Acct 346 managerial accounting week 8 final exam all sets answer

Acct 346 managerial accounting week 8 final exam all sets answer

Question :

(TCO 1) The principle managers follow when they only investigate significant departures from the plan is commonly known as

Points Received:

4 of 4

Question :

(TCO 1) Which of the following is not likely to be a fixed cost?

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4 of 4

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(TCO 2) Which of the following is not a manufacturing cost?

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4 of 4

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(TCO 2) An allocation base is

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4 of 4

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(TCO 3) Equivalent units are calculated by

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4 of 4

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(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?

Points Received:

4 of 4

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(TCO 4) Regression analysis

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4 of 4

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(TCO 4) The number of units that must be sold to exactly cover its fixed and variable costs is the

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4 of 4

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(TCO 5) Which of the following is treated as a product cost in variable costing?

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4 of 4

10.

Question :

(TCO 5) If the number of units sold is less than the number of units produced

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4 of 4

11.

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(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)

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4 of 4

12.

Question :

(TCO 6) Which of the following is not generally true when a company compares ABC and traditional costing?

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4 of 4

13.

Question :

(TCO 7) Fixed costs that will be eliminated if a particular course of action is undertaken are called

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4 of 4

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Question :

(TCO 7) Common costs

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4 of 4

Question :

(TCO 8) Target costing

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4 of 4

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(TCO 8) Which of the following are relevant in deciding whether to accept or reject a special order?

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4 of 4

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(TCO 9) Present value techniques

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4 of 4

Question :

(TCO 9) The internal rate of return

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4 of 4

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(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

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4 of 4

Question :

(TCO 10) Which budget is prepared first?

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4 of 4

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(TCO 10) The standard cost is

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4 of 4

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(TCO 10) In general, an unfavorable material variance arises from

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4 of 4

10.

Question :

(TCO 10) The type of center that has responsibility for generating revenue as well as controlling costs is a(n)

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4 of 4

11.

Question :

(TCO 10) Responsibility accounting holds managers responsible for

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4 of 4

12.

Question :

(TCO 10) Which ratio measures the rate earned on total capital provided by the owners?

Points Received:

4 of 4

Which of the following is not a reason for companies to know the cost of their products? (Points: 5) setting appropriate prices for the products determining the salary of the president of the company cost of product is used in computing cost of good sold computing the value of finished goods inventory

4. TCO2. A job-order costing system is likely used by a (Points: 5) soft drink bottler breakfast cereal manufacturer paint manufacturer custom home builder

5. TCO3 The type of costing system commonly used by companies that produce a large number of homogeneous units in a continuous process is called a (Points: 5) unit costing system job order costing system process costing system management cost system

6. TCO3. The cutting department’s work in process inventory on May 1 is 2,000 units and its work in process at May 31 is 1,800 units. If 10,000 units were completed during the period, how many units were started in the cutting department? (Points: 5) 12,000 units 9,800 units 10,000 units 10,200 units

7. TCO4. The range of activity for which estimates of cost behavior are likely to accurate is the (Points: 5) incremental range margin of safety relevant rang range of opportunity

8. TCO4. the margin of safety is the difference between (Points: 5) total revenue and total fixed costs expected level of sales and the break-even point budgeted fixed costs and actual fixed costs selling price and variable cost per unit

9. TCO5. Which of the following items on a variable costing income statement will change in direct proportion to a change in units sold? (Points: 5)

sales, contribution margin, income
sales, variable costs, contribution
margin sales, variable costs, fixed costs
sales, fixed costs, net income

10. TCO5. If the number of units sold is less than the number of units produced (Points: 5)
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. TCO6. Costs may be allocated to (Points: 5)
products
services
departments
any of the above

12. TCO6. The cost objective is the (Points: 5) reason for allocating the cost calculation based on budgeted amounts product, service or department that is to receive the allocation maximum amount to be allocated to any single department

13. TCO7. Which of the following is never considered in incremental analysis? (Points: 5) incremental revenues sunk costs incremental profit differential costs

14. TCO7. Fixed costs that will be eliminated if a particular course of action is undertaken are called (Points: 5)
optional costs opportunity costs direct costs avoidable costs
15. TCO8. Which of the following should be true in order for a company to accept a special order? (Points: 5) variable costs are less than fixed costs incremental revenues exceed incremental costs opportunity costs are zero the order is for a current customer

16. TCO8. Customer profitability analysis would trace which of the following to each customer? (Points: 5) sales revenue cost of goods sold cost of filling the customer order all of the above

17. TCO9. Which of the following techniques uses time value of money? (Points: 5) payback period internal rate of return accounting rate of return relative sales value method

18. TCO9. Internal rate of return (Points: 5) takes into account time value of money is the rate of return that equates the present value of future cash slows to the initial investment both A and B neither A nor B

19. TCO10. The ratio that measures the return earned independently of how the firm is financed is the (Points: 5) return on stockholders’ equity price earnings ratio earnings per share return on assets

20. TCO10. The percentage increase in sales from on year to the next would be most obvious by using (Points: 5) horizontal analysis vertical analysis cost-volume-profit analysis time and motion analysis

21. TCO10. The standard cost is (Points: 5) 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

22. TCO10. The overhead volume variance indicates that (Points: 5) raw materials have been wasted management has done a poor job of controlling costs the quantity of production differed from what was anticipated labor rates were higher than expected

23. TCO10. Responsibility accounting holds managers responsible for (Points: 5) 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

24. TCO10. In a bottom-up approach to budgeting (Points: 5) 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

25. TCO10. The cash budget alerts management to all of the following except? (Points: 5) stockouts will cause customer dissatisfaction the cash balance will be very low excess cash will be available for investment significant capital acquisitions are planned

1. Managerial accounting a. is used primarily by external users ,b.must follow GAAP ,c. is required by taxing authorities such as the IRS ,d. is optional
2.Which of the following is a period expense? a.rent on factory building ,b.raw materials ,c.depreciation on production equipment ,d.commissions paid to sales personnel

3.A form used to accumulate the cost of producing an item is called a(n) a.job-cost sheet, b.material requisition ,c.balance sheet ,d.invoice

4.Why do we compute equivalent units differently for raw materials and conversion costs? a. raw materials are more difficult to count, b. conversion costs are more difficult to count , c.they are introduced into the process at different times , d. none of the above

5.Why is it necessary to compute equivalent units for separtely for materials and conversion costs? a. mistakes are made in the accounting for these costs, b. materials and conversion enter the production process at different rates, c. conversion costs are more difficult to estimate d.none of the above reasons are true.

6. the margin of safety is the difference between (Points: 5)
a.total revenue and total fixed costs
b.expected level of sales and the break-even point
c.budgeted fixed costs and actual fixed costs
d.selling price and variable cost per unit

7.The contribution margin per unit is the difference between (Points: 5)
a.total revenue and total fixed costs
b.selling price and variable costs per unit
c.anticipated level of sales and break-even sales
d.budgeted fixed costs and actual fixed costs

8.Which of the following items on a variable costing income statement will change in direct proportion to a change in units sold? (Points: 5)
a.sales, contribution margin, income
b.sales, variable costs, contribution margin
c.sales, variable costs, fixed costs
d.sales, fixed costs, net income

9.If the number of units sold is less than the number of units produced (Points: 5)
a.full costing and variable costing will yield the same net income
b.full costing will assign some fixed manufacturing overhead to the units in the ending inventory
c.net income will be higher under variable costing than under full costing
d.inventory levels will decrease

10.A major problem with cost-plus contracts is that they (Points: 5)
a.are not acceptable under GAAP
b.cause suppliers to significant financial risks
c.require suppliers to use variable costing
d.create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract

11.Which of the following steps is not involved in the ABC approach? (Points: 5)
a.identify activities which cause costs to be incurred.
b.allocate costs to products based on activity usage
c.group costs of activities into cost pools
d.Improve processes based on benchmarking

12.Which of the following is never considered in incremental analysis? (Points: 5)
a.incremental revenues
b.sunk costs
c.incremental profit
d.differential costs

13Fixed costs that will be eliminated if a particular course of action is undertaken are called (Points: 5)
optional costs
opportunity costs
direct costs
avoidable costs

14.Target costing (Points: 5)
a.starts with the features a customer wants and what they will pay for them
b.is used after the product is designed
c.focuses on including all features in a product that a customer may want
d.all of the above

15.Customer profitability analysis would trace which of the following to each customer? (Points: 5)
sales revenue
cost of goods sold
cost of filling the customer order
all of the above

16.Present value techniques (Points: 5)
ignore cash flows that will occur more than ten years in the future
are a way of converting future dollars into equivalent current dollars
provide more conservative results than similar time value of money computations
treat dollars received today the same as dollars received in the future.

17.Which of the following techniques uses time value of money? (Points: 5)
payback period
internal rate of return
accounting rate of return
relative sales value method

18. TCO10. The ratio that measures the return earned independently of how the firm is financed is the (Points: 5)
return on stockholders’ equity
price earnings ratio
earnings per share
return on assets

19. TCO10. Asset turnover is a measure of (Points: 5)
a.how quickly a company is moving its inventory
b.how quickly a company is turning it accounts receivable into cash
c.the overall efficiency with which the company uses its assets to generate revenues
d.how rapidly the market believes the company will grow

20. TCO10. Which ratio measures the rate earned on total capital provided by the owners? (Points: 5)
return on assets
return on stockholders’ equity
earnings per share
price earnings ratio

21. TCO10. In general, an unfavorable material variance arises from (Points: 5)
using more material than planned
paying a higher price for material than planned
both A and B
none of the above

22. TCO10. Why is ROI better than income as a measurement of performance for an investment center? (Points: 5)
ROI follows GAAP
ROI is simpler to compute than income
ROI considers the amount invested as well as the net income
ROI is forward looking

23. TCO10. Which of the following is a responsibility that distinguishes an investment center manager from a profit center manager? (Points: 5)
setting prices for products
controlling costs
generating revenues
significant influence over investment decisions

24. TCO10. A subunit that has responsibility for controlling cost but not revenues is a(n)? (Points: 5)
profit center
cost center
investment center
business center

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Question :

(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 Received:

20 of 20

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:

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 Received:

25 of 25

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 $100,000
February $150,000
March $125,000

Compute cash collections for February.

Points Received:

25 of 25

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.

Points Received:

25 of 25

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Question :

(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?

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Question :

(TCO 4) Legal Beagals 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 $1,440,000 Variable Expenses 1,008,000 Contribution margin 432,000 fixed costs 250,000 profit 182,000.

Required.

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

Question 3 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 $1,295,000 Variable Expenses $1,023,000 Contribution margin $272,000 Fixed costs $250,000 Profit $22,000 Required: (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?

Question :

(TCO 5) The following data has been taken from Air-Tite company in its first year of business.

Units produced 100,000
Units 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.

Question: 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

1. A project will require an initial investment of $750,000 and will return $200,000 each year for five years. If taxes are ignored and the required rate of return is 9%, what is the project’s net present value? Based on this analysis, should the company proceed with the project?

4. 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.

3. 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 $100,000 February $150,000 March $125,000 Question: Compute cash collections for February

Question 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 units Desired ending inventory is budgeted at 20% of next month sales. Compute production for February.

Acct 346 managerial accounting week 8 final exam all sets answer