ACCT 346 Week 4 Midterm 1 (Devry)

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1. Question :(TCO 1) Managerial accounting

stresses accounting concepts and procedures that

are relevant to preparing reports for2. 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) Shulas 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:EstimatedActual9.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 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 Departments 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 between2. 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 Allens 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 Paulas 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$20Direct Labor per unit12Variable
manufacturing overhead per unit10Fixed
manufacturing overhead per year $148,500In
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 to8. Question :(TCO 5)
An allocation base9. 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.
1Production Dept. 2Square
footage15,00045,000Direct labor
hours25,00050,000If 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.