Study Guides (248,280)
United States (123,315)
HSCI 1105 (11)
Midterm

Exam 1 - VI Solutions.doc

9 Pages
101 Views
Unlock Document

Department
Health Science
Course
HSCI 1105
Professor
Sandy Blank
Semester
Fall

Description
Managerial Accounting Acct 2301 Summer II 2008 Exam 1 – Version 1 Name: ‘ There are 25 questions on this exam. Select the best answer for each question and fill your answer in on your scantron. Good Luck! 1. Powney Company is considering adding a new product – engine oil to its automotive division. The sales price will be $2.40 per unit. The variable cost per unit is expected to be $1.00 and the fixed costs are $21,000. The company expects to sell 20,000 units. What is the margin of safety in terms of sales dollars? Budgeted Sales – Breakeven Sales Budgeted Sales = $2.40 * 20,000 = $48,000 Breakeven Sales = $2.40X - $1.00X = $1.40X - $21,000 = 0 X = 15,000 units * $2.40 = $36,000 MOS = 48,000 – 36,000 = $12,000 a. $5,000 b. $7,000 c. $12,000 d. $24,000 e. None of the above 2.At the beginning of 2008, Barr Co. estimated that its total annual fixed overhead costs would amount to $50,000. Further, Barr estimated that its volume of production would be 2,000 units of product. Based on these estimates, Barr computed a predetermined overhead rate that was used to allocate overhead costs to the products made in 2008. As predicted, actual fixed overhead costs did amount to $50,000. However, actual volume of production amounted to only 1,800 units of product. Based on this information alone, Estimated = $50,000 / 2,000 units = $25 Actual = $50,000 / 1,800 = $27.78 a. Products were costed accurately in 2008. b. Products were overcosted in 2008. c. Products were undercosted in 2008. d. Products were priced at half. e. None of the above 3.Shed Industries produces two products. The products' identified costs are as follows: The company's overhead costs of $54,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product A? Overhead Allocation = Rate = $54,000 / $36,000 = 1.50 Product A = 1.50 * $12,000 = $18,000 Total Product Cost for A = $20,000 + 12,000 + 18,000 = $50,000 Cost per Unit = $50,000 / 4,000 = $12.50 Acct 2301 – Exam 1 Page 1 a. $12.50 b. $17.00 c. $14.75 d. $10.25 e. None of the above 4. Which of the following should be recorded as an asset? a. Paid for a new product advertising campaign b. Paid rent on the warehouse used to store finished goods c. Paid for research and development costs d. Paid for raw materials to be used in production e. None of the above 5. What is the effect on the financial statement model of making cash sales of inventory to customers (assuming the product is sold at a profit)? (Ignore the effect on cash flow.) A s s =e tLs i a+bE . q u iRt ye -v.E x pN. e t I nC c a. s h F l o w A ) - n / a - n / a - - n / a B ) + n / a + + + + + O A C ) - n / a - n / a n / a n / a - O A D ) + n / a - + n / a + n / a a. Item A b. Item B c. Item C d. Item D e. None of the above 6. During her first year with the company, Tiffany mistakenly accumulated some of the company’s period costs in ending inventory. Which of the following indicates how this error affects the company’s financial statements assuming production exceeded sales during the period? a. Cash flows from operations are understated. b. Gross margin is understated. c. Net income is understated. d. Inventory is overstated. e. None of the above 7. Medlock Company is analyzing whether its new product will be profitable. The following data are provided for analysis. Expected variable cost of manufacturing $30 per unit Expected fixed manufacturing costs $48,000 per year Expected sales commission $ 6 per unit Expected fixed administrative costs $12,000 per year Medlock has decided to advertise the product heavily and has set the sales price at $54. If sales are 9,000 units, how much can Medlock spend on advertising and still breakeven? Sales – VC = CM – FC = Profit $54(9,000) - $30(9,000) - $6(9,000) = $162,000 - $48,000 - $12,000 – X = 0 X = $102,000 Acct 2301 – Exam 1 Page 2 a. $114,000 b. $102,000 c. $168,000 d. $156,000 e. None of the above 8. Perry Copies Company provides professional copying services to customers through the 20 copy stores it operates in the southwestern United States. Each store employs a manager and four assistants. The manager earns $3,500 per month plus a bonus of 3 percent of sales. The assistants earn hourly wages. Each copy store costs $3,000 per month to lease. The company spends $5,000 per month on corporate-level advertising and promotion. What type of cost is the store manager’s salary relative to the number of copies made for customers? a. Fixed b. Variable c. Mixed d. Inverse e. None of the above 9. Craw Company incurs annual fixed costs of $140,000. The company’s contribution margin is 40%. The company would like to earn a profit of $40,000. What amount of sales dollars would be needed in order to achieve the desired profit? Sales – VC = CM – FC = Profit 0.40S - $140,000 = $40,000 0.40S = $180,000 $180,000 / .40 S = $450,000 a. $450,000 b. $180,000 c. $300,000 d. $150,000 e. There is not enough information available. 10. Vanity Chairs Corporation produces ergonomically designed chairs favored by architects. The company normally produces and sells from 5,000 to 8,000 chairs per year. The following cost data apply to various production levels. No. of chairs 5,000 Total Costs Incurred Fixed $ 84,000 Variable 60,000 Total Costs $144,000 What would be the company’s total cost if 7,000 chairs were produced? FC + VC = Total Cost FC = $84,000 For VC = $60,000 / 5,000 = $12 VC per Unit VC = $12 * 7,000 = $84,000 $84,000 + $84,000 = $168,000 a. $201,600 Acct 2301 – Exam 1 Page 3 b. $177,600 c. $144,000 d. $168,000 e. None of the above 11. Dade Company manufactures CD players. According to the company’s records, the variable costs, including direct labor and direct materials, are $50 per unit. Factory depreciation and other fixed manufacturing costs are $192,000. Dade pays its salespeople a commission of $18 per unit. Annual fixed selling and administrative costs are $128,000. Dade has determined they will be able to sell 10,000 units. At what price will Dade have to sell the players in order to breakeven? Sales – VC = CM – FC = Profit 10,000X - $50(10,000) - $18(10,000) - $192,000 - $128,000 = 0 10,000X = $1,000,000 $1,000,000 / 10,000 X = $100 a. $300 b. $200 c. $100 d. $ 69 e. None of the above 12. The following are the costs for the Palmer Company for 2008: Wages paid to workers in a manufacturing plant - $50,000 Salary of the receptionist working the sales department - $20,000 Supplies used in the sales department - $8,000 Wages of janitors who clean the factory floor - $30,000 Salary of the company president - $80,000 Depreciation on administrative buildings - $3,000 Depreciation on manufacturing equipment - $5,000 Salary of an engineer who maintains all manufacturing plant equipment - $40,000 What is the company’s total product cost for 2008? $50,000 + 30,000 + 5,000 + 40,000 = $125,000 a. $125,000 b. $205,000 c. $120,000 d. $50,000 e. None of the above 13. In reviewing Quartey Company’s September accounting records, Ken Helm, the chief accountant, noted the following depreciation costs. Factory buildings - $25,000 Computers used in manufacturing - $4,000 A building used to display finished goods - $8,000 Trucks used to deliver merchandise to customers - $14,000 Forklifts used in the factory - $22,000 Furniture used in the president’s office - $9,000 Elevators in administrative buildings - $6,000 Factory machinery
More Less

Related notes for HSCI 1105

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit