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ACC122final Exam-New W2016 REV1 Revised 02/06/16 200 Points Chapters 20, 21, 22, 23, 24 Name _____________________________ 1. List the operating budgets in order of completion: (2 points each) page 1 of 7 _______________________________________ _______________________________________ ________________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 2. List the Financial Budgets in order of completion: (2 points each) ________________________________________ ________________________________________ ________________________________________ ________________________________________ 3. Which of the following is not a guideline for budget preparation? (2 points) a. Revise budget to include planning decisions b . Know the sources of budget information c. Limit the use of a budget to one user group d . Establish the format of the budget 4. Which of the following budgets must managers prepare before they can prepare a direct materials purchases budget? (2 points) a. Labor budget b. Overhead budget c. Production budget d. Cost of goods manufactured budget 5. Joe's Ceramics company expects to begin the coming year with 7,000 ceramic pots in finished goods inventory. It expects to sell 95,000 ceramic pots and end the year with 12,000 pots in the finished goods inventory. Five pounds of clay go into each ceramic pot. The company expects to have 2,000 pounds of clay on hand at the beginning of the coming year and wishes to end the year with 4,000 pounds in inventory. Page 2 of 7 a. Prepare a production budget showing the number of ceramic pots that the company must manufacture to carry out these plans.(24 points) ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ _______________________________________________________________ b. Prepare a direct materials purchases budget showing the number of pounds of clay that the company must purchase during the year. (30 points) _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 6. A performance management and evaluation system is a set of procedures that account for and report on which of the following? (2 points) a. qualitative performance. b. Financial and nonfinancial performance. c. Employee performance. d. Standard performance. Page 3 of 7 7. The manager of Center A of Harry International is responsible for generating cash inflows and incurring costs with the goal of generating returns for the company. The manager has no responsibility for assets. What type of responsibility center is Center A? (2 points) a. Cost center. b. Discretionary cost center. c. Revenue center. d. Profit center. 8. The performance of Steve, the manager of Center B, is evaluated the end of every month, by comparing the amount spent on manufacturing overhead with the budgets prepared at the beginning of the month. What type of responsibility center is Center B? (2 points) a. Profit center. b. Discretionary cost center. c. Cost center. d. Revenue center. 9. How is the contribution margin calculated when utilizing variable costing? (2 points) a. Sales less variable cost of goods sold. b. Sales less cost of goods sold. c. Sales less variable cost of goods sold, less variable selling and administrative expenses, less fixed cost of goods sold, less fixed selling and administrative expenses. d. Sales less variable cost of goods sold, less variable selling and administrative expenses. 10. Prepare a brief performance report utilizing the following information. (25 points) Account: Direct materials _____________ _____________ _____________ Total Costs Actual results ___________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ __________ __________ __________ __________ __________ __________ _________ _________ _________ _________ _________ _________ ____________ ____________ ____________ ____________ ____________ _____________ Page 4 of 7 11. Using the following information, prepare: 1) Traditional Income statement (18 points), 2) Variable Costing Income statement (21 points). Sales $ 5,000,000 Variable Cost of Goods Sold 1,500,000 Variable Selling Expenses 700,000 Fixed Selling expenses 175,000 Fixed manufacturing costs 500,000 Traditional Income Statement: _______________________________________ Variable Costing Income Statement: ________________________________ _______________________________________ ________________________________ _______________________________________ ________________________________ _______________________________________ ________________________________ _______________________________________ ________________________________ Operating Income ________________________________ $ ______________ Operating Income $ ____________ 12. As the staff accountant for Investment Center 916, calculate the October 2014 ROI, Using the following information: (round your answers to 2 decimal places) (2 points) October 2014 Profit Margin 35% October 2014 Sales $1,500,000 Assets at September 2014 $1,750,000 Assets at October 2014 $1,530,000 ROI = ____________________________________________________________ 13. Gunnies Inc. produces and sells dog food. Each bag contains 20 pounds of dog food. The following information is provided by the company. Compute the standard unit cost per bag, show all calculations: (7 points) Direct material quantity standard 20 pounds per unit (bag) Direct materials price standard $ 0.02 per pound Direct labor time standard .1 hour per unit Direct labor rate standard $ 11.50 per hour Variable overhead rate standard $ 2.50 per machine hour Fixed overhead standard $ 1.50 per machine hour Machine hour standard 0.25 hours per unit Page 5 of 7 The standard unit cost per bag is: a. $ 2.55 b. $ 2.21 c. $ 2.15 d. $ 2.80 14. Regis Company has a tax rate of 25 percent and is considering a capital project that will Make the following annual contribution to operating income: Cash revenues Noncash revenues Cash expenses Depreciation Operating income before income taxes Income taxes Operating income 175,000.00 5,000.00 (45,000.00) (20,000.00) 115,000.00 (28,750.00) 86,250.00 Determine the net cash inflows for this project using the following: a) Receipts and disbursements method (show calculations; 6 points) b) Income adjustment method (show calculations; 6 points) 15. Which is not a method used for evaluating proposed capital investments? (2 pts) a. Net present value. b. Payback method. c. Accounting rate of return. d. Carrying value of equipment. 16. Depreciation expense influences cash flows because it directly affects which of the following? (2 points) a. cash received from revenues during the current period. b. the carrying value of the asset. c. revenues earned by the equipment. d. the amount of income taxes paid by the company. Page 6 17. Projected disposal or residual values of replacement equipment are relevant to capital Investment analysis because: (2 points) a. they represent future cash inflows and usually differ among the alternatives. b. they represent future cash inflows. c. the usually differ from the alternatives. d. they reduce income taxes. 18. Sabrina Company has a tax rate of 30 percent and is considering a capital project That will make the below annual contribution to operating income. Using the income adjustment procedure, net cash inflows are (4 points): Cash revenues 4,000,000 Noncash revenues 110,000 Cash expenses (2,000,000) Depreciation (60,000) Operating income before income taxes 2,050,000 Income taxes (512,500) Operating income 1,537,500 The correct answer is: a. 1,537,500 b. 1,487,500 c. 1,597,500 d. 2,110,000 19. The following data have been gathered for a capital investment decision. Cash inflows: year 1 year 2 year 3 year 4 year 5 50,000 60,000 40,000 50,000 40,000 (3 points each) a. Compute the present value of each of the cash inflows of the investment. Page 7 b. What would have been the present value of the cash flows if they were received In equal Installments over the five-year period at the same discount rate? (Assume the total cash inflows remain the same.) c. If the answer to part a and b differ, explain the reasons why: 20. Radio Company makes several models of radios for the auto industry. One of the components is currently purchase for $ 220.00 per 100 units. Management is reviewing the possibility of making the part in-house. Annual production of this one model radio is 70,000 units. Fixed costs are $ 38,500.00 (which is unchanged whether the part is made or purchased), variable cost per unit for direct materials is $ 0.70, $ 0.55 per unit for direct labor, and $ 0.70 per unit for variable overhead. Using the incremental analysis, make a decision as to whether Radio Company should manufacture the part or purchase the part from an outside vendor. (8 points) Difference Make Buy In favor of Make Direct Materials __________________ _________ _________ _____________ Direct Labor __________________ _________ _________ _____________ Variable Overhead _______________ _________ _________ _____________ Purchased Parts _________________ _________ _________ _____________ Totals $ _________ $ _________ $ _____________ Decision: ____________________________________________________________________ ____________________________________________________________________ Score________/ 200 points