Week 4 Midterm - Devry ACCT 505

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Question :

(TCO A) The variable portion of advertising costs is a



Question :

(TCO A)  A cost incurred in the past that is not relevant to any current decision is classified as a(n)


Question :

(TCO A) Depreciation of office buildings and office equipment is also known as


Question :

(TCO A)  When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following?



Question :

(TCO F) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to



Question :

(TCO F) Which of the following statements about the process-costing system is incorrect?



Question :

(TCO F)  The FIFO method only provides a major advantage over the weighted-average method in that



Question :

(TCO B)  The contribution margin equals



Question :

(TCO B)  To obtain the break-even point in terms of dollar sales, total fixed expenses are divided by which of the following?



Question :

(TCO E) In an income statement prepared using the variable costing method, fixed manufacturing overhead would



Question :

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larden Corporation for the just-completed year.





 Purchases of raw materials



 Direct labor



 Manufacturing overhead



 Administrative expenses



 Selling expenses



 Raw materials inventory, beginning



 Raw materials inventory, ending



 Work-in-process inventory, beginning



 Work-in-process inventory, ending



 Finished goods inventory, beginning



 Finished goods inventory, ending


Required: Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.



Question :

(TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

                                                                        Percentage Completed

                                                   Units            Materials     Conversion

Work in process, June 1              150,000             75%          55%

Work in process, Jun 30              145,000             85%          75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.


Question :

(TCO B) A cement manufacturer has supplied the following data:

Tons of cement produced and sold                                  220,000

Sales revenue                                                               $924,000

Variable manufacturing expense                                    $297,000

Fixed manufacturing expense                                         $280,000

Variable selling and admin expense                                $165,000

Fixed selling and admin expense                                    $82,000

Net operating income                                                    $100,000


a. Calculate the company's unit contribution margin.

b. Calculate the company's unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?



Question :

(TCO E) The Dean Company produces and sells a single product. The following data refer to the year just completed:

Selling price




Units in beginning Inventory



Units produced



Units sold




Variable costs per unit:


Direct materials


 $         200

Direct labor


 $           50

Variable manufacturing overhead


 $           30

Variable selling and admin


 $           15


Fixed Costs:


Fixed manufacturing overhead


 $   275,000

Fixed selling and admin


 $   230,000

Assume that direct labor is a variable cost.


a. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.

b. Prepare an income statement for the year using absorption costing.

c. Prepare an income statement for the year using variable costing.

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