I need step by step solutions for the questions that that requires calculations. i already have the answers but seeing how the calculations are done will help me to understand the material much better.

\fUniversity of Connecticut School of Business Managerial Accounting - Accounting 2101 Exam 2 - F13 - W October 29, 2013 Student: ___________________________________________________________________________ (Some questions have 4 options to select and others have 5) 1. A company's sales forecast would likely consider all of the following factors except: A. past sales levels and trends. B. the company's intended pricing policy. C. the company's cash payment policy. D. market research studies. E. planned advertising and promotions. 2. The following data have been taken from the budget reports of Brandon company, a merchandising company. Forty percent of purchases are paid for in cash at the time of purchase, and 30% are paid for in each of the next two months. Purchases for the previous November and December were $150,000 per month. Employee wages are 10% of sales for the month in which the sales occur. Selling and administrative expenses are 20% of the following month's sales. (July sales are budgeted to be $220,000.) Interest payments of $20,000 are paid quarterly in January and April. Brandon's cash disbursements for the month of April would be: A. $140,000 B. $254,000 C. $200,000 D. $248,000 1 3. A recent income statement of Dragonwood Corporation reported the following data: If the company desired to earn a target profit of $1,270,000, it would have to sell: A. 5,778 units. B. 8,600 units. C. 10,160 units. D. 11,908 units. E. an amount other than those above. 4. 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 with the same hourly labor rate and skilled personnel, Stanley's non-value-added cost per setup would be: A. B. C. D. E. $0. $150. $300. $900. $1,200. 5. Which of the following budgets gets its information from the largest number of other budget components? A. Direct labor budget. B. Overhead budget. C. Sales budget. D. Cash budget. E. Selling and administrative expense budget. 6. Sainte Claire Corporation has a highly automated production facility. Which of the following factors would likely have the most influence on the company's manufacturing overhead budget cost applied to Work-inProcess? A. Labor hours. B. Cash payments. C. Production volume D. Factory building E. Indirect labor cost. 2 7. Under section 404 of the Sarbanes-Oxley Act, the external auditors are required to: A. Attest to and report on management's assessment of internal controls. B. Establish and maintain internal controls for audited companies. C. Advise management on its preparation of the Report on Internal Controls. D. Evaluate the company's internal control system periodically throughout the year. E. All of these. 8. Break-even analysis assumes that: A. total costs are constant. B. the average fixed expense per unit is constant. C. the average variable expense per unit is constant. D. variable expenses are nonlinear. 9. Which of the following statements about a just-in-time (JIT) purchasing system is false? A. Since there is minimal backup, companies must acquire quality raw materials. B. Raw materials are stockpiled to avoid production disruptions. C. In comparison with experiences under traditional systems, manufacturers normally deal with a reduced number of suppliers. D. Supplier reliability tends to be more important under a JIT system than under a traditional purchasing system. E. The average purchase size is smaller with a JIT system than under a traditional purchasing system. 10. Which of the following is not a key feature of a JIT system? A. Purchases of materials in relatively large amounts (i.e., lot sizes). B. A smooth, uniform production rate. C. Total quality control. D. Multiskilled workers and flexible production facilities. E. A pull approach to coordinating steps in the production process. 11. Which of the following is not a characteristic of the Public Company Accounting Oversight Board (PCAOB)? A. It was established based on the Sarbanes-Oxley Law with oversight and governance by the SEC. B. It sets auditing standards. C. It has the authority to inspect, investigate, and enforce auditing standards. D. It creates generally accepted accounting principles (GAAP). E. It can establish or supervise the establishment of ethical standards. 3 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Edmonco Company produced and sold 45,000 units of a single product last year, with the following results: 12. If Edmonco's unit sales increase 15%, what will be the percentage increase in income before income taxes? A. B. C. D. E. 15%. 45%. 60%. 75%. An amount other than those above. 13. In the article titled \"Using systems thinking to reach new heights in business\\fUniversity of Connecticut School of Business Managerial Accounting 2101 Exam 2 - S14 - W April 1, 2014 Student: __________________________________________________________________________ (Some questions have 4 options to select and others have 5) 1. One of the biggest issues when implementing an ERP System A. Once you implement the system and there are serious issues, the financial impact could be substantial. B. An ERP system increases communication between departments C. An ERP system integrates the system into one data base D. The savings could be substantial 1 2. The wholesale division of Juniper Corporation is considering installing a just-in-time purchasing system. An analysis by the company's managerial accountant identified the following impacts from operation of the new system. The impacts were: 1. Lost sales totaled 5,500 units from out-of-stock situations with each unit having an average sales price of $100 per unit and variable cost being $77 per unit. 2. The overall inventory dropped by $700,000. The money can be invested elsewhere and will return 13%. 3. The cost of a leased warehouse (annual rent of $36,000) that was saved by successfully canceling the lease contract. 4. Six warehouse employees (annual salary cost of $43,000 per employee) will no longer be needed. Therefore, five will be used (at the same salary) to support a new process improvement project and the remaining one will be laid off with no separation benefits. 5. Annual property taxes and insurance are expected to fall by $18,900. 6. In order to keep valued customers, Juniper will occasionally use over-night deliveries when out-ofstock situations arise, resulting in added cost to the company of $2,300 for the year. 7. A state of the art loading dock will be built at $1,340,000. The dock is expected to have a 10 year life. Was just-in-time financially successful for the year? A. B. C. D. E. No, it lost $73,900 Yes, it profited by $17,100. Yes, it profited by $60,100 Yes, it profited by $20,100. None of the above. 3. Which of the following formulas is used to calculate the contribution margin ratio? A. (Sales - Fixed expenses) Sales B. (Sales - Cost of goods sold) Sales C. (Sales - Variable expenses) Sales D. (Sales - Total expenses) Sales 2 4. At a volume level of 500,000 units, Sullivan reported the following information: The company's contribution-margin ratio is closest to: A. 0.33. B. 0.40. C. 0.60. D. 0.67. E. an amount other than those above. 5. Which of the following is not one of the main components of COSO? A. Control Environment B. Financial reporting accuracy C. Risk Assessment D. Monitoring E. Control Activities 6. Factory Oak produces various wooden bookcases, tables, storage units, and chairs. Which of the following would be included in a listing of the company's non-value-added activities? A. Assembly of tables. B. Staining of storage units. C. Transfer of chairs from the assembly line to a staging area prior to movement to the staining facility. D. Storage of completed bookcases in inventory awaiting orders from customers. E. Both "C" and "D." 7. Which of the following statements about why Betty Vinson ended up being a criminal is true: A. Betty was never considered a criminal as she was only doing what her boss told her to do B. Betty was focused on putting together the financial statement; thus giving WorldCom management time to address any operating issues. C. Betty knew the accounting entries she was making were in accordance with GAAP - generally accepted accounting principles. D. While Betty was concerned at first, she felt she was following orders: Her family was counting on her income and benefits. E. A and C 3 8. Sarbanes Oxley requires signing officers of financial reports to disclose the following to auditors: A. Any material weaknesses in internal controls B. Future projections of taxable income C. Work in process inventory D. Industry risk factors 9. The budget method that maintains a constant twelve-month 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. 10. The fraud perpetrated at WorldCom can best be summarized as: A. Utilizing different financing techniques such as derivatives to fund their major projects B. Setting up deals with Reinsurance Companies to look like WorldCom risk was being reduced by buying insurance from other companies when in fact that was not happening. C. Inappropriately capitalizing expenses D. Creating separate limited partnerships that supposedly was getting paid to assume some of WorldCom's debt, when in fact the debt still belonged to WorldCom. 11. The break-even point in unit sales is found by dividing total fixed expenses by: A. the contribution margin ratio. B. the variable expenses per unit. C. the sales price per unit. D. the contribution margin per unit. 4 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Cowles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31, this requirement was not met because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. 12. The total cost of Material K to be purchased in August is: A. $47,650 B. $38,120 C. $30,350 D. $24,280 13. Which of the following would depict the logical order for preparing (1) a production budget, (2) a cash budget, (3) a sales budget, and (4) a direct-labor budget? This is not all the budgets, but sequence the four identified in the problem. A. 1-3-4-2. B. 2-3-1-4. C. 2-1-3-4. D. 3-1-4-2. E. 3-1-2-4. 14. Which of the following changes would lead to an increase in the number of units needed to breakeven? A. B. C. D. E. 5 An increase in selling price. A decrease in selling price. A decrease in variable cost per unit. A decrease in fixed cost. An increase in the number of units sold. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $450,000, all for cash. Merchandise inventory on October 31 was $200,000. The cash balance November 1 was $18,000. Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. Budgeted depreciation for November is $25,000. The planned merchandise inventory on November 30 is $230,000. The cost of goods sold is 70% of the selling price. All purchases are paid for in cash. There is no interest expense or income tax expense. 15. The budgeted net income for November is: A. $50,000 B. $68,000 C. $75,000 D. $135,000 6 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January. Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible. The cost of goods sold is 65% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 60% of the next 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 $20,300. Monthly depreciation is $20,000. Ignore taxes. 16. Accounts payable at the end of December would be: A. $81,900 B. $141,700 C. $59,800 D. $149,500 17. The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales, which are 4,800 units for February. The variable selling and administrative expense is $8.10 per unit. All variable expenses are paid in cash the same month the expense is incurred. The budgeted fixed selling and administrative expense is $71,520 per month, which includes depreciation of $16,800 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be: A. $38,880 B. $54,720 C. $110,400 D. $93,600 7 18. Which of the following is NOT an objective of the budgeting process? A. To communicate management's plans throughout the entire organization. B. To provide a means of allocating resources to those parts of the organization where they can be used most effectively. C. To ensure that the company continues to grow. D. To uncover business issues before they occur. 19. Within an organization, who has the highest responsibility for internal control? A. Management B. Board of Directors C. Internal Auditors D. External Auditors E. A, B, and C 20. The compliance requirements of sections 404 of Sarbanes Oxley have been criticized as disproportionately affecting: A. Small companies B. Financial companies C. Large manufacturers D. Telecom companies 21. During a recent accounting period, Marty's shipping department processed 26 orders. Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company's non-value-added cost would be: A. $0. B. $56. C. $364. D. $1,456. E. $1,820. 8 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Wright Corporation's contribution format income statement for last month appears below. There were no beginning or ending inventories. The company produced and sold 3,000 units during the month. 22. If sales decrease by 500 units by next month, by how much would fixed expenses have to be reduced to maintain the current net operating income? A. $7,500 B. $6,000 C. $2,000 D. $3,000 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Data concerning Delmore Corporation's single product appear below: 23. The break-even in monthly unit sales is closest to: A. 7,804 units B. 4,390 units C. 2,810 units D. 5,001 units 9 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS 24. Refer to the figure above. The slope of line B is equal to the: A. fixed cost per unit. B. selling price per unit. C. profit per unit. D. variable cost per unit. E. unit contribution margin. 25. Refer to the figure above. Line A is the: A. total revenue line. B. fixed cost line. C. variable cost line. D. total cost line. E. profit line. 26. Which of the following internal control components is considered the foundation module of COSO (The Committee of Sponsoring Organizations of the Treadway Commission) within which the other modules were developed: A. Monitoring B. Control activities C. Control environment D. Information & Communication E. Risk assessment 10 27. Internal control is broadly defined as a process designed to provide reasonable assurance regarding the achievement of objectives in the following categories. A. Compliance with applicable laws and regulations B. Reliability of Financial Reporting C. Effectiveness and efficiency of operations D. All of the above 28. Company A uses a heavily participative budgeting approach whereas at Company B, top management develops all budgets and imposes them on lower-level personnel. Which of the following statements is false? A. A's employees will likely be more motivated to achieve budgetary goals than the employees of Company B. B. B's employees may be somewhat disenchanted because although they will be evaluated against a budget, they really had little say in budget development. C. Budget padding will likely be a greater problem at Company B. D. Budget preparation time will likely be longer at Company A. E. Ethical issues are more likely to arise at Company A when the budget is used as a basis for performance appraisal. 29. Which of the following is not a key feature of a JIT system? A. Purchases of materials in relatively large amounts (i.e., lot sizes). B. A smooth, uniform production rate. C. Total quality control. D. A pull approach to coordinating steps in the production process. 30. Maxine's budget for the upcoming year revealed the following figures: If the company's break-even sales total $750,000, Maxine's safety margin would be: A. $(90,000). B. $90,000. C. $246,000. D. $336,000. E. $696,000. 11 31. When an organization involves its many employees in the budgeting process in a meaningful way, the organization is said to be using an approach most commonly known as: A. budgetary slack. B. participative budgeting. C. budget padding. D. imposed budgeting. E. employee-based budgeting. 32. Grime-X is studying the profitability of a change in operation and has gathered the following information: Should Grime-X make the change? A. Yes, the company will be better off by $6,000. B. No, because sales will drop by 3,000 units. C. No, because the company will be worse off by $4,000. D. No, because the company will be worse off by $22,000. E. It is impossible to judge because additional information is needed. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Wilmut's current sales is 32,000. Analysis of price and unit cost revealed that the price is $50 and variable cost is 60% of the sales price. Further analysis determined that the fixed cost will be $800,000. 33. If Wilmut sells 48,000 units, what will the safety margin be: A. $200,000. B. $400,000. C. $1,000,000. D. $1,200,000. E. an amount other than those above. 12 34. Cost-volume-profit analysis is based on certain general assumptions. Which of the following is not one of these assumptions? A. Product prices will remain constant as volume varies within the relevant range. B. Costs can be categorized as fixed or variable. C. The efficiency and productivity of the production process and workers will change to reflect manufacturing advances. D. Total fixed costs remain constant as activity changes. E. Unit variable cost remains constant as activity changes. 35. A recent income statement of Dragonwood Corporation reported the following data: If the company desired to earn a target profit of $1,270,000, it would have to sell: A. 5,778 units. B. 8,600 units. C. 10,160 units. D. 11,908 units. E. an amount other than those above. 36. The PCAOB (Public Company Accounting Oversight Board) A. Is governed by the SEC B. Investigates the ethical performance of auditors C. Enforces the proper use of audit standards D. Investigates and enforces the proper use of accounting and auditing standards E. All of the above 37. A company's sales forecast would likely consider all of the following factors except: A. past sales levels and trends. B. the company's intended pricing policy. C. the company's product costing policy. D. market research studies. E. planned advertising and promotions. 13 38. Which of the following is not true about the Sarbanes-Oxley Act (SOX) A. SOX is a piece of legislation passed by the U.S. Congress in 2002 B. A series of large and visible accounting and business frauds preceded SOX C. SOX regulations are the same for large, public corporations in all 50 states D. SOX eliminated the use of creative accounting 39. Which of the following would take place if a company increased its variable cost per unit? A. B. C. D. E. Choice A Choice B Choice C Choice D Choice E 40. The following information relates to Dazie Company: Dazie's operating leverage factor is closest to: A. 0.067. B. 0.167. C. 0.400. D. 2.500. E. 6.000. 14 41. Swansong, a retail florist, plans to sell 10,000 units of a particular product during July, and expects sales to increase at the rate of 10% per month during the remainder of the year. The June 30 and September 30 ending inventories are anticipated to be 1,100 units and 950 units, respectively. On the basis of this information, how many units should Swansong purchase for the quarter ended September 30? A. 31,850. B. 32,150. C. 32,950. D. 33,250. E. Some other amount. 15 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS The Gingham Company's budgeted income statement reflects the following amounts: Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year. Gingham pays for all purchases in the month following purchase and takes advantage of a 3% discount. The discount is not reflected in Gingham's books until the cash is paid for the purchases. The following balances are as of January 1: *Of this balance, $35,000 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $5,000 of depreciation expense on the sales office building. The expenses are paid in the month incurred. 42. Gingham's expected cash balance at the end of January is: A. $87,000. B. $89,160. C. $92,000. D. $94,160. E. $113,160. 43. Gingham's budgeted cash payments in February are: A. $75,660. B. $94,860. C. $97,200. D. $99,860. E. $102,200. 16 44. Systems thinking is all of the following except: A. A framework for seeing detailed snapshots of one part of a business process B. A holistic approach on how to make systems/processes more effective & comprehensive in solving problems C. Is also known as process thinking and allows us to consider how changes to one variable will impact other variables within the system D. Helps to highlight possible fraud or improprieties by looking at issues from a wider industry perspective E. All of the above 45. You are analyzing Becker Corporation and Newton Corporation and have concluded that Becker has a higher operating leverage factor than Newton. Which one of the following choices correctly depicts (1) the relative use of fixed costs (as opposed to variable costs) for the two companies and (2) the percentage change in income caused by a change in sales? A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 46. End-of-period figures for accounts receivable and payables to suppliers would be found on the: A. cash budget. B. budgeted schedule of cost of goods manufactured. C. budgeted income statement. D. budgeted balance sheet. E. budgeted statement of cash flows. 47. The Board of Directors for a publicly traded company: A. Is in charge of governance, guidance and oversight B. Approves (appoints) the CEO C. Has to sign off on the audited financial statements D. A and B are true E. B and C are true 17 48. A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of the following statement is (are) true? A. Each unit "contributes" $3 toward covering the fixed costs of $900. B. The situation described is not possible and there must be an error. C. Once the break-even point is reached, the company will increase income at the rate of $3 per unit. D. The firm will definitely lose money in this situation. E. Statements "A" and "C" are true. 49. Which of the following is an example of a business-value-added activity to the external customer (consumer)? A. Adopting bar-code technology in the receiving department. B. Installation of a computerized human resource management module. C. Shortening the customers' billing cycle. D. Addition of an employee hotline for workplace complaints. E. Final painting and polishing of the product. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION Jackson Company's operating results for last year are given below: Assume sales price per unit, variable cost per unit, and total fixed expenses are constant. 50. If the company wants to increase its total contribution margin by 40% over last year, the increase in sales dollars from last year to this year would be: A. $17,160 B. $24,960 C. $38,400 D. $26,400 18 1