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ACCT 505 Week 4 Mid Term Exam All Correct Answer

ACCT 505 Week 4 Mid Term Exam All Correct Answer

ACCT 505 Week 4 Mid Term Exam All Correct Answer

ACCT 505 Week 4 Mid Term Exam All Correct Answer

ACCT 505 Week 4 Mid Term Exam All Correct Answer

ACCT 505 Week 4 Mid Term Exam All Correct Answer

1. Question : (TCO A) Wages paid to an assembly line worker in a factory are a

Prime Cost YES…..Conversion Cost NO.

Prime Cost YES…..Conversion Cost YES.

Prime Cost NO….Conversion Cost NO.

Prime Cost NO…..Conversion Cost YES.

2. Question : (TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n)

period cost.

incremental cost.

opportunity cost.

None of the above

3. Question : (TCO A) Depreciation of office buildings and office equipment is also known as

: variable costs.

conversion costs.

product costs.

period costs.

4. Question : (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?

: 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.

5. Question : (TCO F) Which of the following statements is true?
I. Overhead application may be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the time of completion of the job.
III. Overhead application should be made to any job not completed at year end in order to properly value the work in process inventory.

: Only statement I is true.

Only statement II is true.

Both statements I and II are true.

Statements I, II, and III are all true.

6. Question : (TCO F) A job-order cost system is employed in those situations where

: many different products, jobs, or batches of production are being produced each period.
manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.
the product moves from department to department before being completed.
the unit cost of production is computed by dividing the total production costs by the number of units produced.

7. Question : (TCO F) The FIFO method only provides a major advantage over the weighted-average method in that

: 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.

8. Question : (TCO B) The contribution margin ratio always decreases when the

: break-even point increases.

break-even point decreases.

variable expenses as a percentage of net sales increase.

variable expenses as a percentage of net sales decrease.

9. Question : (TCO B) Which of the following would not affect the break-even point?

: Number of units sold

Variable expense per unit

Total fixed expenses

Selling price per unit

10. Question : (TCO E) In an income statement prepared using the variable costing method, variable selling and administrative expenses would

: be used in the computation of the contribution margin.

be used in the computation of net operating income but not in the computation of the contribution margin.
be treated differently from variable manufacturing expenses.

not be used.

1. Question : (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year:
Sales……………………………………………………………………… $910
Purchases of raw materials………………………………………… $225
Direct labor…………………………………………………………….. $245
Manufacturing overhead……………………………………………. $265
Administrative expenses……………………………………………. $150
Selling expenses………………………………………………………. $140
Raw materials inventory, beginning………………………………. $15
Raw materials inventory, ending………………………………….. $45
Work-in-process inventory, beginning…………………………… $20
Work-in-process inventory, ending………………………………. $55
Finished goods inventory, beginning…………………………….. $100
Finished goods inventory, ending………………………………… $135
Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

2. Question : (TCO F) The Illinois 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 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
The department started 475,000 units into production during the month and transferred 480,000 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.

3. Question : (TCO B) A tile manufacturer has supplied the following data:
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Net operating income $180,000
Required:
a. Calculate the company’s unit contribution margin.
b. Calculate the company’s unit contribution ratio.
c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company’s net operating income be?

4. Question : (TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price $ 125

Units in beginning inventory 600
Units oroduced 3000
Units sold 3500
Units in ending inventory 100

Variable costs per unit:
Direct materials $ 15
Direct labor $ 50
Variable manufacturing overhead $ 8
Variable selling and admin $ 12

Fixed costs:
Fixed manufacturing overhead $ 75,000
Fixed selling and admin $ 20,000
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. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.

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