1. ACC 561 Final Exam Guide (New, 2018, Score
100%)
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ACC 561 Final Exam Guide (New, 2018, Score
100%)
2. The investigation of materials price variance
usually begins in the:
controller’s office.
accounts payable department.
first production department.
purchasing department
Hollis Industries produces flash drives for
computers, which it sells for $20 each. Each flash
drive costs $13 of variable costs to make. During
April, 1,000 drives were sold. Fixed costs for
March were $2 per unit for a total of $1,000 for the
3. month. How much is the contribution margin
ratio?
35%
25%
75%
65%
Which of the following statements is not true?
When a company’s sales revenue is decreasing,
high operating leverage is good because it means
4. that profits will decrease at a slower pace than
revenues decrease.
When a company’s sales revenue is increasing,
high operating leverage is good because it means
that profits will increase rapidly.
Companies that have higher fixed costs relative to
variable costs have higher operating leverage.
Operating leverage refers to the extent to which a
company’s net income reacts to a given change in
sales.
Which of the following will not result in an
unfavorable controllable margin difference?
5. Sales under budget; costs under budget
Sales exceeding budget; costs under budget
Sales under budget; costs over budget
Sales exceeding budget; costs over budget
5 Based on the following data, what is the amount
of working capital?
Accounts
payable………………………………………………………..
$64,000
8. 6 Miller Manufacturing’s degree of operating
leverage is 1.5. Warren Corporation’s degree of
operating leverage is 3. Warren’s earnings would
go up (or down) by ________ as much as Miller’s with
an equal increase (or decrease) in sales.
2 times
4.5 times
1.5 times
1/2 times
9. 7 What is the primary difference between a static
budget and a flexible budget?
The static budget contains only fixed costs, while
the flexible budget contains only variable costs.
The static budget is prepared only for units
produced, while a flexible budget reflects the
number of units sold.
The static budget is constructed using input from
only upper level management, while a flexible
budget obtains input from all levels of
management.
The static budget is prepared for a single level of
activity, while a flexible budget is adjusted for
different activity levels.
10. 8 Ben Gordon, Inc. manufactures 2 products,
wheels and seats. The company has estimated its
overhead in the assembling department to be
$660,000. The company produces 300,000 wheels
and 600,000 seats each year. Each wheel uses 2
parts, and each seat uses 3 parts. How much of the
assembly overhead should be allocated to wheels?
$165,000
$220,000
$264,000
$282,856
9 Financial and managerial accounting are similar
in that both:
11. produce general-purpose reports.
deal with the economic events of an enterprise.
have reports that are prepared quarterly and
annually.
have the same primary users.
10 It costs Garner Company $12 of variable and $5
of fixed costs to produce one bathroom scale which
normally sells for $35. A foreign wholesaler offers
to purchase 3,000 scales at $15 each. Garner
would incur special shipping costs of $1 per scale if
the order were accepted. Garner has sufficient
unused capacity to produce the 3,000 scales. If the
special order is accepted, what will be the effect on
net income?
12. $6,000 decrease
$9,000 decrease
$6,000 increase
$45,000 increase
11 Which one of the following is an example of a
period cost?
A manager’s salary for work that is done in the
corporate head office.
A box cost associated with computers.
13. A change in benefits for the union workers who
work in the New York plant of a Fortune 1000
manufacturer.
Workers’ compensation insurance on factory
workers’ wages allocated to the factory.
12 The Mac Company has four plants nationwide
that cost $350 million. The current fair value of the
plants is $300 million. The plants will be reported
as assets at:
$300 million.
$350 million.
$600 million.
14. $700 million.
13 Are advanced receipts from customers treated
as revenue at the time of receipt? Why or why not?
Yes, the intent of the company is to perform the
work and the customer is confident that the
services will be completed.
No, the amount of revenue cannot be adequately
determined until the company completes the
work.
Yes, they are treated as revenue at the time of
receipt because the company has access to the
cash.
15. No, revenue cannot be recognized until the work is
performed.
14 Which statement is correct?
The cash basis of accounting is objective because
no one can be certain of the amount of revenue
until the cash is received.
As long as management is ethical, there are no
problems with using the cash basis of accounting.
As long as a company consistently uses the cash
basis of accounting, generally accepted accounting
principles allow its use.
16. The use of the cash basis of accounting violates
both the revenue recognition and expense
recognition principles.
15 If a plant is operating at full capacity and
receives a one-time opportunity to accept an order
at a special price below its usual price, then:
the order will likely be accepted.
only variable costs are relevant.
the order will likely be rejected.
fixed costs are not relevant.
17. 16 Kimble Company applies overhead on the basis
of machine hours. Given the following data,
compute overhead applied and the under- or
overapplication of overhead for the period:
Estimated annual overhead cost $1,600,000
Actual annual overhead cost $1,575,000
Estimated machine hours 400,000
Actual machine hours 390,000
$1,560,000 applied and $15,000 underapplied
$1,560,000 applied and $15,000 overapplied
$1,600,000 applied and $15,000 overapplied
18. $1,575,000 applied and neither under- nor
overapplied
17 Scorpion Production Company planned to use 1
yard of plastic per unit budgeted at $81 a yard.
However, the plastic actually cost $80 per yard.
The company actually made 3,900 units, although
it had planned to make only 3,300 units. Total
yards used for production were 3,960. How much
is the total materials variance?
$3,960 F
$48,600 U
$900 U
$4,860 U
19. 18 Which of the following statements concerning
users of accounting information is incorrect?
Present creditors are considered external users.
Taxing authorities are considered external users.
Regulatory authorities are considered internal
users.
Management is considered an internal user.
19 Top management notices a variation from
budget and an investigation of the difference
20. reveals that the department manager could not be
expected to have controlled the variation. Which of
the following statements is applicable?
Department managers should be credited for
favorable variances even if they are beyond their
control.
Department managers should be held accountable
for all variances from budgets for their
departments.
Department managers’ performances should not
be evaluated based on actual results to budgeted
results.
Department managers should only be held
accountable for controllable variances for their
departments.
21. 20 Danner Corporation reported net sales of
$650,000, $720,000, and $780,000 in the years
2016, 2017, and 2018, respectively. If 2016 is the
base year, what percentage do 2018 sales
represent of the base?
120%
83%
20%
108%
21 La More Company had the following
transactions during 2016:
22. Sales of $9,000 on account
Collected $4,000 for services to be performed in
2017
Paid $3,750 cash in salaries for 2016
Purchased airline tickets for $500 in December for
a trip to take place in 2017
What is La More’s 2016 net income using accrual
accounting?
$9,250
$9,750
$5,250
23. $5,750
22 If there are no units in process at the beginning
of the period, then:
the units started into production will equal the
number of units transferred out.
the company must be using a job order cost
system.
the units to be accounted for will equal the units
transferred out and the units in process at the end
of the period.
only one computation of equivalent units of
production will be necessary.
24. 23 Which of the following is not an underlying
assumption of CVP analysis?
Sales mix is constant.
Beginning inventory is larger than ending
inventory.
Cost classifications are reasonably accurate.
Changes in activity are the only factors that affect
costs.
24. In performing a vertical analysis, the base for
sales revenues on the income statement is:
net sales.
25. cost of goods available for sale.
sales revenue.
net income.
25 Differences between a job order cost system
and a process cost system include all of the
following except the:
unit cost computations.
flow of costs.
documents used to track costs.
point at which costs are totaled.
26. 26 Henson Company began the year with retained
earnings of $380,000. During the year, the
company recorded revenues of $500,000,
expenses of $380,000, and paid dividends of
$40,000. What was Henson’s retained earnings at
the end of the year?
$460,000
$540,000
$840,000
$500,000
27 At September 1, 2017, Baxter Inc. reported
Retained Earnings of $423,000. During the month,
Baxter generated revenues of $60,000, incurred
expenses of $36,000, purchased equipment for
$15,000 and paid dividends of $6,000. What is the
27. balance in Retained Earnings at September 30,
2017?
$24,000 credit
$423,000 debit
$426,000 credit
$441,000 credit
28 An activity-based overhead rate is computed as
follows:
estimated overhead divided by actual use of cost
drivers.
28. actual overhead divided by estimated use of cost
drivers.
estimated overhead divided by estimated use of
cost drivers.
actual overhead divided by actual use of cost
drivers.
29. Which is the last step in developing the master
budget?
Preparing the cash budget
29. Preparing the cost of goods manufactured
budget
Preparing the budgeted balance sheet
Preparing the budgeted income statement
30 The entry to record the acquisition of raw
materials on account is:
Manufacturing Overhead Raw Materials
Inventory Accounts Payable
Work in Process Inventory Accounts Payable
Raw Materials Inventory Accounts Payable
Accounts Payable Raw Materials Inventory
