ACC 349 Final Exam

1) What is the best way to handle manufacturing overhead costs in order to get the most timely job
cost information?
2) At the end of the year, manufacturing overhead has been overapplied. What occurred to create
this situation?
3) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is
part of the year end entry to dispose of the overapplied amount assuming the amount is material
4) Which of the following would be accounted for using a job order cost system?
5) Which one of the following is NEVER part of recording the issuance of raw materials in a job
order cost system?
6. What is unique about the flow of costs in a job order cost system?
7) Which one of the following costs would be included in manufacturing overhead of a lawn mower
manufacturer?
8) What broad functions do the management of an organization perform?
9) Which of the following represents the correct order in which inventories are reported on a
manufacturers balance sheet?
10) In traditional costing systems, overhead is generally applied based on
11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)
12) A well-designed activity-based costing system starts with
13) Which of the following factors would suggest a switch to activity-based costing?
14) All of the following statements are correct EXCEPT that
15) What sometimes makes implementation of activity-based costing difficult in service industries is
16) One of Astro Companys activity cost pools is machine setups, with estimated overhead of
$150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine
setup cost pool should be assigned to sparklers?
17) Poodle Company manufactures two products, Mini A and Maxi B. Poodles overhead costs
consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000.
Information on the two products is:
18) Poodle Company manufactures two products, Mini A and Maxi B. Poodles overhead costs
consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000.
Information on the two products is:
19) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18
each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit;
however, $5 per unit is avoidable. Should Truckel make or buy the wickets?

20) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a cost of $20,000. If
the calculators are scrapped, they can be sold for $1.10 each (for parts). If they are repackaged, at a
cost of $15,000, they could be sold to toy stores for $2.50 per unit. What alternative should be
chosen, and why?

21) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit.
In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision
22) Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75,
and the total monthly fixed costs are $300,000. How much is Hartleys contribution margin ratio?
23. Which statement describes a fixed cost?
24) Disneys variable costs are 30% of sales. The company is contemplating an advertising
campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the
companys net income increase?

25) Variable costing

26) Which cost is NOT charged to the product under variable costing?

27) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and
sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct
labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000
selling and administrative expenses. The per unit manufacturing cost under absorption costing is

28) Which of the following is NOT considered an advantage of using standard costs?

29) The difference between a budget and a standard is that

30) If a company is concerned with the potential negative effects of establishing standards, they
should

31) The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200
gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product.
The direct materials quantity variance for last month was

32) The standard number of hours that should have been worked for the output attained is 8,000
direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor
price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour,
what was the actual rate of pay for direct labor?

33) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is
twice the total overhead variance. What is the total overhead variance?

34) Manufacturing overhead costs are applied to work in process on the basis of

35) The overhead volume variance relates only to

36) If the standard hours allowed are less than the standard hours at normal capacity
37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug
requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees
of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of
direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have
2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?

38) Lewis Hats is planning to sell 600 straw hats. Each hat requires a half pound of straw and a
quarter hour of direct labor. Straw costs $0.20 per pound and employees of the company are paid
$22 per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and wants to have 50
pounds of straw and 60 hats in ending inventory. How many units should Lewis Hats produce in
April?

39) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will
sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barrys
policy is to maintain an ending inventory equal to 25% of the next quarters sales. Each widget costs
$1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004?

40) In most cases, prices are set by the

41) A company must price its product to cover its costs and earn a reasonable profit in

42) The cost-plus pricing approachs major advantage is

43) What does cost accounting measure, record, and report

44) Why is factory overhead applied to products and jobs by manufacturing companies?

45) In a job order cost accounting system, the Work in Process account is

46) Managerial accounting

47) A well-designed activity-based costing system starts with

48) Which of the following is a value-added activity?

49) Which of the following is a nonvalue-added activity?

50) Each of the following is a limitation of activity-based costing EXCEPT

51) Ace Company sells office chairs with a selling price of $25 and a contribution margin per unit of
$15. It takes 3 machine hours to produce one chair. How much is the contribution margin per unit of
limited resource?

52) Walton, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of
the unassembled product is $16, while the cost of assembling each unit is estimated at $17.
Unassembled units can be sold for $55, while assembled units could be sold for $71 per unit. What
decision should Walton make?

53) Which cost is charged to the product under variable costing?

54) Which of the following statements is FALSE?

55) If standard costs are incorporated into the accounting system

56) A standard cost is

57) The per-unit standards for direct labor are 2 direct labor hours at $12 per hour. If in producing
2,400 units, the actual direct labor cost was $51,200 for 4,000 direct labor hours worked, the total
direct labor variance is

58) If the standard hours allowed are less than the standard hours at normal capacity, the volume
variance

59) Which of the following statements is FALSE?

60) Looker Hats is planning to sell 600 felt hats, and 700 will be produced during June. Each hat
requires a half yard of felt and a quarter hour of direct labor. Felt costs $3.00 per yard and employees
of the company are paid $20 per hour. How much is the total amount of budgeted direct labor for
June?

61) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by
the

62) Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

63) The first step in activity-based costing is to

64) Which one of the following is required in order for an activity base to be useful in cost behavior
analysis?
65) Which cost is NOT charged to the product under absorption costing?

66) A company developed the following per-unit standards for its product: 2 pounds of direct
materials at $6 per pound. Last month, 2,000 pounds of direct materials were purchased for $11,400.
The direct materials price variance for last month was

67) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600
for 4,000 direct labor hours worked, the direct labor price (rate) variance is

68) Wacos Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during
July. Waco keeps 10% of the next months sales as ending inventory. How many units should Waco
produce during June?

69) In cost-plus pricing, the target selling price is computed as

70) Which one of the following is an important feature of a job order cost system?

71) Which of the following represents the two basic types of cost accounting systems?

72) Which one of the following is indirect labor considered?

73) Which of the following is an element of manufacturing overhead?

74) Which of the following is NOT typical of traditional costing systems?

75) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make
Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess
capacity, the opportunity cost of buying Part A from the supplier is

76) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine
has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent
contribution margin. If other factors are equal, which product should H55 push to customers?

77) During December, the capital budget indicates a $280,000 purchase of equipment. The ending
November cash balance is budgeted to be $40,000. Cash receipts are $840,000, and cash
disbursements are $610,000 during December. The company wants to maintain a minimum cash
balance of $20,000. What is the minimum cash loan that must be planned to be borrowed from the
bank during December?

78) Prices are set by the competitive market when

79) The standards and rules that are recognized as a general guide for financial reporting are called
__________.

80) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of
$74,400 and sales for the current year of $100,000. How much is Hesss break even point?

81) In what situations will a static budget be most effective in evaluating a managers effectiveness?

82) The primary purpose of the statement of cash flows is to __________.

83) The category that is generally considered to be the best measure of a companys ability to
84) Of the items below, the one that appears first on the statement of cash flows is

85) Which of the following transactions does not affect cash during a period?

86) One of Lara Dole Companys activity cost pools is machine setups, with estimated overhead of
$300,000. Dole produces flares (400 setups) and health packs (600 setups). How much of the
machine setup cost pool should be assigned to flares?

87) As compared to a high-volume product, a low-volume product