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Managerial Accounting - Final Exam Solutions | ACC 132.00, Exams of Management Accounting

Illinois State University (ISU)Management Accounting
Prof. Harlan Fuller

Material Type: Exam; Professor: Fuller; Class: Managerial Accounting; Subject: Accounting ; University: Illinois State University; Term: Spring 2011;

Typology: Exams

2010/2011
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1. A detailed financial plan for the future is know as a:
a. Budget
b. Performance report
c. Organizational chart
d. Segment
2. On a manufacturing company’s income state, the cost fo goods available for sale is calculated by
adding together:
a. Cost of goods manufactured and the beginning balance of work in process inventory
b. Cost of goods manufactured and the beginning balance of finished goods inventory
c. Total manufacturing costs and the beginning balance of finished goods inventory are
made
d. Total manufacturing costs and the beginning balance of work in process inventory
3. Stright-line depreciation ona computer used in the marketing department of a manufacturing
firm would be classified as:
a. An asset representing funds accumulated to replace the computer when it is retired
b. A liability representing the probably future outlay of funds to replace the computer
when it is retired
c. A product cost that is fixed in terms of cost behavior
d. A period cost that is fixed in terms of cost behavior
4. Which of the following entries would record correctly the application of overhead cost?
a. Work in process- debit, manufacturing overhead-credit
b. Work in process- debit, A/P- credit
c. Manufacturing overhead-debit, A/P-credit
d. Manufacturing overhead-debit, work in process-credit
5. Which cost will change with a decrease in volume?
a. Total fixed costs and total variable cost
b. Unit fixed costs and total variable cost
c. Total fixed cost and unit variable costs
d. Unit fixed costs and unit variable costs
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  1. A detailed financial plan for the future is know as a: a. Budget b. Performance report c. Organizational chart d. Segment
  2. On a manufacturing company’s income state, the cost fo goods available for sale is calculated by adding together: a. Cost of goods manufactured and the beginning balance of work in process inventory b. Cost of goods manufactured and the beginning balance of finished goods inventory c. Total manufacturing costs and the beginning balance of finished goods inventory are made d. Total manufacturing costs and the beginning balance of work in process inventory
  3. Stright-line depreciation ona computer used in the marketing department of a manufacturing firm would be classified as: a. An asset representing funds accumulated to replace the computer when it is retired b. A liability representing the probably future outlay of funds to replace the computer when it is retired c. A product cost that is fixed in terms of cost behavior d. A period cost that is fixed in terms of cost behavior
  4. Which of the following entries would record correctly the application of overhead cost? a. Work in process- debit, manufacturing overhead-credit b. Work in process- debit, A/P- credit c. Manufacturing overhead-debit, A/P-credit d. Manufacturing overhead-debit, work in process-credit
  5. Which cost will change with a decrease in volume? a. Total fixed costs and total variable cost b. Unit fixed costs and total variable cost c. Total fixed cost and unit variable costs d. Unit fixed costs and unit variable costs
  1. Compute the amount of direct materials used during August if $25,000 of raw material was purchased during the month and the inventories were as follows: Balance Balance Inventories Aug 1 Aug 31 Raw materials $5,000 $3, Work in process 13,000 16, Finished goods 25,000 27, a. 17, b. 16, c. 27, d. 23, a. Beg RM + purchases RM = RM available b. RM available – end RM = RM used c. 5000+25000=30000-3000= 27,
  2. Which of the following is unlikely to be classified as a fixed cost? a. Property tax b. Rent on factory building c. Supplies d. Depreciation
  3. Show below are a number of costs incurred last year at Mecca publishing co., a manufacturing of elementary school textbooks: Solbents and cleaners used by custodians $ Depreciation on the automobiles used by sales reps 4, Fire insurance on factory building 2, Shipping costs on textbooks sold 3, What is the total of manufacturing overhead costs above? a. 500 b. 2, c. 6, d. 10,
  1. The variable overhead efficiency variance is most effective in measuring: a. The difference between actual variable overhead costs incurred during the period and the budget amount based on the time that should have been expended in producing at a certain level of activity. b. The difference between actual hours utilized in production and the standard hours allowed at a certain level of output c. The difference between actual variable overhead costs incurred during the period and the budget allowance based on actual input d. Excessive usage of overhead materials
  2. The following costs are budegeted for Ivory corporation for the next year:
    1. Total VC = 350,
    2. Total FC = 240,
    3. Total cost = 590,
    4. These costs are based on an activity level of 10,000 units. What would the total cost be for ivory if the level of activity was 12,000 units? b. 708, c. 660, d. 638, e. 590,
  3. The santos company erred in selecting a denominator level of activity and chose a much lower level than was realistic. This error would most likely result in a large: a. Favorable variable overhead efficiency variance. b. Favorable fixed overhead budget variance c. Favorable overhead volume variance d. Unfavorable fixed overhead budget variance
  4. In a decision to sell or process futher beyond the split-off point, a manager should base the decision on: a. The amount of joint product costs allocated. b. The incremental operating income attainable beyond the split-off point c. The incremental revenue attainable beyond the split-off point d. The incremental cost incurred beyond the split-off point\
  1. Gary company produced products x, y, and z froma single RM input. Budgeted data for the next month is as follows: i. ii. X iii. Y iv. Z v. Units vi. 2,500 vii. 3000 viii. 4000 ix. Per unit sales value at split-off x. $20 xi. $22 xii. $ xiii. Added processing costs per unit xiv. $8 xv. $8.50 xvi. $ xvii. Per unit sales value if processed further xviii. $30 xix. $30 xx. $ If the cost of raw material input is $150,000, which of the products should be processed beyond the split-off point?` b. Only Y c. Y and Z d. X and Z e. All three Use the following information for questions 19/20: The stats violin company has the capacity to manufacture and sell 5000 violins per year but is currently only manufacturing and selling 4,800. The following per uinit numbers realte to annual operation at 4,800 units: Sales price $600/unit Manufacturing cost: Variable $130/unit Fixed $270/unit Selling/admin costs: Variable $20/unit Fixed $40/unit An overseas customer is interested in purchasing the 200 units of excess capacity if they can get a price of $350. This special order would not affect regular sales.
  1. The silver company uses a predetermined overhead rate to apply manufacturing over to jobs. The predetermined overhead rate is based on labor cost in dept. A and on machine hours in dept. B. at the beinging of the year, the following estimates were made: Dept A Dept B DL cost 60,000 40, Manufacturing overhead 90,000 45, DL hours 6,000 9, Machine hours 2,000 15, What predetermined overhead rates would be used in dept. A and Dept. B, respectively? a. 150% and $3. b. 67% and $3. c. 67% and $5. d. 150% and $5.
  2. The impact on net income of short-run change in sale fo r segment can be most clearly predicted by analyzing: a. The segment margin. b. Net sales less segment fixed costs c. The contribution margin ratio d. The segment margin ratio
  3. Nelson company’s activity for the first six months of 19x4 is as follows: Machine Electrical Month Hours Costs Jan 4,000 3120 Feb 6000 4460- March 4800 3500 April 3800 3040 May 3600 2900- June` 4200 3200 Using the high-low method, the fixed portion of the electrical cost each month would be: a. 260 b. 440 c. 560 d. 1520
  1. Kaufman company recorded the following data for the month of January 19x5: Inventories 1/1/x5 1/31/x Rm 22000 21000 Work in process 16000 13000 Finished goods 20,000 25, Additional data: Sales revenue 200, DL cost 30, Manufacturing overhead costs 70. Selling expenses 15, Administrative expenses 25, If raw materials costing 25,000 were purchased during January, the total manufacturing costs for the month would be: a. 124, b. 125, c. 126, d. 128,
  2. The sale of equipment at a gain would be shown on the statement of cash flows prepared under the indirect method in which of the following manners? a. Cash received would be shown under investing activities and the gain would not appear on the statement of cash flows b. Cash received would be shown as an adjustment to net income and the gain would not appear on the statement of cash flows c. Cash received would be shown under investing activities and the gain would be deducted from net income d. Cash received would be shown under investing activities and the gain would be added to net income
  3. Sales = 600,000, variable expenses = 420,000, fixed expenses = 126, The break-even point in sales dollars is: a. 180. b. 420, c. 546, d. 500, For questions 31-32 refer to following: During 19x2, Krepps Company manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows: Fixed overhead 240, Variable overhead 200, Direct labor 110,

d. 7740 units

  1. The desired ending inventory for august is: a. 380 units b. 540 units c. 680 units d. 720 units
  2. At the beginning of last year, Tara Corporation budgeted $300,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine hours. At the end of the year, Tara’s fixed overhead budget variance was $9,000 favorable. Its fixed overhead volume variance was $15,000 favorable. Actual direct labor hours for the year were 625,000. What was Tara’s total standard machine hours allowed for last year’s output? a. 570, b. 595, c. 630, d. 655, Refer to this for questions 37/38: Standard quantity of materials 5 lb Standard cost per lb $. Standard direct labor hours. Standard wage rate per hour $7. Materials purchased 100,000 lb Cost of materials purchased $.17 /lb Materials consumed for manufacture of 10, units 60,000 lb Actual direct labor hours required for 10,000 3, Actual direct labor cost per hour $7. The materials price variance is recognized when materials are purchased.
  3. Nell’s materials price variance for June was a. 3,000 unfavorable b. 3000 favorable c. 2000 unfavorable d. 2000 favorable e. None of these
  4. Nell’s labor efficiency variance for June was a. 720 unfavorable b. 720 favorable c. 700 unfavorable d. 700 favorable e. None of these

Refer to for questions 39/40: Difazzio manufacturing company uses a standard cost system with machine hours as an ovehaed based. For 19x5, Difazzio budgeted its fixed overhead costs at $728,000 for the year but ended up incurring only $691,600 for the year. The following amounts relate to Difazzio for 19x5. Denominator activity level in machine hours 2, Standard machine hours allowed 2, Actual machine hours incurred 2,

  1. The fixed overhead budget variance for 19x5 was: a. 8,400 favorable b. 9,4000 favorable c. 36,400 favorable d. 41,600 unfavorable
  2. The fixed overhead volume variance for 19x5 was: a. 9,408 favorable b. 28,000 favorable c. 56,000 favorable d. 84,000 favorable Refer to for questions 41/42/ Chelm music company manufactures violins, vilas, cellos, and string basses using a job-order cost system to collect costs related to production.
  3. What account should be debited when the workers who carve the wood for the instruments are paid? a. Direct labor b. Work in process c. Manufacturing overhead d. Salaries and wages expense
  4. What account should Chelm debit when the production manage is paid? a. Direct labor b. Work in process c. Manufacturing overhead d. Salaries and wages expense
  5. What account should CHelm debit when the president of the company is paid? a. Direct labor b. Work in process c. Manufacturing overhead d. Salaries and wages expense

McCain company recorded the following events for 19x6:

  • Refer to for questions 48/
    • Retirement of preferred stock -40,
    • Sale of bonds issues by other companies 65,
    • Interest paid on notes payable 25,
    • Dividends paid to shareholders 80,
    • Collection by McCain on loan 45,
    • Payment of deferred tax- 35,
      • a. 30, 48. The net decrease in cash resulting from financing activities for 19x6 was:
      • b. 35,
      • c. 75,
      • d. 120,
      • a. 5, 49. The net increase in cash resulting from investing activites for 19x6 was:
      • b. 10,
      • c. 30,
      • d. 110,
      • e. 65000+