BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

Multiple Choice Questions (20 points). Please bold/underline/circle the correct answer. 1. Which of the following involves the coordination of daily business functions within an organization? A. Decision making. B. Planning. C. Directing operational activities. D. Controlling. E. Motivating.

2. Which of the following is not an ethical standard of managerial accounting? A. Competence. B. Confidentiality. C. Efficiency. D. Integrity. E. Credibility.

3. Employee empowerment involves encouraging and authorizing workers to take initiatives to: A. improve operations. B. reduce costs. C. improve product quality. D. improve customer service. E. All of these.

4. Which of the following statements is true? A. Product costs affect only the balance sheet. B. Product costs affect only the income statement. C. Period costs affect only the balance sheet. D. Period costs affect both the balance sheet and the income statement. E. Product costs eventually affect both the balance sheet and the income statement.

BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

5. Depreciation of factory equipment would be classified as: A. operating cost. B. "other" cost. C. manufacturing overhead. D. depreciation expense. E. administrative cost.

6. The primary difference between normalized and actual costing methods lies in the determination of a job's: A. direct material costs. B. direct labor costs. C. manufacturing overhead costs. D. selling costs. E. administrative costs.

7. Electricity costs that were incurred by a company's production processes should be debited to: A. Utilities Expense. B. Accounts Payable. C. Cash. D. Manufacturing Overhead. E. Work-in-Process Inventory.

8. Which of the following statements about material requisitions is false? A. Material requisitions are often computerized. B. Material requisitions are a common example of source documents. C. Material requisitions contain information that is useful to the cost accounting department. D. Material requisitions authorize the transfer of materials from the production floor to the raw materials warehouse. E. Material requisitions are routinely linked to a bill of materials that lists all of the materials needed to complete a job.

BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

9. Which of the following statements is false? A. In job-order costing, costs are accumulated by job order. B. In process costing, costs are accumulated by department. C. In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production activity. D. In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed. E. In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.

10. Which of the following companies would likely use a process-costing system?

A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E

BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

Question 1 (12 points) The following terms are used to describe various economic characteristics of costs:

Required: Choose one of the preceding terms to characterize each of the amounts described below. Each term may be used only once. A. The cost of including one extra child in a day-care center. Marginal cost B. The cost of merchandise inventory purchased five years ago. The goods are now obsolete. Sunk Cost C. The cost of feeding 300 children in a public school cafeteria is $450 per day, or $1.50 per child per day. What economic term describes this $1.50 cost? Average Cost D. The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for $30,000. What economic term describes this $30,000 of lost rental revenue? Opportunity Cost E. The cost of building an automated assembly line in a factory is $700,000; a manually operated assembly line would cost $250,000. What economic term is used to describe the $450,000 variation between these two amounts? Differential Cost F. Refer to the preceding question and assume that the firm is currently building the assembly line for $700,000. What economic term is used to describe the $700,000 construction cost? Out-of-Pockect cost

BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

Question 2 (28 points) Rockville, Inc., which uses a job-costing system, began business on January 1, 20x3 and applies manufacturing overhead on the basis of direct-labor cost. The following information relates to 20x3: Budgeted direct labor and manufacturing overhead were anticipated to be $200,000 and $250,000, respectively. Job nos. 1, 2, and 3 were begun during the year and had the following charges for direct material and direct labor:

Job nos. 1 and 2 were completed and sold on account to customers at a profit of 60% of cost. Job no. 3 remained in production. Actual manufacturing overhead by year-end totaled $233,000. Rockville adjusts all under- and overapplied overhead to cost of goods sold. Required: A. Compute the company's predetermined overhead application rate. B. Compute Rockville's cost of job(s) in ending work-in-process inventory. C. Determine Rockville's cost of job(s) sold and sales revenue. D. Was manufacturing overhead under- or overapplied during 20x3? By how much?

Refer to attached Excel

BUS 424 Managerial Accounting Exam1 (100 points)

Name:______ ________________ Time: 2.0 hours

Question 3 (40 points) Federal, Inc., uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 62,000 units and 70,000 units, the latter of which was 40% complete. The production supervisor noted that Federal completed 100,000 units during the month. Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $40,000; conversion, $90,000. During May, Federal charged production with $300,000 of material and $710,000 of conversion. Required: Prepare schedules as of May 31, to compute the following: A. Physical flow of units. B. Equivalent units of production. C. Costs per equivalent unit for material and conversion. D. Cost of the May 31 finished-goods inventory and work-in-process inventory.

Refer to attached Excel