NOVA ACT540 midterm exam 2017

2 points

1. Which of the following is not a characteristic of financial accounting?

	a.	Information is used by external parties.
	b.	Financial reports are prepared according to GAAP
	c.	Reports are prepared periodically.
	d.	Information is subjective, relevant and future-oriented.

2 points

QUESTION 2

1. Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon. During July, Cooper Company purchased and used 13,000 gallons, paying $93,200. The direct materials quantity variance was $1,500 unfavorable. How many units were produced?

	a.	6,400 units
	b.	6,600 units
	c.	6,214 units
	d.	13,000 units

2 points

QUESTION 3

1. A cost is $50,000 when 25,000 units are produced, and $50,000 when 50,000 units are produced. This is an example of a(n)

	a.	indirect cost.
	b.	fixed cost.
	c.	variable cost.
	d.	direct cost.

2 points

QUESTION 4

1. ____________________ is a method of analysis used to evaluate individual financial statement items or groups of items in terms of a specific base amount.

2 points

QUESTION 5

1. A master budget is an example of a

	a.	pricevariance.
	b.	volume variance
	c.	flexible budget.
	d.	static budget.

2 points

QUESTION 6

1. What is the primary goal of accounting?

	a.	To motivate others to work towards a plan's success.
	b.	To set long-term goals and objectives.
	c.	To arrange for the necessary resources to achieve a plan.
	d.	To provide information for decision making.

2 points

QUESTION 7

1. Prime costs are the same as

	a.	Manufacturing costs minus manufacturing overhead.
	b.	Manufacturing costs minus non-manufacturing costs.
	c.	Manufacturing costs minus direct materials.
	d.	Manufacturing costs minus fixed costs.

2 points

QUESTION 8

1. A company has a current ratio of 1.92, total liabilities of $193,849, long-term notes payable (the only long-termliability) of $85,791, and a quick ratio of .96. What are total quick assets for the company?

2 points

QUESTION 9

1. Which of the following is not a source that can be used in preparing the sales budget?

	a.	Prior sales.
	b.	The production budget.
	c.	Marketing activities
	d.	Industry trends.

2 points

QUESTION 10

1. Robin Company has the following balances for the current month:

Direct Materials Used	24,000
Direct Labor	36,800
Sales Salaries	19,200
Indirect Labor	4,800
Production Manager's Salary	9,600
Marketing Costs	14,400
Factory Lease	6,400

What are Robin's conversion costs?

	a.	91,200
	b.	57,600
	c.	60,800
	d.	70,400

2 points

QUESTION 11

1. A cost object is

	a.	an item for sale by a business.
	b.	an item for which managers are trying to determine the cost.
	c.	an item to which managers must directly trace costs.
	d.	an item to which it is not worth the effort of tracing costs.

2 points

QUESTION 12

1. Which of the following functions of management involves comparing actual results with budgeted results?

	a.	Organizing
	b.	Planning
	c.	Control
	d.	Directing/Leadng

2 points

QUESTION 13

1. Which of the following is not a characteristic of managerial accounting?

	a.	Information is used by internal parties.
	b.	Information is subjective, relevant, future-oriented.
	c.	Reports are prepared according toGAAP.
	d.	Reports are prepared as needed.

2 points

QUESTION 14

1. A fixed cost

	a.	goes down in total when activity increases.
	b.	goes up in total when activity increases.
	c.	goes down per unit when activity increases.
	d.	goes up in total when activity increases.

2 points

QUESTION 15

1. Participative budgeting is an approach to budgeting that

	a.	discourages budget slack.
	b.	is more likely to motivate people to work towards the organization's goals than a top-down approach.
	c.	allows top management to set the budget.
	d.	is top-down in nature.

2 points

QUESTION 16

1. Contents Inc. has a material standard of 1 pound per unit of output. Each pound has a standard price of $26 per pound. During July, Contents Inc. paid $66,100 for 2,475 pounds, which they used to produce 2,350 units. What is the direct materials quantity variance?

	a.	$4,550 unfavorable
	b.	$1,300 favorable
	c.	$3,250 unfavorable
	d.	$1,750 unfavorable

2 points

QUESTION 17

1. A primaryfinancial budget that isprepared in the budgeting process is the

	a.	Production budget.
	b.	Selling and administrative budget.
	c.	Inventory budget.
	d.	Cash budget.

2 points

QUESTION 18

1. Which of the following functions of management involves taking actions to implement the plan?

	a.	Planning
	b.	Organizing
	c.	Control
	d.	Directing/leading

2 points

QUESTION 19

1. Redco Inc has a direct labor standard of 2 hours per unit of output. Each employee has a standard wage rate of $22.50 per hour. During July, Redcopaid $94,750 to employees for 4,445 hours worked. 2,350 units were produced during July. What is the direct labor rate variance?

	a.	$5,262.50 favorable
	b.	$10,525.00 unfavorable
	c.	$11,000.00 favorable
	d.	$5,737.50 favorable

QUESTION 20

1. Which of the following is not included in the operating budget?

	a.	Budgeted balance sheet
	b.	Sales budget
	c.	Selling and administrative budget
	d.	Raw materials purchases budge

2 points

QUESTION 21

1. Cleveland Inc. has forecast sales to be $125,000 in February, $135,000 in March, $150,000 in April, and $140,000 in May. The average cost of goods sold is70% of sales. All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following. What are budgeted cash receipts in April?

	a.	150,000
	b.	141,000
	c.	144,000
	d.	105,000

2 points

QUESTION 22

1. Which of the following statements about employee motivation is true?

	a.	Budgets are difficult to use for motivation.
	b.	A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too difficult to achieve.
	c.	A budget that is too difficult to achieve is more likely to motivate than a budget that is too easy or that is tight but attainable.
	d.	A budget that is too easy to achieve is more likely to motivate than a budget that is too difficult or that is tight but attainable.

2 points

QUESTION 23

1. Sam'sWarehouse Inc has forecast purchases on account to be $465,000 in March, 555,000 in April, $630,000 in May, and $735,000 in June. Seventy percent of purchases are paid for in the month of purchase, the remaining 30% are paid in the following month. What are budgeted cash payments for April?

	a.	528,000
	b.	577,500
	c.	189,000
	d.	388,500

2 points

QUESTION 24

1. Conversion costs can be defined as

	a.	Manufacturing costs minus direct materials.
	b.	Manufacturing costs plus non-manufacturing costs.
	c.	Direct labor plus direct materials
	d.	Variable costs plus fixed costs.

2 points

QUESTION 25

1. Describe the purpose of horizontal financial statement analysis and how it is applied. Also in your description explain the two types of horizontal analyses and describe how they are different.

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6 points

QUESTION 26

1. Contents, Inc. has a material standard of 1 pound per unit of output. Each pound has a standard price of $26 per pound. During July, Contents Inc paid$66,100 for 2,475 pounds, which they used to produce 2,350 units. What is the direct materials price variance?

	a.	$6,300 unfavorable
	b.	$5,000 unfavorable
	c.	$1,750 unfavorable
	d.	$1,300 favorable

2 points

QUESTION 27

1. What determines the difference between a direct and an indirect cost?

	a.	Whether it can be traced to a specific cost object .
	b.	Whether it is relevant to a particular decision.
	c.	Whether it is related to manufacturing or nonmanufacturing activities.
	d.	Whether it changes when activity levels change.

2 points

QUESTION 28

1. After selling 4,300 units during the period, Dole Corp. prepared a flexible budget that included $22,962 for direct materials, $36,120 for direct labor, $19,350 for variable overhead, and $46,440 for fixed overhead. Dole originally planned its master budget based on sales of 4,000 units. What would total costs have been on the master budget?

	a.	119,400
	b.	111,070
	c.	124,872
	d.	116,160

2 points

QUESTION 29

1. A company has a current ratio of 1.92, total liabilities of $193,849, long-term notes payable of $85,791 (the only long term liability on the books), and a quick ratio of .96. What are total current assets for the company?

2 points

QUESTION 30

1. When are period costs counted as inventory?

	a.	Before products are sold.
	b.	Never
	c.	After products are completed, but before they are sold.
	d.	After products are sold.

2 points

QUESTION 31

1. A company has an inventory turnover ratio of 2.90, merchandise inventory for 2014 of $46,095, and cost of goods sold of $173,420. What is the average inventory?

$59,800

2 points

QUESTION 32

1. Oak Cabinets, Inc has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Oak's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Selling and administrative costs are budgeted to be $15,000 per month plus $5 per unit sold. What are budgeted selling and administrative expenses for September?

	a.	$30,000
	b.	$32,500
	c.	$52,500
	d.	$67,500

2 points

QUESTION 33

1. Which of the following is an indirect cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

	a.	The cost of rent on the factory where the table is manufactured.
	b.	The cost of the labor used to assemble the table.
	c.	The cost of the wood in the table.
	d.	The cost of the glass in the table.

2 points

QUESTION 34

1. Three of the most common tools of financial analysis are1) Horizontal Analysis, (2) Vertical Analysis, and (3) Ratio Analysis.

3 points

QUESTION 35

1. Greenfield Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Greenfield Company's ending finished goods inventory policy is 10% of the following month's sales. What is budgeted ending finished goods inventory for May?

	a.	1,000
	b.	1,600
	c.	1,300
	d.	2,100

2 points

QUESTION 36

1. Budgeted cost of goods sold should include which of the following?

	a.	Raw materials and direct labor.
	b.	Raw materials, direct labor, manufacturing overhead, and selling expenses.
	c.	Raw materials, direct labor, and manufacturing overhead.
	d.	Raw materials, direct labor, manufacturing overhead, selling expenses, and administrative expenses

2 points

QUESTION 37

1. Variable costs are

	a.	costs that vary inversely, per unit, with the number of units produced.
	b.	costs that stay the same, in total, regardless of activity level.
	c.	costs that change, in total, in direct proportion to changes in activity levels.
	d.	costs that vary inversely, in total, with the number of units produced.

2 points

QUESTION 38

1. Laurie's FashionsOutlet. has forecast purchases to be $330,000 in June, $375,000 in July, $310,000 in August, and $270,000 in September. Purchases average 30% paid in cash, 70% are on credit. Credit purchases are paid 60% in the month of purchase, 30% during the month following, and 10% the second month following the purchase. Cash disbursements in September would be

	a.	113,400
	b.	285,750
	c.	261,450
	d.	204,750

2 points

QUESTION 39

1. Ajax Inc. produces metalwidgets. The sales budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Ajax Inc.'s ending finished goods inventory policy is 10% of the following month's sales. Each widget requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2hours of skilled labor (paid $15 per hour). What will be the total labor cost for the month of August?

	a.	303,800
	b.	225,680
	c.	24,675
	d.	305,970

2 points

QUESTION 40

1. A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced. This is an example of a(n)

	a.	variable cost.
	b.	fixed cost.
	c.	indirect cost
	d.	direct cost.

2 points

QUESTION 41

1. Jackson Inc. produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather. Jackson Inc.'s leather inventory policy is 30% of next month's production needs. On July 1 leather inventory was expected to be 1,000 square meters. What will leather purchases be in July?

	a.	2,300 square meters
	b.	2,550 square meters
	c.	2,700 square meters
	d.	3,575 square meters

2 points

QUESTION 42

1. What is the main purpose of financial statement analysis?

.Name at least 3 common analytical goals users of financial statements want to accomplish using financial statement analysis

4 points

QUESTION 43

1. The starting point for preparing the master budget is the

	a.	budgeted balance sheet.
	b.	sales budget.
	c.	inventory policy.
	d.	production budget.

2 points

QUESTION 44

1. Robin Company has the following balances for the current month:

Direct Materials Used	24,000
Direct Labor	36,800
Sales Salaries	19,200
Indirect Labor	4,800
Production Manager's Salary	9,600
Marketing Costs	14,400
Factory Lease	6,400

2.

3. What is Robin's total manufacturing cost?

4.

	a.	60,800
	b.	81,600
	c.	33,600
	d.	115,200

2 points

QUESTION 45

1. JonesCompany has budgeted fixed overhead of $135,000 based on budgeted production of 9,000 units. During July, 9,400 units were produced and$142,800 was spent on fixed overhead. What is the fixed overhead spending variance?

	a.	$7,800 unfavorable
	b.	$7,800 favorable
	c.	$1,800 favorable
	d.	$1,800 unfavorable

2 points

QUESTION 46

1. The comparison of a company's financial condition and performance across time is known as

	a.	Balance
	b.	Vertical
	c.	Horizontal
	d.	Management

2 points

QUESTION 47

1. The budgeted income statement is a combination of

	a.	All the operating budgets plus the budgeted balance sheet
	b.	All the operating budgets.
	c.	The direct materials budget, the direct labor budget, and the manufacturing overhead budget.
	d.	The production budget, the cost of goods sold budget, and the selling and administrative expense budget.

2 points

QUESTION 48

1. A spending variance is made up of

	a.	price variance and volume variance
	b.	price variance and rate variance.
	c.	price variance and quantity variance.
	d.	volume variance and quantity variance.