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Exam 061682RR - COSTS AND DECISION MAKING

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Question;Exam: 061682RR - COSTS AND DECISION;MAKING;When you have completed your exam and;reviewed your answers, click Submit Exam.Answers will not be recorded;until you hit Submit Exam.If you need to exit before completing the;exam, click Cancel Exam.;Questions 1 to 20:Select the best answer to each question.;Note that a question and its answers may be split across a page break, so be;sure that you have seen the entirequestion and allthe answers;before choosing an answer.;1. Viren Corporation has provided the;following data from its activity-based costing system;Activity Cost Pool;Total Cost;Total Activity;Assembly;$387,000;25,000 machine-hours;Processing orders;$68,510;1,700 orders;Inspection;$129,117;1,930 inspection-hours;The company makes 240 units of product;T91H a year, requiring a total of 550 machine hours, 90 orders, and 40;inspection hours per year. The product's direct materials cost is $16.98 per;unit, and its direct labor cost is $12.09 per unit. According to the;activity-based costing system, the average cost of product T91H is closestto_______per;unit.;A. $79.66;B. $29.07;C. $90.81;D. $75.70;2. A disadvantage of the high-low method;of cost analysis is that;A. it relies totally on the judgment of;the person performing the cost analysis.;B. it uses two extreme data points, which;may not be representative of normal conditions.;C. it's too time-consuming to apply.;D. it can't be used when there are a very;large number of observations.;3.;Use the following information to answer this question.;Callaham Corporation is a wholesaler that;sells a single product. Management has provided the following cost data for two;levels of monthly sales volume. The company sells the product for $115.80 per;unit.;Sales volume (units);4,000 5,000;Cost of sales;$338,000;$422,500;Selling and administrative costs;$89,600;$106,000;The bestestimate of the total;contribution margin when 4,300 units are sold is;A. $38,270.;B. $43,430.;C$134,590.;D.;$64,070.;4.;A cost driveris;A. the largest single category of cost in;a company.;B. an indirect cost that's essential to;the business.;C. a factor that causes variations in a;cost.;D. a fixed cost that can't be avoided.;5. At a break-even point of 400 units;sold, variable expenses were $4,000, and fixed expenses were $2,000. What will;the 401st unit sold contribute to profit?;A. $0;B. $5;C$15;D. $10;6. Use the following information to answer;this question.;Harris Company produces a single product.;Last year, Harris manufactured 17,000 units and sold 13,000 units. Production;costs for the year were as follows;Production Cost Data;Direct materials;$153,000;Direct labor;$110,500;Variable manufacturing overhead;$204,000;Fixed manufacturing overhead;$255,000;Sales were $780,000 for the year, variable;selling and administrative expenses were $88,400, and fixed selling and;administrative expenses were $170,000. There was no beginning inventory. Assume;that direct labor is a variable cost.;Under variable costing, the company's net;operating income for the year would be_______than under absorption costing.;A. $60,000 higher;B. $60,000 lower;C $108,000 lower;D. $60,000 higher;7. Use the following information to answer;this question.;Lifsey;Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner;of the company has provided the following data concerning the activity rates in;its activity-based costing system;Activity Cost Pools Activity Rate;Size-related;$0.94 per guest;Complexity-related;$31.62 per tier;Order-related;$55.79 per order;? The measure of activity for the size-related;activity cost pool is the number of planned guests at the wedding reception.;The greater the number of guests, the larger the cake.;? The measure of complexity is the number of;tiers in the cake.;? The activity measure for the order-related;cost pool is the number of orders. (Each wedding involves one order.);? The activity rates include the costs of raw;ingredients, such as flour, sugar, eggs, and shortening. The activity rates;don't include the costs of purchased decorations, such as miniature statues and;wedding bells, which are accounted for separately.;Data concerning two recent orders are;listed here;Pyburn Smith Wedding Wedding;Number of reception guests;72;189;Number of tiers on the cake;4;5;Cost of purchased decorations for cake;$29.92;$68.75;Assuming that all of the costs listed;above are avoidable costs in the event that an order is turned down, which;amount would the company have to charge for the Pyburn wedding cake to just;break even?;A. $279.87;B. $338.64;C. $29.92;D. $55.79;8. Last year, Gransky Corporation's;variable costing net operating income was $52,100, and its ending inventory;increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What;was the absorption costing net operating income last year?;A. $54,900;B. $49,300;C. $2,800;D. $52,100;9. Mardist Corporation has sales of;$100,000, variable expenses of $75,000, fixed expenses of $30,000, and a net;loss of $5,000. How much would Mardist have to sell to achieve a profit of 10%;of sales?;A. $225,500;B. $180,000;C $187,500;D. $200,000;10. An increase in the activity level;within the relevant range results in a/an;A. proportionate increase in total fixed;costs.;B. unchanged fixed cost per unit.;C. increase in fixed cost per unit.;D. decrease in fixed cost per unit.;11.;Slosh Cleaning Corporation services both residential and commercial;customers. Slosh expects the following operating results next year for each;type of customer;Operating Results;Residential Commercial;Sales;$60,000;$140,000;Contribution margin ratio;50%;30%;Slosh expects to have $18,000 in fixed;expenses next year. What would Slosh's total dollar sales have to be next year;to generate a profit of $90,000?;A. $216,000;B. $270,000;C. $300,000;D. $250,000;12. Use the following information to;answer this question.;Gargymal Company would like to estimate;the variable and fixed components of its electrical costs and has compiled the;following data for the past five months of operations.;Machine Electrical Hours Cost;August;1,000;$1,620;September;900;$1,510;October;1,500;$1,870;November;2,000;$1,950;December;1,300;$1,730;Using the high-low method of analysis, the;estimated fixed cost per month for electricity is closest to which of the;following?;A. $1,150.00;B. $1,306.50;C. $1,290.00;D.;$870.00;13. Use the following information to;answer this question.;Lifsey Wedding Fantasy Company makes very;elaborate wedding cakes to order. The owner of the company has provided the;following data concerning the activity rates in its activity-based costing;system;Activity Cost Pools;Activity Rate;Size-related;$0.94 per guest;Complexity-related;$31.62 per tier;Order-related;$55.79 per order;? The measure of activity for the size-related;activity cost pool is the number of planned guests at the wedding reception.;The greater the number of guests, the larger the cake.;? The measure of complexity is the number of;tiers in the cake.;? The activity measure for the order-related;cost pool is the number of orders. (Each wedding involves one order.);? The activity rates include the costs of raw;ingredients, such as flour, sugar, eggs, and shortening. The activity rates;don't include the costs of purchased decorations, such as miniature statues and;wedding bells, which are accounted for separately.;Data concerning two recent orders are;listed here;Pyburn Wedding;Smith Wedding;Number of reception guests;72;189;Number of tiers on the cake;4;5;Cost of purchased decorations for cake;$29.92;$68.75;Suppose the company decides that the;present activity-based costing system is too complex and that all costs (except;for the costs of purchased decorations) should be allocated on the basis of the;number of guests. In that event, what would you expect to happen to the costs;of cakes?;A. The costs of all cakes would go down.;B. The cost of cakes for receptions with;more than the average number of guests would go down.;C. The cost of cakes for receptions with;fewer than the average number of guests would go down.;D. The costs of all cakes would go up.;14. Use the following information to;answer this question.;Callaham Corporation is a wholesaler that;sells a single product. Management has provided the following cost data for two;levels of monthly sales volume. The company sells the product for $115.80 per;unit.;Sales volume (units);4,000 5,000;Cost of sales;$338,000;$422,500;Selling and administrative costs;$89,600;$106,000;The bestestimate of the total;variable cost per unit is;A. $106.90.;B. $100.90.;C. $84.50.;D. $105.70.;15. Murdoch Corporation has provided the;following data concerning its only product;Murdoch Product Data;Selling price;$230 per unit;Current sales;39,100 units;Break-even sales;29,716 units;What is the margin of safety in dollars?;A. $5,995,333;B. $8,993,000;C. $6,834,680;D. $2,158,320;16. Daniele Corporation uses an;activity-based costing system with the following three activity cost pools;Activity Cost Pool;Total Activity;Fabrication;50,000 machine-hours;Order processing;500 orders;Other;not applicable;The Other activity cost pool is used to;accumulate costs of idle capacity and organization-sustaining costs. The;company has provided the following data concerning its costs;Cost Data;Wages and salaries;$280,000;Depreciation;$200,000;Occupancy;$140,000;Total;$620,000;The distribution of resource consumption;across activity cost pools is given below;Activity;Cost Pools;Fabrication;Order Processing;Other;Total;Wages and salaries;60%;30%;10%;100%;Depreciation;20%;35%;45%;100%;Occupancy;10%;50%;40%;100%;The activity rate for the Fabrication;activity cost pool is closestto ___ per machine hour.;A. $1.24;B. $7.44;C. $4.44;D. $3.72;17. Indiana Corporation produces a single;product that it sells for $9 per unit. During the first year of operations;100,000 units were produced, and 90,000 units were sold. Manufacturing costs;and selling and administrative expenses for the year were as follows;Fixed Costs;Variable Costs;Raw materials;$1.75 per unit produced;Direct labor;$1.25 per unit produced;Factory overhead;$100,000;$0.50 per unit produced;Selling and administrative;$70,000;$0.60 per unit sold;What was Indiana Corporation's net;operating income for the year using variable costing?;A.;$181,000;B.;$271,000;C.;$281,000;D.;$371,000;18. Bear Publishing sells a nature guide.;The following information was reported for a typical month (sales volume is constant;each month);Total;Per Unit;Sales;$17,600;$16.00;Variable expenses;$9,680;$8.80;Contribution margin;$7,920;$7.20;Fixed expenses;$3,600;Net operating income;$4,320;Bear is expecting a 20-cent increase in;variable expenses. No other changes are expected or planned. How much;contribution margin should Bear expect after the increase?;A. $9,900;B. $4,100;C. Can't be determined;D. $7,700;19.;Rank the following methods of assigning overhead costs from leastaccurate;to mostaccurate.;A. Plantwide rate, departmental rates;activity-based costing;B. Plantwide rate, activity-based costing;departmental rates;C. Departmental rates, plantwide rate;activity-based costing;D. Activity-based costing, departmental;rates, plantwide rate;20. Which of the following is trueregarding;the contribution margin ratio of a single-product company?;A. As fixed expenses decrease, the;contribution margin ratio increases.;B. The contribution margin ratio increases;as the number of units sold increases.;C. If sales increase, the dollar increase;in net operating income can be computed by multiplying the contribution margin;ratio by the dollar increase in sales.;D.;The contribution margin ratio multiplied by the variable expense per unit;equals the contribution margin per unit.

 

Paper#37498 | Written in 18-Jul-2015

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