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Question;Unit 3 Exam;Each;question is worth 5 points;1. Standard costs may be used by;a. universities.;b. governmental;agencies.;c. charitable;organizations.;d. all;of these.;2. Which of the following statements is false?;a. A;standard cost is more accurate than a budgeted cost.;b. A;standard is a unit amount.;c. In;concept, standards and budgets are essentially the same.;d. The;standard cost of a product is equivalent to the budgeted cost per unit of;product.;3. Budget data are not journalized in cost;accounting systems with the exception of;a. the;application of manufacturing overhead.;b. direct;labor budgets.;c. direct;materials budgets.;d. cash;budget data.;4. It is possible that a company's financial;statements may report inventories at;a. budgeted;costs.;b. standard;costs.;c. both;budgeted and standard costs.;d. none;of these.;5. A standard differs from a budget because a;standard;a. is;a predetermined cost.;b. contributes;to management planning and control.;c. is a unit amount.;d. none;of the above, a standard does not differ from a budget.;6. Marburg Co. expects direct materials cost of $6 per unit for;100,000 units (a total of $600,000 of direct materials costs). Marburg?s;standard direct materials cost and budgeted direct materials cost is;Standard Budgeted;a. $6;per unit $600,000 per;year;b. $6 per unit $6;per unit;c. $600,000 per year $6;per unit;d. $600,000 per year $600,000;per year;7.;The standard direct materials quantity does not include allowances for;a. unavoidable;waste.;b. normal spoilage.;c. unexpected;spoilage.;d. all;of the above are included.;8. Allowances should not be made in the direct labor quantity standard for;a. wasted;time.;b. rest;periods.;c. cleanup.;d. machine;downtime.;9. The standard;predetermined overhead rate used in setting the standard overhead cost;is determined by dividing;a. budgeted overhead costs by an expected;standard activity index.;b. actual overhead costs by an expected;standard activity index.;c. budgeted overhead costs by actual activity.;d. actual overhead costs by actual activity.;10. Hofburg?s standard quantities for 1 unit of product include 2;pounds of materials and 1.5 labor hours. The standard rates are $2 per pound;and $7 per hour. The standard overhead rate is $8 per direct labor hour. The;total standard cost of Hofburg?s product is;a. $14.50.;b. $17.00.;c. $22.50.;d. $26.50.;11. All of the following are;involved in the capital budgeting evaluation process except a company's;a. board;of directors.;b. capital;budgeting committee.;c. officers.;d. stockholders.;12. Most of the capital budgeting methods use;a. accrual;accounting numbers.;b. cash;flow numbers.;c. net;income.;d. accrual;accounting revenues.;13. The first step in the capital budgeting;evaluation process is to;a. request;proposals for projects.;b. screen;proposals by a capital budgeting committee.;c. determine;which projects are worthy of funding.;d. approve;the capital budget.;14. The capital budgeting decision depends in;part on the;a. availability;of funds.;b. relationships;among proposed projects.;c. risk;associated with a particular project.;d. all;of these.;15. Capital budgeting is the process;a. used;in sell or process further decisions.;b. of;determining how much capital stock to issue.;c. of;making capital expenditure decisions.;d. of;eliminating unprofitable product lines.;16. Net annual cash flow can be estimated by;a. deducting;credit sales from net income.;b. adding;depreciation expense to net income.;c. deducting;credit purchases from net income.;d. adding;advertising expense to net income.;17. A company?s discount rate;is based on the;a. cost;of capital and the internal rate of return.;b. cost;of capital and the risk element.;c. cut-off;rate and the risk element.;d. cut-off;rate and the internal rate of return.;18. The;discount rate that will result in the lowest net present value for a project is;a. any;rate lower that the cost of capital.;b. any;rate higher than the cost of capital.;c. the;lowest rate used to evaluate the project.;d. the;highest rate used to evaluate the project.;19. The;discount rate that will result in the highest net present value for a project;is;a. any;rate lower that the cost of capital.;b. any;rate higher than the cost of capital.;c. the;lowest rate used to evaluate the project.;d. the;highest rate used to evaluate the project.;20. Which;of the following will increase the net present value of a project?;a. An;increase in the initial investment;b. A;decrease in annual cash inflows;c. An;increase in the discount rate;d. A;decrease in the discount rate;Each problem is worth 25 points;21.Johnson Corp. has an 8% required rate of;return. It?s considering a project that would provide annual cost savings of;$50,000 for 5 years. The most that Johnson would be willing to spend on this;project is;Present;Value PV of an Annuity;Year of 1 at 8%;of 1 at 8%;1.926.926;2.857 1.783;3.794 2.577;4.735 3.312;5.681 3.993;a. $125,910.;b. $165,600.;c. $199,650.;d. $34,050.;22.Corn Doggy, Inc. produces;and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle;production manager, is considering purchasing a machine that will make the corn;dogs. Austin has shopped for machines and found that the machine he wants will;cost $215,000. In addition, Austin estimates that the new machine will increase;the company?s annual net cash inflows by $33,000. The machine will have a;12-year useful life and no salvage value.;Instructions;(a) Calculate the cash payback period.;(b) Calculate the machine?s internal rate of return.;(c) Calculate the machine?s net present value using a;discount rate of 10%.;(d) Assuming;Corn Doggy, Inc.?s cost of capital is 10%, is the investment acceptable? Why or;why not?;23.Flagstaff;Inc. uses standard costing for its one product, baseball bats. The standards;call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work;at $12 per hour per bat. Total manufacturing overhead costs were estimated at;$9,450, of which the variable portion was $0.50 per bat and the fixed portion;was $1.00 per bat with an estimate of 6,300 bats to be produced. Flagstaff;identifies price variances at the earliest possible point in time.;During March, the company had the following;results;Direct labor used;= 4,800 hours at a cost of $56,400;Actual;manufacturing overhead fixed costs = $6,000;Actual;manufacturing overhead variable costs = $3,100;Bats produced =;6,000;Instructions;Compute the following variances for March.;1. Labor quantity variance;2. Total labor variance;a3. Overhead controllable variance;a4. Overhead volume variance;24. Riggins;Inc. manufactures one product called tybos. The company uses a standard cost;system and sells each tybo for $8. At the start of monthly production, Riggins;estimated 9,500 tybos would be produced in March. Riggins has established the;following material and labor standards to produce one tybo;Standard;Quantity Standard Price;Direct;materials 2.5 pounds $3 per pound;Direct;labor 0.6 hours $10 per hour;During March 2013, the following activity was;recorded by the company relating to the production of tybos;1. The company produced 9,000 units during the;month.;2. A total of 24,000 pounds of materials were;purchased at a cost of $66,000.;3. A total of 24,000 pounds of materials were;used in production.;4. 5,000 hours of labor were incurred during the;month at a total wage cost of $55,000.;Instructions;Calculate the following variances for March for;Riggins, Inc.;(a) Materials price variance;(b) Materials quantity variance;(c) Labor price variance;(d) Labor quantity variance


Paper#39453 | Written in 18-Jul-2015

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