ACC 20 MCQs and 4 Computational Problems Test 2015
Question # 00074230
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Updated on: 06/04/2015 12:37 AM Due on: 06/18/2015
1. (TCO 3) A characteristic of managerial accounting would include: (Points : 3)
being based on historical financial information.
following GAAP.
foregoing accuracy for timeliness.
being designed to report information to external users.
Question 2.2. (TCO 3) The process of creating a formal plan and translating goals into a quantitative format is called: (Points : 3)
budgeting.
cost analysis.
historical financial statements.
profit and loss.
Question 3.3. (TCO 3) The Coyote Cafe had sales revenues and food costs in 2007 of $800,000 and $600,000, respectively. In 2008, Coyote will be introducing a new menu item that will generate $100,000 in sales revenues and $45,000 in food costs. Assuming no changes are expected for the other food items, the differential operating profit for 2008 is: (Points : 3)
$55,000.
$100,000.
$155,000.
$200,000.
Question 4.4. (TCO 1) A manufacturing company incurs direct labor costs as it transforms direct material into marketable products. The cost of the direct labor will be treated as an expense on the income statement when the resulting: (Points : 3)
payroll costs are paid.
products are completed.
products are sold.
payroll costs are incurred.
Question 5.5. (TCO 1) Costs that remain unchanged as the volume of activity changes are called: (Points : 3)
fixed costs.
variable costs.
sunk costs.
manufacturing costs.
Question 6.6. (TCO 1) Calculate the prime costs from the following information:
Fixed manufacturing overhead
$2,000
Variable manufacturing overhead
1,500
Direct materials
4,000
Direct labor
3,000
(Points : 3)
$4,000
$7,000
$9,000
$6,500
Question 7.7. (TCO 1) The excess of sales over the cost of merchandise sold is termed: (Points : 3)
the net income.
the contribution margin.
the operating profit.
the gross margin.
Question 8.8. (TCO 6) Western Sales has the following information concerning its one and only product:
Selling price per unit: $40
Variable cost per unit: $15
Total fixed costs: $250,000
Compute the break-even point in sales dollars. (Points : 3)
$250,000
$1,000,000
$400,000
$666,680
Question 9.9. (TCO 6) When the sales volume equals total costs and there is zero profit or loss, this is termed: (Points : 3)
the contribution margin.
the break-even point.
the margin of safety.
the profit-volume model.
Question 10.10. (TCO 6) The following information pertains to Klyne Company:
Sales: $500,000
Variable costs: $100,000
Fixed costs: $30,000
What is Klyne's total contribution margin?
(Points : 3)
$400,000
$370,000
$130,000
$500,000
1. (TCO 5) The management method for dealing with bottlenecks in the production process is called: (Points : 3)
differential management.
make-buy decision.
differential strategy.
theory of constraints.
Question 2.2. (TCO 5) Costs that differ between two or more alternatives are termed: (Points : 3)
sunk costs.
opportunity costs.
short run costs.
differential costs.
Question 3.3. (TCO 5) Differential analysis may be used for all the following except: (Points : 3)
a make-buy decision.
adding or dropping a product.
accepting a special order.
costing our product using full absorption costing.
Question 4.4. (TCO 3) Which of the following is NOT a statistical method of cost estimation? (Points : 3)
Regression analysis method
Scattergraph method
Account analysis method
High-low method
Question 5.5. (TCO 3) The cost estimation method that is based on the measurements and pricing of the work involved in a task is the: (Points : 3)
account analysis method.
engineering method.
regression analysis.
high-low method.
Question 6.6. (TCO 3) A basic assumption of regression analysis is: (Points : 3)
it will use a spreadsheet application.
management is honest.
the process for which costs are being estimated remains constant over time.
business will constantly change for the better.
Question 7.7. (TCO 2) Which of the following statements does not reflect one of the fundamental themes underlying the design of cost systems for managerial purposes? (Points : 3)
Cost systems should have a decision focus.
Different cost information is used for different purposes.
Cost information for managerial purposes must meet the cost-benefit principle.
The primary purpose of cost systems is to gather information in order to value inventory.
Question 8.8. (TCO 2) In a labor intensive company in which more overhead is used by the more highly skilled and paid employees, which activity base would be most appropriate for applying overhead to production? (Points : 3)
Direct labor cost
Direct material cost
Direct labor hours
Machine hours
Question 9.9. (TCO 2) What is the amount transferred out for Case B?
Case B
Beginning balance
$23,000
Ending balance
19,200
Transferred in
97,700
Transferred out
????
(Points : 3)
$93,000
$101,500
$116,900
$120,700
Question 10.10. (TCO 2) The loan department of a financial corporation provides loans to businesses. The costs of processing these loans are often several thousand dollars. All loans are initially evaluated using the same financial analysis software, but some require outside services, such as appraisals and legal services. Which is the most appropriate costing system for the loan department? (Points : 3)
Job order costing
Process costing
Operation costing
Batch costing
1. (TCO 6) T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics:
Sales price per unit: $125
Variable cost per unit: $75
Annual fixed costs: $180,000
(a) How many units must T-Tunes sell to break even?
(b) How many units must T-Tunes sell to make an operating profit of $120,000 for the year?
(c) What will the operating profit be, assuming that the projected sales for the year are 7,500 units?
Consider requirements (b) and (c) independent of each other. (Points : 30)
Question 2.
2. (TCO 4) Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:
Total factory overhead costs $180,000
Direct labor hours 50,000 hours
Direct labor costs $250,000
Machine hours 60,000 hours
Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
(Points : 30)
Question 3.
3. (TCO 1) The Moundsview Company provided you with the following information for the fiscal year ending on December 31:
Work-in-process inventory, 12/31 $115,800
Finished goods inventory, 1/1 614,800
Direct labor costs incurred 2,008,600
Manufacturing overhead costs 5,368,800
Direct materials inventory, 1/1 501,600
Finished goods inventory, 12/31 1,022,000
Direct materials purchased 3,500,400
Work-in-process inventory, 1/1 202,000
Direct materials inventory, 12/31 338,800
(a) Compute the total manufacturing costs incurred during the year.
(b) Compute the total work-in-process during the year.
(c) Compute the cost of goods manufactured during the year.
(d) Compute the cost of goods sold during the year. (Points : 30)
Question 4.
4. (TCO 5) The following information relates to a product produced by Bayfield Company:
Direct materials $70
Direct labor 40
Variable overhead 45
Fixed overhead 50
Unit cost $205
Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $170 each. A customer has offered to buy 60,000 units for $160 each. Compute the effect on the net income if Bayfield accepts the special order.
(Points : 20)
being based on historical financial information.
following GAAP.
foregoing accuracy for timeliness.
being designed to report information to external users.
Question 2.2. (TCO 3) The process of creating a formal plan and translating goals into a quantitative format is called: (Points : 3)
budgeting.
cost analysis.
historical financial statements.
profit and loss.
Question 3.3. (TCO 3) The Coyote Cafe had sales revenues and food costs in 2007 of $800,000 and $600,000, respectively. In 2008, Coyote will be introducing a new menu item that will generate $100,000 in sales revenues and $45,000 in food costs. Assuming no changes are expected for the other food items, the differential operating profit for 2008 is: (Points : 3)
$55,000.
$100,000.
$155,000.
$200,000.
Question 4.4. (TCO 1) A manufacturing company incurs direct labor costs as it transforms direct material into marketable products. The cost of the direct labor will be treated as an expense on the income statement when the resulting: (Points : 3)
payroll costs are paid.
products are completed.
products are sold.
payroll costs are incurred.
Question 5.5. (TCO 1) Costs that remain unchanged as the volume of activity changes are called: (Points : 3)
fixed costs.
variable costs.
sunk costs.
manufacturing costs.
Question 6.6. (TCO 1) Calculate the prime costs from the following information:
Fixed manufacturing overhead
$2,000
Variable manufacturing overhead
1,500
Direct materials
4,000
Direct labor
3,000
(Points : 3)
$4,000
$7,000
$9,000
$6,500
Question 7.7. (TCO 1) The excess of sales over the cost of merchandise sold is termed: (Points : 3)
the net income.
the contribution margin.
the operating profit.
the gross margin.
Question 8.8. (TCO 6) Western Sales has the following information concerning its one and only product:
Selling price per unit: $40
Variable cost per unit: $15
Total fixed costs: $250,000
Compute the break-even point in sales dollars. (Points : 3)
$250,000
$1,000,000
$400,000
$666,680
Question 9.9. (TCO 6) When the sales volume equals total costs and there is zero profit or loss, this is termed: (Points : 3)
the contribution margin.
the break-even point.
the margin of safety.
the profit-volume model.
Question 10.10. (TCO 6) The following information pertains to Klyne Company:
Sales: $500,000
Variable costs: $100,000
Fixed costs: $30,000
What is Klyne's total contribution margin?
(Points : 3)
$400,000
$370,000
$130,000
$500,000
********************************************************
1. (TCO 5) The management method for dealing with bottlenecks in the production process is called: (Points : 3)
differential management.
make-buy decision.
differential strategy.
theory of constraints.
Question 2.2. (TCO 5) Costs that differ between two or more alternatives are termed: (Points : 3)
sunk costs.
opportunity costs.
short run costs.
differential costs.
Question 3.3. (TCO 5) Differential analysis may be used for all the following except: (Points : 3)
a make-buy decision.
adding or dropping a product.
accepting a special order.
costing our product using full absorption costing.
Question 4.4. (TCO 3) Which of the following is NOT a statistical method of cost estimation? (Points : 3)
Regression analysis method
Scattergraph method
Account analysis method
High-low method
Question 5.5. (TCO 3) The cost estimation method that is based on the measurements and pricing of the work involved in a task is the: (Points : 3)
account analysis method.
engineering method.
regression analysis.
high-low method.
Question 6.6. (TCO 3) A basic assumption of regression analysis is: (Points : 3)
it will use a spreadsheet application.
management is honest.
the process for which costs are being estimated remains constant over time.
business will constantly change for the better.
Question 7.7. (TCO 2) Which of the following statements does not reflect one of the fundamental themes underlying the design of cost systems for managerial purposes? (Points : 3)
Cost systems should have a decision focus.
Different cost information is used for different purposes.
Cost information for managerial purposes must meet the cost-benefit principle.
The primary purpose of cost systems is to gather information in order to value inventory.
Question 8.8. (TCO 2) In a labor intensive company in which more overhead is used by the more highly skilled and paid employees, which activity base would be most appropriate for applying overhead to production? (Points : 3)
Direct labor cost
Direct material cost
Direct labor hours
Machine hours
Question 9.9. (TCO 2) What is the amount transferred out for Case B?
Case B
Beginning balance
$23,000
Ending balance
19,200
Transferred in
97,700
Transferred out
????
(Points : 3)
$93,000
$101,500
$116,900
$120,700
Question 10.10. (TCO 2) The loan department of a financial corporation provides loans to businesses. The costs of processing these loans are often several thousand dollars. All loans are initially evaluated using the same financial analysis software, but some require outside services, such as appraisals and legal services. Which is the most appropriate costing system for the loan department? (Points : 3)
Job order costing
Process costing
Operation costing
Batch costing
********************************************************
1. (TCO 6) T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics:
Sales price per unit: $125
Variable cost per unit: $75
Annual fixed costs: $180,000
(a) How many units must T-Tunes sell to break even?
(b) How many units must T-Tunes sell to make an operating profit of $120,000 for the year?
(c) What will the operating profit be, assuming that the projected sales for the year are 7,500 units?
Consider requirements (b) and (c) independent of each other. (Points : 30)
Question 2.
2. (TCO 4) Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:
Total factory overhead costs $180,000
Direct labor hours 50,000 hours
Direct labor costs $250,000
Machine hours 60,000 hours
Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
(Points : 30)
Question 3.
3. (TCO 1) The Moundsview Company provided you with the following information for the fiscal year ending on December 31:
Work-in-process inventory, 12/31 $115,800
Finished goods inventory, 1/1 614,800
Direct labor costs incurred 2,008,600
Manufacturing overhead costs 5,368,800
Direct materials inventory, 1/1 501,600
Finished goods inventory, 12/31 1,022,000
Direct materials purchased 3,500,400
Work-in-process inventory, 1/1 202,000
Direct materials inventory, 12/31 338,800
(a) Compute the total manufacturing costs incurred during the year.
(b) Compute the total work-in-process during the year.
(c) Compute the cost of goods manufactured during the year.
(d) Compute the cost of goods sold during the year. (Points : 30)
Question 4.
4. (TCO 5) The following information relates to a product produced by Bayfield Company:
Direct materials $70
Direct labor 40
Variable overhead 45
Fixed overhead 50
Unit cost $205
Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $170 each. A customer has offered to buy 60,000 units for $160 each. Compute the effect on the net income if Bayfield accepts the special order.
(Points : 20)
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Solution: ACC 20 MCQs and 4 Computational Problems Test 2015 Answers