1. ACCT 346 Week 4 Midterm 1
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1. Question : (TCO 1) Managerial accounting stresses accounting concepts and
procedures that are relevant to preparing reports for
2. Question : TCO 1) Which of the following statements regarding fixed costs is
3. Question : TCO 1) You own a car and are trying to decide whether or not to
trade it in and buy a new car. Which of the following costs is an opportunity cost
in this situation?
2. 4. Question :(TCO 1) Shula’s 347 Grill has budgeted the following costs for a
month in which 1,600 steak dinners will be produced and sold: materials, $4,080;
hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other
fixed costs, $600. Each steak dinner sells for $14.00 each. How much is the
budgeted variable cost per unit?
5. Question : (TCO 1) Which of the following is an example of a manufacturing
6. Question : (TCO 1) Which of the following is a period cost?
7. Question : (TCO 1) If the balance in the Finished Goods Inventory account
increased by $30,000 during the period and the cost of goods manufactured was
$220,000, how much is cost of goods sold?
8. Question : (TCO 2) BCS Company applies manufacturing overhead based on
direct labor cost. Information concerning manufacturing overhead and labor for
9.Question : (TCO 2) During 2011, Madison Company applied overhead using a
job-order costing system at a rate of $12 per direct labor hours. Estimated direct
labor hours for the year were 150,000, and estimated overhead for the year was
$1,800,000. Actual direct labor hours for 2011 were 140,000 and actual overhead
What is the amount of under or over applied overhead for the year?
10. Question : (TCO 3) Companies in which of the following industries would not
be likely to use process costing?
11. Question : (TCO 3) The Blending Department began the period with 45,000
units. During the period the department received another 30,000 units from the
prior department and completed 60,000 units during the period. The remaining
units were 75% complete. How much are equivalent units in The Blending
Department’s work in process inventory at the end of the period?
12. Question : (TCO 3) During March, the varnishing department incurred costs of
$90,250 for direct labor. The beginning inventory was 3,500 units and 10,000 units
were transferred to the varnishing department from the sanding department
during June. The direct labor cost in the beginning inventory was $27,270. The
ending inventory consisted of 2,000 units, which were 25% complete with respect
to direct labor. What is the cost per equivalent unit for direct labor?
3. 13. Question : (TCO 4) Clearance Depot has total monthly costs of $8,000 when
2,500 units are produced and $12,400 when 5,000 units are produced. What is the
estimated total monthly fixed cost?
1. Question : (TCO 4) The margin of safety is the difference between
2. Question : (TCO 4) Allen Company sells homework machines for $100 each.
Variable costs per unit are $75 and total fixed costs are $62,000. Allen is
considering the purchase of new equipment that would increase fixed costs to
$84,000, but decrease the variable costs per unit to $60. At that level Allen
Company expects to sell 3,000 units next year. What is Allen’s break-even point in
units if it purchases the new equipment?
3.Question : (TCO 4) Paula Corporation sells a single product at a price of $275
per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are
expected to be $825,000, what is Paula’s margin of safety?
4. Question : (TCO 5) In variable costing, when does fixed manufacturing
overhead become an expense?
5. Question : (TCO 5) Variable costing income is a function of:
6. Question : (TCO 5) Peak Manufacturing produces snow blowers. The selling
price per snow blower is $100. Costs involved in production are:
Direct Material per unit
Direct Labor per unit
Variable manufacturing overhead per unit
Fixed manufacturing overhead per year
In addition, the company has fixed selling and administrative costs of $150,000
per year. During the year, Peak produces 45,000 snow blowers and sells 30,000
snow blowers. How much is cost of goods sold using full costing?
7.Question : (TCO 6) Costs may be allocated to
8. Question : (TCO 5) An allocation base
9. Question : (TCO 6) The building maintenance department for Jones
Manufacturing Company budgets annual costs of $4,200,000 based on the
expected operating level for the coming year. The costs are allocated to two
production departments. The following data relate to the potential allocation
4. Production Dept. 1
Production Dept. 2
Direct labor hours
If Jones assigns costs to departments based on square footage, how much total
costs will be allocated to Production Department 1
10. Question : (TCO 7) A company is trying to decide whether to sell partially
completed goods in their current state or incur additional costs to finish the
goods and sell them as complete units. Which of the following is not relevant to
11. Question : (TCO 7) BigByte Company has 12 obsolete computers that are
carried in inventory at a cost of $13,200. If these computers are upgraded at a
cost of $7,500, they could be sold for $15,300. Alternatively, the computers could
be sold "as is" for $9,000. What is the net advantage or disadvantage of
reworking the computers?
12. Question : (TCO 7) Olde Store has 12,000 cans of crab meat just a week past
the expiration date. Each can cost $0.31. The cans could be sold as is for $0.20
each, or relabeled and sold as gourmet cat food. The cost of relabeling the cans
would be $0.04 per can and the cans would then sell for $0.29 per can. What
should be done with the cans and why?
1. Question : (TCO 3) Describe a process costing system, including the types of
companies that commonly use this system. How can process costing information
be used in incremental analysis?
2. Question : (TCO 7) Each year, ACE Engines surveys 7,600 former and
prospective customers regarding satisfaction and brand awareness. For the
current year, the company is considering outsourcing the survey to RBG
Associates, who have offered to conduct the survey and summarize results for
$50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a
higher-quality job than his company has been doing, but is unwilling to spend
more than $12,000 above current costs. The head of bookkeeping for ACE has
prepared the following summary of costs related to the survey in the prior year.
Prepare an incremental analysis in good form to determine the impact on profit of
going outside versus conducting the survey as in the past. Will ACE accept the
RBG offer? Why or why not?
3. Question : (TCO 4) The following monthly data are available for RedEx, which
produces only one product that it sells for $84 each. Its unit variable costs are
5. $28 and its total fixed expenses are $64,960. Sales during April totaled 1,600
6. $28 and its total fixed expenses are $64,960. Sales during April totaled 1,600