ACC 240 : FINAL EXAM. QUESTIONS

2 of 35

Contribution margin per unit is best described by which of the following?

	Sales price per unit minus fixed cost per unit
	Sales price per unit minus variable cost unit
	Sales price per unit minus fixed and variable costs per unit
	Units sold time contribution margin ratio

Question

7 of 35

Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies' normal selling price is $30 per DVD player. The total manufacturing cost per DVD player is $12 and consists of variable costs of $14 per DVD player and fixed overhead costs of $4 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.)

How much are the expected increase (decrease) in revenues and expenses from the special sales order?

	Expected increase in revenues $220,000; expected increase in expenses $140,000
	Expected increase in revenues $220,000; expected increase in expenses $40,000
	Expected increase in revenues $300,000; expected increase in expenses $140,000
	Expected increase in revenues $220,000; expected increase in expenses $120,000

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12 of 35

Which of the following budgets projects cash inflows and outflows and the budgeted balance sheet?

	Purchases budget
	Capital expenditures budget
	Financial budget
	Cash budget

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Romona Company expects its November sales to be 20% higher than its October sales of $165,000. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases were $110,000 in October and are expected to be $140,000 in November. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,500. The cash balance on November 30 will be

	$46,300.
	$59,800.
	$2,050.
	$32,800.

Question

14 of 35

June sales were $5,000 while projected sales for July and August were $6,500 and $7,000, respectively. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale. What are the expected collections for July?

	$7,975
	$5,525
	$6,825
	$5,975

Question

16 of 35

Honda's East Liberty Auto Plant which builds Honda cars is most likely treated as a(n)

	cost center.
	investment center.
	profit center.
	revenue center.

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A product line at PepsiCo (such as the Pepsi Max product line) is most likely treated as a(n)

	cost center.
	profit center.
	investment center.
	revenue center.

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The CEO of Banana Republic, a division of The Gap, Inc., would be in charge of a(n)

	cost center.
	investment center.
	profit center.
	revenue center.

Question

19 of 35

The manager of a local CVS drugstore would be in charge of a(n)

	cost center.
	investment center.
	revenue center.
	profit center.

Question

20 of 35

The store manager for the Dick's Sporting Goods location in Columbus, Ohio, is in charge of a(n)

	cost center.
	investment center.
	profit center.
	revenue center.

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21 of 35

The manager of the accounting department at Adidas would be in charge of a(n)

	investment center.
	cost center.
	profit center.
	revenue center.

Question

22 of 35

Sole Purpose manufactures beach shoes that use a canvas as the main raw material. Data related to the shoes for June follows:

Standard quantity per unit of output (yards)	4.5
Standard price per yard	$10.50
Actual materials purchased in yards	16,500
Actual cost of materials purchased	$90,450
Actual materials used in production (yards)	16,000
Actual outputs in units	3,600

What is the materials quantity variance for canvas for June?

	$1,645 favorable
	$2,100 favorable
	$1,645 unfavorable
	$2,100 unfavorable

Question

23 of 35

Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows:

Standard direct materials cost per yard	$ 8
Standard direct materials quantity per t-shirt (yards)	1.5

During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows:

Actual yards of direct material purchased	1,400
Actual direct materials total cost	$ 15,500

What is the direct materials price variance for the month?

	$4,300 unfavorable
	$4,300 favorable
	$3,800 favorable
	$3,800 unfavorable

Question

24 of 35

Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:

Standard tons of direct material (steel) per car	4
Standard cost per ton of steel	$ 17.00

During the month of March, the company produced 1,650 cars. Related production data for the month follows:

Actual materials purchased and used (tons)	6,650
Actual direct materials total cost	$ 115,000

What is the direct materials quantity variance for the month?

	$ 850 favorable
	$ 850 unfavorable
	$ 1,950 favorable
	$ 1,950 unfavorable

Question

25 of 35

How is the direct labor rate variance calculated?

	The difference between the standard labor rate and the actual labor rate multiplied by the actual labor hours used
	The difference between the standard labor rate and the actual labor rate multiplied by the standard allowable hours
	The difference between the standard labor hours and the allowable labor hours
	The difference between the standard labor rate and the actual labor rate

Question

26 of 35

A favorable direct labor efficiency variance might indicate that

	higher skilled workers were used that performed the task slower than expected.
	higher skilled workers were used that performed the task faster than expected.
	lower skilled workers were paid a higher wage than expected.
	lower skilled workers were paid a lower wage than expected.

Question

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An unfavorable direct labor rate variance indicates which of the following?

	Both actual quantity and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output.
	The actual quantity of direct labor hours worked exceeded the standard quantity of hours for actual output.
	The actual direct labor cost per hour exceeded the standard direct labor cost per hour for actual quantity of direct labor hours.
	The actual cost of direct labor per hour was less than the standard cost of direct labor per hour.

Question

28 of 35

A favorable direct labor efficiency variance and an unfavorable direct labor rate variance might indicate which of the following?

	Unskilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate
	Unskilled workers using less actual hours than standard, paid a lesser rate per hour than the standard rate
	Skilled workers using less actual hours than standard, paid at a higher rate per hour than the standard rate
	Skilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate

Question

32 of 35

How does depreciation affect the calculation of a project's payback period?

	Depreciation is deducted from the annual cash inflows.
	Depreciation is added to the annual cash inflows.
	Depreciation is only deducted if the payback period exceeds five years.
	Depreciation does not affect the payback calculation.

Question

33 of 35

Gomez Corporation is considering two alternative investment proposals with the following data:

	Proposal X	Proposal Y
Investment	$ 850,000	$ 468,000
Useful life	8 years	8 years
Estimated annual net cash inflows for eight years	$ 125,000	$ 78,000
Residual value	$ 40,000	$ -
Depreciation method	Straight-line	Straight-line
Required rate of return	14%	10%

What is the accounting rate of return for Proposal X?

	2.88 %
	14.71 %
	26.62 %
	2.79%

Question

34 of 35

(Use present value tables in textbook.) Vino Winery is considering the purchase of a state-of-the-art bottling machine. The new machine will cost $28,250 and will have a useful life of 10 years. The new machine will provide net cash savings of $5,000 per year. What is the internal rate of return (IRR) for the new bottling machine?

13 years ago

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