This midterm consists of 4 pages. Please verify that you have the requisite number of pages. By signing above you attest that you have verified that you have all the pages to this exam. Circle the BEST answer 1.Which of the following statements about net income (NI) is TRUE? A.NI = operating income plus nonoperating revenue B.NI = operating income plus operating costs C.NI = operating income less income taxes D.NI = operating income less cost of goods sold 2.Contribution margin equals: A) revenues minus period costs B) revenues minus product costs C) revenues minus variable costs D) revenues minus fixed costs 3.The selling price per unit less the variable cost per unit is the: A) fixed cost per unit B) gross margin C) margin of safety D) contribution margin per unit 4.Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs. Contribution margin per unit is: A) $4.00 B) $4.29 C) $6.00 D) None of these answers are correct. 5.Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. Contribution margin per ham is: A) $5.00 B) $15.00 C) $20.00 D) None of these answers are correct. 6.Budgeting is used to help companies: A) plan to better satisfy customers B) anticipate potential problems C) focus on opportunities D) All of these answers are correct. 7.A master budget: A) includes only financial aspects of a plan and excludes nonfinancial aspects B) is an aid to coordinating what needs to be done to implement a plan C) includes broad expectations and visionary results D) should not be altered after it has been agreed upon 8.Operating decisions PRIMARILY deal with: A) the use of scarce resources B) how to obtain funds to acquire resources C) acquiring equipment and buildings D) satisfying stockholders 9.Financing decisions PRIMARILY deal with: A) the use of scarce resources B) how to obtain funds to acquire resources C) acquiring equipment and buildings D) preparing financial statements for stockholders 10.A budget can help implement: A) strategic planning B) long-run planning C) short-run planning D) All of these answers are correct. 11.Budgets should: A) be flexible B) be administered rigidly C) only be developed for short periods of time D) include only variable costs 12.Production is primarily based on: A) projected inventory levels B) the revenues budget C) the administrative costs budget D) the capital expenditures budget 13.The direct materials usage budget is based on: A) the units to be produced during a period B) budgeted sales dollars C) the predetermined factory overhead rate D) the amount of labor-hours worked 14.Schultz Company expects to manufacture and sell 30,000 baskets in 20X4 for $6 each. There are 3,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 20X4 budgeted income statement? A) $174,000 B) $180,000 C) $186,000 D) $204,000 15.DeArmond Corporation has budgeted sales of 18,000 units, target ending finished goods inventory of 3,000 units, and beginning finished goods inventory of 900 units. How many units should be produced next year? A) 21,900 units B) 20,100 units C) 15,900 units D) 18,000 units Questions 16 -17 Abernathy Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. Actual Budgeted Units sold 92,000 units 90,000 units Variable costs $450,800 $432,000 Fixed costs $ 95,000 $100,000 16.What is the static-budget variance of revenues? A) $20,000 favorable B) $20,000 unfavorable C) $2,000 favorable D) $2,000 unfavorable 17.What is the static-budget variance of variable costs? A) $1,200 favorable B) $18,800 unfavorable C) $20,000 favorable D) $1,200 unfavorable 18.Marie's Decorating produces and sells a mantel clock for $100 per unit. In 20X5, 100,000 clocks were produced and 80,000 were sold. Other information for the year includes: Direct materials $30.00 per unit Direct manufacturing labor $ 2.00 per unit Variable manufacturing costs $ 3.00 per unit Sales commissions $ 5.00 per part Fixed manufacturing costs $25.00 per unit Administrative expenses, all fixed $15.00 per unit What is the inventoriable cost per unit using variable costing? A) $32 B) $35 C) $40 D) $60 19.The contribution-margin format of the income statement: A) is used with absorption costing B) highlights the lump sum of fixed manufacturing costs C) distinguishes manufacturing costs from nonmanufacturing costs D) calculates gross margin 20.________ are subtracted from sales to calculate contribution margin. A) Variable manufacturing costs B) Variable marketing costs C) Fixed manufacturing costs D) Both A and B are correct.

1 Strayer University ACC350- Cost Accounting Fall 2010 Final Exam Name_____________________ Date______________________________ This midterm consists of 4 pages. Please verify that you have the requisite number of pages. By signing above you attest that you have verified that you have all the pages to this exam. Circle the BEST answer 1. Which of the following statements about net income (NI) is TRUE? A. NI = operating income plus nonoperating revenue B. NI = operating income plus operating costs C. NI = operating income less income taxes D. NI = operating income less cost of goods sold 2. Contribution margin equals: A) revenues minus period costs B) revenues minus product costs C) revenues minus variable costs D) revenues minus fixed costs 3. The selling price per unit less the variable cost per unit is the: A) fixed cost per unit B) gross margin C) margin of safety D) contribution margin per unit 4. Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs. Contribution margin per unit is: A) $4.00 B) $4.29 C) $6.00 D) None of these answers are correct. 2 5. Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. Contribution margin per ham is: A) $5.00 B) $15.00 C) $20.00 D) None of these answers are correct. 6. Budgeting is used to help companies: A) plan to better satisfy customers B) anticipate potential problems C) focus on opportunities D) All of these answers are correct. 7. A master budget: A) includes only financial aspects of a plan and excludes nonfinancial aspects B) is an aid to coordinating what needs to be done to implement a plan C) includes broad expectations and visionary results D) should not be altered after it has been agreed upon 8. Operating decisions PRIMARILY deal with: A) the use of scarce resources B) how to obtain funds to acquire resources C) acquiring equipment and buildings D) satisfying stockholders 9. Financing decisions PRIMARILY deal with: A) the use of scarce resources B) how to obtain funds to acquire resources C) acquiring equipment and buildings D) preparing financial statements for stockholders 10. A budget can help implement: A) strategic planning B) long-run planning C) short-run planning D) All of these answers are correct. 11. Budgets should: A) be flexible B) be administered rigidly C) only be developed for short periods of time D) include only variable costs 3 12. Production is primarily based on: A) projected inventory levels B) the revenues budget C) the administrative costs budget D) the capital expenditures budget 13. The direct materials usage budget is based on: A) the units to be produced during a period B) budgeted sales dollars C) the predetermined factory overhead rate D) the amount of labor-hours worked 14. Schultz Company expects to manufacture and sell 30,000 baskets in 20X4 for $6 each. There are 3,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 20X4 budgeted income statement? A) $174,000 B) $180,000 C) $186,000 D) $204,000 15. DeArmond Corporation has budgeted sales of 18,000 units, target ending finished goods inventory of 3,000 units, and beginning finished goods inventory of 900 units. How many units should be produced next year? A) 21,900 units B) 20,100 units C) 15,900 units D) 18,000 units Questions 16 -17 Abernathy Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. Actual Budgeted Units sold 92,000 units 90,000 units Variable costs $450,800 $432,000 Fixed costs $ 95,000 $100,000 16. What is the static-budget variance of revenues? A) $20,000 favorable B) $20,000 unfavorable C) $2,000 favorable D) $2,000 unfavorable 4 17. What is the static-budget variance of variable costs? A) $1,200 favorable B) $18,800 unfavorable C) $20,000 favorable D) $1,200 unfavorable 18. Marie's Decorating produces and sells a mantel clock for $100 per unit. In 20X5, 100,000 clocks were produced and 80,000 were sold. Other information for the year includes: Direct materials Direct manufacturing labor Variable manufacturing costs Sales commissions Fixed manufacturing costs Administrative expenses, all fixed $30.00 per unit $ 2.00 per unit $ 3.00 per unit $ 5.00 per part $25.00 per unit $15.00 per unit What is the inventoriable cost per unit using variable costing? A) $32 B) $35 C) $40 D) $60 19. The contribution-margin format of the income statement: A) is used with absorption costing B) highlights the lump sum of fixed manufacturing costs C) distinguishes manufacturing costs from nonmanufacturing costs D) calculates gross margin 20. ________ are subtracted from sales to calculate contribution margin. A) Variable manufacturing costs B) Variable marketing costs C) Fixed manufacturing costs D) Both A and B are correct