Hi could I get help with number 22, 25 41? See attached exam.

University of Connecticut School of Business Managerial Accounting 2101 Exam 2 Fall 15 -W November 2, 2015 Student: ___________________________________________________________________________ (some questions have 4 options to select and others have 5) 1. The SarbanesOxley Act requires reporting by the company/client on internal control over financial reporting via: A. A management statement in the annual report on Form 10K B. A special quarterly filing from the audit committee C. A footnote to the auditor's report D. A direct letter addressed to the SEC signed by the audit committee 2. Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. Narchie: A. will breakeven by selling 8,000 units. B. will breakeven by selling 13,333 units. C. will breakeven by selling 20,000 units. D. will breakeven by selling 1,000,000 units. E. cannot breakeven because it loses money on every unit sold. 3. Which of the following are responsible for an organization's internal controls, which are broadly defined as a process designed to provide reasonable assurance regarding the achievement of the objectives of effectiveness & efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations: A. The Board of Directors B. The CEO C. Management D. All of the above E. None of the above 1 4. Sarbanes Oxley addresses a concern that firms may seek to exaggerate their financial statements. Why would executives want to do that? A. to enhance the CEO's reputation B. to trigger higher bonuses to key executives under plans tied to firm earnings C. to raise stock prices before a key executive sells his or her stock D. all of the above. 5. The budget method that maintains a constant twelvemonth planning horizon by adding a new month on the end as the current month is completed is called: A. an operating budget. B. a capital budget. C. a continuous or rolling budget. D. a master budget. 6. Brooklyn sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Brooklyn's unit sales are 300 units more than anticipated, its breakeven point will: A. increase by $12 per unit sold. B. decrease by $12 per unit sold. C. increase by $8 per unit sold. D. decrease by $8 per unit sold. E. not change. 2 7. Management of Lapco recently decided to adopt a justintime inventory policy to curb steadily rising costs and freeup cash for investments. The company anticipates that inventory will decrease by $4,450,000 with the released funds to be invested at a 10% return for the firm. Additional data follow: 1. Reduced inventories should produce savings in insurance and property taxes of $46,000. 2. Reduced rawmaterial inventory levels and accompanying stockout will cost Lapco $85,000. 3. Lapco will lease 80% of an existing warehouse to another firm for $2.50 per square foot. The warehouse has 40,000 square feet. Rental cost of the warehouse is $18,000 4. Four employees who currently earn $35,000 each will be redirected to the just intime task force. 5. Because of the need to handle an increased number of small shipments from suppliers, Lapco will remodel the receiving dock for $750,000. The dock will be depreciated over a ten year life. What is the financial impact of Lapco's decision to adopt J.I.T.? A. $4,416,000 savings B. $411, 000 savings C. $551,000 savings D. $264,000 loss. E. $34,000 loss 3 8. Contribution margin is the amount remaining after: A. variable expenses have been deducted from sales revenue. B. fixed expenses have been deducted from sales revenue. C. fixed expenses have been deducted from variable expenses. D. cost of goods sold has been deducted from sales revenues. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION 9. Refer to the figure above. At a given sales volume, the vertical distance between the fixed cost line and the total cost line represents: A. fixed cost. B. variable cost. C. profit or loss at that volume. D. semivariable cost. E. the safety margin. 10. Which of the following is not the key feature of Just In Time Purchasing? A. Pull method B. Materials and parts delivered in small lot sizes C. Sign longterm contracts with only a few vendors D. Total Quality Management is Key to make JIT inventory work E. Many inspections of delivered materials and parts are required 4 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Upchurch Corporation produces and sells a single product. Data concerning that product appear below: 11. Assume the company's target profit for the month is $14,000. The dollar sales to attain that target profit is closest to: A. $326,180 B. $593,248 C. $494,212 D. $959,353 12. As part of the TwoDimensional ABC/ ABM Model, the root cause relates to: A. the calculation of the normal rate charged for each product that is to be built. B. the previous manufacturing process step that must be completed before the next manufacturing step can be started. C. the problem identified by the manager of a manufacturing facility. D. the assessed reason why the problem occurred. E. the calculation of total cost for the cost object. 13. Of the 5 components of internal control per COSO, which one of them is considered to be the foundation for the other components A. Control environment B. Risk assessment C. Information and communication D. Control activities E. Monitoring 14. All the following are considered to be benefits of participative budgeting, except for: A. Individuals at all organizational levels are recognized as being part of a team; this results in greater support for the organization. B. The budget estimates are prepared by those directly involved in the activities. C. When first line managers (workers report directly to this manager) set their own targets for the budget, top management need not be concerned with the overall profitability of operations. D. Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others. 5 15. Budgeted sales in Acer Corporation over the next four months are given below: Twentyfive percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be: A. $103,875 B. $98,125 C. $136,375 D. $119,500 16. Generally speaking, budgets are not used to: A. identify a company's bestselling products. B. evaluate performance. C. create a plan of action. D. assist in the control of profit and operations. E. facilitate communication and coordinate activities. 17. A company's plan for the issuance of stock or incurrence of debt is commonly called a: A. proforma budget. B. master budget. C. financial budget. D. profit plan. E. capital budget. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $3.00 per direct laborhour; the budgeted fixed manufacturing overhead is $66,000 per month, of which $10,000 is factory depreciation. 6 18. If the budgeted direct labor time for October is 6,000 hours, then the total budgeted manufacturing overhead for October is: A. $28,000 B. $56,000 C. $74,000 D. $84,000 19. Storch Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Storch's nonvalueadded cost would be: A. $0. B. $150. C. $300. D. $900. E. $1,200. 20. Which of the following outcomes is (are) sometimes associated with participative budgeting? A. Employees make little effort to achieve budgetary goals. B. Budget preparation time is much less. C. The problem of budget padding may arise. D. Financial modeling becomes easier to do. 21. Which of the following expressions can be used to calculate breakeven sales revenue with the contributionmargin ratio (CMR)? A. CMR fixed costs. B. CMR fixed costs. C. Fixed costs CMR. D. (Fixed costs + variable costs) CMR. E. (Sales revenue variable costs) CMR. 7 22. Cleason sells a single product at $14 per unit. The firm's most recent income statement revealed unit sales of 80,000, variable costs of $800,000, and fixed costs of $560,000. Management believes that a $3 drop in selling price will boost unit sales volume by 20%. Which of the following correctly depicts how these two changes will affect the company's breakeven point? Assume each selection is independent of the other selections. A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 23. The breakeven point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total contribution margin equals the sum of variable cost plus fixed cost. D. sales revenue equals total variable cost. E. profit is greater than zero. 24. Section 404 of the SarbanesOxley Act states that management must: A. identify new accounting reporting standards B. establish internal controls C. report financial progress to the PCAOB D. make sure that the board of directors sign the annual report to attest to the effectiveness of internal controls 8 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS Carter Lumber sells lumber and general building supplies to building contractors in a mediumsized town in Montana. Data regarding the store's operations follow: Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January. Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. The cost of goods sold is 65% of sales. The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $22,000. Monthly depreciation is $20,000. Ignore taxes. 25. Accounts payable at the end of December would be: A. $253,500 B. $50,700 C. $208,000 D. $258,700 26. The net income for December would be: A. $114,500 B. $94,500 C. $101,400 D. $82,800 9 27. Which of the following module(s) of COSO (The Committee of Sponsoring Organizations of the Treadway Commission) is responsible for assessing the quality of the system's performance over time? A. Control environment B. Risk assessment C. Control activities D. Information & communication E. Monitoring 28. Which of the following statements concerning the budget director is false? A. The budget director is often an organization's financial controller. B. The budget director has the responsibility of specifying the process by which budget data will be gathered. C. The budget director oversees the master budget process. D. The budget director communicates budget procedures and deadlines to employees throughout an organization. E. The budget director usually has the authority to give final approval to the master budget. 29. Edmonco Company produced and sold 45,000 units of a single product last year, with the following results: If Edmonco's sales revenues increase 15% due to increased unit sales, what will be the percentage increase in income before income taxes? A. 15%. B. 45%. C. 60%. D. 75%. E. None of the other answers is correct. 10 30. Which of the following is an important theme that Sarbanes Oxley is seeking to promote? A. lowering interest rates in the US economy B. independence of the external auditor from the publicly traded firm it is auditing C. increasing nonaudit service by the external auditor (e.g., computer consulting) D. increasing loans from the publicly traded firm to its CEO 31. Airstream builds recreational motor homes. All of the following activities add value to the finished product except: A. installation of carpet. B. assembly of the frame to the chassis. C. storage of the vehicle in the sales area. D. addition of exterior lights. E. final painting and polishing. 32. All of the following contributed to the need for the Sarbanes Oxley Act of 2002 except? A. Executives of companies felt pressure to succeed B. There was less of a focus on internal controls C. Nonaudit services in public accounting firms caused potential conflicts of interest D. Improved technology in support of business process E. Audit Committees within Board of Directors lack independence 33. For July, White Corporation has budgeted production of 6,000 units. Each unit requires 0.10 direct labor hours at a cost of $8.50 per direct laborhour. How much will White Corporation budget for labor in July? A. $51,000 B. $5,160 C. $600 D. $5,100 11 34. What are the areas in which Internal Control is designed to provide reasonable assurance regarding the achievement of objectives? I. Effectiveness and efficiency of operations II. Reliability of financial reporting III. Compliance with applicable laws and regulations A. Only I B. Only II C. I and II D. II and III E. I, II, and III 35. Which of the following occurs if a company was able to reduce its variable cost per unit assuming all other factors (i.e., sales price, fixed cost, etc.) stay the same? A. Choice A. B. Choice B. C. Choice C. D. Choice D. E. Choice E. 12 36. When a company switches from a traditional system to a justintime production and inventory system, what often happens to the quality of raw material purchased and the number of vendors that supply the firm? A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 37. If a company desires to increase its safety margin, it should: A. increase fixed costs. B. decrease the contribution margin. C. decrease selling prices, assuming the price change will have no effect on demand. D. stimulate sales volume. E. attempt to raise the breakeven point. 38. Which of the following are false about ERP (Enterprise Resource Planning) Systems: A. ERP systems are expensive to implement B. ERP systems work out of the box and pose little risk to operations C. ERP systems consolidate ALL company data into a single database D. ERP systems require major changes in business process 39. Which of the following is not one of the five components for an effective system of internal control as delineated by the COSO report on internal controls? A. To assure an effective control environment, top management sets tone for the organization on internal controls. B. To assure proper risk assessment, key business risks should be identified including an estimate of their significance and the likelihood of occurrence. C. To assure sales performance, identify valid business prospects for each sales district. D. Assure proper control activities through development of policies and procedures. E. Ensure that the flow of information and communication supports the business processes. 13 40. The Breiden Corporation sells rodaks for $6.00 per unit. Fixed expenses total $37,500 per month and variable expenses are $2.00 per unit. The number of units that must be sold each month to realize a profit of 15% of sales is closest to: A. 9,375 units B. 11,029 units C. 12,097 units D. 9,740 units 41. The contribution margin income statement differs from the financial accounting (traditional) income statement in which of the following ways? A. The financial accounting income statement separates costs into fixed and variable components. B. The financial accounting income statement subtracts all variable costs from sales to obtain the contribution margin. C. Costvolumeprofit relationships can be analyzed more easily from the contribution margin income statement. D. The effect of sales volume changes on profit is readily apparent on the financial accounting income statement. E. The contribution margin income statement separates costs into product and period categories. 42. The focus of "Systems Thinking" is: A. Better analysis of financial statements. B. Analysis of issues in the context of the big picture including an understanding the process, the business and the industry. C. Developing an approach to crisis management. D. Creating internal controls consistent with COSO. 14 43. The following are budgeted data: Two pounds of material are required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be: A. 39,200 pounds B. 52,000 pounds C. 36,800 pounds D. 38,000 pounds 44. The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as: A. an integrated budget. B. a proforma budget. C. a master budget. D. a financial budget. E. a rolling budget. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT THREE QUESTIONS Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 400 units. The company needs to prepare a production budget for the third quarter of the year. 15 45. The desired ending inventory for August is: A. 720 units B. 460 units C. 540 units D. 380 units 46. The beginning inventory in units for September is: A. 380 units B. 460 units C. 4,600 units D. 720 units 47. The total number of units to be produced in July is: A. 5,580 units B. 5,400 units C. 6,120 units D. 5,220 units USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Data concerning Marchman Corporation's single product appear below: The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month. 16 48. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $8 per unit. In exchange, the sales staff would accept a decrease in their salaries of $27,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on the company's monthly net operating income of this change? A. decrease of $1,000 B. decrease of $55,000 C. increase of $26,200 D. increase of $191,000 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. 49. The budgeted accounts receivable balance on February 28 would be: A. $250,000 B. $210,000 C. $175,000 D. $215,000 50. Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. If Narchie sells 24,000 units, its safety margin will be: A. $200,000. B. $400,000. C. $1,000,000. D. $1,200,000. E. None of the other answers is correct. 17 1