ACCT 505 Midterm Exam (New) Set 1

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ACCT 505 Midterm Exam (New) Set 1

1. (TCO A)  Direct material cost is a part of (Points : 6)

Conversion Cost NO…. Prime Cost NO.

Conversion Cost YES…. Prime Cost NO.

Conversion Cost YES…. Prime Cost YES.

Conversion Cost NO…. Prime Cost YES.

 

 

Question 2.2. (TCO A)  Total fixed costs (Points : 6)

will increase with increases in activity.

will decrease with increases in activity.

are not affected by activity.

should be ignored in making decisions because they can never change.

 

 

Question 3.3. (TCO A) Property taxes on a company’s factory building would be classified as a(n) (Points : 6)

variable cost.

opportunity cost.

period cost.

product cost.

 

 

Question 4.4. (TCO C) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? (Points : 6)

Fixed costs per unit decrease and variable costs per unit do not change.

Fixed costs per unit increase and variable costs per unit do not change.

Fixed costs per unit do not change and variable costs per unit do not change.

Fixed costs per unit do not change and variable costs per unit increase.

 

 

ACCT 505 Midterm Exam (New) Set 1

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Question 5.5. (TCO B) Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.

II. Overhead application may be made in a single application at the time of completion of the job.

III. Overhead application should be made to any job not completed at year end in order to properly value the work in process inventory. (Points : 6)

Only statement I is true.

Only statement II is true.

Both statements I and II are true.

Statements I, II, and III are true.

 

 

Question 6.6. (TCO B) Under a job-order costing system, the product being manufactured (Points : 6)

is homogeneous.

passes from one manufacturing department to the next before being completed.

can be custom manufactured.

has a unit cost that is easy to calculate by dividing total production costs by the units produced.

 

 

Question 7.7. (TCO F)  Equivalent units for a process costing system using the FIFO method would be equal to (Points : 6)

units completed during the period, plus equivalent units in the ending work-in-process inventory.

units started and completed during the period, plus equivalent units in the ending work-in-process inventory.

units completed during the period and transferred out.

units started and completed during the period, plus equivalent units in the ending work-in-process inventory, plus work needed to complete units in the beginning work-in-process inventory.

 

ACCT 505 Midterm Exam (New) Set 1

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Question 8.8. (TCO C) The contribution margin equals (Points : 6)

sales – expenses.

sales – variable costs.

sales – cost of goods sold.

sales – fixed costs.

 

Question 9.9. (TCO C)  Which of the following would not affect the break-even point? (Points : 6)

Variable expense per unit

Number of units sold

Total fixed expenses

Selling price per unit

 

Question 10.10. (TCO D) Under variable costing, (Points : 6)

inventory costs will be lower than under absorption costing.

inventory costs will be higher than under absorption costing.

net operating income will always be lower than under absorption costing.

net operating income will always be higher than under absorption costing.

 

1. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year.

Sales    $950

Purchases of raw materials      $225

Direct labor     $250

Manufacturing overhead         $295

Administrative expenses         $150

Selling expenses          $140

Raw materials inventory, beginning   $30

Raw materials inventory, ending        $45

Work-in-process inventory, beginning            $20

Work-in-process inventory, ending     $55

Finished goods inventory, beginning  $100

Finished goods inventory, ending      $135

 

Prepare a Schedule of Cost of Goods Manufactured statement in the text box below. (Points : 15)

 

Schedule of cost of goods manufactured

Direct materials:

 

Question 2.2. (TCO B) The Nebraska Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed

Units   Materials         Conversion

Work in process, June 1          140,000           65%     45%

Work in process, Jun 30          120,000           75%     65%

 

The department started 580,000 units into production during the month and transferred 600,000 completed units to the next department.

 

 

ACCT 505 Midterm Exam (New) Set 1

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Question 3.3. (TCO C) A tile manufacturer has supplied the following data.

Boxes of tile produced and sold         625,000

Sales revenue  $2,975,000

Variable manufacturing expense         $1,720,000

Fixed manufacturing expense $790,000

Variable selling and admin expense    $152,000

Fixed selling and admin expense        $133,000

Net operating income  $180,000

 

Question 4.4. (TCO D) The Hampton Company produces and sells a single product. The following data refer to the year just completed.

Selling price    $450

 

Units in beginning inventory  0

Units produced           25,000

Units sold        22,000

 

Variable costs per unit:

Direct materials           $150

Direct labor     $75

Variable manufacturing overhead       $25

Variable selling and admin     $15

 

Fixed costs:

Fixed manufacturing overhead           $275,000

Fixed selling and admin          $200,000

 

Required:

Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.

Prepare an income statement for the year using absorption costing.

Prepare an income statement for the year using variable costing. (Points : 30)

ACCT 505 Midterm Exam (New) Set 1

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