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UMUC MGMT640 Final exam (both parts I and II) Spring 2014




Question;UMUC MGMT640 final exam part 1;1.;A typical use of;managerial accounting is to;A);Help investors and;creditors to assess the financial position of the company.;B);Help management get a;clean audit report.;C);Help the SEC decide;whether management is in compliance with its policies.;D);Help the marketing manager decide which product;promotion to implement.;Q2;Three costs incurred by Pitt Company are summarized;below;1,000 units;2,000 units;Cost;A;$10,000;$15,000;Cost;B;$21,000;$21,000;Cost;C;$16,000;$32,000;Which of these costs are;variable?;3. Bubba?s steakhouse has budgeted the following costs for a;month in which 1,600 steak dinners will be sold: Materials, $4,080, hourly;labor (variable), $5,200, rent (fixed), $1,720, depreciation, $600, and other;fixed costs, $550. Each dinner sells for $12.60. How much would Bubba?s profit;increase if 10 more dinners were sold?;A) $68.;B) $72.;C) $52.;D) $126.;Q4 Bellfont Company produces;door stoppers. August production costs are below;Door Stoppers;produced 74,000;Direct material;(variable);$20,000;Direct labor;(variable);40,000;Supplies;(variable);20,000;Supervision;(fixed) 27,400;Depreciation;(fixed);21,000;Other;(fixed) 4,800;In September, Bellfont expects to produce 100,000 door stoppers.;Assuming no structural changes, what is Bellfont?s production cost per door;stopper for September?;Q5;Aaron's chairs is in the process of preparing a production;cost budget for August. Actual costs in July for 120 chairs were;Materials cost;$4,820;Labor cost;2,560;Rent;1,500;Depreciation;2,500;Other fixed costs;3,200;Materials and labor are the only variable costs. If;production and sales are budgeted to increase to 130 chairs in August, how much;is the expected total variable cost on the August budget?;Q-6;Carry-ALL plans to sell 1,300 carriers next year and has;budgeted sales of $46,000 and profits of $22,000. Variable costs are projected;to be $20 per unit. Michael Co. offers to pay $24,300 to buy 520 units from;Carry-ALL. Total fixed costs are $7,000 per year. This offer does not affect;Carry-ALL's other planned operations. The incremental revenues for this;situation are;Q7;Stellar Company has the following sales, variable cost, and;fixed cost. If sales increase by $10,000 then their profit increases/decreases;by how much?;Sales $50,000;Variable Costs $7,300;Fixed Costs $25,000;Q8;Susan is trying to decide whether or not to attend college;during the next 12-week session. She has the following options;1. Attend college full-time at a cost of $1,200.;2. Attend college part-time at a cost of $600 and work;part-time earning $1,600.;3. Work full-time earning $4,900.;What is Susan's incremental profit if she chooses option 3;over option 2?;Q9;Total cost were $74,300 when 27,000 units were produced and;$99,000 when 40,000 units were produced. Use the high-low method to find the estimated;total costs for a production level of 32,000 units.;Q10;Professional University teaches a large range of;undergraduate courses. It is interested in determining the cost equation for;the facilities cost as a function of student credit hours so that it an more;accurately budget its facilities costs as enrollment grows. Information for the;high and low cost semesters and volumes for last 5 years appears below;Semester;Student Credit Hours Facilities Cost;Spring;2007 250,000 $500,000;Fall;2004 300,000 $530,000;Using;the high low method, with student credit hours as the activity driver, what is;the equation for facilities cost (FC) as a function of student credit hours?;Q11;Randy's tireland makes a product that sells for $61 per unit;and has $50 per unit in variable costs. Annual fixed costs are $24,000. If;Rambles sells 10 units less than breakeven, how much loss would the company;recognize on its income statement?;Q12;Ritz Furniture has a contribution margin ratio of 0.17. If;fixed costs are $165,000, how many dollars of revenue must the company generate;in order to reach the break-even point?;Q13;U.S. Telephone Cellular sells phones for $100. The unit;variable cost per phone is $50 plus a selling commission of 10% (based on the;unit sales price per phone). Fixed manufacturing costs total $1,010 per month;while fixed selling and administrative costs total $2,200. How many phones must;be sold to achieve the breakeven point?;Q14;Swimkids is a swimsuit manufacturer. They sell swim suits at;a selling price is $30 per unit. Swimkids variable costs are $18 per unit.;Fixed costs are $71,200. Swimkids expects sales of $262,800 next year. What is;Swimkids's margin of safety?;Q15;Lambardi Company sells 3 types of bags. Bag A sells for $17;and has variable cost of $9.00 per unit. Bag B sells for $14 and has variable;cost of $12.00 per unit. Bag C sells for $8 and has variable costs of $6.00 per;unit. Lambardi sells in a mix of 2 units of A, 3 units of B and 5 units of C.;What is the weighted average contribution margin per unit for Lambardi?;Q16;Product A has a contribution margin per unit of $500 and;required 2 hours of machine time. Product B has a contribution margin per unit;of $1,000 and requires 5 hours of machine time. How much of each product should;be produced given there are 100 hours of available machine time?;Q17;Delfi Company produces two;models of buckets, Tonto and Pronto. Information regarding these products for;May follows;Tonto Pronto;Number of units 3,000 7,000;Sales revenue $120,000 $140,000;Variable costs 60,000 42,000;Fixed costs 24,000 50,000;Net Income $36,000 $48,000;Pounds of plastic to produce one;bucket 4.0 1.6;Contribution margin per unit $20 $14;Due to increased demand of plastic in;the market, Delfi Company can obtain only 9,000 pounds of plastic per month. Delfi;can sell as many buckets as it can produce of either model. How many of each;model should Delfi produce to maximize profit in May considering the constraint?;Tonto: 2,250, Pronto: 0;Tonto: 0, Pronto: 5,625;Tonto: 0, Pronto: 4,375;Tonto: 1,125, Pronto: 2,812;Solution;Q18;Aberdeen Corp. uses;activity-based costing system with three activity cost pools. The following;information is provided;Costs: Wages and salaries $ 220,000;Depreciation 120,000;Utilities 100,000;Total $440,000;Activity Cost Pools;Assembly Setting Up Other Total;Wages and salaries 60% 30% 10% 100%;Depreciation 35% 45% 20% 100%;Utilities 30% 40% 30% 100%;How much total cost would be;allocated to the Assembly activity cost pool?;A. $204,000;B. $174,000;C. $440,000;D. $162,000UMUC MGMT640 final exam part II;Maxx Inc. has provided the;following data from its activity-based costing system;Activity Cost Pools Total;Cost Total;Activity;Designing;products;$370,600 6,550;product design hours;Setting up;batches;$52,678;7366 batch set-ups;Assembling;products;$25,122 4,018;assembly hours;The activity rate for the;?designing products? activity cost pool is:Question;2 (1 point);Sasha Company allocates the;estimated $181,400 of its accounting department costs to its production and;sales departments since the accounting department supports the other two;departments particularly with regard to payroll and accounts payable functions.;The costs will be allocated based on the number of employees using the direct;method. Information regarding costs and employees follows;Department;Employees;Accounting;4;Production;29;Sales;14;How much of the accounting;department costs will be allocated to the production?Question;3 (1 point);Medusa Company allocates costs from the payroll department (S1) and the;maintenance department (S2) to the molding (P1), finishing (P2), and packaging;(P3) departments. Payroll department costs are allocated based on the number of;employees in the department and maintenance department costs are allocated;based on the number of square feet which the production department occupies;within the factory. Information about the departments is presented below;Number of;Number of Square;Department;Costs;Employees;Feet Occupied;Payroll (S1);$136,000;2;2,000;Maintenance (S2);$220,000;8;64,000;Molding (P1);70;100,000;Finishing (P2);44;60,000;Packaging (P3);22;40,000;Medusa uses the direct method to allocate costs. Round all answers to;the nearest dollar.;What amount of the payroll department costs will be allocated to the molding;department?Question;4 (1 point);The Manassas Company has 55 obsolete keyboards that are;carried in inventory at a cost of $9,600. If these keyboards are upgraded at a;cost of $7,400, they could be sold for $19,300. Alternatively, the keyboards;could be sold ?as is? for $8,900.;What is the net advantage or disadvantage of;re-working the keyboards?;Your Answer;Question 4 options;Sol;Q5;Ritz Company sells fine collectible;statues and has implemented activity-based costing. Costs in the shipping;department have been divided into three cost pools. The first cost pool;contains costs that are related to packaging and shipping and Rand has;determined that the number of boxes shipped is an appropriate cost driver for;these costs. The second cost pool is made up of costs related to the final;inspection of each item before it is shipped and the cost driver for this pool;is the number of individual items that are inspected and shipped. The final;cost pool is used for general operations and supervision of the department and;the cost driver is the number of shipments. Information about the department is;summarized below;Cost Pool;Total Costs;Cost Driver;Annual Activity;Packaging and shipping;$164,700;Number of boxes shipped;24,000 boxes;Final inspection;$200,600;Number of individual items shipped;98,900 items;General operations and supervision;$84,300;Number of orders;8,100 orders;During the period, the Far East sales;office generated 684 orders for a total of 6,120 items. These orders were;shipped in 1,474 boxes. What amount of shipping department costs should be;allocated to these sales?;Sol;Q6;Baller Financial is a banking;services company that offers many different types of checking accounts. The;bank has recently adopted an activity-based costing system to assign costs to;their various types of checking accounts. The following data relate to the;money market checking accounts, one of the popular checking accounts, and the;ABC cost pools;Annual number of accounts = 57,000 accounts Checking account cost;pools;Cost Pool;Cost;Cost Drivers;Returned check costs;$2,900,000;Number of returned checks;Checking account reconciliation costs;54,000;Number of account reconciliation requests;New account setup;645,000;Number of new accounts;Copies of cancelled checks;380,000;Number of cancelled check copy requests;Online banking web site maintenance;189,000;Per product group (type of account);Annual activity information related;to cost drivers;Cost Pool;All Products;Money Market Checking;Returned check;200,000 returned checks;18,000;Check reconciliation costs;380,000 checking account;420;New accounts;53,000 new accounts;15,000;Cancelled check copy requests;93,000 cancelled check;60,000;Web site costs;2 types of accounts;1;Calculate the overhead cost per;account for the Money Market Checking.;Sol;Q7;Sosa Company has $39 per;unit in variable costs and $1,900,000 per year in fixed costs. Demand is;estimated to be 138,000 units annually.;What is the price if a;markup of 35% on total cost is used to determine the price?;Q8;Bob's Company sells one;product with a variable cost of $5 per unit. The company is unsure what price;to charge in order to maximize profits. The price charged will also affect the;demand. If fixed costs are $100,000 and the following chart represents the;demand at various prices, what price should be charged in order to maximize;profits?;Units Sold Price;30,000 $10 40,000 $9 50,000;$8 60,000 $7;Question 26 options;A. $10;B. $9;C, $8;D. $7;Explain.;Question;9 (1 point);A retailer purchased some trendy;clothes that have gone out of style and must be marked down to 30% of the;original selling price in order to be sold. Which of the following is a;sunk cost in this situation?;Question 9 options;the original selling price;the anticipated profit;the original purchase price;the current selling price;Question;10 (1 point);Carlton Products Company has;analyzed the indirect costs associated with servicing its various customers in;order to assess customer profitability. Results appear below;Cost Pool;Annual;Cost;Cost Driver;Annual;Driver Quantity;Processing electronic orders;$1,000,000;Number of orders;500,000;Processing non-electronic orders;$2,000,000;Number of orders;400,000;Picking orders;$3,000,000;Number of different products;ordered;800,000;Packaging orders;$1,500,000;Number of items ordered;50,000,000;Returns;$2,000,000;Number of returns;50,000;If all costs were assigned to;customers based on the number of items ordered, what would be the cost per item;ordered?;Your Answer;Question 10 options;Sol;Question;11 (1 point);Costa Company has a capacity of;40,000 units per year and is currently selling 35,000 for $400 each. Barton;Company has approached Costa about buying 2,000 units for only $300 each. The;units would be packaged in bulk, saving Costa $20 per unit when compared to the;normal packaging cost. Normally, Costa has a variable cost of $280 per unit.;The annual fixed cost of $2,000,000 would be unaffected by the special order.;What would be the impact on profits if Costa were to accept this special order?;Question 11 options;Profits would increase $40,000.;Profits would increase $60,000.;Profits would decrease $200,000.;Profits would increase $80,000;Question 12 (1 point);A company has $6.10 per unit in;variable costs and $4.3 per unit in fixed costs at a volume of 50,000 units. If;the company marks up total cost by 0.45, what price should be charged if 63.000;units are expected to be sold?;Your Answer;Question 12 options;Question;13 (1 point);Customer profitability analysis;might result in;Question 13 options;dropping some customers that are;unprofitable.;lowering price or offering;incentives to profitable customers.;giving incentives to all customers;to place orders online.;All of the above.;Question 14 (1 point);The Estrada Company uses cost-plus;pricing with a 0.31 mark-up. The company is currently selling 100,000 units at;$12 per unit. Each unit has a variable cost of $5.10. In addition, the company;incurs $189,300 in fixed costs annually. If demand falls to 73,700 units and;the company wants to continue to earn a 0.31 return, what price should the;company charge.;Q15;A new product is being designed by an;engineering team at Golem Security. Several managers and employees from the;cost accounting department and the marketing department are also on the team to;evaluate the product and determine the cost using a target costing methodology.;An analysis of similar products on the market suggests a price of $135 per;unit. The company requires a profit of 30 percent of selling price. How much is;the target cost per unit?;Q16;A company using activity based pricing marks up;the direct cost of goods by 0.22 plus charges customers for indirect costs;based on the activities utilized by the customer. Indirect costs are charged as;follows: $7.3 per order placed, $2.6. per separate item ordered, $26.9 per;return. A customer places 8 orders with a total direct cost of $2800, orders 281;separate items, and makes 4 returns. What will the customer be charged?;Q 17;A law firm uses activity-based;pricing. The company?s activity pools are as follows: Cost Pool Annual;Estimated Cost Cost Driver Annual Driver Quantity Consultation 185,000 Number;of consultations 90 consultations Administrative Costs 131,000 Admin labor;hours 98,00 labor hours Client Service 97,000 Number of clients 120 clients The;firm had two consultations with this client and required 130 administrative;labor hours. What additional costs will be charged to this customer?


Paper#49049 | Written in 18-Jul-2015

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