Having an issue with this. Would appreciate any help that you can.

ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 NAME ____________________________________________ STUDENT ID# __________________________ Page 1 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 Select the best answer to each of the following questions. 1. In a process costing system, the number of WIP inventories: A. equals the number of products produced. B. equals the number of production departments. C. equals the number used in a job cost system. D. cannot equal the number of parts used in the product 2. In a process system, direct materials are normally: A. added at the end of the process. B. added in full at the beginning of the process. C. added evenly throughout the process. D. none of the above. 3. Natural Desserts has 2,500 gallons of paint in ending WIP inventory, with all materials already added. The paint is 80% through the process. (Assume all conversion costs are added evenly throughout the process). What are the equivalent units for materials costs in ending WIP inventory? A. 0 B. 2,500 C. 500 D. 2,000 4. The following information is provided by Abbott Corporation: WIP inventory, January 1 Units started Units completed and transferred out WIP inventory, December 31 Direct materials Direct labor Manufacturing overhead 0 units 12,000 8,000 4,000 $26,700 $15,400 $9,000 The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs. At the end of the year, what are the equivalent units for conversion costs? A. 8,000 B. 9,600 C. 1,600 D. 4,800 Page 2 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 5. At OxyCorp, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: WIP beginning (55% for conversion) Units started Units completed and transferred out WIP ending (35% for conversion) Beginning WIP direct materials Beginning WIP conversion costs Costs of materials added Costs of conversion added 13,700 units 125,000 units 116,500 units 22,200 units $50,300 $22,500 $412,000 $301,000 What is the cost per equivalent unit for conversion costs? (round to the nearest cent) A. $2.42 B. $2.33 C. $2.61 D. $2.60 6. ABC produces ping pong balls using a three-step sequential process that includes molding, coloring and finishing. When the balls and associated costs are transferred out of the coloring process and into the finishing process, the journal entry would include a: A. debit to WIP inventory- coloring and a credit to WIP-finishing. B. debit to WIP inventory- finishing and a credit to WIP-coloring. C. debit to Finished Goods inventory and a credit to WIP-coloring. D. debit to WIP inventory- coloring and a credit to Finished Goods inventory. 7. The entry to record actual manufacturing overhead costs incurred in a process department would include a: A. debit to manufacturing overhead. B. debit to WIP inventory. C. credit to manufacturing overhead. D. credit WIP inventory. 8. Trextor produces plastic cups using a three-step process that includes molding, coloring and finishing. Which of the following accounts is credited when material requests are filled? A. Finished goods inventory B. WIP inventory-finishing C. Manufacturing overhead D. Raw materials inventory E. Accounts payable 9. Trextor produces plastic cups using a three-step process that includes molding, coloring and finishing. Which of the following accounts is credited for applied manufacturing overhead? A. WIP inventory-molding B. WIP inventory-finishing C. WIP inventory-coloring D. Manufacturing Overhead Page 3 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 10. Process costing is most likely used in which of the following industries? A. Aircraft B. Oil refining C. Construction D. Legal services 11. Which of the following statements is TRUE with respect to variable costs per unit? A. They will decrease as production increases within the relevant range. B. They will increase as production decreases within the relevant range. C. They will remain the same as production levels change within the relevant range. D. They will decrease as production decreases within the relevant range. 12. Renting a car and paying $15 per day plus $.03 per mile driven is an example of what type of cost? A. Conversion cost B. Fixed cost C. Mixed cost D. Variable cost 13. Plymouth Manufacturing produces cup holders. Total manufacturing costs are $400,000 when 40,000 holders are produced. Of this amount, total variable costs are $120,000. What are the total production costs when 60,000 holders are produced? (Assume the same relevant range for both production levels.) A. $180,000 B. $600,000 C. $580,000 D. $460,000 14. Which of the following cost behaviors cannot be accurately represented by a single straight line? A. Step costs B. Mixed costs C. Fixed costs D. Variable costs 15. Manufacturing overhead is usually what type of cost? A. Variable B. Fixed C. Mixed D. Step Page 4 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 16. Maintenance costs at Red Dot Manufacturing over the past six months are listed in the following table. Month January February March April May June Maintenance cost $9,500 $9,860 $8,600 $8,840 $8,600 $8,100 Machine hours 15,800 17,300 14,500 16,100 17,100 15,500 Using the high low method, what would the total maintenance costs be if 18,000 machine hours were used? A. $15,660 B. $ 7,875 C. $ 9,950 D. $10,175 17. If a regression analysis shows an R factor of .85 exists, it is safe to assume: A. a strong positive relationship between cost and volume. B. a strong negative relationship between cost and volume. C. no relationship between cost and volume. D. a perfect positive relationship between cost and volume 18. Toby's Farm Store buys portable generators for $500 and sells them for $800. He pays a sales commission of 5% of sales revenue to his sales staff. Toby pays $2,000 a month rent for his store, and also pays $1,800 a month to his staff in addition to the commissions. Toby sold 200 generators in June. If Toby prepares a contribution margin income statement for the month of June, what would be his operating income? A. $48,200 B. $108,000 C. $160,000 D. $56,000 19. Zucca Company has a contribution margin per unit of $54. If 6,000 more items are sold, and fixed expenses remain the same, the net change in operating income will be: A. $(324,000). B. $324,000. C. $111. D. $6,000. Page 5 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 20. Vanco Industries wanted to determine the relationship between its monthly operating costs and a potential cost driver, machine hours. The output of a regression analysis showed the following information (note: only a portion of the regression analysis results is presented here.) SUMMARY OUTPUT Regression Statistics Multiple R 0.975786544 R Square 0.952159379 Adjusted R Square 0.940199223 Standard Error 143.9824153 Observations 6 ANOVA df Regression Residual Total 1 4 5 Intercept X Variable 1 Coefficients 2413.21376 0.897286837 Significance SS MS F F 1650409.59 1650410 79.61095 0.000872 82923.74363 20730.94 1733333.333 Standard Error t Stat P-value 413.6628873 5.833769 0.004303 0.100564543 8.922497 0.000872 What is closest to the total cost if the firm uses 5,000 machine hours? A. $ 6,899.65 B. $ 2,413.21 C. $ 12,066,068.80 D. $ 4,486.43 21. Izzy Creations provides the following information about its single product: Targeted operating income Selling price per unit Variable cost per unit Total fixed cost What is the contribution margin ratio? A. 2.50 B. 0.08 C. 0.40 D. 0.60 Page 6 of 12 $40,000 $20.00 $12.00 $80,000 Lower 95% 1264.701 0.618075 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 22. The following information for the past year for the Lambert Company has been provided: Fixed costs: Manufacturing Marketing Administrative Variable costs: Manufacturing Marketing Administrative $150,000 28,000 21,000 $132,000 32,000 43,000 During the year, the Lambert Company produced and sold 50,000 units of product at a sale price of $10.00 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin for the year? A. $ 94,000 B. $293,000 C. $301,000 D. $500,000 23. On a CVP, sales below the breakeven point indicate a _____________, whereas sales above the breakeven point indicate a ___________. A. loss; loss B. loss; profit C. profit; profit D. profit; loss 24. On a CVP graph, the line that begins at the origin represents: A. total fixed expenses. B. total expenses. C. total variable expenses D. total sales revenues. E. both the total expenses and the total sales revenues. 25. The Sweet Factory produces and sells specialty fudge. The selling price per pound is $20, variable costs are $12 per pound, and total fixed costs are $6,000. What are breakeven sales in dollars? A. $ 9,000 B. $ 3,750 C. $ 750 D. $15,000 Page 7 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 26. If the sale price per unit is $38, the unit contribution margin is $17, and total fixed expenses are $56,950, what will the breakeven sales in units be? A. 1,499 B. 968,150 C. 2,712 D. 3,350 27. Marietta Piping Corporation provides the following information about its single product. Targeted operating income Selling price per unit Variable cost per unit Total fixed cost $60,000 $120.00 $45.00 $90,000 How many units must be sold to earn the targeted operating income? A. 800 B. 1,200 C. 2,000 D. 909 28. Which of the following statements is TRUE if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant? A. Breakeven point in units increases. B. Breakeven point in units decreases. C. Breakeven point in units remains the same. D. Contribution margin ratio increases. 29. Wynn Technology USB drives sell for $15 per drive. Unit variable expenses total $9. The breakeven sales in units is 2,000 and budgeted sales in units is 4,200. What is the margin of safety in dollars? A. $ 147 B. $93,000 C. $33,000 D. $ 2,200 30. By multiplying the operating leverage factor by the anticipated percentage change in volume, one can find the anticipated change: A. in sales revenue. B. in contribution margin. C. in fixed expenses. D. in operating income. Page 8 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 31. Julia's Catering has a monthly target operating income of $6,000. Variable expenses are 40% of sales and monthly fixed expenses are $3,600. What is Julia's operating leverage factor at the target level of operating income? A. 0.40 B. 1.60 C. 2.67 D. 0.63 32. Which of the following best describes an \"opportunity cost\"? A. Costs that were incurred in the past and cannot be changed B. Benefits foregone by not choosing an alternative course of action C. The distribution of all products to be sold D. Expected future costs that differs among alternatives 33. Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available: Original cost Remaining useful life in years Current age in years Book value Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs Old Machine $45,000 5 5 $25,000 $8,000 $0 $7,000 Replacement Machine $35,000 5 0 $0 $4,000 Which of the information provided in the table is irrelevant to the replacement decision? A. The annual operating cost of the old machine B. The original cost of the old machine C. The current disposal value of the old machine D. Both A and C 34. Swisser Vase Company manufactures and sells vases. Great Products Company has offered Swisser Vase $16 per vase for 5,000 vases. Swisser Vase's normal selling price is $28 per vase. The total manufacturing cost per vase is $18 and consists of variable costs of $14 per vase and fixed overhead costs of $4 per vase. (NOTE: Assume excess capacity and no effect on regular sales.) Should Swisser Vase accept or reject the special sales order? A. Accept, because operating income would increase $150,000. B. Reject, because operating income would decrease $70,000. C. Reject, because operating income would decrease $10,000. D. Accept, because operating income would increase $10,000. Page 9 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 35. Which of the describes the target total cost? A. Revenue at market price minus desired profit B. Revenue at market price plus desired profit C. Total cost plus desired profit D. Total cost minus actual cost 36. Which of the following are methods for a company to meet target total cost and profit goals if the current cost of the product is higher than the target cost? A. Accept a lower profit B. Cut fixed costs C. Cut variable costs D. Any of the above 37. I Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $460,000 355,000 105,000 76,000 $29,000 Cups $310,000 235,000 75,000 38,000 $37,000 Pitchers $150,000 120,000 30,000 38,000 $(8,000) If $20,000 of fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? A. Increase $19,000 B. Decrease $50,000 C. Decrease $10,000 D. Increase $48,000 38. Outsourcing decisions are sometimes referred to as: A. buy decisions. B. make decisions. C. make-or-buy decisions. D. none of the above. 39. When deciding whether to outsource a product or service, managers should consider which of the following? A. Quality of the product or service B. Delivery schedule of the product or service C. Cost charged for the product or service D. All of the above Page 10 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 40. Kathy has the following information to evaluateher current salary of $53,000 versus total revenues of $82,000 and expenses of $69,000 from starting a new business. How much is the opportunity cost associated with staying at her current job? A. $151,000 B. $13,000 C. $53,000 D. $16,000 41. Which of the following would be a consideration for \"sell as is or process further\" decisions? A. Revenue generated if sold \"as is\" B. Revenue generated if \"further processed\" C. Costs involved in further processing D. All of the above 42. In a sell or process further decision, the company should not process further if the extra: A. cost of processing further is the same as the extra revenue. B. revenue from processing further is more than the extra cost. C. cost of processing further is less than as the extra revenue. D. cost of processing further is greater than the extra revenue. Page 11 of 12 ACC241 Uses of Accounting Information II Examination #2 - Version A Spring, 2016 Scratch Paper Page 12 of 12