Devry ACCT 434 Midterm Exam Latest

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Devry ACCT 434 Midterm Exam Latest

 

Midterm

Question 1.1.(TCO 1) Which of the following is a sign that an ABC system may be useful? (Points : 5)

Operations staff agrees with accountants about the costs of manufacturing and marketing products and services.
There are small amounts of indirect costs.
Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity.
Products a company is less suited to produce and sell show small profits.

 

Question 2.2.(TCO 1) Merriamn Company provides the following ABC costing information:

Activities Total Costs Activity-cost drivers
Account inquiry hours $400,000 10,000 hours
Account billing lines $280,000 4,000,000 lines
Account verification accounts $150,000 40,000 accounts
Correspondence letters $ 50,000 4,000 letters
Total costs $880,000

The above activities are used by Department A and B as follows:

Department A Department B
Account inquiry hours 2,000 hours 4,000 hours
Account billing lines 400,000 lines 200,000 lines
Account verification accounts 10,000 accounts 8,000 accounts
Correspondence letters 1,000 letters 1,600 letters

How much of account verification costs will be assigned to Department A? (Points : 5)

$14,000
$150,000
$10,000
$37,500

 

Question 3.3.(TCO 2) Examples of nonfinancial budgets include all of the following EXCEPT (Points : 5)

cash collections from customers.
units sold.
units manufactured.
number of new products introduced.

 

Question 4.4.(TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units. The flexible-budget variance is (Points : 5)

$2,000 favorable.
$14,000 unfavorable.
$16,400 unfavorable.
$2,400 favorable.

 

Question 5.5.(TCO 3) Which of the following does NOT represent a cause-and-effect relationship? (Points : 5)

It makes sense that if a complex product has a large number of parts, it will take longer to assemble than a simple product with fewer parts.
Material costs increase as the number of units produced increases.
A company is charged 40 cents for each brochure printed and mailed.
Utility costs increase at the same time that insurance costs increase.

 

Question 6.6.(TCO 4) Relevant costs in a make-or-buy decision of a part include (Points : 5)

setup overhead for the manufacture of the product using the outsourced part.
currently used manufacturing capacity that has alternative uses.
annual plant insurance that will remain the same.
corporate office costs that will be allocated differently.

 

Question 7.7.(TCO 5) The theory of constraints is used for cost analysis when (Points : 5)

a manufacturing company produces multiple products and uses multiple manufacturing facilities and/or machines.
using a long-term time horizon.
operating costs are assumed fixed.
All of the above

 

Question 8.8.(TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:

Direct materials $45,000
Direct labor 65,000
Variable factory overhead 30,000
Fixed factory overhead 70,000
Total costs $210,000

Of the fixed factory overhead costs, $30,000 is avoidable.

Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should

(Points : 5)

make the part, as this would save $3 per unit.
buy the part, as this would save $3 per unit.
buy the part, as this would save the company $30,000.
make the part, as this would save $1 per unit.

 

Question 9.9.(TCO 3) The cost function y = 100 10X (Points : 5)

has a slope coefficient of 100.

is a nonlinear.
has an intercept of 100.

represents a fixed cost.

 

 

Question 10.10.(TCO 4) Sunk costs (Points : 5)

are relevant.
are differential.
are ignored when evaluating alternatives.
have future implications.

Essays

Question 1.1.

(TCO 1) For each of the following drivers identify an appropriate activity.

a. # of machines

b. # of setups

c. # of inspections

d. # of orders

e. # of runs

f. # of bins or aisles

g. # of engineers

(Points : 25)

 

Question 2.2.

(TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period:

Month Unit Sales

June 90,000

July 120,000

August 210,000

September 150,000

October 180,000

November 120,000

There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.

Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds.

Prepare production budgets in units for July, August, and September.

(Points : 25)

 

Question 3.3.(TCO 3) Patrick Ross, the president of Ross’s Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Month Machine-hours Overhead Costs

February 1,700 $20,500

March 2,800 22,250

April 1,000 19,950

May 2,500 21,500

June 3,500 23,950

Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

(Points : 25)

 

Question 4.4.(TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year.

A supplier offers to make the wheels at a price of $4 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $42,000 of fixed manufacturing overhead being charged to the wheels will have to be absorbed by other products.

a. Prepare an incremental analysis for the decision to make or buy the wheels.

b. Should Collier Bicycles buy the wheels from the outside supplier? Justify your answer.

(Points : 25)

 

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Devry ACCT 434 Midterm Exam Latest

Best Devry ACCT 434 Midterm Exam Latest

Devry ACCT 434 Midterm Exam Latest