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kalpan acc505 final




Question;1. Nelson Company's activity for the first six months of;2004 is as follows;Month Machine;Hours;Electrical;Cost;January 4,000 $3,120;February 6,000 4,460;March 4,800 3,500;April 3,800 3,040;May 3,600 2,900;June 4,200 3,200;Using the high-low method, the variable rate per machine;hour would be $.40;$.65;$.67;$.70;2. In the decision to replace an old machine with a new;machine, which of the following would be considered a relevant cost?;The current disposal price of the old equipment;The loss on the disposal of the old equipment;Depreciation expense on the old equipment;The book value of the old equipment;3. Clarkson Industries produces an electronic calculator;that sells for $75 per unit. Variable costs are $45 per unit and fixed costs;are $150,000 annually. The company has been averaging an annual income of;$100,000 over the past five years. The break-even point for Clarkson Industries;would be;2,000 units.;3,333 units.;5,000 units.;10,000 units.;4. Contribution margin is the amount remaining after;variable expenses have been deducted from sales revenue.;fixed expenses have been deducted from sales revenue.;fixed expenses have been deducted from variable expenses.;cost of goods sold has been deducted from sales revenues.;5. The Pohl Company uses a standard cost system in which;manufacturing overhead is applied to units of product on the basis of machine;hours. For June, the company's manufacturing overhead flexible budget showed;the following total budgeted costs at a denominator activity level of 20,000;machine hours;Variable overhead;$26,000;Fixed overhead 30,000;During June, 17,000 machine hours were used to complete;13,000 units of product, and the following actual total overhead costs were;incurred;Variable overhead;$25,330;Fixed overhead 28,820;At standard, each unit of finished product requires 1.4;hours of machine time.;The fixed overhead budget variance for June was;$3,230 F.;$3,230 U.;$1,180 F.;$1,180 U.;6. Newmax Co. is a manufacturing business. When it pays the;workers who assemble its products, the cash account should be decreased and;what account should be increased?;Cost of goods sold;Work-in-process inventory;Manufacturing overhead;Finished goods inventory;7. The Talbot Company produces wheels that are used in the;production of bicycles. Talbot's costs to produce 100,000 wheels annually are;Direct materials $;30,000;Direct labor 50,000;Variable overhead 20,000;Fixed overhead 70,000;Total $170,000;An outside supplier has offered to sell Talbot similar;wheels for $1.25 per wheel. If the wheels were purchased from the outside;supplier, $15,000 of annual fixed factory overhead could be avoided.;What is the highest price that Talbot could pay the outside;supplier for the wheel and still be economically indifferent between making or;buying the wheels?;$1.70;$1.15;$1.00;$.80;8. The cost of goods sold in a merchandising firm typically;would be classified as a;variable cost.;fixed cost.;mixed cost.;step-variable cost.;9. Questions 9 and 10 refer to the following;Jones Co. is considering buying a machine that cost;$100,000. If purchased, Jones believes the new machine will reduce its;operating cost by $20,000 per year for the next 10 years. At the end of 10;years the machine will have $0 salvage value. If acquired, Jones will;depreciate the machine using the straight-line method.;Jones? cost of capital is 12%. From present value tables;Jones had identified that the present value factor for an amount of 1;discounted at 12%, is.322, while the present value of a 10 year annuity of 1;discounted at 12%, is 5.65.;Ignoring income taxes, what is the payback period of this;project?;5.0 years;4.5 years;4.4 years;4.0 years;10. Ignoring income taxes, what is the net present value of;this project?;$ 5,760;$ 6,440;$12,200;$13,000;11. The individual generally responsible for explaining the;direct-labor efficiency variance is the;the purchasing agent.;the sales manager.;the production manager. LINDA;the industrial engineering department.;12. Allen Company collects 25% of a month's sales in the;month of sale, 70% in the month following sale, and 4% in the second month;following sale. The remainder is uncollectible. Budgeted sales for the next;three months are;April May June;Budgeted sales;$100,000 $120,000 $110,000;Cash collections in June are budgeted would be;$115,500.;$111,000.;$110,000.;$113,400.;13. Young Enterprises has budgeted sales in units for the;next four months as follows;June 10,000 units;July 8,000 units;August 12,000 units;September 14,800 units;Past experience has shown that the ending inventory for each;month should be equal to 20% of the next month's sales in units. Budgeted;production for July should be;8,800 units.;8,400 units.;8,000 units.;7,200 units.;14. The Collins Company applies overhead to production;orders on the basis of machine hours. At the beginning of 2002, the company;made the following estimates;Estimated Amount;Direct labor cost $100,000;Indirect labor cost 25,000;Advertising expense 30,000;Direct materials 50,000;Indirect materials 10,000;Depreciation on factory equipment 40,000;Machine hours to be worked 10,000;What predetermined overhead rate should Collins Co. use?;$ 3.50;$ 7.50;$ 9.00;$12.00;15. The purpose of a flexible budget is to;reduce the total time in preparing the annual budget.;compare actual and budgeted results at virtually any level;of production.;eliminate cyclical fluctuations in production reports by;ignoring variable costs.;allow management some latitude in meeting goals.;16. Following is information relating to Kew Co.'s Vale;Division for 2001;Sales $500,000;Variable expenses 300,000;Fixed expenses 50,000;Average operating assets 1,000,000;Minimum desired return 12%;What was Vale's residual income?;$120,000;$150,000;$ 30,000;$ 80,000;17. The labor time required to assemble a product is an;example of a;Unit-level activity.;Batch-level activity.;Product-level activity.;Facility-level activity.;18. Anola Company has two products: A and B. The company;uses activity- based costing to determine product costs. The estimated overhead;costs and expected activity for each of the company's three overhead activity;centers are as follows;Activity;Center;Estimated;Overhead;Costs;Expected;Activity;Total Product A Product;B;Activity 1 $18,000 500 300 200;Activity 2 $16,000 600 500 100;Activity 3 $27,000 900 600 300;The predetermined overhead rate under the activity-based;costing system for Activity 3 is closest to;$30.00.;$30.50.;$90.00.;$67.78.;19. A standard is;unrelated to budgeting since standards are used for control;purposes only.;normally set at the ideal rather than the practical level of;cost, efficiency, or quantity.;normally not applied to the variable portion of overhead.;the budgeted cost for one unit of product.;20. Which of the following would be most appropriate for;evaluating a cost center?;Return on investment;Contribution margin percentage;A static budget;A standard costing system


Paper#42576 | Written in 18-Jul-2015

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