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ACCT 505 Midterm Exam (Updated)

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ACCT 505 Midterm Exam (Updated)

 

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1. (TCO A) Wages paid to an assembly line worker in a factory are a (Points : 6)
Prime Cost YES…..Conversion Cost NO.
Prime Cost YES…..Conversion Cost YES.
Prime Cost NO….Conversion Cost NO.
Prime Cost NO…..Conversion Cost YES.

Question 2.2. (TCO A)  The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to be (Points : 6)
direct costs.
sunk costs.
incremental costs.
None of the above

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Question 3.3. (TCO A) Depreciation of office buildings and office equipment is also known as (Points : 6)
variable costs.
conversion costs.
product costs.
period costs.

Question 4.4. (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? (Points : 6)
Fixed costs per unit increase and variable costs per unit increase.
Fixed costs per unit decrease and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit increase.

Question 5.5. (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 (Points : 6)
understate the predetermined overhead rate.
overstate the predetermined overhead rate.
have no effect on the predetermined overhead rate.
This cannot be determined from the information given.

Question 6.6. (TCO F) Under a job-order costing system, the product being manufactured (Points : 6)
is homogeneous.
passes from one manufacturing department to the next before being completed.
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total production costs by the units produced.

Question 7.7. (TCO F) The FIFO method only provides a major advantage over the weighted-average method in that (Points : 6)
the calculation of equivalent units is less complex under the FIFO method.
the FIFO method treats units in the beginning inventory as if they were started and completed during the current period.
the FIFO method provides measurements of work done during the current period.
the weighted-average method ignores units in the beginning and ending work-in-process inventories.

Question 8.8. (TCO B) The contribution margin equals (Points : 6)
sales – expenses.
sales – cost of goods sold.
sales – variable costs.
sales – fixed costs.

Question 9.9. (TCO B) The unit sales needed to attain the target profit is found by (Points : 6)
dividing fixed costs by the contribution margin.
adding variable expenses to fixed expenses and dividing the total by the contribution margin.
adding target profit to the fixed expenses and then dividing the total by the unit contribution margin.
adding target profit to the fixed expenses and then dividing the total by the contribution margin.

Question 10.10. (TCO E) Under variable costing, (Points : 6)
net operating income will tend to move up and down in response to changes in levels of production.
inventory costs will be lower than under absorption costing.
net operating income will tend to vary inversely with production changes.
net operating income will always be higher than under absorption costing.

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larden Corporation for the just-completed year.
Sales $950
Purchases of raw materials $170
Direct labor $210
Manufacturing overhead $220
Administrative expenses $180
Selling expenses $140
Raw materials inventory, beginning $70
Raw materials inventory, ending $80
Work-in-process inventory, beginning $30
Work-in-process inventory, ending $20
Finished goods inventory, beginning $100
Finished goods inventory, ending $70
Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.

(Points : 15)

(TCO F) The Colorado 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 80,000 65% 45%
Work in process, Jun 30 65,000 75% 65%
The department started 325,000 units into production during the month and transferred 340,000 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.

(Points : 20)

(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
Required:

Calculate the company’s unit contribution margin.
Calculate the company’s contribution margin ratio.
If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company’s net operating income be?
(TCO E) Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations.
Selling price $175

Units in beginning inventory 0
Units produced 9,500
Units sold 8,000
Units in ending Inventory 1,500

Variable costs per unit:
Direct materials $55
Direct labor $38
Variable manufacturing overhead $2
Variable selling and admin $10

Fixed costs:
Fixed manufacturing overhead $300,000
Fixed selling and admin $125,000
Required:

What is the unit product cost for the month under variable costing?
What is the unit product cost for the month under absorption costing?
Prepare an income statement for the month using the variable costing method.
Prepare an income statement for the month using the absorption costing method.

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