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ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

ACCT 505 Week 8 Final Exam Set 1 set 2 and set 3 Complete Answer

Set 1

1. (TCO A) Wages paid to the factory maintenance supervisor are considered an example of: (Points : 5) Direct Labor – yes, Period Cost – yes Direct Labor – yes, Period Cost – No Direct Labor – no , Period Cost – yes Direct Labor – no , Period Cost – no

2. (TCO A) Rent on a manufacturing plant is an element of: (Points : 5) Conversion cost – yes, period cost – no Conversion cost – yes, period cost – yes Conversion cost – no, period cost – yes Conversion cost – no, period cost – no
3. (TCO B) Evergreen Corp. has provided the following data: Sales per period 1,000 units Selling price $40 per unit Variable manufacturing cost $12 per unit Selling expenses $5,100 plus 5% of selling price Administrative expenses $3,000 plus 20% of selling price The number of units needed to achieve a target net operating income of $63,900 would be:
(Points : 5) 4,000 units 3,950 units 4,150 units 4,050 units

4. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points : 5) Contribution Margin Per Unit – Increases, Contribution Margin Ratio – Increases, Break-Even in Units – Decreases Contribution Margin Per Unit – No Change, Contribution Margin Ratio – No Change, Break-Even in Units – No Change Contribution Margin Per Unit – No Change, Contribution Margin Ratio – Increases, Break-Even in Units – No Change Contribution Margin Per Unit – Increases, Contribution Margin Ratio – No Change, Break-Even in Units – Decreases

5. (TCO E) Rebel Company manufactures a single product and has the following cost structure: Variable costs per unit: Production…………………………………………. $5 Selling and administrative……………………… $3 Fixed costs in total: Production…………………………………………. $32,000 Selling and administrative……………………… $16,000 Last year there were no beginning inventories, 8,000 units were produced, and 7,800 units were sold.
Under variable costing, the unit product cost would be:
(Points : 5) $5 $8 $9 $11

6. (TCO F) Vagon Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $86,000. Which of the following statements is true? (Points : 5) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000 Actual manufacturing overhead incurred during the month was $66,000 Manufacturing overhead applied to Work in Process for the month was $76,000 Manufacturing overhead for the month was overapplied by $10,000

7. (TCO G) The net present value (NPV) method of investment project analysis assumes that the project’s cash flows are reinvested at the: (Points : 5) internal rate of return. discount rate used in the NPV calculation. firm’s simple rate of return. firm’s average ROI.

8. (TCO G) Logan Company is considering two projects, A and B. The following information has been gathered on these projects: Project A Project B Initial investment needed………………………………….$40,000 $60,000 Present value of future cash flows………………………………………60,000 85,000 Useful life………………………………………….4 years 4 years Based on this information, which of the following statements is (are) true?
I. Project A has the highest ranking according to the profitability index criterion. II. Project B has the highest ranking according to the net present value criterion.
(Points : 5) Only I Only II Both I and II Neither I and II

9. (TCO B) Variable expenses for Alpha Company are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: (Points : 5) $250,000 $375,000 $600,000 $150,000

10. (TCO F) Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used: $4,200
Direct labor hours worked: 300
Direct labor rate per hour: $8.00
Machine hours used: 200
Predetermined overhead rate per machine hour: $15.00
What is the total manufacturing cost recorded on Job 1501?
(Points : 5) $8,800 $9,600 $10,300 $11,100

1. (TCO C) The following overhead data are for a department of a large company.
Actual costs Static Incurred budget
Activity level (in units) 360 340
Variable costs: Indirect materials $4,182 $4,148 Electricity $2,536 $2,414 Fixed costs: Administration $6,540 $6,500 Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.

2. (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data:
PRODUCT
Total A B C
Sales…………………………………………$ 100,000……..$50,000………$20,000………..$30,000
Variable Expenses………………………… 60,000……….30,000…………10,000………….20,000
Contribution Margin……………………….. .40,000……….20,000…………10,000………….10,000
Fixed Expenses:
Rent…………………………………………. .5,000………..2,500…………..1,000……………1,500
Depreciation………………………………. 6,000………..3,000…………..1,200…………….1,800
Utilities………………………………………4,000………..2,000……………..500…………….1,500
Supervisors’ salaries………………….. 5,000………. 1,500……………..500…………….3,000
Maintenance………………………………3,000………..1,500………………600………………900
Administrative Expenses……………. 10,000………..3,000……………..2,000…………..5,000
Total Fixed Expenses…………………… 33,000……….13,500……………5,800………….13,700
Net Operating Income…………………… $7,000……….$6,500………….$4,200…………($3,700)
The following additional information is available:
The factory rent of $1,500 assigned to product C is avoidable if the product were dropped.
The company’s total depreciation would not be affected by dropping C.
Eliminating product C will reduce the monthly utility bill from $1,500 to $800.
All supervisors’ salaries are avoidable.
If product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.
Elimination of product C will make it possible to cut two persons from the administrative staff. Currently, their combined salaries total $2,000.
Required: Prepare an analysis showing whether product C should be eliminated. Articulate your findings.

Set 2

1. (TCO A) Wages paid to the factory maintenance supervisor are considered an example of: (Points : 5) Direct Labor – yes, Period Cost – yes Direct Labor – yes, Period Cost – No Direct Labor – no , Period Cost – yes Direct Labor – no , Period Cost – no

2. (TCO A) Rent on a manufacturing plant is an element of: (Points : 5) Conversion cost – yes, period cost – no Conversion cost – yes, period cost – yes Conversion cost – no, period cost – yes Conversion cost – no, period cost – no

3. (TCO B) Evergreen Corp. has provided the following data: Sales per period 1,000 units Selling price $40 per unit Variable manufacturing cost $12 per unit Selling expenses $5,100 plus 5% of selling price Administrative expenses $3,000 plus 20% of selling price The number of units needed to achieve a target net operating income of $63,900 would be:
(Points : 5) 4,000 units 3,950 units 4,150 units 4,050 units

4. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points : 5) Contribution Margin Per Unit – Increases, Contribution Margin Ratio – Increases, Break-Even in Units – Decreases Contribution Margin Per Unit – No Change, Contribution Margin Ratio – No Change, Break-Even in Units – No Change Contribution Margin Per Unit – No Change, Contribution Margin Ratio – Increases, Break-Even in Units – No Change Contribution Margin Per Unit – Increases, Contribution Margin Ratio – No Change, Break-Even in Units – Decreases

5. (TCO E) Rebel Company manufactures a single product and has the following cost structure: Variable costs per unit: Production…………………………………………. $5 Selling and administrative……………………… $3 Fixed costs in total: Production…………………………………………. $32,000 Selling and administrative……………………… $16,000 Last year there were no beginning inventories, 8,000 units were produced, and 7,800 units were sold.
Under variable costing, the unit product cost would be:
(Points : 5) $5 $8 $9 $11

6. (TCO F) Vagon Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $86,000. Which of the following statements is true? (Points : 5) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000 Actual manufacturing overhead incurred during the month was $66,000 Manufacturing overhead applied to Work in Process for the month was $76,000 Manufacturing overhead for the month was overapplied by $10,000

7. (TCO G) The net present value (NPV) method of investment project analysis assumes that the project’s cash flows are reinvested at the: (Points : 5) internal rate of return. discount rate used in the NPV calculation. firm’s simple rate of return. firm’s average ROI.

8. (TCO G) Logan Company is considering two projects, A and B. The following information has been gathered on these projects: Project A Project B Initial investment needed………………………………….$40,000 $60,000 Present value of future cash flows………………………………………60,000 85,000 Useful life………………………………………….4 years 4 years Based on this information, which of the following statements is (are) true?
I. Project A has the highest ranking according to the profitability index criterion. II. Project B has the highest ranking according to the net present value criterion.
(Points : 5) Only I Only II Both I and II Neither I and II

9. (TCO B) Variable expenses for Alpha Company are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: (Points : 5) $250,000 $375,000 $600,000 $150,000

10. (TCO F) Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used: $4,200
Direct labor hours worked: 300
Direct labor rate per hour: $8.00
Machine hours used: 200
Predetermined overhead rate per machine hour: $15.00
What is the total manufacturing cost recorded on Job 1501?
(Points : 5) $8,800 $9,600 $10,300 $11,100

1. (TCO C) The following overhead data are for a department of a large company.
Actual costs Static Incurred budget
Activity level (in units) 360 340
Variable costs: Indirect materials $4,182 $4,148 Electricity $2,536 $2,414 Fixed costs: Administration $6,540 $6,500 Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.

2. (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data:
PRODUCT
Total A B C
Sales…………………………………………$ 100,000……..$50,000………$20,000………..$30,000
Variable Expenses………………………… 60,000……….30,000…………10,000………….20,000
Contribution Margin……………………….. .40,000……….20,000…………10,000………….10,000
Fixed Expenses:
Rent…………………………………………. .5,000………..2,500…………..1,000……………1,500
Depreciation………………………………. 6,000………..3,000…………..1,200…………….1,800
Utilities………………………………………4,000………..2,000……………..500…………….1,500
Supervisors’ salaries………………….. 5,000………. 1,500……………..500…………….3,000
Maintenance………………………………3,000………..1,500………………600………………900
Administrative Expenses……………. 10,000………..3,000……………..2,000…………..5,000
Total Fixed Expenses…………………… 33,000……….13,500……………5,800………….13,700
Net Operating Income…………………… $7,000……….$6,500………….$4,200…………($3,700)
The following additional information is available:
The factory rent of $1,500 assigned to product C is avoidable if the product were dropped.
The company’s total depreciation would not be affected by dropping C.
Eliminating product C will reduce the monthly utility bill from $1,500 to $800.
All supervisors’ salaries are avoidable.
If product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.
Elimination of product C will make it possible to cut two persons from the administrative staff. Currently, their combined salaries total $2,000.
Required: Prepare an analysis showing whether product C should be eliminated. Articulate your findings.

Set 3

1. (TCO A) Wages paid to the factory maintenance supervisor are considered an example of: (Points : 5) Direct Labor – yes, Period Cost – yes Direct Labor – yes, Period Cost – No Direct Labor – no , Period Cost – yes Direct Labor – no , Period Cost – no

2. (TCO A) Rent on a manufacturing plant is an element of: (Points : 5) Conversion cost – yes, period cost – no Conversion cost – yes, period cost – yes Conversion cost – no, period cost – yes Conversion cost – no, period cost – no

3. (TCO B) Evergreen Corp. has provided the following data: Sales per period 1,000 units Selling price $40 per unit Variable manufacturing cost $12 per unit Selling expenses $5,100 plus 5% of selling price Administrative expenses $3,000 plus 20% of selling price The number of units needed to achieve a target net operating income of $63,900 would be:
(Points : 5) 4,000 units 3,950 units 4,150 units 4,050 units

4. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points : 5) Contribution Margin Per Unit – Increases, Contribution Margin Ratio – Increases, Break-Even in Units – Decreases Contribution Margin Per Unit – No Change, Contribution Margin Ratio – No Change, Break-Even in Units – No Change Contribution Margin Per Unit – No Change, Contribution Margin Ratio – Increases, Break-Even in Units – No Change Contribution Margin Per Unit – Increases, Contribution Margin Ratio – No Change, Break-Even in Units – Decreases

5. (TCO E) Rebel Company manufactures a single product and has the following cost structure: Variable costs per unit: Production…………………………………………. $5 Selling and administrative……………………… $3 Fixed costs in total: Production…………………………………………. $32,000 Selling and administrative……………………… $16,000 Last year there were no beginning inventories, 8,000 units were produced, and 7,800 units were sold.
Under variable costing, the unit product cost would be:
(Points : 5) $5 $8 $9 $11

6. (TCO F) Vagon Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $86,000. Which of the following statements is true? (Points : 5) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000 Actual manufacturing overhead incurred during the month was $66,000 Manufacturing overhead applied to Work in Process for the month was $76,000 Manufacturing overhead for the month was overapplied by $10,000

7. (TCO G) The net present value (NPV) method of investment project analysis assumes that the project’s cash flows are reinvested at the: (Points : 5) internal rate of return. discount rate used in the NPV calculation. firm’s simple rate of return. firm’s average ROI.

8. (TCO G) Logan Company is considering two projects, A and B. The following information has been gathered on these projects: Project A Project B Initial investment needed………………………………….$40,000 $60,000 Present value of future cash flows………………………………………60,000 85,000 Useful life………………………………………….4 years 4 years Based on this information, which of the following statements is (are) true?
I. Project A has the highest ranking according to the profitability index criterion. II. Project B has the highest ranking according to the net present value criterion.
(Points : 5) Only I Only II Both I and II Neither I and II

9. (TCO B) Variable expenses for Alpha Company are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: (Points : 5) $250,000 $375,000 $600,000 $150,000

10. (TCO F) Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used: $4,200
Direct labor hours worked: 300
Direct labor rate per hour: $8.00
Machine hours used: 200
Predetermined overhead rate per machine hour: $15.00
What is the total manufacturing cost recorded on Job 1501?
(Points : 5) $8,800 $9,600 $10,300 $11,100

1. (TCO C) The following overhead data are for a department of a large company.
Actual costs Static Incurred budget
Activity level (in units) 360 340
Variable costs: Indirect materials $4,182 $4,148 Electricity $2,536 $2,414 Fixed costs: Administration $6,540 $6,500 Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.

2. (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data:
PRODUCT
Total A B C
Sales…………………………………………$ 100,000……..$50,000………$20,000………..$30,000
Variable Expenses………………………… 60,000……….30,000…………10,000………….20,000
Contribution Margin……………………….. .40,000……….20,000…………10,000………….10,000
Fixed Expenses:
Rent…………………………………………. .5,000………..2,500…………..1,000……………1,500
Depreciation………………………………. 6,000………..3,000…………..1,200…………….1,800
Utilities………………………………………4,000………..2,000……………..500…………….1,500
Supervisors’ salaries………………….. 5,000………. 1,500……………..500…………….3,000
Maintenance………………………………3,000………..1,500………………600………………900
Administrative Expenses……………. 10,000………..3,000……………..2,000…………..5,000
Total Fixed Expenses…………………… 33,000……….13,500……………5,800………….13,700
Net Operating Income…………………… $7,000……….$6,500………….$4,200…………($3,700)
The following additional information is available:
The factory rent of $1,500 assigned to product C is avoidable if the product were dropped.
The company’s total depreciation would not be affected by dropping C.
Eliminating product C will reduce the monthly utility bill from $1,500 to $800.
All supervisors’ salaries are avoidable.
If product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.
Elimination of product C will make it possible to cut two persons from the administrative staff. Currently, their combined salaries total $2,000.
Required: Prepare an analysis showing whether product C should be eliminated. Articulate your findings.

3. (TCO E) Duif Company’s absorption costing income statement for the last year of operations is presented below: Sales…………………………………………………$70,000 Less cost of goods sold: Beginning inventory………………………………………. 0 Add cost of goods manufactured………………48,000 Goods available for sale………………………….48,000 Less ending inventory………………………………6,000 Cost of goods sold………………………………..42,000 Gross margin……………………………………….28,000 Less selling & admin. expenses………………..25,000 Net operating income…………………………..$ 3,000
Data on units produced and sold for the year are given below:
Units in beginning inventory……………………………..0 Units produced……………………………………….8,000 Units sold………………………………………………7,000 Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.

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