ACCT 344 – Cost Accounting Week 8 Final Exam

by | Mar 18, 2020 | Uncategorized

  

Question
1.1 Which cost is NOT a period cost?

Lumber for furniture
Executive administrative assistant
salary
Depreciation on sales staff’s cars
Sales commission

Question
2.2. Which product would use job-order
costing?

Ink pens
Custom boot maker
Soda pop
Horse saddles

Question
3.3. As production occurs, materials, direct
labor, and applied manufacturing overhead are recorded in

cost of goods sold.
work-in-process.
materials.
finished goods.

Question
4.4.
A company keeps 60 days of materials inventory on hand to avoid shutdowns
due to materials shortages. Carrying costs average $5,000 per day. A
competitor keeps 30 days of inventory on hand, and the competitor’s
carrying costs average $2,000 per day. The value-added costs are

$300,000.
$150,000.
$60,000.
$0.

Question
5.5.
Which is a value-added activity?

Moving
Inspection
Processing
Waiting

Question
6.6.The
break-even point is

the volume of activity where all
fixed costs are recovered.
where fixed costs equal total
variable costs.
where total revenues equal total
costs.
where total costs equal total
contribution margin.

Question
7.7.
The Kringel Company provides the following information.

Sales (200,000
units)
$500,000
Manufacturing costs
Variable
$170,000
Fixed
$30,000
Selling and administrative costs
Variable
$80,000
Fixed
$20,000
Which is the break-even point in units for Kringel?

33,334 units
100,000 units
40,000 units
200,000 units

Question
8.8.
Which would be the most appropriate base for allocating the costs of the
maintenance department?

Machine hours
Direct labor hours
Number of employees
Square feet

Question
9.9.
Yo Department Store incurred $8,000 of indirect advertising costs for its
operations. The following data have been collected for 2013 for its three
departments.

Shoes

Cosmetics

Crafts

Sales

$120,000

$100,000

$100,000

Direct
advertising costs

$9,000

$7,000

$4,000

Newspaper
ad space

60%

20%

20%

How much of the indirect advertising costs will be allocated to the
Cosmetics Department if newspaper ad space is the activity driver?

$8,000
$1,600
$1,400
$6,400

Question
10.10
Which best describes zero-base budgeting?

A budget that is developed for a
single level of activity
A budget that analyzes existing
activities (and continuation of that activity must be justified and
resources needed must be justified by each manager)
A budget that is based solely on
prior period information, adjusted for inflation
A budget that is continuous or
rolling

Question
11.11.
Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of
wood and 1 unit of steel. Scheduled production of buggies for the next 2
months is 500 and 600 units, respectively. Beginning inventory is 4,000
units of wood and 30 units of steel. The ending inventory of wood is
planned to decrease 500 units in each of the next 2 months, and the steel
inventory is expected to increase 5 units in each of the next 2 months.
How many units of wood are expected to be used in production during the
second month?

12,500 units
10,000 units
15,000 units
12,000 units

Question
12.12.
Which statement is true?

Absorption costing net income
exceeds variable costing net income when units produced and sold are equal.
Variable costing net income exceeds
absorption costing net income when units produced exceed units sold.
Absorption costing net income
exceeds variable costing net income when units produced are less than units
sold.
Absorption costing net income
exceeds variable costing net income when units produced are greater than
units sold.

Question
13.13.Using
more highly skilled direct laborers might affect which variance?

Direct materials usage variance
Direct labor efficiency variance
Variable manufacturing overhead
efficiency variance
All of the above

Question
14.14.
Which equation measures the total budget variance?

AQ x (AP – SP).
SP x (AQ – SQ).
SQ x (AP – SP).
(AQ x AP) – (SQ x SP).

Question
1.1 George Corporation has an estimated monthly
sales of 12,000 units for $80 per unit. Variable costs include manufacturing
costs of $50 and distribution costs of $20. Fixed costs are $60,000 per
month.

Required:
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume

Create a contribution margin-based income statement.

Question 2.2. Darling Manufacturing Inc. manufactures two products, A
and B, from a joint process. A single production costs $5,000 and results in
200 units of A and 800 units of B. To be ready for sale, both products must
be processed further, incurring seperable costs of $3 per unit for A and $4
per unit for B. The market price for Product A is $15 and for Product B is
$10.

Required: Allocate joint production costs to each product using the net
realizable value method.

Question 3.3. Santa Inc. manufactures toys based on the following
information.

Standard costs

Materials (4 ounces at $4)

$16

Direct labor (1 hour per unit)

$7

Variable overhead (based on direct labor hours)

$3.50

Fixed overhead budget

$16,000

Actual results and costs

Materials purchased

Units

10,000

Cost

$38,500

Materials used in production

Finished product units

2,200

Raw material (ounces)

9,500

Direct labor hours

2,200

Direct labor cost

$18,000

Variable overhead costs

$8,400

Fixed overhead costs

$16,200

Required:

Compute the following variances (show calculations).

a. Materials usage variance

b. Labor rate variance

-c. Fixed overhead budget variance

Question 4.4.(TCO 4) Toshi Company incurred the following costs in
manufacturing desk calculators.

Direct materials
$14
Indirect materials
(variable)
4
Direct
labor
8
Indirect labor
(variable)
6
Other variable factory
overhead
10
Fixed factory
overhead
28
Variable selling
expenses 20
Fixed selling
expenses
14

During the period, the company produced and sold 1,000 units.
a. What is the inventory cost per unit using absorption costing?
b. What is the inventory cost per unit using variable costing?

Question 5.5.(TCO 8) Musical Instruments Company manufactures two
products (trumpets and trombones). Overhead costs ($175,000) have been
divided into three cost pools that use the following activity drivers.

Product

Number of setups

Machine hours

Packing orders

Trumpets

50

1,500

150

Trombones

50

4,500

250

Cost per pool

$60,000

$90,000

$25,000

Required (show all calculations)

a. What is the allocation rate for trumpets per setup using activity-based costing?

b. What is the allocation rate for trumpets per machine hours using activity-based costing?

c. What is the allocation rate for trumpets per packing order using activity-based costing?

Question 6.6. The Baxter Corporation has the following budgeted and
actual results.

Budgeted data

Actual results

Unit sales

35,000

Unit sales

36,000

Unit production

35,000

Unit production

37,000

Fixed overhead

Fixed overhead

Supervision

$25,000

Supervision

$23,500

Depreciation

$40,000

Depreciation

$40,000

Rent

$20,000

Rent

$20,000

Variable costs per unit

Variable costs

Direct materials

$25.00

Direct materials

$900,000

Direct labor

$26.00

Direct labor

$950,000

Supplies

$0.25

Supplies

$9,000

Indirect labor

$1.30

Indirect labor

$50,000

Electricity

$0.20

Electricity

$7,500

Required:

Prepare a performance report for
all costs, showing flexible budget variances (indicate F or U).

Question
1.1 Which cost is NOT a period cost?

Lumber for furniture
Executive administrative assistant
salary
Depreciation on sales staff’s cars
Sales commission

Question
2.2. Which product would use job-order
costing?

Ink pens
Custom boot maker
Soda pop
Horse saddles

Question
3.3. As production occurs, materials, direct
labor, and applied manufacturing overhead are recorded in

cost of goods sold.
work-in-process.
materials.
finished goods.

Question
4.4.
A company keeps 60 days of materials inventory on hand to avoid shutdowns
due to materials shortages. Carrying costs average $5,000 per day. A
competitor keeps 30 days of inventory on hand, and the competitor’s
carrying costs average $2,000 per day. The value-added costs are

$300,000.
$150,000.
$60,000.
$0.

Question
5.5.
Which is a value-added activity?

Moving
Inspection
Processing
Waiting

Question
6.6.The
break-even point is

the volume of activity where all
fixed costs are recovered.
where fixed costs equal total
variable costs.
where total revenues equal total
costs.
where total costs equal total
contribution margin.

Question
7.7.
The Kringel Company provides the following information.

Sales (200,000
units)
$500,000
Manufacturing costs
Variable
$170,000
Fixed
$30,000
Selling and administrative costs
Variable
$80,000
Fixed
$20,000
Which is the break-even point in units for Kringel?

33,334 units
100,000 units
40,000 units
200,000 units

Question
8.8.
Which would be the most appropriate base for allocating the costs of the
maintenance department?

Machine hours
Direct labor hours
Number of employees
Square feet

Question
9.9.
Yo Department Store incurred $8,000 of indirect advertising costs for its
operations. The following data have been collected for 2013 for its three
departments.

Shoes

Cosmetics

Crafts

Sales

$120,000

$100,000

$100,000

Direct
advertising costs

$9,000

$7,000

$4,000

Newspaper
ad space

60%

20%

20%

How much of the indirect advertising costs will be allocated to the
Cosmetics Department if newspaper ad space is the activity driver?

$8,000
$1,600
$1,400
$6,400

Question
10.10
Which best describes zero-base budgeting?

A budget that is developed for a
single level of activity
A budget that analyzes existing
activities (and continuation of that activity must be justified and
resources needed must be justified by each manager)
A budget that is based solely on
prior period information, adjusted for inflation
A budget that is continuous or
rolling

Question
11.11.
Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of
wood and 1 unit of steel. Scheduled production of buggies for the next 2
months is 500 and 600 units, respectively. Beginning inventory is 4,000
units of wood and 30 units of steel. The ending inventory of wood is
planned to decrease 500 units in each of the next 2 months, and the steel
inventory is expected to increase 5 units in each of the next 2 months.
How many units of wood are expected to be used in production during the
second month?

12,500 units
10,000 units
15,000 units
12,000 units

Question
12.12.
Which statement is true?

Absorption costing net income
exceeds variable costing net income when units produced and sold are equal.
Variable costing net income exceeds
absorption costing net income when units produced exceed units sold.
Absorption costing net income
exceeds variable costing net income when units produced are less than units
sold.
Absorption costing net income
exceeds variable costing net income when units produced are greater than
units sold.

Question
13.13.Using
more highly skilled direct laborers might affect which variance?

Direct materials usage variance
Direct labor efficiency variance
Variable manufacturing overhead
efficiency variance
All of the above

Question
14.14.
Which equation measures the total budget variance?

AQ x (AP – SP).
SP x (AQ – SQ).
SQ x (AP – SP).
(AQ x AP) – (SQ x SP).

Question
1.1 George Corporation has an estimated monthly
sales of 12,000 units for $80 per unit. Variable costs include manufacturing
costs of $50 and distribution costs of $20. Fixed costs are $60,000 per
month.

Required:
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume

Create a contribution margin-based income statement.

Question 2.2. Darling Manufacturing Inc. manufactures two products, A
and B, from a joint process. A single production costs $5,000 and results in
200 units of A and 800 units of B. To be ready for sale, both products must
be processed further, incurring seperable costs of $3 per unit for A and $4
per unit for B. The market price for Product A is $15 and for Product B is
$10.

Required: Allocate joint production costs to each product using the net
realizable value method.

Question 3.3. Santa Inc. manufactures toys based on the following
information.

Standard costs

Materials (4 ounces at $4)

$16

Direct labor (1 hour per unit)

$7

Variable overhead (based on direct labor hours)

$3.50

Fixed overhead budget

$16,000

Actual results and costs

Materials purchased

Units

10,000

Cost

$38,500

Materials used in production

Finished product units

2,200

Raw material (ounces)

9,500

Direct labor hours

2,200

Direct labor cost

$18,000

Variable overhead costs

$8,400

Fixed overhead costs

$16,200

Required:

Compute the following variances (show calculations).

a. Materials usage variance

b. Labor rate variance

-c. Fixed overhead budget variance

Question 4.4.(TCO 4) Toshi Company incurred the following costs in
manufacturing desk calculators.

Direct materials
$14
Indirect materials
(variable)
4
Direct
labor
8
Indirect labor
(variable)
6
Other variable factory
overhead
10
Fixed factory
overhead
28
Variable selling
expenses 20
Fixed selling
expenses
14

During the period, the company produced and sold 1,000 units.
a. What is the inventory cost per unit using absorption costing?
b. What is the inventory cost per unit using variable costing?

Question 5.5.(TCO 8) Musical Instruments Company manufactures two
products (trumpets and trombones). Overhead costs ($175,000) have been
divided into three cost pools that use the following activity drivers.

Product

Number of setups

Machine hours

Packing orders

Trumpets

50

1,500

150

Trombones

50

4,500

250

Cost per pool

$60,000

$90,000

$25,000

Required (show all calculations)

a. What is the allocation rate for trumpets per setup using activity-based costing?

b. What is the allocation rate for trumpets per machine hours using activity-based costing?

c. What is the allocation rate for trumpets per packing order using activity-based costing?

Question 6.6. The Baxter Corporation has the following budgeted and
actual results.

Budgeted data

Actual results

Unit sales

35,000

Unit sales

36,000

Unit production

35,000

Unit production

37,000

Fixed overhead

Fixed overhead

Supervision

$25,000

Supervision

$23,500

Depreciation

$40,000

Depreciation

$40,000

Rent

$20,000

Rent

$20,000

Variable costs per unit

Variable costs

Direct materials

$25.00

Direct materials

$900,000

Direct labor

$26.00

Direct labor

$950,000

Supplies

$0.25

Supplies

$9,000

Indirect labor

$1.30

Indirect labor

$50,000

Electricity

$0.20

Electricity

$7,500

Required:

Prepare a performance report for
all costs, showing flexible budget variances (indicate F or U).
  

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