Acct 605 Fa23 Final Exam i Saved Help Save & Ex 2 Assume a company makes only three products, A, B, and C: Product A Product B Product C Estimated customer demand in units 700 600 800 Selling price per unit $ 80 $ 65 $ 45 0.6 Variable cost per unit $ 35 $ 26 $ 20 points Machine-hours per unit 2.5 3.0 1.25 03:46:00 The company has only 1,250 machine-hours available. What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? eBook Multiple Choice O $27,500 O $24,500 O $26,500 O $25,5003 Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000 units for a price of $40 per unit. The company's accounting system reports the following costs of making the part: Per 10,000 Units Unit per Year 0.6 $ 18 $ 180,000 points Direct materials Direct labor 12 120,000 03:42:23 Variable manufacturing overhead 2 20,000 Fixed manufacturing overhead, traceable 80, 000 Fixed manufacturing overhead, allocated 40,000 Total cost $ 44 $ 440, 000 eBook One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. If the company begins buying the part from a supplier, it can use freed up capacity to produce and sell 2,150 more units of another product that earns a contribution margin per unit of $7.50. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier? Multiple Choice O $(60,000) O $(3,875) O $(32,150) O $(23,875)7 Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $31,500 and $35,000, respectively. It also expects credit sales of $51,500 and $61,500, respectively. The company expects to collect 45% of its credit sales in the month of the sale, 50% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the second month? 0.6 points Multiple Choice 03:30:04 O $88,425 Book O $85,850 O $27,675 O $92,25011 0.6 points { | 8 03:11:21 | \\. eBook \\ .2\" Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Standard Hours Standard Price or Rate Cost Direct materials 5 pounds $ 12.16 per pound $ 66.56 Direct labor 2 hours $ 1?.06 per hour $ 34.60 Variable manufacturing overhead 2 hours $ 3.06 per hour $ 6.60 During the most recent period. the following additional information was available: . 20,000 pounds of material was purchased at a cost of $10.50 per pound. . All ofthe material that was purchased was used to produce 3,900 units. . 8.000 direct laborhours were recorded at a total cost of $132,000. What is the direct materials spending variance? MmmeChoke 0 $25,950 F $6.050 U O 0 $25,950 U 0 $6.050 F Assume a company has two manufacturing departments - Assembly and Fabrication. The company considers all of its manufacturing overhead costs to be fixed costs. The first set of data below is bu 12 the company as a whole that was estimated at the beginning of the year. The second set of data below is actual data for the company as a whole that was derived at the end of the year. The third set one particular job completed during the year- Job Z. Budgeted Data Assembly Fabrication 0.6 Manufacturing overhead costs $ 300, 000 $ 400,000 points Direct labor hours 25, 000 15, 000 03:10:36 Machine hours 10,000 50,000 Actual Data Assembly Fabrication Manufacturing overhead costs $ 330, 000 $ 380,000 Direct labor hours 27, 000 16, 000 eBook Machine hours 10,500 48,000 Job Z Assembly Fabrication Direct labor hours 10.00 hours 7 hours Machine hours 1 hour 7 hours If the company uses a plantwide approach for applying overhead to production with direct labor-hours as the allocation base, how much manufacturing overhead would be applied to Job Z? Multiple Choice O $250.96 O $206.33 O $297.5014 Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The company's average unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 10.00 Variable manufacturing overhead 2. 80 0.6 Fixed manufacturing overhead 5.00 points Variable selling expenses 1. 70 03:04:56 Fixed selling expenses 4.50 Total cost per unit $ 33.50 The company's relevant range of production is 70,000 - 100,000 units. It believes that spending an additional $195,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) eBook of spending the additional money on advertising? Multiple Choice O $125,000 O $59,000 O $65,000 O $10,000Assume a company's sales budget for April and May is 50,000 units and 52,000 units, respectively. Its production budget for the same two months is 47,000 units and 48,000 units, respectively. Each unit of finished 15 goods required 2 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. Also assume the company pays $2.95 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance 0.6 on March 31st is $150,000. What would be the accounts payable balance at the end of April? points X 03:04:27 Multiple Choice Book O $144,240 O $113,240 O $143,240 O $139,240Which of the following statements is true? 16 Multiple Choice 0.6 points 8 03:03:52 O If the value added time increases and the throughput time decreases, then the manufacturing cycle efficiency (MCE) will always increase. eBook O If the value added time increases and the throughput time increases, then the manufacturing cycle efficiency (MCE) will always increase. O If the value added time decreases and the throughput time decreases, then the manufacturing cycle efficiency (MCE) will always increase. O If the value added time decreases and the throughput time increases, then the manufacturing cycle efficiency (MCE) will always increase.17 Assume that a company uses a standard cost system and applies overhead to production based on direct labor-hours. It provided the following excerpt from the standard cost card of its only product: Standard Standard Hours Standard Rate Cost Fixed manufacturing overhead 2 hours $ 6.00 per hour $ 12.00 0.6 points During the most recent period, the following additional information was available: 03:03:25 . The total actual fixed overhead cost was $275,000. The budgeted amount of fixed overhead cost was $285,000. 46,000 direct labor-hours were actually used to produce 24,050 units. Book How much was the fixed overhead volume variance? Multiple Choice O $13,600 F O $3,600 F O $3,600 U O $13,600 UAssume a company's direct labor budget for September estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per 18 direct labor-hour. The budgeted fixed manufacturing overhead for September is $60,000 including $8,000 of depreciation. What is the total budgeted manufacturing overhead for September? 0.6 points Multiple Choice 03:02:58 O $98,000 Book O $90,000 O $88,000 O $82,000Which of the following statements is false? 19 Multiple Choice 0.6 points 8 03:02-31 O Operating leverage is a measure of how sensitive fixed costs are to a given percentage change in dollar sales. eBook O The break-even point is the level of sales at which the total contribution margin equals the total fixed costs. O Margin of safety is the excess of budgeted or actual dollar sales over the break-even dollar sales. O Sales mix refers to the relative proportions in which a company's products are sold.Which of the following statements best describes a viable approach for reducing the cost of quality? 20 Multiple Choice 0. 6 points f\"\\ IKE caozoejl 0 Making additional investments in prevention activities with the goal of realizing even larger reductions in external failure costs. eBook Making additional investments in external failure activities with the goal of realizing even larger reductions in appraisal costs. 0 Making additional investments in appraisal activities with the goal of realizing even larger reductions in prevention costs. 0 Making additional investments in internal failure activities with the goal of realizing even larger reductions in appraisal costs. Which of the following is an example of a product-level activity? 21 Multiple Choice 0.6 points 03:01:46 O Assembling products eBook O Heating a manufacturing facility O Setting up machines O Advertising productsAssume a company reported the following results: 22 Sales $ 400,000 Variable expenses 260,000 Contribution margin 140,000 0.6 Fixed expenses 40,000 points Net operating income $ 100,000 03:01:27 Average operating assets $ 550,000 If the company's minimum required rate of return on average operating assets is 16%, its residual income would be: eBook Multiple Choice O $14,000. O $13,000. O $12,000. O $15,000.Assume the labor rate variance is $400 unfavorable and the labor spending variance is $200 unfavorable. Given these assumptions, which of the following statements is true? 23 Multiple Choice 0.6 points 03:00:20 O The labor efficiency variance must be $600 favorable. eBook O The labor efficiency variance must be $200 unfavorable. O The labor efficiency variance must be $600 unfavorable. O The labor efficiency variance must be $200 favorable.24 0.6 points /' IKE 02 59:5 eBook .\\ 9 l J Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Standard Hours Standard Price or Rate Cost Direct materials 5 pounds $ 11.99 per pound $ 55.99 Direct labor 2 hours $ 17.99 per hour $ 34.99 Variable manufacturing overhead 2 hours $ 3.99 per hour $ 6.99 During the most recent period. the following additional information was available: . 20,000 pounds ofmaterial was purchased at a cost of $10.50 per pound. . All of the material that was purchased was used to produce 3,900 units. . 8000 direct laborhours were recorded at a total cost of $132,000. What is the direct materials quantity variance? Multiple Choice 0 $5.250 U $5.500 F $5.250 F O O $5.500 U Q Assume that a company has decided to include "average years of tenure per employee" and "absenteeism rate" as performance measures within its balance scorecard. Which of the following choices reflects 25 management's most likely expectations regarding how these measures should change over time? Average years of tenure per employee Absenteeism rate 0.6 A Increase Increase points B) Increase Decrease 02-59:33 C) Decrease Increase D ) Decrease Decrease eBook Multiple Choice Choice B O Choice D O Choice A O Choice CWhich of the following statements is true? 26 Multiple Choice 0.6 points 02:58:29 O Using residual income to evaluate managers will motivate them to pursue investments that increase their return on investment (ROI) even if it lowers their residual income. Book O Using residual income to evaluate managers will motivate them to pursue investments that increase their return on investment (ROI) even though they do not earn enough net operating income to exceed the minimum required return on operating assets. O Using residual income to evaluate managers will motivate them to pursue investments that increase their residual income only when it also increases their return on investment (ROI). O Using residual income to evaluate managers will motivate them to pursue investments that increase their residual income even if it lowers their return on investment (ROI).27 Assume a company is considering adding a new product. The expected cost and revenue data for this product are as follows: Annual sales 5,000 units Unit selling price $ 60 Unit variable costs: 0.6 Production $ 29.90 points Selling $ 6 02:58:04 Incremental fixed costs per year: Production $ 35,000 Selling $ 45,000 If the company adds this new product, it expects the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge and still break-even on the new Book product? Multiple Choice O $55.60 O $40.60 O $51.90 O $39.60Assume the following (1) selling price per unit = $30, (2) variable expense per unit = $18, and (3) total fixed expenses = $46,500. Given these three assumptions, the unit sales needed to achieve a target profit of $6,300 28 is: 0.6 Multiple Choice points 02:57:41 O 63,500 units. eBook O 10,700 units. O 52,800 units. O 4,400 units.Assume a merchandising company provides the following information from its master budget for the month of May: 29 Sales $ 118,000 Cost of goods sold $ 94, 000 Selling and administrative expenses $ 28,000 0.6 points Accounts receivable, May ist $ 17,000 Accounts receivable, May 31st $ 23,000 02:57:16 If all of the company's sales are on account, what is the amount of cash collections from customers included in the cash budget for May? eBook Multiple Choice O $112,000 O $118,000 O $101,000 O $107,000Which of the following is a criticism of return on investment (ROI)? 30 Multiple Choice 0.6 points 02:56:50 O A manager's non-operating assets are excluded from the calculation of ROI. Book O A manager can control margin, but is unable to control turnover even though it influences the calculation of ROI. O A manager who is evaluated using ROI may reject investment opportunities that lower her ROI even though the investment would be profitable for the company as a whole. O A manager can control turnover, but is unable to control margin even though it influences the calculation of ROI.Assume that a company has decided to include \"overall equipment effectiveness" and "percent of customer complaints settled on first contact" as performance measures Within its balance scorecard. Which ofthe 31 following Choices reflects management's most likely expectations regarding how these measures should change over time? Overall Percent of customer equipment complaints settled on 06 effectiveness 'First contact palms A) Increase Increase (8 02551; B) Increase Decrease \\/ C) Decrease Increase D) Decrease Decrease eEook Multiple Choice 0 Choice C Choice D Choice A O 0 Choice B O Assume the following information: 32 Amount Per Unit Sales $ 300, 000 $ 40 Variable expenses 120,000 16 0.6 points Contribution margin 180, 000 $ 24 Fixed expenses 77,000 02:56:08 Net operating income $ 103, 000 If the selling price per unit increases by 10% and unit sales drop by 5%, then the best of estimate of the new net operating income is: eBook Multiple Choice O $114,800. O $149,800. O $112,800. O $122,500.33 0.6 points / IKE 01-5531 eBook .\\ s | J Assu me the following information appears in the standard cost card for an enterprise that makes only one product: Standard Quantity or Standard Hours Standard Price or Rate Cost Direct materials 5 pounds $ 11.00 per pound $ 55.80 Direct labor 2 hours $ 1?.00 per hour 35 34.00 Variable manufacturing overhead 2 hours $ 3.00 per hour $ 6.60 During the most recent period. the following additional information was available: . 20,000 pounds of material was purchased at a cost of $10.50 per pound. . All of the material that was purchased was used to produce 3,900 units. . 8000 direct laborhours were recorded at a total cost of $132,000. What is the direct labor spending variance? Multiple Choice 0 $3300 u $600 U $600 F O 0 $3,300 F O 34 Assume a merchandising company is deciding whether to keep or drop one of the many product lines that it sells at its retail store location. Which of the following would be relevant to the decision? Multiple Choice 0.6 points 02:55:24 O The store manager's salary eBook O The general administrative expenses allocated from corporate headquarters to this product line O The contribution margin earned by this product line O The rent paid for the company's retail space, a portion of which is allocated to this product lineWhich of the following is the definition for residual income? 35 Multiple Choice 0.6 points 02:54:59 O The net operating income that an investment center earns above the minimum required return on its total sales. eBook O The net operating income that a profit center earns above the minimum required return on its total current assets. O The net operating income that an investment center earns above the minimum required return on its average operating assets. O The net operating income that an investment center earns above the minimum required return on its total current assets.In its rst year of operations a company produced and sold 70.000 units of Product A at a selling price of$20 per unit and 17.500 units of Product B at a selling price of$40 per unit. Additional information relating to 3 6 the company's only two products is shown below Product A Product B Total Direct materials $ 436,396 $ 251,799 $ 688,999 gains Direct labor $ 299,998 $ 164,996 394,669 Manufacturing overhead 698,999 r\\ L2 uzwz/i Cost Dr goods sold $ 1,699,999 The company created an activity-based coating system that allocated its manufacturing overhead costs to four activities as follows: eBook Manufacturing Activity Activity Cost Pool (and Activity Measure) Overhead Product A Product B Total Machining (machineihours) $ 213,599 99,999 62,599 152,599 Setups (setup hours) 157,599 75 399 375 Product design (number or products) 126,999 1 1 2 Other (organization'susteining costs) 117,999 NA NA NA Total manufacturing overhead cost $ 698,999 The company's ABC implementation tearn also concluded than $32,000 and $118,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively, The remainder of its selling and administrative expenses ($490,000) was organizationrsustaining in nature, The company's actiVIty-based costing system would repor1 a product margin for Product A of: Note: Do not round your intermediate calculations. Multiple Choice 0 $54420 O 0 $514.20 0 Assume a company reported the following results: 37 Sales $ 400,000 Variable expenses 260,000 Contribution margin 140,000 0.6 40,090 points Fixed expenses Net operating income $ 100,000 02-54:14 Average operating assets $ 725,000 The return on investment (ROI) is closest to: eBook Multiple Choice O 26.3%. O 13.8%. O 35.0%. O 55.2%.A normal cost system applies overhead cost to jobs by multiplying: 38 Multiple Choice 0.6 points 02-53:45 O An actual overhead rate by the actual amount of the allocation base used by the jobs. eBook O An actual overhead rate by the estimated amount of the allocation base used by the jobs. O A predetermined overhead rate by the actual amount of the allocation base used by the jobs. O A predetermined overhead rate by the estimated amount of the allocation base used by the jobs.Assume the following information: 39 Actual run time this week 4,520 minutes Machine time available this week 5,000 minutes Actual run rate this week 3.6 units per minute 0.6 Ideal run rate 4.0 units per minute points Defect-free output this week 15,000 units 02-53:26 Total output this week ( including defects) 16,272 units What is the total number of units lost due to the combined utilization, efficiency, and quality losses? Book Multiple Choice O 3,728 units O 1,272 units O 3,080 units O 5,000 unitsAssume that June's production budget showed required production of 437,000 units, desired ending finished goods inventory of 28,000 units, and beginning finished goods inventory 12,000 units. What were June's 40 budgeted unit sales? 0.6 Multiple Choice points 02:53:10 O 421,000 units Book O 453,000 units O 470,000 units O 414,000 unitsWhich of the following choices best reflects the interrelationships of the four categories of balanced scorecard performance measures? 41 A) Learning and growth Customer Internal business process - Financial B) Learning and growth Internal business process Financial - Customer C) Financial Learning and growth Internal business process - Customer 0.6 D) Learning and growth Internal business process Customer - Financial points 02:52-45 Multiple Choice eBook O Choice A O Choice C O Choice D O Choice B42 Assume the following information for a merchandising company: Sales $ 486,000 Variable selling expenses $ 25,000 Cost of goods sold $ 350,000 0.6 Fixed administrative expenses $ 50,000 points Fixed selling expenses $ 40,000 02:52-28 Variable administrative expenses $ 5,000 What is the company's contribution margin? eBook Multiple Choice O $111,000. O $136,000. O $106,000. O $131,000.Which of the following statements is true for a manufacturing company that uses standard costing and allocates its manufacturing overhead to production based on direct labor-hours? 43 Multiple Choice 0.6 points 02:52-10 O If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its standard quantity of labor hours allowed must be greater than actual labor-hours worked . Book O If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its labor efficiency variance must be favorable. O If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its variable overhead efficiency variance must be unfavorable. O If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its labor rate variance must be unfavorable.Which of the following measures would managers hope to see decreasing over time? 44 Multiple Choice 0.6 points 02:51:50 O Manufacturing cycle efficiency (MCE) eBook O Overall equipment effectiveness (0EE) O Number of warranty claims O Defect-free units as a percentage of completed unitsAssume the following information: 45 Actual run time this week 4,500 minutes Machine time available this week 5,000 minutes Actual run rate this week 3.6 units per minute 0.6 Ideal run rate 4.0 units per minute points Defect-free output this week 14, 200 units 02-51:16 Total output this week (including defects) 16, 200 units The overall equipment effectiveness (OEE) is closest to: Note: Do not round your intermediate calculations. eBook Multiple Choice O 0.66. O 0.56. O 0.71. O 0.63.Assume the following information: 46 Hours Queue time Wait time 24 0.6 Process time 2 points Move time 2 02:50:56 Inspection time 4 If the delivery cycle time is 67 hours, then the queue time is closest to: eBook Multiple Choice O 21 hours. O 9 hours. O 13 hours. O 35 hours.47 Assume a company reported the following results: Sales $ 400, 000 Variable expenses 260,090 Contribution margin 140, 000 0.6 40,090 points Fixed expenses Net operating income $ 100,000 02:50:38 Average operating assets $ 450,000 The turnover is closest to: eBook Multiple Choice O 0.1 O 0.9 O 0.3 O 0.2Which of the following statements is false with respect to the selling and administrative expense budget? 48 Multiple Choice 0.6 points 02:50-20 O It impacts the budgeted net operating income reported on the income statement. eBook O It includes estimated variable and fixed selling and administrative expenses. O It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. O It excludes depreciation expense because it is not a cash flow.Assume a company's budgeted unit sales and its required production in units for April are 97,000 units and 95,000 units, respectively. The direct labor-hours required per unit is 1.75 hours and the direct labor wage rate 49 is $18.50 per hour. What is the budgeted direct labor cost for April? 0.6 points Multiple Choice 02:50:04 O $3,140,375 eBook O $3,125,332 O $3,075,625 O $3,131,036Which ofthe following statements best denes responsibility accounting? 50 Multiple Choice 0. 6 points / \"\\ l 2 0:49:45 l k. 2 Q It asserts that managers should be held responsible for those itemsand only those itemsthat the manager can actually control. eBook Q It involves gathering feedback that enables organizations to make modifications as circumstances change. 0 It involves developing goals and preparing various budgets to achieve those goals. It gives specific managers responsibility for serving specific customers