ACCT 346 Final Exam 2

split products
joint products
combination products
common products

charge customers with the costs they are creating.
make greater profits by charging all customers more.
maintain all customers in the customer base.
all of the above.

The impact the order will have on existing business.
The price that will be charged on the special order.
The incremental cost of filling the special order.
All of the above.

contribution margin.
depreciation methods.
fixed costs.
cost of capital.

Payback period
Internal rate of return
Accounting rate of return
Relative sales value method

the CFO alone determines the budget.
only the budget for the next month is prepared.
lower level managers are the primary source of budget information.
the production budget is prepared before the sales budget.

Stockouts will cause customer dissatisfaction
The cash balance will be very low
Excess cash will be available for investment
Significant capital acquisitions are planned

same as actual cost
the cost that should have been incurred to produce an item or service
useful only to manufacturing firms
calculated after production is completed

Rate and efficiency
Attainable and ideal
Price and quantity
Volume and controllable

Setting prices for products
Controlling costs
Generating revenues
Significant influence over investment decisions

all costs charge to their department.
all direct cost of their department plus part of the allocated company costs.
only costs they have personally approved.
only costs they can control.

Return on assets
Return on stockholders’ equity
Earnings per share
Price earnings ratio

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. (Points : 20)
2. 2. (TCO 6) Booth Financial Services, LLC has two revenue producing departments, Financial Planning and Business Consulting. The accounting department is trying to determine the best method to allocate $1,000,000 of common costs (secretarial staff, reception personnel, etc), either by salary or number of employees. Information on the revenue departments are as follows:

   Department	Employees	Salaries
   Financial Planning	150 employees	$10,000,000

    

   Business Consulting

   50 employees

   $5,000,000

   (a) Allocate the $1,000,000 common costs to the two revenue departments using both methods.
   (b) Why are allocations called arbitrary? (Points : 25)

3. 1. (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 unitsDesired ending inventory is budgeted at 20% of next month sales.Compute production for February. (Points : 25)
4. 4. (TCO 2) Acme Fireworks uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $1,000,000 and direct labor hours are budgeted at 200,000 hours. Actual hours worked were 195,000 and actual overhead was $978,000.(a) Compute the predetermined manufacturing overhead rate.
      (b) Compute the applied manufacturing overhead.    (c) Compute the amount of over/under applied manufacturing overhead. (Points : 25)
   5. (TCO 9) A project will require an initial investment of $600,000 and is expected to generate the following cash flows:Year 1    $100,000
      Year 2    $250,000
      Year 3    $250,000
      Year 4    $200,000
      Year 5    $100,000(a) What is the project’s payback period?
   6. TCO 4) Copper Queen Hotel is interested in estimating fixed and variable costs so the hotel can make more accurate projections of costs, break-even and profits. The hotel is in a resort area and busy from November through March. In July and August, the hotel has only a 50 percent occupancy rate. Classify each of the following costs as fixed, variable or mixed.A. Depreciation of the building
      B. Salaries of restaurant staff
      C. Salaries of hotel manager, desk manager, accounting clerks
      D. Soap, shampoo and other toiletries in the bathrooms
      E. Laundry costs (cost of bed linens, table cloths, cleaning products, depreciation on cleaning equipment.
      F. Food and beverage costs
      G. Grounds Maintenance (Points : 25)
   7. 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)