ACCT 505 Week 6 Quiz and Week 8 Final Exam (3 Different Versions)
ACCT505 Managerial Accounting – DeVry
ACCT 505 Week 6 Quiz Solutions
1. (TCO D) Return on investment (ROI) is equal to the margin multiplied by
2. (TCO D) For which of the following decisions are opportunity costs relevant?
3. (TCO D) Last year, the House of Orange had sales of $826,650, net operating income of $81,000, and operating assets of $84,000 at the beginning of the year and $90,000 at the end of the year. What was the company’s turnover, rounded to the nearest tenth?
4. (TCO D) Data for December concerning Dinnocenzo Corporation’s two major business segments-Fibers and Feedstocks-appear below:
5. (TCO D) Wryski Corporation had net operating income of $150,000 and average operating assets of $500,000. The company requires a return on investment of 19%.
6. (TCO D) Tjelmeland Corporation is considering dropping product S85U. Data from the company’s accounting system appear below.
7. (TCO D) Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows.
8. (TCO D) Biello Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 14,250 medals. The company normally charges $115 per medal. Cost data for the current level of production are shown below.
ACCT 505 Week 8 Final Exam Version 1
1. (TCO A) Wages paid to the factory maintenance supervisor are considered an example of: (Points : 5)
2. (TCO A) Rent on a manufacturing plant is an element of: (Points : 5)
3. (TCO B) Evergreen Corp. has provided the following data:
Sales per period 1,000 units
Selling price $40 per unit
Variable manufacturing cost $12 per unit
Selling expenses $5,100 plus 5% of selling price
Administrative expenses $3,000 plus 20% of selling price
The number of units needed to achieve a target net operating income of $63,900 would be: (Points : 5)
4. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points : 5)
5. (TCO E) Rebel Company manufactures a single product and has the following cost structure: Variable costs per unit:
Selling and administrative……………………… $3
Fixed costs in total:
Selling and administrative……………………… $16,000
Last year there were no beginning inventories, 8,000 units were produced, and 7,800 units were sold.
Under variable costing, the unit product cost would be:
(Points : 5)
6. (TCO F) Vagon Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $86,000. Which of the following statements is true? (Points : 5)
7. (TCO G) The net present value (NPV) method of investment project analysis assumes that the project’s cash flows are reinvested at the: (Points : 5)
8. (TCO G) Logan Company is considering two projects, A and B. The following information has been gathered on these projects:
Project A Project B
Present value of future cash
life………………………………………….4 years 4 years
Based on this information, which of the following statements is (are) true?
I. Project A has the highest ranking according to the profitability index criterion.
II. Project B has the highest ranking according to the net present value criterion. (Points : 5)
9. (TCO B) Variable expenses for Alpha Company are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: (Points : 5)
10. (TCO F) Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used: $4,200
Direct labor hours worked: 300
Direct labor rate per hour: $8.00
Machine hours used: 200
Predetermined overhead rate per machine hour: $15.00
What is the total manufacturing cost recorded on Job 1501? (Points : 5)
11. (2.1) (TCO C) The following overhead data are for a department of a large company.
12. (2.2) (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data:……….
11. (2.3) (TCO E) Duif Company’s absorption costing income statement for the last year of operations is presented below:……….
12. (2.4) (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just completed year…….
13. (3.1) (TCO F) Maverick Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Work in process, beginning:……….
14. (3.2) (TCO F) Cavalerio Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:
15. (3.3) (TCO G) (Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:
ACCT 505 Week 8 Final Exam Version 2
1. A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be:
2. Turnover is computed by dividing average operating assets into:
3. A segment of a business responsible for both revenues and expenses would be called:
4. All other things being equal, if a division’s traceable fixed expenses increase:
5. In computing the margin in a ROI analysis, which of the following is used?
6. Net operating income is defined as:
7. Suppose a manager is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager, assuming other factors remain constant?
8. During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000. Division D’s sales were closest to:
9. Cable Company had the following results for the year just ended:
10. The segment margin ratio in Store J was:
11. Company A’s residual income is:
12. Company A’s return on investment (ROI) is:
13. If South wants a residual income of $50,000 and the minimum required rate of return is 10%, the annual turnover will have to be:
14. How much is the return on the investment?
15. Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products. A cost that is not relevant is:
16. A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company’s overall net operating income would:
17. Manor Company plans to discontinue a department that has a contribution margin of $24,000 and $48,000 in fixed costs. Of the fixed costs, $21,000 cannot be avoided. The effect of this discontinuance on Manor’s overall net operating income would be a(an):
18. Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $21,000 cannot be eliminated. The effect on the profit of Manor Company of discontinuing this department would be:
19. Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:
20. Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows:
21. Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available:
22. Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split-off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit. Product A should be:
23. The sunk cost in this situation is:
24. How much of the unit product cost of $59.90 is relevant in the decision of whether to make or buy the part?
25. If direct labor-hours is the company’s production constraint, then the three products should be produced in the order:
26. If Austin chooses to produce 4,000 afghans each month, the change in the monthly net operating income as compared to selling 4,000 spindles of yarn is:
27. What is the lowest price Austin should be willing to accept for one afghan as long as it can sell spindles of yarn to the outside market for $12 each?
28. (Ignore income taxes in this problem.) How is depreciation handled by the following capital budgeting techniques?
29. The payback method measures:
30. The evaluation of an investment having uneven cash flows using the payback method:
31. If the net present value of a project is zero based on a discount rate of sixteen percent, then the time-adjusted rate of return:
32. (Ignore income taxes in this problem.) A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. The payback period for this machine in years is closest to:
33. (Ignore income taxes in this problem.) Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $450,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $20,000 per year to operate and maintain, but would save $100,000 per year in labor and other costs. The old machine can be sold now for scrap for $50,000. The simple rate of return on the new machine is closest to:
34. Perkins Company is considering several investment proposals, as shown below:
35. (Ignore income taxes in this problem.) The following data pertain to an investment proposal:
36. (Ignore income taxes in this problem.) Sam Weller is thinking of investing $70,000 to start a bookstore. Sam plans to withdraw $15,000 from the business at the end of each year for the next five years. At the end of the fifth year, Sam plans to sell the business for $110,000 cash. At a 12% discount rate, what is the net present value of the investment?
37. The immediate cash outflow required for this project would be:
38. The present value of all future operating cash inflows is closest to:
39. The present value of the net cash flows (all cash inflows less all cash outflows) occurring during year 4 is:
40. The present value of the net cash flows (all cash inflows less all cash outflows) occurring during year 6 is closest to:
ACCT 505 Week 8 Final Exam Version 3
Purchases of direct materials 7,000
Direct labor 5,000
Work in process inventory, 1/1 800
Work in process inventory, 12/31 3,000
Finished goods inventory, 1/1 4,000
Finished goods inventory, 12/31 5,300
Accounts payable, 1/1 1,700
Accounts payable, 12/31 1,500
Direct materials inventory, 1/1 6,000
Direct materials inventory, 12/31 1,000
Indirect labor 600
Indirect materials used 500
Utilities expense, factory 1,900
Depreciation on factory equipment 3,500
Gross Margin _________________
2. Whichcosts will change with a decrease in activity within the relevant range?
3. An increase in the activity level within the relevant range results in:
4. The gross margin of Evans Retail Stores, Inc. for the first quarter is:
5. The contribution margin of Evans Retail Stores, Inc. for the first quarter is:
6. The total contribution margin decreases if sales volume remains the same and:
7. A company has provided the following data:
8. Wallace, Inc., prepared the following budgeted data based on a sales forecast of $6,000,000:
9. The following information pertains to Rica Company:
10. The variable expense per unit is:
11. The break-even point in sales dollars is:
12. An allocated portion of fixed manufacturing overhead is included in product costs under:
13. What is the unit product cost for the month under variable costing?
14. What is the unit product cost for the month under absorption costing?
15. What is the net income for the month under variable costing?
18. Avril Company makes collections on sales according to the following schedule:
19. A labor efficiency variance resulting from the use of poor quality materials should be charged to:
20. An unfavorable labor efficiency variance indicates that:
21. A favorable labor rate variance indicates that
22. The materials price variance for January is:
23. The materials quantity variance for January is:
24. The labor rate variance for January is:
25. The labor efficiency variance for January is:
26. How much is the residual income?
27. How much is the return on the investment?
28. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is.
29. In responsibility accounting, each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.
30. Some managers believe that residual income is superior to return on investment as a means of measuring performance, since it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.
31. The performance of the manager of Division A is measured by residual income. Which of the following would increase the manager’s performance measure?
32. A segment of a business responsible for both revenues and expenses would be called:
33. The Northern Division of the Smith Company had average operating assets totaling $150,000 last year. If the minimum required rate of return is 12%, and if last year’s net operating income at Northern was $20,000, then the residual income for Northern last year was:
34. Company A’s residual income is:
35. investment (ROI) is:
36. Gata Co. plans to discontinue a department that has a $48,000 contribution margin and $96,000 of fixed costs. Of these fixed costs, $42,000 cannot be avoided. What would be the effect of this discontinuance on Gata’s overall net operating income?
37. Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows:
38. Some investment projects require that a company expand its working capital to service the greater volume of business that will be generated. Under the net present value method, the investment of working capital should be treated as
39. Which of the following capital budgeting techniques consider(s) cash flow over the entire life of the project?
40. The net present value of the project is closest to:
41. The payback period for the investment would be:
42. The net present value of this investment would be:
43. The Tse Manufacturing Company uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. The company closes any balance in the Manufacturing Overhead account to Cost of Goods Sold. During the year the company’s Finished Goods inventory account was debited for $125,000 and credited for $110,000. The ending balance in the Finished Goods inventory account was $28,000. At the end of the year, manufacturing overhead was overapplied by $4,500. The balance in the Finished Goods inventory account at the beginning of the year was:
44. Matthias Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of May. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $53,000 and the total of the credits to the account was $69,000. Which of the following statements is true?
45. Yoder Company uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month: What was the cost per equivalent unit for materials during the month?
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