ACCT 2521 Final Exam UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Materials used in a factory that are not an integral part of the final product, such as cleaning supplies,
should be classified as: - CORRECT ANSWER indirect materials, manufacturing overhead
Indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and
insurance on manufacturing facilities - CORRECT ANSWER manufacturing overhead costs
All product costs - CORRECT ANSWER direct materials, direct labor, and moh, inventories
Product costs that have become expenses can be found in - CORRECT ANSWER cost of
goods sold
Period costs include - CORRECT ANSWER selling and administrative expenses
Which is an example of a period cost in a company that makes clothing? - CORRECT ANSWER
advertising cost for a new line of clothing
Within the relevant range, variable costs per unit will: - CORRECT ANSWER remain constant
Within the relevant range, variable costs in total will: - CORRECT ANSWER increase and
decrease with production levels
An example of a committed fixed cost - CORRECT ANSWER taxes on real estate, rent,
depreciation, long term equipment leases, salaries of upper management
A company prepays insurance for a 3 year period. The premium for the 3 years is $2,100 and is paid at
the beginning of the 1st year. 60% of the premium applies to manufacturing operations and 40%
applies to selling & administrative activities.
,What amounts should be considered product and period costs for the first year of coverage? -
CORRECT ANSWER Step 1: annual insurance exp = 2100/3 = 700
Product costs = .60 x 700 = 420
Period costs = .40 x 700 = 280
*Product costs of $420, period costs of $280.*
Direct Materials .......... $113k
Utilities, factory ........... $5k
Administrative salaries ......... $81k
Indirect labor .............. $25k
Sales commissions ........ $48k
Depr. Of production equipment ........ $20k
Depr. Of admin. Equipment ......... $30k
Direct labor ............ $129k
Advertising ............ $135k
The total product costs listed above is: - CORRECT ANSWER Step 1: Product costs include:
dm, utilities, indirect labor, depr. Of production equipment, and dl:
-->Plug in: 113k + 5k + 25k + 20k +129k = *$292,000*
Direct Materials .......... $113k
Utilities, factory ........... $5k
Administrative salaries ......... $81k
Indirect labor .............. $25k
Sales commissions ........ $48k
Depr. Of production equipment ........ $20k
Depr. Of admin. Equipment ......... $30k
Direct labor ............ $129k
Advertising ............ $135k
The total period costs listed above is: - CORRECT ANSWER Step 1: period costs include:
admin. Salaries, sales commissions, depr. Of admin. Equipment, and advertising:
, -->Plug in: 81k + 48k + 30k + 135k = *$294,000*
Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's total
variable selling exp. Was $96,900; total fixed selling exp. Was $34,300; total variable admin. Exp.
Was $71,400; and total fixed admin. Exp. Was $100,100. The cogs in this company is a variable cost.
The contribution margin for December is: - CORRECT ANSWER Step 1: CM = sales -
variable expenses (cogs, var selling & admin exp., var admin. Exp.)
-->Plug in: 1555500 - (1025100+96900+71400) = *$362,100 CM*
Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's total
variable selling exp. Was $96,900; total fixed selling exp. Was $34,300; total variable admin. Exp.
Was $71,400; and total fixed admin. Exp. Was $100,100. The cogs in this company is a variable cost.
The gross margin for December is: - CORRECT ANSWER Step 1: GM = sales - cogs
-->Plug in: 1555500 - 1025100 = *$530,400 GM*
Company bases its pdohr on the estimated machine-hours for the upcoming year. At the beginning of
the recently competed year, Co. Estimated machine-hours for the upcoming year at 79k machine-hrs.
The estimated variable moh was $7.38 per machine-hr and the estimated total fixed moh was
$2,347,090.
The pdohr for the recently completed year was closest to: - CORRECT ANSWER Step 1:
estimated total moh = 2,347,090 + (7.38 x 79,000) = 2,930,110
Step 2: PDOHR = estimated total moh / estimated total amt of allocation base:
-->Plug in: 2,930, = *$37.09 per machine-hr*
Co. Is using a pdohr that was based on estimated total fixed moh of $492k and 30k machine-hrs for
the period. The co. Incurred actual total fixed moh of $517k and 28,300 total machine-hrs for the
period.
The amount of moh that would have been applied to all jobs during the period is: - CORRECT
ANSWER Step 1: PDOHR = est. Total fixed moh / est. Activity level
-->Plug in: 492k / 30k = $16.40
Step 2: MOH applied = pdohr x actual activity level:
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Materials used in a factory that are not an integral part of the final product, such as cleaning supplies,
should be classified as: - CORRECT ANSWER indirect materials, manufacturing overhead
Indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and
insurance on manufacturing facilities - CORRECT ANSWER manufacturing overhead costs
All product costs - CORRECT ANSWER direct materials, direct labor, and moh, inventories
Product costs that have become expenses can be found in - CORRECT ANSWER cost of
goods sold
Period costs include - CORRECT ANSWER selling and administrative expenses
Which is an example of a period cost in a company that makes clothing? - CORRECT ANSWER
advertising cost for a new line of clothing
Within the relevant range, variable costs per unit will: - CORRECT ANSWER remain constant
Within the relevant range, variable costs in total will: - CORRECT ANSWER increase and
decrease with production levels
An example of a committed fixed cost - CORRECT ANSWER taxes on real estate, rent,
depreciation, long term equipment leases, salaries of upper management
A company prepays insurance for a 3 year period. The premium for the 3 years is $2,100 and is paid at
the beginning of the 1st year. 60% of the premium applies to manufacturing operations and 40%
applies to selling & administrative activities.
,What amounts should be considered product and period costs for the first year of coverage? -
CORRECT ANSWER Step 1: annual insurance exp = 2100/3 = 700
Product costs = .60 x 700 = 420
Period costs = .40 x 700 = 280
*Product costs of $420, period costs of $280.*
Direct Materials .......... $113k
Utilities, factory ........... $5k
Administrative salaries ......... $81k
Indirect labor .............. $25k
Sales commissions ........ $48k
Depr. Of production equipment ........ $20k
Depr. Of admin. Equipment ......... $30k
Direct labor ............ $129k
Advertising ............ $135k
The total product costs listed above is: - CORRECT ANSWER Step 1: Product costs include:
dm, utilities, indirect labor, depr. Of production equipment, and dl:
-->Plug in: 113k + 5k + 25k + 20k +129k = *$292,000*
Direct Materials .......... $113k
Utilities, factory ........... $5k
Administrative salaries ......... $81k
Indirect labor .............. $25k
Sales commissions ........ $48k
Depr. Of production equipment ........ $20k
Depr. Of admin. Equipment ......... $30k
Direct labor ............ $129k
Advertising ............ $135k
The total period costs listed above is: - CORRECT ANSWER Step 1: period costs include:
admin. Salaries, sales commissions, depr. Of admin. Equipment, and advertising:
, -->Plug in: 81k + 48k + 30k + 135k = *$294,000*
Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's total
variable selling exp. Was $96,900; total fixed selling exp. Was $34,300; total variable admin. Exp.
Was $71,400; and total fixed admin. Exp. Was $100,100. The cogs in this company is a variable cost.
The contribution margin for December is: - CORRECT ANSWER Step 1: CM = sales -
variable expenses (cogs, var selling & admin exp., var admin. Exp.)
-->Plug in: 1555500 - (1025100+96900+71400) = *$362,100 CM*
Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's total
variable selling exp. Was $96,900; total fixed selling exp. Was $34,300; total variable admin. Exp.
Was $71,400; and total fixed admin. Exp. Was $100,100. The cogs in this company is a variable cost.
The gross margin for December is: - CORRECT ANSWER Step 1: GM = sales - cogs
-->Plug in: 1555500 - 1025100 = *$530,400 GM*
Company bases its pdohr on the estimated machine-hours for the upcoming year. At the beginning of
the recently competed year, Co. Estimated machine-hours for the upcoming year at 79k machine-hrs.
The estimated variable moh was $7.38 per machine-hr and the estimated total fixed moh was
$2,347,090.
The pdohr for the recently completed year was closest to: - CORRECT ANSWER Step 1:
estimated total moh = 2,347,090 + (7.38 x 79,000) = 2,930,110
Step 2: PDOHR = estimated total moh / estimated total amt of allocation base:
-->Plug in: 2,930, = *$37.09 per machine-hr*
Co. Is using a pdohr that was based on estimated total fixed moh of $492k and 30k machine-hrs for
the period. The co. Incurred actual total fixed moh of $517k and 28,300 total machine-hrs for the
period.
The amount of moh that would have been applied to all jobs during the period is: - CORRECT
ANSWER Step 1: PDOHR = est. Total fixed moh / est. Activity level
-->Plug in: 492k / 30k = $16.40
Step 2: MOH applied = pdohr x actual activity level:
