ACCT 434 Midterm Exam

ACCT 434 Midterm Exam

1. (TCO 1) Which of the following is a sign that an ABC system may be useful?

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2. (TCO 1) Merriamn Company provides the following ABC costing information:. How much of the account billing cost will be assigned to Department B?

3. (TCO 2) Budgeting provides all of the following EXCEPT

4. (TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units. The flexible-budget variance is

5. (TCO 3) The conference method estimates cost functions

6. (TCO 4) In evaluating different alternatives, it is useful to concentrate on

7. (TCO 5) Producing more nonbottleneck output

8. (TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows. Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should

9. (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet-molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs?

1.(TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design

2. (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period. There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.

Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds.

Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.

3. (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department. Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.

4. (TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year……? Justify your answer.

5. (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design

6. (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period ……Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.

7. (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department: Observation Machine-hours Total Operating Costs January 4,000 $45,000 February 4,600 49,500 March 3,800 45,750 April 4,400 48,000 May 4,500 49,800 Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.

8. (TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $4 each. If the bicycle company accepts this offer……

9. (TCO 4) Sunk costs Answer; Are past costs.