< DEVRY ACCT 346 week 8 final exam >

Week 8 : Final Exam - Final Exam

  
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1. (TCO 1) Performance reports often compare current period performance with (Points : 4)
        Performance in a prior period.
        Planned (budgeted) performance.
        Both A and B are correct.
        Neither A nor B is correct.

2. (TCO 1) A company has a cost that is $2.00 per unit at a volume of 12,000 units and $2.00 per unit at a volume of 16,000 units. What type of cost is this? (Points : 4)
        Fixed
        Variable
        Sunk
        Incremental

3. (TCO 2) Which of the following is a manufacturing cost? (Points : 4)
        Direct material
        Advertising expense
        Depreciation of the office equipment used by the sales staff
        Salary of the company president

4. (TCO 2) An allocation base is (Points : 4)
        a common characteristic that jobs share, which is used to spread the overhead costs among the various jobs.
        the minimum amount of overhead assigned to a job.
        used to determine how many labor hours were needed to complete a job.
        used to authorize the release of materials from the storeroom to the production area.

5. (TCO 3) Equivalent units are calculated by (Points : 4)
        taking the units needed to complete the beginning inventory, adding units started and taking the equivalent units in ending inventory
        taking the units completed plus the equivalent units in ending inventory.
        taking the total units to account for and subtracting equivalent units in ending inventory
        taking units started plus units transferred out.

6. (TCO 3) In the assembly department, all the direct materials are added at the beginning of the processing. Beginning Work in Process inventory consists of 2,000 units with a direct materials cost of $31,860. During the period, 15,000 units are started and direct materials costing $250,000 are charged to the department. If there are 1,000 units in ending inventory, what is the cost per equivalent unit? (Points : 4)
        $15.93
        $15.63
        $14.83
        $16.58

7. (TCO 4) The range of activity for which estimates of cost behavior are likely to be accurate is the (Points : 4)
        incremental range
        margin of safety
        relevant range
        range of opportunity

8. (TCO 4) Beaudreaux Motors is operating at its break-even point of 16,000 units. Which of the following statements is not true? (Points : 4)
        The amount of the company’s total costs equals the amount of its revenues.
        The company’s fixed costs equal its variable costs.
        The company’s profit equals zero.
        Assuming no other changes, if the company sold more units, it would earn a profit.

9. (TCO 5) Which of the following is treated as a product cost in variable costing? (Points : 4)
        Sales commissions
        Administrative salaries
        Fixed manufacturing overhead
        Direct labor

10. (TCO 5) When the number of units sold is equal to the number of units produced, net income using full costing will be (Points : 4)
        greater than net income under variable costing
        equal to net income using variable costing
        less than income using variable costing
        none of the above

11. (TCO 6) A major problem with cost-plus contracts is that they (Points : 4)
        are not acceptable under GAAP.
        cause the supplier to take significant financial risks.
        require the supplier to use variable costing.
        create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract.

12. (TCO 6) Which of the following steps is not involved in the ABC approach? (Points : 4)
        Identify activities which cause costs to be incurred.
        Allocate costs to products based on activity usage.
        Group costs of activities into cost pools.
        Improve processes based on benchmarking

13. (TCO 7) Which of the following is not a term used to describe the additional costs incurred as a result of selecting one decision over another? (Points : 4)
        Differential costs
        Sunk costs
        Relevant costs
        Incremental costs

1 .(TCO 1) Distinguish managerial accounting from financial accounting. Include a brief discussion of the differences in the types of information provided to users as well as the differences of the users of the accounting information.

2. (TCO 6) Pacific Airlines has three service departments; ticketing, baggage handling, and aircraft maintenance. Costs of these departments are allocated to two revenue producing departments, domestic and international flights. Costs for the service departments are not separated into fixed and variable and the totals are as follows:

 
Ticketing $4,000,000
Baggage handling $2,000,000
Aircraft maintenance $6,000,000

 
Air miles are as follows:
Domestic 10,000,000
K2International 30,000,000

3. (TCO 10) Gina's Boutique makes custom jewelry. One item, the guru necklace, is a best seller and sales in units for the first quarter are as follows:

 
January 100,000 units
February 150,000 units
March 180,000 units

 
Desired ending inventory is budgeted at 20% of next month sales. 

 
Compute production for February.
K8

4. (TCO 2) Coyote Trading uses a predetermined manufacturing overhead rate of $12 per machine hour. Last year the company had actual overhead of $898,000 and 75,000 machine hours.

 
(a) Compute the amount of manufacturing overhead applied.
(b) Compute the amount of over/underapplied overhead.
(c) What is the disposition of the over/under applied overhead

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1. (TCO 9) An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years. What is the investment's internal rate of return? (Points : 25)
     
2. (TCO 4) Legal Beagals Inc. is a legal services firm that files incorporation papers for small businesses. They charge $1,000 per application. This year's income statement shows the following:

 
Sales $1,440,000
Variable Expenses $1,008,000
Contribution margin $432,000
Fixed costs $250,000
Profit $182,000.

 
Required:
(a) Compute the break-even point in units.
(b) Compute the contribution margin ratio.
(c) Compute the current margin of safety.
(d) How many applications must the company sell to make a profit of $350,000

3. (TCO 5) The following data has been taken from Air-Tite company in its first year of business.

 
Units produced 100,000
Units sold 60,000
Units in ending inventory 40,000
Fixed manufacturing overhead $500,000

 
(a) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if full absorption costing is used.
(b) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if variable costing is used.
(c) Compute the amount of fixed manufacturing overhead that would be included in ending inventory under full absorption costing. (Points : 25)