ACCT 230 NAME: ____________________
EXAM 1A ID# _______________________
THIS EXAM CONSISTS OF 9
MULTIPLE CHOICE QUESTIONS, AND 3 WORKOUT PROBLEMS. RECORD THE ANSWERS TO ALL MULTIPLE CHOICE
QUESTIONS ON A SCANTRON. ONLY THE
SCANTRON WILL BE CONSIDERED.
COMPUTATIONS FOR THE WORK OUT PROBLEMS MUST BE SHOWN IN GOOD FORM
(INCLUDING NECESSARY LABEL OTHERWISE NO PARTIAL CREDIT WILL BE GIVEN). THE POINT DISTRIBUTION IS AS FOLLOWS:
Possible
points Points
Earned
1 – 10 MULTIPLE CHOICE (10 @ 4 each) 36 _______
11. Job order costing 24 _______
12. ABC vs Traditional 20 _______
13. Cost Behavior 15 _______
14. Essay 5 _______
Total 100
#1 Sawyer Manufacturing Company uses a predetermined
overhead rate based on direct labor hours to apply manufacturing overhead to
jobs. Last year, the company worked
57,000 actual direct labor hours and incurred $345,000 of actual manufacturing
overhead cost. The Company had estimated
that it would work 55,000 direct labor hours during the year and incur $330,000
of manufacturing overhead cost. The company’s manufacturing
overhead cost for the year was:
a. overapplied
by $15,000.
b. underapplied
by $15,000.
c. overapplied
by $3,000.
d. underapplied
by $3,000.
#2 The balance in
White Company’s Work in Process inventory account was $15,000 on August 1 and
$18,000 on August 31. The company
incurred $30,000 in direct labor cost during August and requisitioned $25,000
in raw materials (all direct material).
If the sum of the debits to the manufacturing Overhead
account total $28,000 for the month, and if the sum of the credits
totaled $30,000, then:
a. Finished Goods was debited for $82,000
during the month.
b. Finished Goods was credited for $83,000
during the
month.
c. Manufacturing Overhead was underapplied by $2,000 at the end of the month.
d. Finished Goods was debited for $85,000
during the month.
#3 An increase in the activity level within the relevant range
results in:
a. an increase
in fixed cost per unit.
b. an
proportionate increase in total fixed costs.
c. an unchanged
fixed cost per unit.
d. a decrease
in fixed cost per unit.
#4. The linear
equation Y = a + bx is often used to express cost
formulas. In this equation:
a. the b term represents variable cost per
unit of activity.
b. the a term represents variable cost in
total.
c. the X term represents total cost.
d. the Y term represents total fixed cost.
#5. An example of a
discretionary fixed cost is:
a. insurance
b. taxes on real estate
c. management training.
d. depreciation of buildings and
equipment.
#6 An example of a
committed fixed cost is:
a. a training program for salespersons.
b. executive travel expenses.
c. property taxes on the factory building.
d. new product research and development.
In the O’Donnell Manufacturing
Company, at an activity level of 80,000 machine hours, total overhead cost were $223,000.
Of this amount, utilities were $48,000 (all variable) and depreciation
was $60,000 (all fixed). The balance of
the overhead cost consisted of maintenance cost (mixed). At 100,000 machine hours, maintenance cost were $130,000.
Assume that all of the activity
levels mentioned in this problem are within the relevant range.
#7 The variable cost for maintenance per machine hour is:
a. $1.30
b. $1.44
c. $0.75
d. $1.35
#8 The total fixed overhead cost for O’Donnell is:
a. $115,000
b. $130,000
c. $ 60,000
d. $ 55,000
#9 If 110,000 machine hours of activity are
projected for next
period, total expected overhead cost would be:
a. $256,000
b. $263,500
c. $306,625
d. $242,500
#10 Allenton Company is a manufacturing firm
that uses job-order costing. At the beginning
of the year, the company’s inventory balances were as follows:
Raw materials . . . . .
. . . . . $ 26,000
Work in process . . . . . . . . 47,000
Finished goods . . . . .
. . . . 133,000
The
company applies overhead to jobs using a predetermined overhead rate based on
machine-hours. At the beginning of the
year, the company estimated that it would work 31,000 machine-hours and incur
$248,000 in manufacturing overhead cost.
The following transactions were recorded for the year:
a. Raw
materials were purchased, $411,000.
b. Raw materials were requisitioned for
use in production, $409,000 ($388,000 direct and $21,000 indirect).
c. The following employee costs were
incurred; direct labor, $145,000; indirect labor, $61,000; and administrative
salaries, $190,000.
d. Selling costs, $148,000.
e. Factory utility costs, $12,000.
f. Depreciation for the year was $121,000
of which $114,000 is related to factory operations and $7,000 is related to
selling and administrative activities.
g. Manufacturing overhead was applied to
jobs. The actual level of activity for
the year was 29,000 machine-hours.
h. The cost of goods available for sale
for the year was $916,000.
i. Sales for the year totaled $1,107,000
and the costs remaining in finished goods Inventory totaled 148,000.
j. The balance in the Manufacturing
Overhead account was closed out to Cost of Goods Sold.
Required:
a. Calculate cost of good manufactured in
good form.
b. Was the
overhead under or overapplied? By how much? __________
c. The company treats any under or overapplied overhead as insignificant. What is the journal entry to dispose of
it?
d. What is Net Income? _____________
#11 Acton Company
has two products: A and B. The annual production and sales of Product A
is 800 units and of Product B is 500 units. The company has traditionally used direct
labor-hours as the basis for applying all manufacturing overhead to
products. Product A requires 0.3 direct
labor hours per unit and Product B requires 0.2 direct labor hours per
unit. The total estimated overhead for
next period is $92,023.
The
company is considering switching to an activity-based costing system for the
purpose of computing unit product costs for external reports. The new activity-based costing system would
have three overhead activity cost pools –Activity 1, Activity 2, and General
Factory – with estimated overhead costs and expected activity as follows:
Estimated
Activity Overhead Expected Activity
Cost
Pool Costs Product A Product B Total
Activity
1 $14,487 500 600 1,100
Activity
2 $64,880 2,500 500 3,000
General
Factory $12,736 240 100 340
Required: Calculate the unit costs of Product A and
Product B under
A B
a. Traditional Costing ____________ _____________
b. Activity-based Costing ____________ _____________
#12 The Central Valley Company is a
merchandising firm that sells a single product.
The company’s revenues and expenses for the last three months are given
below:
Central Valley Company
Comparative Income Statement
For the Second Quarter
April May June
Sales in
units . . . . . . . . . . . . . . . . . . .
4,500 5,250 6,000
Sales
revenue . . . . . . . . . . . . . . . . . . $630,000 $735,000 $840,000
Less cost
of goods sold . . . . . . . . . . 252,000 294,000 336,000
Gross
margin . . . . . . . . . . . . . . . . .
. 378,000 441,000 504,000
Less
operating expenses:
Shipping expense . . . . . . . . . . 56,000 63,500 71,000
Advertising expense . . . . . . . . 70,000 70,000 70,000
Salaries and commissions . . . 143,000 161,750 180,500
Insurance expense . . . . . . . . . . 9,000 9,000 9,000
Depreciation expense . . . . . . . 42,000 42,000 42,000
Total operating expenses . . 320,000 346,250 372,500
Net
Income . . . . . . . . . . . . . . . . . . . . . $
58,000 $ 94,750 $131,500
Required:
a. Determined
which expenses are variable, fixed or mixed.
Use of the high-low method, separate each mixed expense into its
variable and fixed components. State the
cost formula for each mixed expense.
|
Cost item |
Cost behavior |
Varcost/Unit |
Total Fixed Cost |
|
Cost of
Goods sold |
|||
|
Shipping expense |
|||
|
Advertising expense |
|||
|
Salaries &
Commission |
|||
|
Insurance
expense |
|||
|
Depreciation expense |
B) Compute Central Valley’s Contribution
Margin and Net Income when it sells 5800 units.
Contribution Margin ____________________
Net Income __________________________
Essay
13. List and describe the three generic
competitive strategies.
Answers
Spring ’02 Exam 1 Answers
COGS 24,000
12. a. Cost behavior Var Cost/ Unit Total Fixed Cost
Var 56 0 Mixed 10 11,000
Fixed 0 70,000
Mixed 25 30,500
Fixed 0 9,000
Fixed 0 42,000
b. $284,200
$121,700
ACCT 230 NAME: ____________________
EXAM 2 ID# _______________________
Section 8:00 ____ 9:35 _____
McGowan
THIS EXAM CONSISTS OF 10
MULTIPLE CHOICE AND 3 WORKOUT PROBLEMS.
ONLY SCANTRON ANSWERS WILL BE CONSIDERED FOR MULTIPLE CHOICE
QUESTIONS. SHOW CALCULATIONS IN GOOD
FORM FOR PROBLEMS 11-13. OTHERWISE NO
PARTIAL CREDIT WILL BE AWARDED. LABLE
ALL WORK AND WHEN WORK IS SHOWN ON OTHER THAN THE PROBLEM PAGE – PLEASE INDICATE.
THE POINT DISTRIBUTION IS
AS FOLLOWS:
Question # Topic
Possible
Points Points Earned
1
– 10 (03 each) Multiple Choice 30 _______
11 CVP Analysis 22 _______
12 Absorption/Variable
Costing 24 _______
13 Standard
Costing 24 _______
_________ _______
Total Points 100 _______
Good Luck!
Multiple Choice (1-10)
#1 What factor is
the cause of the difference between net income as computed under absorption
costing and net income as computed under variable costing?
a. Absorption costing considers all
manufacturing costs in the determinations of net income, whereas variable
costing considers only prime costs.
b. Absorption costing allocates fixed
manufacturing costs between cost of goods sold and inventories, and variable
costing considers all fixed manufacturing costs as period costs.
c. Absorption costing includes all variable
manufacturing costs in product costs, but variable costing considers variable
manufacturing cost to be period costs.
d. Absorption costing includes all fixed
costs in product costs, but variable costing expenses all fixed costs.
#2 Modesto Company produces and sells
Product AlphaB.
To guard against stockouts, the company
requires that 20% of the next month’s sales be on hand at the end of each
month. Budgeted sales of Product AlphaB over the next four months are:
June July August September
Budgeted
sales in units 30,000 40,000 60,000
50,000
Budgeted production for August would
be:
a. 62,000
units
b. 70,000
units
c. 58,000
units
d. 50,000
units
#3 The Tobler
Company has budgeted production for next as follows:
Quarter . . . . . . . . . . . . . . . . First
Second Third Fourth
Production in units . . . . . . . 10,000 12,000 16,000 14,000
Four pounds of raw materials are
required for each unit produced. Raw materials on hand at the start of the year totals 4,000
lbs. The raw materials inventory at the
end of each quarter should equal 10% of the next quarter’s production
needs. Budgeted purchases of raw
materials in the third quarter would be:
a. 63,200 lbs.
b. 62,400 lbs.
c. 56,800 lbs.
d. 50,400 lbs
#4 (Appendix) Karpov
Enterprises, a wholesaler of electronic instruments, uses the economic order
quantity model in its inventory management.
Data concerning one product appear below:
Total units purchased
annually . . . . . . . . . . . . . . . .
. . . . 810
Costs to place one
order . . . . . . . . . . . . . . . . .
. . . . . . . . $10
Selling price per
unit . . . . . . . . . . . . . . . . .
. . . . . . . . . . . $40
Annual cost to carry one
unit in stock . . . . . . . . . . . . . . . . $ 2
The economic order quantity
(EOQ) for this product would be:
a. 18 units.
b. 90 units.
c. 81 units.
d. 180 units.
Reference: 5-7
The Bandeiras Company, a
merchandising firm, has budgeted its activity for
December according to the following information:
I. Sales
at $550,000, all for cash.
II. Merchandise
inventory on November 30 was $300,000.
III. Budgeted
depreciation for December is $35,000.
IV. The
cash balance at December 1 was $25,000.
V. Selling and administrative expenses are
budgeted at $60,000 for December and are paid in cash.
VI. The planned merchandise inventory on
December 31 is $270,000.
VII. The invoice cost for merchandise purchases
represents 75% of
the sales price. All purchases are paid
for in cash.
#5 The
budgeted cash receipts for December are:
a. $412,500.
b. $137,500.
c. $585,000.
d. $550,000.
#6 The
budgeted cash disbursements for December are:
a. $382,500
b. $442,500.
c. $472,500.
d. $477,500.
#7 The
budgeted net income for December is:
a. $107,500.
b. $137,500.
c. $
42,500.
d. $
77,500.
#8 Parlee
Company’s sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are
collected in the month of sale, 25% in the month following sales, and 12% in
the second month following sale. The remainder are uncollectible.
The following are budgeted sales data:
January February
March April
Total Sales $60,000 $ 70,000 $50,000
$30,000
Total cash receipts in April
would be budgeted to be:
a. $38,900.
b. $47,900.
c. $27,230.
d. $36,230.
#9 The
amount by which a company’s sales can decline before losses are incurred is
called the:
a. contribution margin ratio.
b. degree of operation leverage.
c. margin of safety.
d. contribution margin ratio.
#10 If company
A has a higher degree of operating leverage than company B, then:
a. the company A has higher variable expenses.
b. the company A’s profits are more sensitive to
percentage changes in sales.
c. the company A is more profitable.
d. the company A is less risky.
#11 Breakeven Analysis
Diversified Corp. manufactures
and sells two products: X and Y. The operating results of the company for 2001
follow:
Product
X Product Y
Sales
in unit 2,000 3,000
Sales
price per unit $ 10 $ 5
Variable
costs per unit 7 3
In
addition, the company incurred total fixed costs in the amount of $9,000.
a. How many total units would the company have
needed to sell to breakeven in 2001?
__________
b. Consistent with A
above, how many of those units would you expect to be
Product X? __________
Product Y? __________
c. How many units would the company have needed
to sell in 2001 to produce a profit of $12,000?
X __________
Y __________
d. How many units would the company need to sell
in 2001 to produce a profit of $12,000 after taxes if the tax rate is 20%?
X __________
Y __________
e. How many units would the company need to earn
a profit equal to 20% of sales?
X __________
Y __________
#12 Absorption vs. Variable costing:
Lee Company,
which has only one product, has provided the following data concerning its most
recent month of operations:
Selling
price . . . . . . . . . . . . . . . . .
. . . . . . . . . $95
Units
in beginning inventory . . . . . . . . .
. . . . . 100
Units
produced . . . . . . . . . . . . . . .
. . . . . . . . 6,200
Units
sold . . . . . . . . . . . . . . . . .
. . . . . . . . . . 5,900
Variable
cost per unit:
Direct
materials . . . . . . . . . . . . . .
. . . . . . $42
Direct
labor . . . . . . . . . . . . . . . . .
. . . . . . . 28
Variable
manufacturing overhead . . . . . . . 1
Variable
selling and administrative . . . . . . 5
Fixed
costs:
Fixed
manufacturing overhead . . . . . . . . . $62,000
Fixed
selling and administrative . . . . . .
. . 35,400
The
company produces the same number of units every month, although the sales in
units vary from month to month. The
company’s variable costs per unit and total fixed costs have been constant from
month to month.
Required:
a. What is the unit product cost for the month
under variable costing?
______________________________
b. What is the unit product cost for the month
under absorption costing?
_______________________________
c. What is net income for the month using the
variable costing method?
_______________________________
d. What is net income for the month using the
absorption costing method?
_______________________________
e. Reconcile the variable costing and absorption
costing net incomes for the month.
#13 Standard costing
(Appendix)
Albert Manufacturing Company manufactures a single product. The standard cost of one unit of this product
is:
Direct
materials: 6 feet at $1.50 . . . . . . . . . $
9.00
Direct
labor: 1 hour at $6.75 . . . . . . . . . . . . 6.75
Variable
overhead: 1 hour at $4.50 . . . . . . . 4.50
Total
standard variable cost per unit . . . .
. . $20.25
During
the month October, 6,000 units were produced.
Selected
cost data relating to the month’s production follow:
Material
purchased: 60,000 feet at $1.43 . . . -
Material
used in production: 38,00
feet . . . . -
Direct
labor: 6,500 hours . . . . . . . . . . .
. . . . . $41,925
Variable
overhead cost incurred . . . . . . . . .
. $30,713
Variable
overhead efficiency variance . . . . . . $ 2,250
There
was no beginning inventory of raw materials.
The variable overhead rate is based on direct labor-hours.
Required:
a. For direct materials, compute the price
and quantity variances for the month, and prepare journal entries to record
activity for the month.
b. For direct labor, compute the rate and
efficiency variances for the month, and prepare a journal entry to record labor
activity for the month.
c. For variable
overhead, compute over/under applied overhead.
d. Explain what variances exist to create
the over/under applied overhead (Indicate favorable or unfavorable)
e. When and why would a firm have an
unfavorable volume variance?
Answers
Spring ’02 Exam 2 Answers
1. b
2. c
3. a
4. b
5. d
6. b
7. c
8. d
9. c
10. b
11. a. 3750
b. X 1500, Y2250
c. X 3500, Y 5250
d. X 4000, Y 6000
e. X 3600, Y 5400
12. a. 71
b. 81
c. 14,700
d. 17,700
e. beg inv fixed OH 1000
end inv fixed OH 4000
3000= 17700-14700
13. a. price 4200F, eff 3000U
b. price 1950F, eff 3375U
c. 3713 underapplied