ACCOUNTING MANAGEMENT

MAY 2’ 2019
FINAL TEST

NAME:______________________________________ SCORE:______
1. Birch Company manufactures a part for its production cycle. The costs per unit for 5,000
units of this part are as follows:
Direct materials $3
Direct labor 5
Variable factory overhead 4
Fixed factory overhead 4
Total costs $16
The fixed factory overhead costs are unavoidable. Spalding Corporation has offered to
sell 5,000 units of the same part to Birch Company for $15 a unit. Assuming no other use
for the facilities, Birch Company should _ $15-($3 DM + $5DL + $4 Variable
OH=$15-$12=$3
2. The following data has been assembled for Hippy Company. Use the high-low method.
Cost Hours
$24,400 2,000
37,000 2,300
34,280 2,850
36,400 3,600
44,160 3,900
The cost function is stated as _____.
($44,160 - $24,400) / (3,900 - 2,000) = $10.40;
$44,160 = a + ($10.40 x 3,900); and a = $3,600;
Y = $3,600 + $10.40X
3. Committed fixed costs can be altered by management if management decides that
different levels of spending are desirable. True False
4. An example of a committed fixed cost is insurance. True False
5. Each cost in a manufacturing operation must be either fixed or variable. True False
6. Ducks Company reported the following information about the production and sales of its
only product during its first month of operations:
Sales ($225 per unit) $405,000
Direct materials used $176,000
Direct labor $100,000
Variable factory overhead $44,000
Fixed factory overhead $80,000
Variable selling and administrative expenses $20,000
Fixed selling and administrative expenses $10,000
Ending inventories:
Direct materials -0-
WIP -0-
Finished goods 400 units
_____ units were produced.
$405,000 / $225 = 1,800 units sold;
1,800 + 400 = 2,200 units
7. ABC Company operates a 100-room property in a location popular for “spring breakers”.
Occupancy rates average 97% in May and 90% in June. The average room rental is $150
per night. How much for the Expected sales for June?
Rate in June =(90% x 100 room) x $150 x 30 days = $405,000
8. _____ is the process of collecting costs by classification.
a. Cost accumulation b. Cost accounting
c. Cost allocation d. Cost application
9. _____ is the process of reassigning cost to a cost object.
a. Cost accumulation b. Cost accounting
c. Cost allocation d. Cost application
10. Busted Company expects to produce 19,000 units. Beginning finished goods inventory is
2,000 units and expected sales are 18,000 units. How much for the Expected ending
finished goods inventory? 19,000 + 2,000 – 18,000 = 3,000 units