cost Cost Formula Indirect materials $2,000 + $0.40/machine hour Maintenance $1,500 + $0.60/machine hour Machine setup $0.30/machine hour Utilities $200 + $0.10/machine hour Depreciation $800 Based on these cost formulas, the total overhead cost at 600 machine hours is expected to be: Select one: a. $5,200 b. $4,500 c. $5,620 d. $5,340 Your answer is correct. The correct answer is: $5,340 Question 6 Correct Mark 3.00 out of 3.00 When comparing a traditional income statement to a contribution margin income statement: Select one: a. net income will be greater or less depending on the sales volume b. net income will always be identical on both c. net income will always be less on the traditional income statement d. net income will always be greater on the traditional statement Your answer is correct. The correct answer is: net income will always be identical on both Comprehensive Final Exam Page 5 of 27 Question 7 Correct Mark 3.00 out of 3.00 Question 8 Correct Mark 3.00 out of 3.00 Kendra Corporation sells 100,000 wrenches for $12 a unit. Fixed costs are $300,000, and net income is $200,000. What should be reported as variable expenses in the CVP income statement? Select one: a. $900,000 b. $1,000,000 c. $700,000 d. $500,000 Your answer is correct. The correct answer is: $700,000 Snyder Corporation, which produces and sells a single product, recently experienced an increase in fixed costs relating to depreciation on new equipment. If variable costs and sales price remain unchanged, what will happen to contribution margin and the break-even point? Select one: a. contribution margin will increase and the break-even point will increase b. contribution margin will decrease and the break-even point will increase c. contribution margin will be unchanged and the break-even point will increase d. contribution margin will be unchanged and the break-even point will decrease Your answer is correct. The correct answer is: contribution margin will be unchanged and the break-even point will increase Comprehensive Final Exam Page 6 of 27 Question 9 Correct Mark 3.00 out of 3.00 Question 10 Correct Mark 3.00 out of 3.00 The following is last month's contribution format (CVP) income statement: Sales (10,000 units) $1,200,000 Less: variable expenses 800,000 Contribution margin 400,000 Less: fixed expenses 240,000 Net income $160,000 What is the company's break-even sales in units? Select one: a. 6,000 units b. 8,000 units c. 12,000 units d. 0 units Your answer is correct. The correct answer is: 6,000 units A 45% contribution margin ratio means that: Select one: a. 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income b. 55% of the company's revenue is consumed by fixed and variable costs c. the company's revenue has increase by 45% during the current accounting period d. the company should contribute 45% of its operating income to qualified charities for maximum tax benefits Your answer is correct. The correct answer is: 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income Comprehensive Final Exam Page 7 of 27 Question 11 Correct Mark 3.00 out of 3.00 Question 12 Correct Mark 3.00 out of 3.00 Suppose Motel 6 has annual fixed costs applicable to its rooms of $1.2 million for its 300-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. How much net income on rooms will be generated if the motel is completely full throughout the entire year? Select one: a. $5,475,000 b. $3,180,000 c. $4,275,000 d. $(1,188,000) Your answer is correct. The correct answer is: $3,180,000 Brant Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: Direct materials $3 Direct labor 5 Variable factory overhead 4 Fixed factory overhead 2 Total costs $14 The fixed factory overhead costs are unavoidable. Assuming no other use of their facilities, the highest price that Brant Company should be willing to pay for the part is Select one: a. $14 b. $8 c. $11 d. $12 Your answer is correct. The correct answer is: $12 Comprehensive Final Exam Page 8 of 27 Question 13 Correct Mark 3.00 out of 3.00 In a decision to retain or replace equipment, the book value of the old equipment is a (an): Select one: a. opportunity cost b. incremental cost c. marginal cost d. sunk cost Your answer is correct. The correct answer is: sunk cost Question 14 Correct Mark 3.00 out of 3.00 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. Select one: a. $50,000 increase b. $120,000 increase c. $10,000 decrease d. $10,000 increase Your answer is correct. The correct answer is: $10,000 decrease Comprehensive Final Exam Page 9 of 27 Question 15 Correct Mark 3.00 out of 3.00 Question 16 Correct Mark 3.00 out of 3.00 Question 17 Incorrect Mark 0.00 out of 3.00 Which of the following are risks of outsourcing the production of a part? Select one: a. unscheduled price increases b. unreliable delivery c. all of the these are risks of outsourcing d. unpredictable quality Your answer is correct. The correct answer is: all of the 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 Select one: a. the order will likely be rejected b. the order will likely be accepted c. fixed costs are not relevant d. only variable costs are relevant Your answer is correct. The correct answer is: the order will likely be rejected A job order cost system traces direct materials cost to a particular job by means of: Select one: a. materials requisitions b. a production budget c. a debit to the job cost sheet for the job d. materials inventory control account Your answer is incorrect. The correct answer is: materials requisitions Comprehensive Final Exam Page 10 of 27 Question 18 Correct Mark 3.00 out of 3.00 Question 19 Incorrect Mark 0.00 out of 3.00 In a manufacturing company, the Cost of Goods Manufactured (COGM) is equal to: Select one: a. total manufacturing costs for the period, less selling expenses b. the beginning inventory of finished goods, plus total manufacturing costs, less the ending inventory of finished goods c. the beginning inventory of work in process, plus total manufacturing costs, less the ending inventory of work in process d. the cost of goods available for sale, less the ending inventory of finished goods Your answer is correct. The correct answer is: 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 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: Select one: a. overapplied overhead of $30,000 b. underapplied overhead of $30,000 c. overapplied overhead of $6,000 d. underapplied overhead of $6,000 Your answer is incorrect. The correct answer is: underapplied overhead of $6,000 Comprehensive Final Exam Page 11 of 27 Question 20 Correct Mark 3.00 out of 3.00 Question 21 Correct Mark 3.00 out of 3.00 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 Select one: a. $40,000 b. $260,000 c. $52,000 d. $208,000 Your answer is correct. The correct answer is: $52,000 The flow of costs in job order costing: Select one: a. begins as soon as a sale occurs b. begins with work in process inventory and ends with finished goods inventory c. parallels the physical flow of materials as they are converted into finished goods d. is necessary to prepare the cost of goods manufactured schedule Your answer is correct. The correct answer is: parallels the physical flow of materials as they are converted into finished goods Comprehensive Final Exam Page 12 of 27 Question 22 Correct Mark 3.00 out of 3.00 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: Select one: a. is part of the ending balance of the Work in Process inventory account b. is transferred to Finished Goods at the end of the period c. is deducted on the income statement as overapplied overhead d. is closed to Cost of Goods Sold Your answer is correct. The correct answer is: is part of the ending balance of the Work in Process inventory account Question 23 Correct Mark 3.00 out of 3.00 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 applies 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) Select one: a. $2,940 b. $640 c. $7,360 d. $3,400 Your answer is correct. The correct answer is: $640 Comprehensive Final Exam Page 13 of 27 Question 24 Incorrect Mark 0.00 out of 3.00 At the end of the accounting period, applied overhead was larger than actual overhead by a material amount. The overapplied overhead should be: Select one: a. ignored; actual overhead is determined only for internal control purposes b. apportioned among Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold c. treated as an extraordinary gain d. closed to Cost of Goods Sold Your answer is incorrect. The correct answer is: apportioned among Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold Question 25 Correct Mark 3.00 out of 3.00 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 $292m500. How much inventory was used on jobs during 2017? Select one: a. $293,000 b. $304,500 c. $292,500 d. $305,500 Your answer is correct. The correct answer is: $304,500 Comprehensive Final Exam Page 14 of 27 Question 26 Correct Mark 3.00 out of 3.00 Question 27 Correct Mark 3.00 out of 3.00 In the year-end financial statements, the Manufacturing Overhead account should have: Select one: a. a zero balance, since all overhead costs incurred during the year should be assigned to the production of the year b. a debit balance, representing overhead on hand and available for use c. a credit balance, representing accumulated depreciation and amounts owed to suppliers of overhead items d. either a debit or a credit balance, depending upon whether the overhead application rate used throughout the year was higher or lower than 100% Your answer is correct. The correct answer is: 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 expenses 105,000 Cash purchases of capital investments 75,000 Cash payment of debt 20,000 Depreciation on operating assets 15,000 There was a $50,000 beginning cash balance. the company desires to have a $25,000 ending cash balance. What is the amount of cash overage or shortage? Select one: a. there is no shortage or overage b. $40,000 shortage c. $25,000 shortage d. $25,000 overage Your answer is correct. The correct answer is: $25,000 shortage Comprehensive Final Exam Page 15 of 27 Question 28 Correct Mark 3.00 out of 3.00 Question 29 Incorrect Mark 0.00 out of 3.00 Question 30 Correct Mark 3.00 out of 3.00 The estimated period costs necessary to support a given level of sales will be shown on the Select one: a. budgeted cash flow statement b. budgeted balance sheet c. selling and administrative budget d. cost of goods sold budget Your answer is correct. The correct answer is: selling and administrative budget The budget for a merchandiser differs from a budget for a manufacturer because: Select one: a. a merchandise purchases budget replaces the production budget b. the manufacturing budgets are not applicable c. none of the above d. both (a) and (b) Your answer is incorrect. The correct answer is: both (a) and (b) Which of the following is generally the first step in preparing the master budget? Select one: a. purchases budget b. budgeted income statement c. operating expense budget d. sales budget Your answer is correct. The correct answer is: sales budget Comprehensive Final Exam Page 16 of 27 Question 31 Correct Mark 3.00 out of 3.00 Question 32 Incorrect Mark 0.00 out of 3.00 A well prepared budget can help benefit the company in all of the following ways except for Select one: a. guarantee profit level b. allocate resources c. serving as a guide d. set performance standards Your answer is correct. The correct answer is: guarantee profit level Seagram Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $200,000, of which $120,000 pertain to sales that were made during June. Budgeted sales for July are $1,000,000. Seagram collects 70& of sales in the month of sale; 20% in the following month; and the final 10% in the second month after the sale. What are Seagram's budget collections for July? Select one: a. $732,000 b. $740,000 c. $700,000 d. $860,000 Your answer is incorrect. The correct answer is: $732,000