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accounting questions




Question;QuestionWhich of the following is not a step needed to maximize the profits from joint products?1.Forecasting the sales price of each final product2.Identifying alternative sets and quantities of final products possible from the jointprocess3.Determining how to allocate joint costs to the final products4.Estimating the costs required to further process joint products into salable productsQuestionA product's net realizable value is calculated by:1.Deducting the cost of goods sold from the sales revenue2.Deducting the allocated joint costs and processing costs after split-off from the sales revenue3.Deducting unit-level costs from the sales revenue4.Deducting processing costs after split-off from the sales revenueQuestionGreat Sweets Candy Company produces various types of candies. Several candies could besold at thesplit-off point or processed further and sold in a different form after further processing.The candies are produced in a joint processing operation with $500,000 of joint processingcostsmonthly, which are allocated based on pounds produced. Information concerning this processfor arecent month appears below:Candy type - Sweet Meats- # of pounds 50,000, Price per pound a split off $ 8.00 Further processing Cost 75,000, price after processing $10.00Candy type - Sweet Meats- # of pounds 100,000, Price per pound a split off $ 10.00 Further processing Cost 30,000, price after processing $10.50Candy type - Sweet Meats- # of pounds 25,000, Price per pound a split off $ 5.00 Further processing Cost 20,000, price after processing $5.50The joint processing costs in this operation:1.Should be allocated to products to determine whether they are sold at split-off orprocessed further2.Should be ignored in determining whether to sell at split-off or process further3.Should be ignored in making all product decisions4.Are never included in product cost, as they are misleading to all management decisionsQuestionGardner Company processes products in a joint processing operation that produces products Aand B in ajoint process. The company incurs $1,200,000 of joint processing costs monthly. Currently,3,600 of A and2,800 of B are being produced each month. Management plans to decrease B's production by600 units in orderto increase the production of A by 1,000 units. Additionally, this change will require minormodificationswhich will add $40,000 to the production costs. This cost is entirely attributable to product BWhat is the amount of the joint costs allocable to A before the changes are made to the existingproduction process, assuming Gardner allocates its joint costs according to the proportion ofA and B produced?1.$675,0002.$547,0583.$529,4124.$525,000[$1,200,000 x 3600/6400 = $675,000/-]QuestionWhich of the following is not a method of allocating joint costs?1.Sales value at split-off2.Net realizable value3.By-product method4.Physical-measures methodQuestionWhich of the following would not be a physical measure used to allocate joint costs?1.Number of pounds produced2.Cubic feet of gas produced3.Sales value at split off4.Energy content (BTUs)QuestionIn joint-process costing and analysis, which of the following costs is relevant when deciding thepoint at which a product should be sold to maximize profits?1.The cost of the machinery used to produce the three products2.The salaries of production personnel making the product3.The cost of the materials required for the joint products4.The selling price if the products are processed furtherQuestionWhich of the following would not be a joint-product cost?1.Cost of picking apples to be processed into cider and applesauce in a cider factory2.Cost of cinnamon used in applesauce3.Cost of maintaining oil rigs for an oil manufacturer4.Costs of running a fishing boat that sells haddock, cod, and lobsters to wholesalersQuestionAllocation of factory service department costs to the production departments is necessary to:1.Measure use of plant capacity2.Make sure that machines are operating efficiently3.Calculate cost per unit for purposes of external financial reporting4.Control costsQuestionWhich of the following would be an appropriate cost-allocation base for allocating thecost of the company cafeteria?1.Square footage occupied by departments2.Number of hours of use3.Number of meals served4.Salaries of personnel purchasing mealsQuestionWhich of the following would not be an appropriate cost-allocation base for the Personneldepartment costs?1.Space occupied2.Number of employees3.Total payroll dollars in department using the equipment4.Labor hoursQuestionWhich of the following would not be an appropriate cost-allocation base for allocating thecost of the corporate library in a consulting company with multiple divisions?1.Number of employees employed in each division2.Square footage occupied by each division3.Cost of periodicals ordered by each division4.Number of consultants employed in each divisionQuestionMansfield River Corporation maintains computer equipment and provides services in all 50states and in 20 countries. The Corporation has a fleet of 3 Corporate Jets and 2 Helicoptersand employs 6 full time pilots who receive salary and benefits. The most appropriate way toallocate the total cost of the corporate jets, helicopters and pilots to individual userdepartments would be:1.Number of trips taken by each department2.Sales revenue generated by each department3.Number of miles flown by each department4.Number of employees in each departmentQuestionWhich of the following is not a recognized method of allocating costs of service departmentsto user departments?1.The direct method2.The reciprocal method3.The labor hours method4.The step methodQuestionThere was an error in the text of this question, so everyone gets this one correct... but I hadalreadyactivated the quiz when the error was discovered (thanks, Scott!) so Blackboard will not allowme toremove the question. To have this automatically scored as correct, select the letter for theanswer of$187,000.1.$187,0002.$165,0003.$171,5834.$136,334QuestionWhich of the following statements regarding traditional cost accounting systems is False?1.Products are often over or under costed in traditional cost accounting systems2.Most traditional cost accounting systems do not trace individual costs to products3.The advantage of traditional cost accounting systems is their simplicity4.Traditional cost accounting systems can be sufficient to meet managers' cost informationneeds as long as the level of indirect costs is relatively high compared to the level ofdirect costsQuestionCosts associated with a special machine which sands the edges of all finished products wouldbe an example of:1.Unit-level activity2.Batch-level activity3.Customer-level activity4.Product-level activityQuestionThe review of each tax return by H & R Block would be an example of:1.Unit-level activity2.Facility-level activity3.Product-level activity4.Batch-level activityQuestionFerguson Molding Company produces custom bottle caps and jar covers for large cosmeticcompanies.Each customer owns the custom-made molds that are used for the caps and jar covers, so capsareproduced only to customer order. Each order requires the setting of molds in moldingmachines.Two full time mechanics, whose combined total annual salary and benefits are $160,000 peryear,are employed setting up and breaking down the molding machines. An order consists ofanywherefrom 50,000 to 500,000 units. 80 orders were received during the year 2008 for individualcustom production runs. The total number of units produced was 8 million.The cost of setting up the molding machines is an example of1.Facility-level activity2.Product-level activity3.Batch-level activity4.Customer-level activityQuestionFerguson Molding Company produces custom bottle caps and jar covers for large cosmeticcompanies.Each customer owns the custom-made molds that are used for the caps and jar covers, so capsareproduced only to customer order. Each order requires the setting of molds in moldingmachines.Two full time mechanics, whose combined total annual salary and benefits are $160,000 peryear,are employed setting up and breaking down the molding machines. An order consists ofanywherefrom 50,000 to 500,000 units. 80 orders were received during the year 2008 for individualcustom production runs. The total number of units produced was 8 million.The most appropriate cost driver base to allocate the salaries of the two mechanics underActivity-Based Costing would be:1.The number of bottle caps and jar covers produced2.The number of setups3.The number of hours spent on each setup4.The number of setup mechanicsQuestionSalaries of the human resource staff responsible for hiring production personnel at DellComputer would be an example of:1.Unit-level activity2.Facility-level activity3.Batch-level activity4.Product-level activityQuestionThe purchase of chemicals to make a special batch of synthetic fiber would be an example of:1.Customer-level resource2.Facility-level resource3.Product-level resource4.Batch-level resourceQuestionRichardson Motors uses ten units of part Number T305 each month in the production of largeDiesel engines.The cost to manufacture one unit of T305 is presented below:Direct Material: $2000Material Handling20% of direct material cost: 400Direct Labor: 16000Manufacturing Overhead150% of direct labor cost: 24000Material handling, which is not included in manufacturing overhead, represents the directvariablecosts of the receiving department that are applied to direct materials and purchasedcomponents on thebasis of their costs. Richardson's annual manufacturing overhead budget isone-third variable and two-thirds fixed) Simpson Castings, one of Richardson's reliablevendors,has offered to supply T305 at a unit price of $30,000.Assume Richardson Motors is able to rent all idle capacity for $50,000 per month. If Richardsondecides to purchase the ten units from Simpson Castings, Richardson's monthlyCost for T305 would:1.Decrease $14,0002.Increase $46,0003.Decrease $34,0004.Decrease $64,000Cost of manufacturing 10 units = ($2,000+$16,000) x 10 +$24,000 =$204,000Cost of buying 10 units = $30,000 x 10 =$300,000Increase in cost = $300,000 - $204,000 = $96,000/Rental Income of $50,000 would reduce the cost by $50,000.Thus, Net Increase in the cost = $96,000 -$50,000 = $46,000/QuestionIn differential analysis, changes in the cost of direct materials among alternatives is an exampleof1.Price discrimination2.Relevant data3.Batch-level costs4.None of the aboveQuestionTwoWheels (TW) manufactures hi-tech bicycles that sell for $600 each. They sell 1,000bicyclesper year. Fixed higher-level costs amount to $100,000. Break-even for TW is 300 bicycles.TW's margin safety is1.$50,0002.$180,0003.$360,0004.$420,000[($600 x 1000) ($600 x 300) = $420,000/-]QuestionFaulk Industries (FI) produces low cost digital cameras that sell for $100. FI requiresa 25% return on sales. Currently feasible costs are $5,160,000 and a cost reduction of$660,000 is required to meet their target. FI assumes they will sell ____ cameras.1.60,0002.75,0003.85,0004.None of the above[($5,160,000 - $660,000) x 100/75 =$6,000,000, $6,000,000/100 =60,000/-]QuestionJuarez Healthcare Center receives reimbursement from C.H.E.A.T.E.M. insurance company.Juarez receives $20 per physical therapy session. Each session lasts 15 minutes. Becauseof a shortage of physical therapists, Juarez often finds it necessary to use a temporaryservice to provide therapists. Assume collections and other variable cost amount to $5per visit and all other facility costs are fixed.What other qualitative factors should Juarez consider before using a temporary service?1.What is the training of the employees?2.Will Juarez builds relationships with the employees and has a potential source of newtherapists?3.Can Juarez uses the temporary service as a means to screen employees for a good matchwith the company?4.All of the aboveQuestionRelevant costs exclude1.Fixed costs2.Costs that change from year to year3.Costs that do not change based upon the alternative choices4.All of the aboveQuestionWhen deciding on special order pricing, it is important to consider1.Alternative capacity uses2.The reaction of other customers3.The potential for future sales4.All of the aboveQuestionAbrams Corporation sells a product for $75 per unit. Its market share is 20 percent. The marketshare can be increased to 30 percent with a reduction in price to $63. The product is currentlyearning a profit of $12 per unit. The president of Abrams feels that the $12 profit per unitmust be maintained.What is the target price per unit?1.$532.$633.$654.$75QuestionUse of negotiation to arrive at a transfer price can lead to divisiveness and competition betweenparticipating division managers.1.True2.FalseQuestionA particular manufacturing job is subject to an estimated 90% learning curve. The first unitrequired40 labor hours to complete. What is the cumulative average time per unit after four units arecompleted?1.32.0 hours2.32.4 hours3.36.0 hours4.40.0 hours[Y4 = 40(4)log0.9/log2 = 32.4 hours]QuestionIn which cost estimation method would costs most likely be broken into unit-level, batch-level,product-level and facility-level costs?1.Scattergraph method2.Account analysis method3.Regression method4.Engineering estimates methodQuestionAn amusement park estimates average costs per day. Which of the following is true?1.Average cost per day considers the relationship between labor costs and other variablessuch as temperature2.Average cost per day can be useful in estimating labor costs3.Average cost per day would include a component of variable labor costs but not fixedlabor cost4.All of the aboveQuestionWhich method of cost estimation does not use the company records as its primary source ofcost-activity data?1.Engineering estimates2.Regression analysis3.Account analysis4.High-low methodQuestionWhich of the following companies would most likely use operation costing?1.A piano manufacturer2.A potato chip company3.An oil company4.A pocketbook manufacturerQuestionOak Bluff Company incorrectly assigns a $50,000 overhead item to selling expense. Bordenhasmore inventory at the end of the year than at the beginning of the year. The result of this errorwill be to:1.Understate inventory and profit for the year2.Have no effect on inventory and profit for the year3.Overstate inventory and profit for the year4.Understate inventory but have no effect on profit for the yearQuestion ]Before prorating overhead, the current period overhead component of Cost of Goods Sold forWilmington Company was $230,000, while the current period overhead component of theendinginventory was $80,000. Manufacturing overhead of $310,000 was applied during the period,whereas$296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end ofthe period.If the manufacturing overhead-variance is prorated between inventory and cost of goods sold,how much will be allocated to the ending inventory? (round to the nearest whole dollar)1.$14,0002.$ 03.$3,6134.$2,868[under applied overhead is $310,000 - $296,000 =$14,000]Cost of goods sold..Dr.$14,000Manufacturing overheadsCr.$14,000WIP Inventory..ZeroCost of goods sold2.3K0/2.3K x $14,000 = $0QuestionWhich of the following statements about activity-based flexible budgeting are true?1.It uses several cost drivers2.Costs that may appear fixed with respect to a single volume-based cost driver may bevariable with respect to other appropriate cost drivers3.It can also be used as the basis for a flexible budget for planning and cost managementpurposes4.All of the aboveQuestionWhich of the following is not important to managers when analyzing revenue sales-volumevariance information?1.The combination of the individual revenue sales-volume variances2.The comparison of budgeted and actual total costs3.The picture of the product-line portrayed by aggregate dollars4.The production for the periodQuestionXYZ Corp. produced 26,000 units of its only product. Machine hours per unit are 2.8. Thebudget planned for23,000 units. What are the budgeted machine hours and the flexible-budget machine hours,respectively?1.64,400 machine hours, 72,800 machine hours2.72,800 machine hours, 64,400 machine hours3.68,000 machine hours, 75,000 machine hours4.75,000 machine hours, 68,000 machine hoursQuestionRhone Corporation produces a product called Sharone, which gives rise to a by-productcalled Erone. The only costs associated with Erone are additional processing costs of $2for each unit. Rhone accounts for Erone's sales first by deducting its separable costsfrom its sales and then by deducting this net amount from the cost of goods sold of Sharone.This year, 4,800 units of Erone were produced. They were all sold for $10 each. Companyoperating expenses were $120,000 for the year. Sales revenue and cost of goods sold forSharone were $800,000 and $400,000, respectively, for the year. (CPA adapted)If Rhone changes its method of accounting for Erone's sales, assuming that all of Erone'sproduction is sold in the period that it is produced, what would be the effect on Rhone's overallprofits?1.Overall profit would increase2.Overall profit would decrease3.Overall profit would remain the same4.Additional information is needed to determine the effect on overall profitQuestionThe Stanford Corporation produces three outputs: A, B and C from one input.The net-realizable-value of A at the split-off point is $200,000.The net-realizable-value of B at the split-off point is $400,000 andthe net-realizable- value of C at the split-off is $50,000. Final salesvalues are $400,000, $600,000 and $50,000 for A, B and C respectively. However,these prices are subject to erratic change. The additional processing costsfor A, B and C are $100,000, $150,000 and $0 respectively. Stanfordproduces 120,000 units of A, 120,000 units of B and 60,000 units of C.The total costs incurred up to the split-off point are $300,000What is the expected gross margin for Stanford Corporation?1.$350,0002.$450,0003.$500,0004.The expected gross margin cannot be determining without knowing how joint-costs will be allocatedGross Profit =[Revenues Joint cost at split-off point additional processing costs]Gross Profit Margin =$400,000 + $600,000 + $50,000 - $300,000 - $100,000 - $150,000=$500,000/-QuestionWhich of the following statements regarding the physical-measures method of allocatingjoint-product costs is false?1.Joint product costs are allocated proportional to economic values2.It is based on the relative volume, weight, or other physical measure of eachjoint product at the split-off point3.It is preferred when prices of output products are highly volatile or unpredictable4.The total profit of the company will be the same regardless of which physicalmeasure is used to allocated joint-product costs


Paper#44467 | Written in 18-Jul-2015

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