You are on page 1of 8

exam 2 fall2013

Student: ___________________________________________________________________________

1.!An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:! A.!some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products. B.!some non-manufacturing costs are assigned to products. C.!first-stage allocations may be based on subjective interview data. D.!all of the above are reasons why an activity-based costing system that is designed for internal decisionmaking will not conform to generally accepted accounting principles.
!

2.!Reach Consulting Corporation has its headquarters in Chicago and operates from three branch offices in Portland, Dallas, and Miami. Two of the company's activity cost pools are General Service and Research Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows: !! Estimated branch data for next year is as follows: !! How much of the headquarters cost allocation should Dallas expect to receive next year?! A.!$280,000 B.!$409,500 C.!$472,500 D.!$504,000
!

3.!Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units. There are three activity cost pools, with total cost and total activity as follows: !! The activity-based costing cost per unit of Product A is closest to:! A.!$2.40 B.!$3.90 C.!$10.59 D.!$6.60
!

!Loffredo Corporation has provided the following data from its activity-based costing accounting system: !! Distribution of Resource Consumption across Activity Cost Pools: Activity Cost Pools !! The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
!

4.!How much supervisory wages and factory supplies cost would be assigned to the Batch Processing activity cost pool?! A.!$136,500 B.!$210,000 C.!$420,000 D.!$186,000
!

5.!How much supervisory wages and factory supplies cost would NOT be assigned to products using the activity-based costing system?! A.!$320,000 B.!$52,000 C.!$100,000 D.!$0
!

6.!Prestwich Company has budgeted production for next year as follows: !! Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:! A.!82,500 pounds B.!165,000 pounds C.!200,000 pounds D.!205,000 pounds
!

7.!Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May

cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:! A.!$102,870 B.!$11,340 C.!$91,530 D.!$111,780
!

8.!Deschambault Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for December, the company needs to borrow:! A.!$25,000 B.!$0 C.!$55,000 D.!$40,000
!

!Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 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 at the end of each month equal to 50% 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 $22,500. Monthly depreciation is $19,000. Ignore taxes. !!
!

9.!The cost of December merchandise purchases would be:! A.!$133,250 B.!$68,250 C.!$130,000 D.!$143,000
!

!Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: Sales are budgeted at $340,000 for November, $350,000 for December, and $370,000 for January. Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory 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 $21,100. Monthly depreciation is $19,000. Ignore taxes. !!
!

10.!The net income for December would be:! A.!$66,400 B.!$43,900 C.!$47,400 D.!$61,500
!

11.!The purpose of a flexible budget is to:! A.!remove items from performance reports that are not controllable by managers. B.!permit managers to reduce the number of unfavorable variances that are reported. C.!update the static planning budget to reflect the actual level of activity of the period. D.!reduce the amount of conflict between departments when the master budget is prepared.
!

12.!21 Salyers Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below !! The Inn's variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 53 guests?! A.!$7,159.20 B.!$6,680.60 C.!$7,184.80 D.!$26,154.40
!

13.!At Jacobson Company, indirect labor is a variable cost that varies with direct labor-hours. Last month's performance report showed that actual indirect labor cost totaled $5,780 for the month and that the associated spending variance was $245 F. If 24,100 direct labor-hours were actually worked last month, then the flexible budget cost formula for indirect labor must be (per direct labor-hour):! A.!$0.20 B.!$0.25 C.!$0.30 D.!$0.35
!

14.!Hamner Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable cost, was $45,240 and that the spending variance for indirect materials cost was $3,480 unfavorable. During that month, the company worked 17,400 machine-hours. Budgeted activity for the month had been 17,000 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to:! A.!$2.46 B.!$2.87 C.!$2.40 D.!$2.80
!

15.!Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:! A.!favorable. B.!unfavorable. C.!either favorable or unfavorable. D.!zero.
!

16.!The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 Unfavorable; and the standard quantity of materials allowed for July production was 21,750 pounds. The materials price variance for July was:! A.!$2,725 F B.!$2,725 U C.!$3,250 F D.!$3,250 U
!

17.!The standard cost card for a product shows that the product should use 4 kilograms of material B per finished unit and that the standard price of material B is $4.50 per kilogram. During April, when the budgeted production level was 1,000 units, 1,040 units were actually made. A total of 4,100 kilograms of material B were used in production and the inventories of material B were reduced by 300 kilograms during April. The total cost of material B purchased during April was $14,400. The material variances for material B during April were: !!! A.!Option A B.!Option B C.!Option C D.!Option D
!

18.!The Reedy Company uses a standard costing system. The following data are available for November: !! The actual direct labor rate for November is:!

A.!$8.80 B.!$8.90 C.!$9.00 D.!$9.20
!

19.!Tavorn Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's standard variable manufacturing overhead rate is $1.80 per machine-hour. The actual variable manufacturing overhead cost for the month was $13,080. The original budget for the month was based on 7,100 machine-hours. The company actually worked 7,210 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 7,070 machine-hours. What was the variable overhead efficiency variance for the month?! A.!$354 unfavorable B.!$252 unfavorable C.!$54 favorable D.!$102 unfavorable
!

20.!The Ammon Company uses a standard cost system in which manufacturing overhead is applied to units on the basis of standard machine-hours. During July, the company budgeted $350,000 in manufacturing overhead cost at a denominator activity of 25,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during July: !! The amount of overhead cost that the company applied to work in process for July was:! A.!$292,500 B.!$315,000 C.!$322,000 D.!$325,000
!

21.!Moralez Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: !! What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?! A.!$380 unfavorable B.!$1,620 favorable C.!$1,660 unfavorable D.!$3,280 unfavorable
!

!!"##$%&'(#)*+#,-%#).&/#+012/3+4#56-#%+3+7)#1#8+'62&'1)6.#3+9+3#6:#;<#%+1)%#=210&2-2#71/17&)5#6'#)*&%#,-%>"#

####?+71-%+#6:#)*&%4#)*+.+#&%#1#*&(*#/.6,1,&3&)5#)*1)#)*+.+#@&33#,+ A" #$':196.1,3+#91.&1,3+#69+.*+18#+B7&+'75#91.&1'7+ ?" #C196.1,3+#91.&1,3+#69+.*+18#+B7&+'75#91.&1'7+ D" #$':196.1,3+#963-2+#91.&1'7+ E" #C196.1,3+#963-2+#91.&1'7+
#!F"##G*&7*#6:#)*+#:6336@&'(#&%#76..+7)H #####A"##I13+%#,-8(+)#&%#)*+#%)1.J'(#/6&')#:6.#/.+/1.&'(#1#21%)+.#,-8(+)" #####?"##I13+%#,-8(+)#&'73-8+%#1#%-221.5#6:#71%*#8&%,-.%+2+')%#:6.#)*+#/+.&68" #####D"##D1%*#,-8(+)#%*6-38#,+#/.+/1.+8#,+:6.+#)*+#%13+%#,-8(+)#)6#/.6K+7)#+0/+7)+8#71%*#7633+7J6'%" #####E"##A33#6:#)*+%+#1.+#76..+7)" ##!;"#G*&7*#6:#)*+#:6336@&'(#&%#76..+7)#76'7+.'&'(#)*+#21'-:17)-.&'(#69+.*+18#,-8(+)H #####A"##L6)13#,-8(+)+8#71%*#8&%,-.%+2+')%#:6.#21'-:17)-.&'(#69+.*+18#+M-13%#)*+#)6)13#6:#,-8(+)+8#91.&1,3+#/3-% #########,-8(+)+8#N0+8#21'-:17)-.&'(#69+.*+18" #####?"##O1'-:17)-.&'(#76%)%#%*6-38#,+#,.6P+'#86@'#,5#76%)#,+*19&6." #####D"##O1'-:17)-.&'(#69+.*+18#,-8(+)#%*6-38#&'73-8+#8&.+7)#31,6." #####E"##A33#6:#)*+%+#1.+#76..+7)" ##!Q"#A?D#&'9639+% #####A"##-%&'(#2-3J/3+#76%)#8.&9+.% #####?"##-%&'(#2-3J/3+#17J9&J+% #####D"##76%)#133671J6' #####E"##A33#6:#)*+%+#1.+#76..+7)"###

#####################!"#$%&&'%%%()**%&+',%%-.)"%&%%)/01-20

'3 4 &3 5

,3 4 63 4 73 ! 83 ! 93 ) :3 ) ;3 ) '+3 ! ''3 5 '&3 ) ',3 ! '63 5 '73 ! '83 5 '93 ! ':3 ) ';3 ! &+3 ! &'3 ! &&3 5 &,3 ) &63 ! &73 4 (<=%>?@A%&%B<=%0C=DEF%&+'6G%H"I$%JK>LM<EL%'7%NO=<KFO%&&%@P<Q>3%%$O>R%@=>%S<Q>=>T%<E%NO>%UE@V3 (<=%>?@A%&%B<=%0C=DEF%&+'6G%F<%<Q>=%JK>LM<EL%&+%NO=<KFO%&7%<E%B@VV%&+',%>?@A%'3