ACCT 346 Final Exam 1

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ACCT 346 Final Exam 1

(TCO 1) The principle managers follow when they only investigate significant departures from the plan is commonly known as
Student Answer:small amounts don’t matter
only materials and labor deserve attention
management by exception
exceptional costs yield exception results
 2.Question :(TCO 1) Which of the following is not likely to be a fixed cost?
Student Answer:Direct materials
 Salary of the human resources director
 3.Question :(TCO 2) Which of the following is not a manufacturing cost?
Student Answer: Manufacturing overhead
 Direct materials
Direct labor
 Administrative expenses
 4.Question :(TCO 2) An allocation base is
Student Answer: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.Question :(TCO 3) Equivalent units are calculated by
Student Answer: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.Question :(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?
Student Answer:$15.93

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 7.Question :(TCO 4) Regression analysis
Student Answer:uses all the available data points to estimate a cost equation
can be performed by many spreadsheet programs
 provides an equation that can be used to estimate total costs at different levels
all of the above
 8.Question :(TCO 4) The number of units that must be sold to exactly cover its fixed and variable costs is the
Student Answer:contribution margin
break-even point
 relevant range
margin of safety
 9.Question :(TCO 5) Which of the following is treated as a product cost in variable costing?
Student Answer:Sales commissions
Administrative salaries
Fixed manufacturing overhead
Direct labor
 10.Question :(TCO 5) If the number of units sold is less than the number of units produced
Student Answer:full costing and variable costing will yield the same net income.
full costing will assign some fixed manufacturing overhead to the units in the ending inventory.
net income will be higher under variable costing than under full costing.
inventory levels will decrease.
 11.Question :(TCO 6) A contract which specifies that the suppler will be paid for the cost of production as well as some fixed amount or percentage of cost is called a(n)
Student Answer:approved overrun.
cost-plus contract.
allocation plan.
indirect cost budget.
 12.Question :(TCO 6) Which of the following is not generally true when a company compares ABC and traditional costing?
 13.Question :(TCO 7) Fixed costs that will be eliminated if a particular course of action is undertaken are called
(TCO 7) Common costs
 2.Question :(TCO 8) Target costing
 3.Question :(TCO 8) Which of the following are relevant in deciding whether to accept or reject a special order?
 4.Question :(TCO 9) Present value techniques
 5.Question :(TCO 9) The internal rate of return
 6.Question :(TCO 10) A method of budget preparation that requires all budgeted amounts to be justified by the department, even if the amounts were supported in prior periods, is called
 7.Question :(TCO 10) Which budget is prepared first?
 8.Question :(TCO 10) The standard cost is
 9.Question :(TCO 10) In general, an unfavorable material variance arises from
 10.Question :(TCO 10) The type of center that has responsibility for generating revenue as well as controlling costs is a(n)
 11.Question :(TCO 10) Responsibility accounting holds managers responsible for
 12.Question :(TCO 10) Which ratio measures the rate earned on total capital provided by the owners?
(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.Question :(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:

Financial Planning150 employees$10,000,000
Business Consulting50 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?

 3.Question :(TCO 10) Charlie Corp sells it products on both credit and cash basis. Monthly sales are sold 20% for cash, 80% for credit. Credit sales are collected 40% in the month of sale and 60% the following month. Sales for the first quarter are as follows:January $100,000February $150,000

March $125,000

Compute cash collections for February.

 4.Question :(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.

(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?
 2.Question :(TCO 4) Legal Docs 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 $1,295,000Variable Expenses $1,023,000

Contribution margin $272,000

Fixed costs $250,000

Profit $22,000


(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.Question :(TCO 5) The following data has been taken from Air-Tite company in its first year of business.Units produced 100,000Units sold 80,000

Units in ending inventory 20,000

Fixed manufacturing overhead $400,000

(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.


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