Sample Final Exam Questions

1. Houseal Corporation has provided the following data from its activity-based costing system:

According to the activity-based costing system, the product margin for product W58B is:

A. $3,668.60
B. $5,975.60
C. $5,515.40
D. $19,418.40

2. Lion Company's direct labor costs for the month of January were as follows:

What was Lion's direct labor efficiency variance?

A. $6,000 favorable
B. $6,150 favorable
C. $6,300 favorable
D. $6,450 favorable

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 Use the following to answer questions 3 and 4.

Forliche Florist specializes in large floral bouquets for hotels and other commercial spaces. The company
has provided the following data concerning its annual overhead costs and its activity based costing
system:

3. What would be the total overhead cost per delivery according to the activity based costing system? In
other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the
nearest whole cent.)

A. $7.20
B. $6.60
C. $6.00
D. $6.80

4. What would be the total overhead cost per bouquet according to the activity based costing system? In
other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round
to the nearest whole cent.)

A. $1.65
B. $1.35
C. $1.58
D. $1.80

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5. Landor Appliance Company makes and sells electric fans. Each fan regularly sells for $42. The
following cost data per fan is based on a full capacity of 150,000 fans produced each period.

A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only
selling costs that would be incurred on this order would be $4 per fan for shipping. Landor is now selling
120,000 fans through regular channels each period. What should Landor use as a minimum selling price
per fan in negotiating a price for this special order?

A. $28
B. $27
C. $31
D. $24

Use the following to answer questions 6-8.

Abdi Company, which has only one product, has provided the following data concerning its most recent
month of operations:

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6. What is the unit product cost for the month under variable costing?

A. $77
B. $66
C. $68
D. $57

7. The total contribution margin for the month under the variable costing approach is:

A. $91,000
B. $168,000
C. $105,000
D. $25,300

8. What is the unit product cost for the month under absorption costing?

A. $66
B. $77
C. $57
D. $68

9. The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three
products that use this machine. Data concerning those products appear below:

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least
profitable product. Up to how much should the company be willing to pay to acquire more of the
constrained resource?

A. $33.28 per unit

B. $10.40 per minute
C. $122.12 per unit
D. $15.30 per minute

10. Hamby Corporation is preparing a bid for a special order that would require 780 liters of material W34C.
The company already has 640 liters of this raw material in stock that originally cost $8.30 per liter.
Material W34C is used in the company's main product and is replenished on a periodic basis. The resale
value of the existing stock of the material is $7.60 per liter. New stocks of the material can be readily
purchased for $8.35 per liter. What is the relevant cost of the 780 liters of the raw material when deciding
how much to bid on the special order?

A. $6,481
B. $6,376
C. $6,513
D. $5,928

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11. The variance that is most useful in assessing the performance of the purchasing department manager is:

A. the materials quantity variance.

B. the materials price variance.
C. the labor rate variance.
D. the labor efficiency variance.

12. Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this
part each year. The company's Accounting Department reports the following costs of producing the part
at this level of activity:

An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this
offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be
avoided. The special equipment used to make the part was purchased many years ago and has no salvage
value or other use. The allocated general overhead represents fixed costs of the entire company. If the
outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be
avoided.
If management decides to buy part S51 from the outside supplier rather than to continue making the part,
what would be the annual impact on the company's overall net operating income?

A. Net operating income would decline by $5,800 per year.

B. Net operating income would decline by $22,800 per year.
C. Net operating income would decline by $149,800 per year.
D. Net operating income would decline by $39,800 per year.

13. Buckler Company manufactures desks with vinyl tops. The standard material cost for the vinyl used per
Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production
run of 1,000 desks in March resulted in usage of 12,600 square feet of vinyl at a cost of $2.00 per square
foot, a total cost of $25,200. The materials quantity variance resulting from the above production run
was:

A. $1,200 unfavorable
B. $1,350 unfavorable
C. $1,800 favorable
D. $3,150 favorable

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14. The acceptance of a special order will improve overall net operating income so long as the revenue from
the special order exceeds:

A. the contribution margin on the order.

B. the incremental costs associated with the order.
C. the variable costs associated with the order.
D. the sunk costs associated with the order.

15. Mayeux Corporation uses an activity-based costing system with three activity cost pools. The company
has provided the following data concerning its costs and its activity based costing system:

How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost
pool?

A. $360,000
B. $336,000
C. $288,000
D. $348,000

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16. The standard cost card for one unit of a finished product shows the following:

If the total standard variable cost for one unit of finished product is $78, then the standard price per foot
for direct materials is:

A. $2
B. $3
C. $4
D. $5

17. Paparo Corporation has provided the following data from its activity-based costing system:

According to the activity-based costing system, the average cost of product Q79Y is closest to:

A. $133.29 per unit

B. $85.03 per unit
C. $127.43 per unit
D. $129.94 per unit

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18. Rice Corporation currently operates two divisions which had operating results last year as follows:

Since the Troy Division also sustained an operating loss in the prior year, Rice's president is considering
the elimination of this division. Troy Division's traceable fixed costs could be avoided if the division
were eliminated. The total common corporate costs would be unaffected by the decision. If the Troy
Division had been eliminated at the beginning of last year, Rice Corporation's operating income for last
year would have been:

A. $15,000 higher
B. $30,000 lower
C. $45,000 lower
D. $60,000 higher

19. Quikcook Microwave Company currently manufactures the doors that it uses for its microwave ovens.
The annual costs to manufacture the 40,000 doors needed each year are as follows:

Delilah Glass Corporation has offered to provide Quikcook with all of its annual door needs for $14 per
door. If Quikcook accepts this offer, only 40% of the fixed overhead above could be totally eliminated.
Also, Quikcook has no alternative use for the idle facilities if the decision was made to go with Delilah's
offer. Based on this information, would Quikcook be better off to make the doors or buy the doors and by
how much?

A. $48,000 better to buy

B. $48,000 better to make
C. $112,000 better to buy
D. $112,000 better to make

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20. Leaper Corporation uses an activity-based costing system with the following three activity cost pools:

The activity rate for the Order Processing activity cost pool is closest to:

A. $1,485 per order

B. $1,540 per order
C. $1,465 per order
D. $1,320 per order

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21. Supler Company produces a part used in the manufacture of one of its products. The unit product cost is
$18, computed as follows:

An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each.
It is estimated that 60 percent of the fixed overhead cost above could be eliminated if the parts are
purchased from the outside supplier. Based on these data, the per-unit dollar advantage or disadvantage
of purchasing from the outside supplier would be:

A. $1 disadvantage
B. $1 advantage
C. $2 advantage
D. $4 disadvantage

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 Sample Final Exam Questions Key
1. A

2. B

3. D

4. A

5. A

6. D

7. A

8. A

9. B

10. C

11. B

12. C

13. B

14. B

15. B

16. C

17. A

18. B

19. D

20. C

21. C