COMPREHENSIVE FINAL EXAMINATION;(Chapters 1 ? 13, Chapter 7 Omitted);Approximate;Problem Topic Points Minutes;I Multiple Choice 50 45;II Matching 16 20;III Variance Analysis 18 25;IV Miscellaneous Managerial Mini-Problems 16 20;100 110;Checking Work 10;120;EXAMINATION INSTRUCTIONS ? READ COMPLETELY AND CAREFULLY!;? This examination is a ?take home? examination.;? This examination must be completed individually, by you!;o If it is discovered that your work on this examination was copied or plagiarized, you will receive an ?F? grade (0%), as fully stated in the syllabus. No exceptions!;? This examination must be completed in typed format and spell checked!;o Your name, in the box at the top of this page, must be typed.;o Handwritten exams will not be accepted, as fully stated in the syllabus!;? Note: You must show computations for all problems except the multiple choice questions!;? This examination, in its entirety, must be turned in with your answers, starting with this page!;? If you need additional space, please attach any work after its associated problem (not attached to the back) with your name clearly present on every page!;o Note: If you have handwritten notes working out problems, attach those after the last page of this examination with your name clearly present on every page.;? You will have until the next class session to complete the examination (see due date and time below). Emailed examinations will not be accepted, as fully stated in the syllabus!;o If your completed and STAPLED examination is not brought to class on Monday, May 3, 2010 by 12:25pm, you will receive an ?F? grade. No exceptions!;? No makeup of this examination will be given, as fully stated in the syllabus.;Problem I ? Multiple Choice (50 points);On your computer, bold, highlight, underline or box the one best answer.;1. A responsibility center that incurs costs (and expenses) and generates revenues is classified as a(n);a. cost center.;b. revenue center.;c. profit center.;d. investment center.;2. The most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center is;a. contribution margin.;b. contribution net income.;c. contribution gross profit.;d. controllable margin.;3. Ramsey Corporation desires to earn target net income of $90,000. If the selling price per unit is $30, unit variable cost is $24, and total fixed costs are $360,000, the number of units that the company must sell to earn its target net income is;a. 30,000.;b. 75,000.;c. 45,000.;d. 60,000.;4. Shane Corporation uses a process cost accounting system. Given the following data, compute the number of units transferred out during the current period.;Beginning Work in Process 20,000 units (1/2 complete);Ending Work in Process 25,000 units (1/3 complete);Started into Production 150,000 units;a. 125,000;b. 141,667;c. 145,000;d. 150,000;5. Given the following information for Hett Company, compute the company's ROI;Sales $1,000,000;Controllable Margin $120,000;Average Operating Assets $500,000;a. 40%;b. 50%;c. 12%;d. 24%;6. The following data has been collected for use in analyzing the behavior of maintenance costs of Ridell Corporation;Month Maintenance Costs Machine Hours;January $121,000 20,000;February 125,000 23,000;March 128,000 24,000;April 159,000 34,000;May 168,000 36,000;June 178,000 38,000;July 181,000 40,000;Using the high-low method to separate the maintenance costs into their variable and fixed cost components, these components are;a. $5 per hour plus $20,000.;b. $5 per hour plus $30,000.;c. $4 per hour plus $41,000.;d. $3 per hour plus $61,000.;7. Given the following data for Glennon Company, compute (A) total manufacturing costs and (B) costs of goods manufactured;Direct materials used $120,000 Beginning work in process $20,000;Direct labor 50,000 Ending work in process 10,000;Manufacturing overhead 150,000 Beginning finished goods 25,000;Operating expenses 175,000 Ending finished goods 15,000;(A) (B);a. $310,000 $330,000;b. $320,000 $310,000;c. $320,000 $330,000;d. $330,000 $340,000;8. The production cost report shows both quantities and costs. Costs are reported in three sections: (1) costs accounted for, (2) unit costs, and (3) costs charged to department. The sections are listed in the following order;a. (1), (2), (3).;b. (1), (3), (2).;c. (2), (1), (3).;d. (2), (3), (1).;9. The starting point of a master budget is the preparation of the;a. cash budget.;b. sales budget.;c. production budget.;d. budgeted balance sheet.;10. The most useful measure for evaluating the performance of the manager of an investment center is;a. contribution margin.;b. controllable margin.;c. return on investment.;d. income from operations.;11. Which of the following capital budgeting techniques explicitly takes the time value of money into consideration?;a. Annual rate of return;b. Internal rate of return;c. Net present value;d. Both (b) and (c) above;Use the following information for questions 12 and 13.;Grant Company estimates its sales at 60,000 units in the first quarter and that sales will increase by 6,000 units each quarter over the year. It has, and desires, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.;12. Cash collections for the third quarter are budgeted at;a. $1,017,000.;b. $1,476,000.;c. $1,773,000.;d. $2,052,000.;13. Production in units for the third quarter should be budgeted at;a. 73,500.;b. 69,000.;c. 91,500.;d. 72,000.;14. A flexible budget;a. is also called a static budget.;b. can be considered a series of related static budgets.;c. can be prepared for sales or production budgets, but not for an operating expense budget.;d. typically uses an activity index different from that used in developing the predetermined overhead rate.;15. Carey Company's equipment account increased $800,000 during the period, the related accumulated depreciation increased $60,000. New equipment was purchased at a cost of $1,400,000 and used equipment was sold at a loss of $40,000. Depreciation expense was $200,000. Proceeds from the sale of the used equipment were;a. $420,000.;b. $500,000.;c. $560,000.;d. $640,000.;16. Which of the following combinations presents correct examples of liquidity, profitability, and solvency ratios, respectively?;Liquidity Profitability Solvency;a. Inventory turnover Inventory turnover Times interest earned;b. Current ratio Inventory turnover Debt to total assets;c. Receivables turnover Return on assets Times interest earned;d. Quick ratio Payout ratio Return on assets;17. A company?s planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs;Variable Fixed;Indirect materials $60,000 Depreciation $25,000;Indirect labor 80,000 Taxes 5,000;Factory supplies 10,000 Supervision 20,000;A flexible budget prepared at the 90,000 machine hours level of activity would allow total manufacturing overhead costs of;a. $135,000.;b. $180,000.;c. $185,000.;d. $150,000.;18. A company developed the following per unit materials standards for its product: 3 gallons of direct materials at $5 per gallon. If 4,000 units of product were produced last month and 12,500 gallons of direct materials were used, the direct materials quantity variance was;a. $1,500 favorable.;b. $2,500 unfavorable.;c. $1,500 unfavorable.;d. $2,500 favorable.;19. The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $8. Last month, 5,000 units were produced and 24,500 direct labor hours were actually worked at a total cost of $180,000. The direct labor quantity variance was;a. $4,000 unfavorable.;b. $6,000 unfavorable.;c. $6,000 favorable.;d. $4,000 favorable.;20. Under the time-and-material-pricing approach, the charges for any particular job include each of the following except the;a. labor charge.;b. charge for materials.;c. material loading charge.;d. overhead charge.;21. The transfer pricing approach that does not reflect the selling division?s true profitability is the;a. cost-based approach.;b. market-based approach.;c. negotiated price approach.;d. time-and-material-pricing approach.;Use the following information for questions 22 and 23.;Robot Toy Company manufactures two products: X-O-Tron and Mechoman. Robot?s overhead costs consist of setting up machines, $200,000, machining, $450,000, and inspecting, $150,000 Additional information on the two products is;X-O-Tron Mechoman;Direct labor hours 15,000 25,000;Machine setups 600 400;Machine hours 24,000 26,000;Inspections 800 700;22. Overhead applied to Mechoman using traditional costing is;a. $320,000.;b. $384,000.;c. $416,000.;d. $500,000.;23. Overhead applied to X-O-Tron using activity-based costing is;a. $300,000.;b. $384,000.;c. $416,000.;d. $480,000.;24. An appropriate cost driver for an assembling cost pool is the number of;a. purchase orders.;b. setups.;c. parts.;d. direct labor hours.;25. Which of the following is included in the cost of goods manufactured under absorption costing but not under variable costing?;a. Direct materials;b. Variable factory overhead;c. Fixed factory overhead;d. Direct labor;Problem II ? Matching (16 points);Instructions: Designate the terminology that best represents the definition or statement given below by placing the identifying letter(s) in the space provided. Note: No terminology should be used more than once.;A. Activity-based costing N. Job cost sheet;B. Annual rate of return O. Noncontrollable costs;C. Budgetary control P. Non-value-added activity;D. Contribution margin Q. Operating budgets;E. Contribution margin ratio R. Overhead controllable variance;F. Controllable costs S. Overhead volume variance;G. Absorption costing T. Physical units;H. Cost accounting U. Process cost systems;I. Cost centers V. Product costs;J. Cost of capital W. Profit center;K. Equivalent units of production X. Value-added activity;L. Fixed costs Y. Variable costs;M. Free cash flow Z. Variances;1. Costs that a manager has the authority to incur within a given period of time.;2. A form used to record the costs chargeable to a job.;3. A responsibility center that incurs costs and also generates revenues.;4. The amount of revenue remaining after deducting variable costs.;5. Used to apply costs to similar products that are mass produced in a continuous fashion.;6. Costs that vary in total directly and proportionately with changes in the activity level.;7. The differences between actual costs and standard costs.;8. Determines profitability of a capital expenditure by dividing expected net income by the average investment.;9. The rate a company must pay to obtain funds from creditors and stockholders.;10. Costs that are an integral part of producing the finished product.;11. Allocates overhead to multiple cost pools and assigns the cost pools to products by means of cost drivers.;12. A measure of the work done during the period, expressed in fully completed units.;13. A costing approach in which all manufacturing costs are charged to the product.;14. Increase the worth of a product or service to customers.;15. The amount of cash from operations after deducting capital expenditures and cash dividends paid.;16. Individual budgets that culminate in a budgeted income statement.;Problem III ? Variance Analysis (18 points);The Olson Company developed the following standard costs for its product in 2008;Standard Cost Card Unit Standard Cost;Direct materials (5 pounds @ $4 per pound) $20;Direct labor (4 hours @ $8 per hour) 32;Manufacturing overhead;Variable (4 hours @ $4 per hour) 16;Fixed (4 hours @ $3 per hour) 12;$80;The company planned to work 100,000 direct labor hours and produce 25,000 units of product in 2008. Actual results for 2008 are as follows;? 24,000 units of product were produced.;? Actual direct materials purchased and used during the year amounted to 122,000 pounds at a cost of $475,800.;? Actual direct labor costs were $779,000 for 95,000 direct labor hours worked.;? Total actual manufacturing overhead incurred amounted to $685,500.;Instructions;Calculate the following variances and you must show computations to support your answers! Note: You must also indicate if the variances are favorable (F) or unfavorable (U).;(a) Direct materials price and direct materials quantity variances.;(b) Direct labor price and direct labor quantity variances.;Problem IV ? Miscellaneous Managerial Mini-Problems (16 points);Carson Corporation manufactures paper shredding equipment. You are requested to ?audit? a sampling of computations made by Carson's internal accountants via your independent recalculation of the information.;Instructions: Compute the requested information for each of the following independent situations. Note: You must show all computations to support your answers!;(a) Carson uses a process costing system. 2,000 units were in process at the beginning of the period, 60% complete. 20,000 units were started into production during the period, 1,000 were in process at the end of the period, 60% complete. Compute equivalent units for conversion costs.;(b) Carson sells each unit for $500. Variable costs per unit equal $300. Total fixed costs equal $800,000. Carson is currently selling 5,000 units per period and would like to earn net income of $400,000. Compute: (1) break-even point in dollars, (2) sales units necessary to attain desired income, and (3) margin of safety ratio for current operations.;(1) Break-even point = $________________________________________________.;(2) Desired sales = _____________________________________________ units.;(3) Margin of safety = _______________________________________________ %.
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