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DEVRY ACCT 346 Week 4 Midterm 1 .pdf



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DEVRY 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 true?
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?
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
overhead cost?
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 August
follows:
Estimated
Actual
9.Question : (TCO 2) During 2011, Madison Company applied overhead using a joborder 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
was $1,670,000.
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?
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
$20
Direct Labor per unit
12
Variable manufacturing overhead per unit
10
Fixed manufacturing overhead per year
$148,500
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 bases:
Production Dept. 1
Production Dept. 2
Square footage
15,000
45,000
Direct labor hours
25,000
50,000
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 the
decision?
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 $28
and its total fixed expenses are $64,960. Sales during April totaled 1,600 units.


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