Peaceful Pastures

Mid-term Exam summon 1 2 3 1. promontory (TCO 1) The goal of managerial accounting is to provide information that managers need for student retort planning. control. decision making. entirely(prenominal) of the above answers argon correct. instructor report Chapter 1, rogue 4 Points receive 4 of 4 Comments 2. misgiving TCO 1) Which of the following statements regarding touch on be is unfeigned? student effect When take increases, flash-frozen appeal per unit increases. When turnout decreases, total fixed woo decrease. When employment increases, fixed appeal per unit decreases. When production decreases, total fixed be increase. teacher comment Chapter 1, pageboy 9 Points true 4 of 4 Comments 3. suspense (TCO 1) A sell merchant purchased some trendy clothes that have gone out of look and must be marked down to 40% of the original merchandising damage in order to be change. Which of the follow ing is a change posture cost in this situation? assimilator repartee the current interchange price the original exchange price the original purchase price the anticipated meshwork Instructor bill Chapter 1, rapscallion 9 Points reliable 4 of 4 Comments 4. Question (TCO 1) Shulas 347 Grill has budgeted the following be for a month in which 1,600 steak dinners will be produced and sold veridicals, $4,080 hourly labor ( inconstant), $5,200 rent (fixed), $1,700 depreciation, $800 and other fixed costs, $600. Each steak dinner sells for $14. 00 each. How some(prenominal) is the budgeted variable cost per unit? savant make $5. 80 $7. 74 $6. 68 $3. 25 Instructor Explanation Chapter 1, knave 8 ($4,080 + $5,200) / 1,600 = $5. 80 Points authoritative 0 of 4 Comments 5. Question (TCO 1) Which of the following is an example of a manufacturing smasher cost? Student Answer security at the manufacturing kit and boodle fabric used to produce shirts cost of shipping product to customers the fee of the president of the connection Instructor Explanation Chapter 2, Page 37 Points veritable 0 of 4 Comments 6. Question (TCO 1) Product costs Student Answer atomic number 18 also called manufacturing costs. are considered an asset until the finished goods are sold. flummox an expense when the goods are sold. All of the above answers are correct. Instructor Explanation Chapter 2, Page 38 Points Received 4 of 4 Comments 7. Question (TCO 1) At December 31, 2010, WDT Inc. has a balance in the Work in extremity Inventory account of $62,000. At January 1, 2010, the balance was $55,000. Current manufacturing costs for the course are $292,000, and cost of goods sold is $284,000. How often is cost of goods manufactured? Student Answer $292,000 $299,000 $277,000 $285,000 Instructor Explanation Chapter 2, Page 43 $55,000 + $292,000 $62,000 = $28 5,000 Points Received 0 of 4 Comments 8. Question (TCO 2) BCS Company applies manufacturing overhead based on deport labor hours. Information concerning manufacturing overhead and labor for August follows Estimated Actual operating expense cost $174,000 $171,000 Direct labor hours 5,800 5,900 Direct labor cost $87,000 $89,975 How much overhead should be applied in total during August? Student Answer 177,000 179,950 171,100 168,200 Instructor Explanation Chapter 2, Page 54 ($174,000 / 5,800) x 5,900 = 177,000 Points Received 0 of 4 Comments 9. Question (TCO 2) Citrus Company incurred manufacturing overhead costs of $300,000. Total overhead applied to jobs was $306,000. What was the step of overapplied or underapplied overhead? Student Answer $7,000 overapplied $6,000 overapplied $6,000 underapplied $13,000 underapplied Instructor Explanation Chapter 2, Page 55 $306,000 $300,000 = $6,000 overapplied Points Received 4 of 4 Comments 10. Question (TCO 3) Companies in which of the following industries would not be presumable to use process costing? Student Answer cereals paints cosmetics auto embody shop Instructor Explanation Chapter 3, Page 84 Points Received 4 of 4 Comments 11. Question (TCO 3) The Blending Department began the outcome with 45,000 units. During the period the part received another 30,000 units from the prior department and sinless 60,000 units during the period. The remaining units were 75% complete. How much are equivalent units in The Blending Departments work in process broth at the end of the period? Student Answer 30,000 22,500 15,000 11,250 Instructor Explanation Chapter 3, Page 88 (45,000 + 30,000 60,000) x 75% = 11,250 Points Received 4 of 4 Comments 12. Question (TCO 3) Ranger render Company manufactures glass for French doors. At the start of May, 2,000 units were in-process. During May, 11,000 units were faultless and 3,000 units were in process at the end of May. These in-process units were 90% complete with respect to material and 50% complete with respect to conversion costs. Other information is as follows Work in process, May 1 Direct material $36,000 mutation costs $45,000 woos incurred during May Direct material $186,000 Conversion costs $255,000 How much is the cost per equivalent unit for acquit materials? Student Answer $24. 00 $16. 20 $15. 86 $13. 58 Instructor Explanation Chapter 3, Page 89 ($36,000 + $186,000) / 11,000 + (3,000 x 90%) = $16. 20 Points Received 0 of 4 Comments 13. Question (TCO 4) Duradyne, Inc. has total costs of $18,000 when 2,000 units are produced and $26,000 when 5,200 units are produced. During March, 4,000 units were produced and sold for $8 each. What is the variable cost per unit? Student Answer $2. 0 $0. 40 $2. 00 $4. 00 Instructor Explanation Chapter 4, Page 127 ($26,000 $18,000) / (5,200 2,0 00) = $2. 50 Points Received 4 of 4 Comments Page 1 2 3 1. Question (TCO 4) The three elements of the profit bank are Student Answer sell price per unit, variable cost per unit, and fixed cost per unit. Total revenues, total variable costs, and total fixed cost. Selling price per unit, variable cost per unit, and total fixed costs. Selling price per unit, total variable costs, and fixed cost per unit. Instructor Explanation Chapter 4, Page 130 Points Received 0 of 4 Comments 2. Question (TCO 4) locomote K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break-even point? Student Answer $1,105,000 $282,880 $1,060,800 $208,476 Instructor Explanation Chapter 4, Page 133 $176,800 / 16% = $1,105,000 Points Received 4 of 4 Comments 3. Question (TCO 4) Randy Company produces a single product that is sold for $85 pe r unit.If variable costs per unit are $26 and fixed costs total $47,500, how many units must Randy sell in order to earn a profit of $100,000? Student Answer 1,735 618 890 2,500 Instructor Explanation Chapter 4, Page 132 ($100,000 + $47,500) / ($85 $26) = 2,500 units Points Received 4 of 4 Comments 4. Question (TCO 5) Which of the following is treated differently in full costing than in variable costing? Student Answer Direct materials unyielding manufacturing overhead Direct labor Variable manufacturing overhead Instructor Explanation Chapter 5, Page 168 Points Received 4 of 4 Comments 5. Question (TCO 5) Which of the following items appears on a variable costing income statement but not on a full costing income statement? Student Answer gross sales stark(a) margin can income Contribution margin Instructor Explanation Chapter 5, Page 169 Points Received 4 of 4 Comments 6. Question (TCO 5) Peak M anufacturing produces snow blowers. The selling price per snow blower is $100. Costs involved in production are Direct Material per unit $20 Direct tug per unit 12Variable manufacturing overhead per unit 10 Fixed manufacturing overhead per year $148,500 In addition, the company has fixed selling and administrative costs of $150,000 per year. During the year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much is net income apply full costing? Student Answer 1,641,000 $1,590,000 $1,441,500 $1,491,000 Instructor Explanation Chapter 5, Pages 172-174 sales = $100 x 30,000 = $3,000,000Expenses = ($148,500 / 45,000) + $20 + $12 + $10 x 30,000 = $1,359,000 COGS + $150,000 = $1,509,000Net Income = $3,000,000 $1,509,000 = $1,491,000 Points Received 0 of 4 Comments 7. Question (TCO 6) Costs may be allo droped to Student Answer products. services. departments. any of the above. Instructor Explanation Chapter 6, Page 201 Points Received 4 of 4 Comments 8. Question (TCO 5) An allocation base Student Answer is the minimum amount to be allocated to a cost object. coordinates the manufacturing overhead costs as they are incurred. will always be less than the variable costs for a product. relates the cost pool to the cost objectives. Instructor Explanation Chapter 6, Page 202 Points Received 4 of 4 Comments 9. Question (TCO 6) Sierra Company allocates the estimated $200,000 of its accounting department costs to its production and sales departments because the accounting department supports the other ii departments, particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the identification number of employees using the direct method. Information regarding costs and employees follows Department Employees Accounting 4 takings 36 gross sales 12How much of the accounting department costs will be allocated to the production a nd sales departments? Student Answer Production $150,000 Sales $50,000 Production $180,000 Sales $60,000 Production $1,800,000 Sales $600,000 Production $22,222 Sales $66,667 Instructor Explanation Chapter 6, Pages 213-214 Production = $200,000 / (36 + 12) x 36 = $150,000Sales = $200,000 / (36 + 12) x 12 = $50,000 Points Received 4 of 4 Comments 10. Question (TCO 7) A company is trying to decide whether to keep or drop the sporting goods department in its department store.If the segment is dropped, the manager will be fired. The managers salary, in relation to the decision to keep or drop the sporting goods department, is Student Answer avoidable and in that respectfore relevant. not avoidable and therefore relevant. sunk and therefore not relevant. the same for all alternatives and therefore not relevant. Instructor Explanation Chapter 7, Pages 256-257 Points Received 0 of 4 Comments 11. Question (TCO 7) BigByte Company has 1 2 obsolete com sheders that are carried in inventory at a cost of $13,200.If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold as is for $9,000. What is the net gain or blemish of reworking the computers? Student Answer $6,300 advantage $1,200 disadvantage $5,400 disadvantage $3,000 advantage Instructor Explanation Chapter 7, Pages 251-252 ($15,300 $9,000) ($7,500 $0) = ($1,200) Points Received 4 of 4 Comments 12. Question (TCO 7) Olde Store has 12,000 masss of crab meat just a week medieval the expiration date. Each can cost $0. 31.The cans could be sold as is for $0. 20 each, or relabeled and sold as gourmet cat food. The cost of relabeling the cans would be $0. 04 per can and the cans would then sell for $0. 29 per can. What should be make with the cans and why? Student Answer The cans should be thrown away since there will be a loss with the other alternatives. The cans should be relabeled into cat food since the sales price increases $0. 09 per can and the cost is only $0. 04 per can. The cans should be put on clearance since there is no reason to put more money into something that is already selling below cost. It doesnt emergence what you do since all alternatives result in a loss. Instructor Explanation Chapter 7, Pages 251-252 Points Received 4 of 4 Comments Page 1 2 3 1. Question (TCO 3) Why is it necessary to use equivalent units in a process costing system? Student Answer Process costing, as we have seen, is essentially a system of averaging. Equivalent Units In reckon the average unit cost, it is necessary to convert the number of partially completed units in Work in Process to an equivalent number of entirely units.Otherwise, the denominator in the average unit cost calculation will be misstated. When partially completed units are converted to a comparable number of completed units, they are referred t o as equivalent units. Jiambalvo. Managerial Accounting, 4th Edition. rear Wiley & Sons. . Instructor Explanation In a company that uses process costing, there may be incomplete units in ending Work in Process inventory. These units are converted to a comparable number of completed units in order to calculate the cost per equivalent unit. Points Received 20 of 20 Comments 2. Question (TCO 7) Computer Boutique sells computer equipment and home authority furniture. Currently, the furniture product line takes up approximately 50% of the companys retail floor space. The president of Computer Boutique is trying to decide whether the company should continue offering furniture or just concentrate on computer equipment. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13%. Allocated fixed costs are assigned based on relative sales. Computer Home Office Equipment Furniture Total Sales $1,2 00,000 $800,000 $2,000,000Less cost of goods sold 700,000 500,000 1,200,000 Contribution margin 500,000 300,000 800,000 Less direct fixed costs Salaries 175,000 175,000 350,000 Other 60,000 60,000 120,000 Less allocated fixed costs subscribe 14,118 9,882 24,000 Insurance 3,529 2,471 6,000 Cleaning 4,117 2,883 7,000 Presidents salary 76,470 53,350 130,000 Other 7,058 4,942 12,000 Total costs 340,292 380,708 649,000 Net Income $159,708 ($ 8,708) $151,000 Prepare an incremental analysis to determine the incremental effect on profit of discontinuing the furniture line. Student Answer Instructor Explanation incremental drop in revenue ($800,000) Incremental cost savings Cost of sales 500,000 Salaries 175,000 Other 60,000 Incremental increase in computer equipment (13% x $1,200,000) 156,000 Incremental increase in computer equipment variable costs (13% x $700,000) (91,000) Incremental increase in profit $ 0 Points Received 10 of 25 Comments 3. Question (TCO 4) Beach Rentals has estimated that fixed costs per month are $79,200 and variable cost per dollar of sales is $0. 2. (a) What is the break-even point per month in sales? (b) What level of sales is needed for a monthly profit of $24,000? (c) For the month of July, the company anticipates sales of $240,000. What is the expected level of profit? Student Answer a. ) $165,000 sales b. ) $215,000 c. ) Instructor Explanation (a) Contribution margin ratio = 1. 00 0. 52 = 0. 48 $79,200 ? 0. 48 = $165,000 (b) ($79,200 + $24,000) ? 0. 48 = $215,000 (c) ($240,000 ? 0. 48) $79,200 = $36,000 Points Received 20 of 25 Comments