1) Managerial accounting stresses accounting concepts and procedures that
are relevant to preparing reports for(Points : 4)
internal users of accounting
users of accounting information.
Securities and Exchange Commission (SEC).
1) Which of the following statements regarding fixed costs is true? (Points : 4)
production increases, fixed cost per unit increases.
production decreases, total fixed costs decrease.
When production increases, fixed
cost per unit decreases.
production decreases, total fixed costs increase.
1) Which of the following is a direct cost in relation to the cost of
teaching the managerial accounting course you are currently taking? (Points : 4)
the cost of the paper that you
receive as handouts for the class
cost of the room you are using for the class
cost of the registration system that allowed you to enroll in the class
cost of the financial aid department that helps you fund the cost of taking
1) Shulaâs 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. What is
the budgeted total variable cost? (Points
1) Which of the following costs is part of manufacturing overhead? (Points : 4)
for the accounting personnel
wages for the janitorial staff for
the sales offices
1) Which of the following is not a period cost? (Points : 4)
of accounting office equipment
1) Red Runnerâs Work in Process Inventory account has a beginning balance
of $50,000 and an ending balance of $40,000. Direct materials used are
$70,000 and direct labor used totals $35,000. Cost of goods sold totals
$135,000. Manufacturing overhead applied is $20,000. How much is cost of
goods manufactured? (Points
2) BCS Company applies manufacturing overhead based on direct labor hours.
Information concerning manufacturing overhead and labor for August follows:
Direct labor hours
Direct labor cost
How much overhead should be applied in total during August? (Points : 4)
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
What is the amount of under or over applied overhead for the year? (Points : 4)
3) Which of the following companies is most likely to use a process costing
system? (Points : 4)
custom home builder
a food manufacturer
3) The Blending Department began the period with 20,000 units. During the
period the department received another 80,000 units from the prior
department and at the end of the period 30,000 units remained, which were
40% complete. How much are equivalent units in The Blending Departmentâs
work in process inventory at the end of the period? (Points : 4)
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? (Points : 4)
4) Total costs were $75,800 when 30,000 units were produced and $95,800
when 40,000 units were produced. Use the high-low method to find the
estimated total costs for a production level of 32,000 units. (Points : 4)
The three elements of the profit margin are: (Points : 4)
price per unit, variable cost per unit, and fixed cost per unit.
Total revenues, total variable costs,
and total fixed cost.
price per unit, variable cost per unit, and total fixed costs.
price per unit, total variable costs, and fixed cost per unit.
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 Allenâs break-even point in units if it
purchases the new equipment?(Points
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 Paulaâs margin of safety? (Points : 4)
In variable costing, when does fixed manufacturing overhead become an
expense? (Points : 4)
period when the product is sold
In the period when the expense is
period when other expenses are at the lowest level
Variable costing income is a function of: (Points : 4)
Both units sold and units produced.
units sold nor units. produced
Peak Manufacturing produces snow blowers. The selling price per snow blower
is $100. Costs involved in production are:
Direct Material per unit
Direct Labor per unit
Variable manufacturing overhead per
Fixed manufacturing overhead per
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 fixed manufacturing overhead is in ending
inventory under full costing?(Points
The cost objective is the (Points
reason for allocating the cost.
based on budgeted amounts.
service, or department that is to receive the allocation.
amount to be allocated to any single department.
Which of the following statements about cost pools is not
true? (Points : 4)
costs in each of the cost pools should be homogeneous or similar.
must make a cost-benefit decision when determining how many cost pools are
Only four different kinds of costs
may be included in a single cost pool.
cost pools usually provide more accurate information, but are more expensive.
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:
Direct labor hours
If Jones assigns costs to departments based on square footage, how much total
costs will be allocated to Production Department 1?(Points : 4)
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? (Points
selling price of the completed units.
The costs incurred to process the
units to this point.
selling price of the partially completed units.
costs that will be incurred to finish the units.
BigByte Company has 20 obsolete computers that are carried in inventory at a
cost of $15,000. If these computers are upgraded at a cost of $8,000, they
could be sold for $17,700. Alternatively, the computers could be sold
“as is” for $8,500. What is the net advantage or disadvantage of
reworking the computers? (Points
YXZ Companyâs market for the Model 55 has changed significantly, and YXZ has
had to drop the price per unit from $275 to $135. There are some units in the
work in process inventory that have costs of $160 per unit associated with
them. YXZ could sell these units in their current state for $100 each. It
will cost YXZ $10 per unit to complete these units so that they can be sold
for $135 each.
Which of the following is the amount of sunk costs in this problem? (Points : 4)
$160 per unit
3) Why is it necessary to use equivalent units in a process costing system? (Points : 20)
After materials, labor and overhead costs have been accumulated in a department, the department’s output must be determined so that unit cost can be computed. A department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department’s out put. These partially converted units are mathematically converted into an equivalent number of fully completed units. It is necessary to use equivalent units of production in a process costing system to make sense of productive cycles that are not fully completed.
7) Computer Boutique sells computer equipment and home office furniture.
Currently, the furniture product line takes up approximately 50% of the
company’s retail floor space. The president of Computer Boutique is trying
to decide whether the company should continue offering furniture or just
concentrate on computer equipment. If furniture is dropped, salaries and
other direct fixed costs can be avoided. In addition, sales of computer
equipment can increase by 13%. Allocated fixed costs are assigned based on
Less cost of goods sold
Less direct fixed costs:
Less allocated fixed costs:
Prepare an incremental analysis to determine the incremental effect on profit
of discontinuing the furniture line.
(Points : 25)
Less: COGS $700,000
Contribution Margin $500,000
Less Direct Fixed Costs
Less Allocated Fixed Costs
President’s Salary $130,000
Total Costs $414,000
Net Income $86,000
If the furniture department is discontinued, net income will drop by $65,000
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
(a) How much is the breakeven point in sales dollars for RedEx?
(b) How many units must RedEx sell in order to earn a profit of $24,640?
(c) A new employee suggests that RedEx sponsor a company softball team as a
form of advertising. The cost to sponsor the team is $1,792. How many more
units must be sold to cover this cost?
a) Breakeven point= fixed expenses / contribution margin per unit = $64,960 / (84 – 28) = 64,960 / 56 = 1160 units
b) Profit / contribution margin per unit = 24,640 / 56 = 440 additional units + 1160 breakeven units = 1600 units must be sold to make desired profit.
c) Cost / contribution margin = 1792 / 56 = 32 additional units must be sold to cover this cost.
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