Grading Summary

These are the automatically computed

Date Taken:
results of your exam. Grades for essay
Time Spent:
questions, and comments from your
instructor, are in the "Details" section below. Points Received:
Question Type:

170 / 170 (100%)

# Of Questions:

# Correct:

Multiple Choice

25

25

Short

N/A

Essay

N/A

Grade Details - All Questions

Page:

1.

1 2 3
Question :

(TCO 1) Which of the following is not a difference between

financial accounting and managerial accounting?

Student Answer:

Financial accounting is primarily concerned with

reporting the past, while managerial accounting is more
concerned with the future.
Managerial accounting uses more nonmonetary
information than is used in financial accounting.
Managerial accounting is primarily concerned with
providing information for external users while financial
accounting is concerned with internal users.
Financial accounting must follow GAAP while managerial
accounting is not required to follow GAAP.

Instructor Explanation:

Points Received:

Chapter 1, Page 7

4 of 4

Comments:

2.

Question :

TCO 1) Which of the following statements regarding fixed

costs is true?

Student Answer:

When production increases, fixed cost per unit

increases.
When production decreases, total fixed costs decrease.
When production increases, fixed cost per unit
decreases.
When production decreases, total fixed costs increase.

Instructor Explanation:

Points Received:

Chapter 1, Page 9

4 of 4

Comments:

3.

Question :

(TCO 1) You own a car and are trying to decide whether or

Page:

1.

1 2 3
Question :

(TCO 4) Which of the following will have no effect on the

break-even point in units?

Student Answer:

The selling price increases

The variable cost per unit increases
The sales volume increases
Total fixed costs increase

Instructor Explanation:

Points Received:

Chapter 4, Page 131

4 of 4

Comments:

2.

Question :

(TCO 4) Circle K Furniture has a contribution margin ratio of

16%. If fixed costs are $176,800, how many dollars of
revenue must the company generate in order to reach the
break-even point?

Student Answer:

$1,105,000
$282,880
$1,060,800
$208,476

Instructor Explanation:

Chapter 4, Page 133

$176,800 / 16% = $1,105,000

Points Received:
Comments:

4 of 4

3.

Question :

(TCO 4) Randy Company produces a single product that is

sold for $85 per unit. If variable costs per unit are $26 and
fixed costs total $47,500, how many units must Randy sell
in order to earn a profit of $100,000?

1,735

Student Answer:

618
890
2,500
Instructor
Explanation:

Chapter 4, Page 132

($100,000 + $47,500) / ($85 - $26) = 2,500 units

Points Received:

4 of 4

Comments:

4.

Question :

(TCO 5) In full costing, when does fixed manufacturing

overhead become an expense?

Student Answer:

In the period when other fixed costs are at the highest

level
In the period when the product is sold
In the period when the expense is incurred
When the controller decides that the expense should be
recognized

Instructor Explanation:

Points Received:
Comments:

Chapter 5, Page 168

4 of 4

5.

Question :

(TCO 5) Variable costing income is a function of:

Student Answer:

Units sold only.

Units produced only
Both units sold and units produced.
Neither units sold nor units. produced

Instructor Explanation:

Points Received:

Chapter 5, Page 169

4 of 4

Comments:

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

Direct Labor per unit

Variable manufacturing overhead per unit

Fixed manufacturing overhead per year

$148,500

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?

Student Answer:

$0
$49,500

$148,500
$99,000
Instructor
Explanation:

Chapter 5, Pages 172-174

($148,500 / 45,000) x (45,000 - 30,000) = $49,500

Points Received:

4 of 4

Comments:

7.

Question :

(TCO 6) Which of the following is not a reason that

companies allocate costs?

Student Answer:

To calculate the full cost of products for financial

reporting purposes
To discourage managers from using external suppliers
To reduce the frivolous use of company resources
To provide information needed by managers to make
appropriate decisions

Instructor Explanation:

Points Received:

Chapter 6, Page 198

4 of 4

Comments:

8.

Question :

(TCO 6) Which of the following statements about cost pools

is not
true?

Student Answer:

The costs in each of the cost pools should be

homogeneous or similar.
Managers must make a cost-benefit decision when
determining how many cost pools are appropriate.

Only four different kinds of costs may be included in a

single cost pool.
More cost pools usually provide more accurate
information, but are more expensive.
Instructor Explanation:

Points Received:

Chapter 6, Page 202

4 of 4

Comments:

9.

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. 1

Production Dept. 2

Square footage

15,000

45,000

Direct labor hours

25,000

50,000

If Jones assigns costs to departments based on square

footage, how much total costs will be allocated to
Production Department 1?

Student Answer:

$1,400,000
$1,050,000
$1,575,000
$2,100,000

Instructor
Explanation:

Chapter 6, Pages 213-214

Cost per square foot = $4,200,000/ ($15,000 + $45,000) = $70

Production Department I Cost = $70 x 15,000 = $1,050,000

Points Received:

4 of 4

Comments:

10.

Question :

(TCO 7) A company is currently making a necessary

component in house (the company is producing the
component for its own use). The company has received an
offer to buy the component from an outside supplier. A
machine is being rented to make the component. If the
company were to buy the component, the machine would
no longer be rented. The rent on the machine, in relation to
the decision to make or buy the component, is:

Student Answer:

sunk and therefore not relevant.

avoidable and therefore not relevant.
avoidable and therefore relevant.
unavoidable and therefore relevant.

Instructor Explanation:

Points Received:

Chapter 7, Pages 252-254

4 of 4

Comments:

11.

Question :

(TCO 7) Ricket Company has 1,500 obsolete calculators that

are carried in inventory at a cost of $13,200. If these
calculators are upgraded at a cost of $9,500, they could be
sold for $22,500. Alternatively, the calculators could be sold
"as is" for $9,000. What is the net advantage or
disadvantage of reworking the calculators?

Student Answer:

$13,000 advantage
$4,000 advantage

$9,200 disadvantage
$200 disadvantage
Instructor Explanation:

Chapter 7, Pages 251-252

($22,500 - $9,000) - ($9,500 - $0) = $4,000

Points Received:

4 of 4

Comments:

12.

Question :

(TCO 7) YXZ Companys 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.
When the incremental revenues and expenses are analyzed,
what is the financial impact?

Student Answer:

$25 per unit profit if the units are completed

$125 per unit if the units are completed
$65 per unit loss if the units are completed
$150 per unit loss if the units are completed

Instructor Explanation:

Chapter 7, Pages 251-252

($135 - $100) - ($10 - $0) = $25

Points Received:

4 of 4

Comments:

Page:

1 2 3

Page:

1.

1 2 3
Question :

(TCO 3) What are transferred-in costs? Which departments

will never have transferred-in costs?

Student Answer:

Instructor Explanation:

2.

Transferred-in costs are those costs that are incurred in one department then
transferred to the next processing department.The department where processing
begins would never have transferred-in costs.

Transferred-in costs are costs incurred in one processing

department that are transferred to the next processing
department. The department where the processing begins will
never have transferred-in costs.

Points Received:

20 of 20

Comments:

right

Question :

(TCO 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 relative sales.

Sales

Computer

Home Office

Equipment

Furniture

$1,200,000

$800,000

Less cost of goods sold

700,000

500,000

Contribution margin

500,000

300,000

Less direct fixed costs:

Salaries

175,000

175,000

60,000

60,000

14,118

9,882

Insurance

3,529

2,471

Cleaning

4,117

2,883

76,470

53,350

7,058

4,942

340,292

380,708

$159,708

($ 8,708)

Other

Less allocated fixed

costs:

Rent

President's
salary

Other

Total costs

Net Income

Prepare an incremental analysis to determine the

incremental effect on profit of discontinuing the furniture
line.

Student Answer:

Incremental Decrease in Revenue ($800,000) Incremental cost savings: Cost of

sales $500,000 Salaries $175,000 Other $60,000 Incremental Increase in
computer equipment($1,200,000*13%) $156,000 Incremental Decrease in
computer equipment VC ($700,000*13%) ($91,000) Incremental Increase in
profit $0

Instructor Explanation:

Incremental drop in revenue

Incremental cost savings:

($800,000)

Cost of sales

500,000

Salaries

175,000

Other

60,000

Incremental increase in computer equipment

(13% x $1,200,000)

156,000

Incremental increase in computer equipment

variable costs (13% x $700,000)

Incremental increase in profit

3.

Points Received:

25 of 25

Comments:

on target!

(91,000)

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.
(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?

Student Answer:

Instructor Explanation:

a) BEP in sales dollars =Fixed costs/Contribution margin ratio (CMR) Unit

contribution margin (UCM) =($84-$28)=$56 CMR=$56/$84=66.67% BEP in sales
dollars =$64,960/66.67%=$97,440 b) =($64,960/$24,640) /UCM
=($64,960/24,640) /$56 =$1,600 Units c) =$1792/$56 =32 Units

(a) 84X 28X 64,960 = 0

X = 1,160 units

X = 1,160 $84 = $97,440

(b) ($24,640 + $64,960) / ($84 - $28) = 1,600 units
(c) $1,792 / ($84 - $28) = 32 units

Points Received:

25 of 25

Comments:

perfect!