Final Examination Review of Attempt 1

Started on: Monday, June 6 2011, 10:54 AM Completed on: Monday, June 6 2011, 12:55 PM Time taken: 2 hours 1 min Overdue: 1 min 8 secs Raw score: 160/320 (50 %) Grade: 160 out of a maximum of 320

Multiple Choice: Choose the best answer to each of the following questions. (16 points each)

1
Marks: 16 LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $14.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 200 and 100 units, respectively. Budgeted direct labor costs for June would be: Answer: a. $1,974,175

b. $564,050

c. $1,979,250

d. $1,984,325

Incorrect Marks for this submission: 0/16.

2
Marks: 16 Muecke Inc. is working on its cash budget for April. The budgeted beginning cash balance is $40,000. Budgeted cash receipts total $150,000 and budgeted cash disbursements total $158,000. The desired ending cash balance is $50,000. To attain its desired ending cash balance for April, the company needs to borrow: Answer: a. $18,000

b. $50,000

c. $0

d. $82,000

each unit of output requires 7. 3 Marks: 16 Shackleford Corporation's standard wage rate is $13. 3. c. b. . credit of $287. In the journal entry to record the incurrence of direct labor costs in October.760 DLHs.000 units were produced. the actual wage rate was $14.10 per DLH.816.700.Correct Marks for this submission: 16/16. In October.0 DLHs. debit of $287.816. and the actual hours were 21.700. the Work in Process entry would consist of a: Answer: a. credit of $306.70 per direct labor-hour (DLH) and according to the standards. debit of $306. d. Incorrect Marks for this submission: 0/16.

............ $20 Direct labor (1......500 Direct materials used in production .... $6 During a recent period the company produced 1............. $28...4 Marks: 16 Beakins Company produces a single product.......100 hours) ................5 hours @ $10 per hour) .... $15 Variable manufacturing overhead (1... Various costs associated with the production of these units are given below: Direct materials purchased (6..... $10....... $17.....000 yards Direct labor cost incurred (2.. The standard cost card for the product follows: : Direct materials (4 yards @ $5 per yard) ...... Variable manufacturing .........200 units of product............. 5...850 Variable manufacturing overhead cost incurred .......000 yards) .......5 hrs @ $4 per /hour) ....080 The company records all variances at the earliest possible point in time..........

the company produced 1. $3.150 U c. The labor rate variance for the period is: Answer: a.625. per unit at 60¢ per ounce. cost of $20.700 U d.000 2. During the month of December.000 units. The material price variance is: Answer: .500 ounces hours purchased worked and at used a at a total total cost of $7. $2.700.Labor: 2 hours per unit at $8 per hour. $2. $3. Information for the month follows: Materials: Labor: 14.150 F b.700 F Correct Marks for this submission: 16/16. 5 Marks: 16 Solly Company produces a product for national distribution.overhead costs are applied to products on the basis of direct labor hours. Standards for the product are: Materials: 12 ounces .

.........000 DLHs Overhead costs at the denominator activity level: Variable overhead cost ...a..... 1............................... $600 U b...... $700 U c.. Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity .. 6 Marks: 16 A manufacturing company has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity.. ........ $600 F Correct Marks for this submission: 16/16.......... $700 F d.

....................380 Actual total fixed overhead cost .150 U b.. $14................. $12... $1..........800 Fixed overhead cost ..........250 The following data pertain to operations for the most recent period: Actual hours .................. $4.. 1............ $1.........450 What was the variable overhead efficiency variance for the period to the nearest dollar? Answer: a..200 DLHs Standard hours allowed for the actual output ........197 U ....................................$3..... 885 DLHs Actual total variable overhead cost .............

000 60..000 $315....... 56.000 84....000 .. $133 U d.. 40...000 Variable overhead cost ....c. $580 U Incorrect Marks for this submission: 0/16..000 70.000 $378. $252... Manufacturing overhead at Crispy is applied to production on the basis of standard direct labor-hours: Direct labor-hours .. 7 Marks: 16 Crispy Company manufactures smoke detectors and has developed the following flexible budget for its overhead costs..000 Detectors produced ...000 50.....

680 favorable c.000 What was Crispy's fixed overhead budget variance? Answer: a..... 43.760 favorable .748 Fixed overhead cost . $714......... $278.. $42. $11........ 62..........000 $672.....000 detectors last year. $37.000 $672.....000 unfavorable b..Fixed overhead cost .... $672....000 Crispy was expecting to produce 40...........640 Variable overhead cost ....200 Direct labor-hours incurred . The actual results for the year were as follows: Number of detectors produced ........

.. 8 Marks: 16 Geschke Corporation..... 8....1 machine-hours Standard supplies cost ............... $53........ $1... which produces commercial safes. has provided the following data: Budgeted production .....70 per machine-hour Actual production .. 9... 8......500 safes Standard machine-hours per safe ..760 favorable Correct Marks for this submission: 16/16.............700 safes .........d.

....... 79........ 9 Marks: 16 Division A makes a part that it sells to customers outside of the company. $10......Actual machine-hours ......947 F c......828 U d..947 U b...828 F Incorrect Marks for this submission: 0/16.. $123.. $10..642 The variable overhead spending variance for supplies is: Answer: a... $10. Data concerning this part .... $10.100 machine-hours Actual supplies cost ..

...... If Division A sells to Division B rather than to outside customers...... Division B requires 5.........appear below: Selling price to outside customers .. $37 b.......... $40 Variable cost per unit ................000 Division B of the same company would like to use the part manufactured by Division A in one of its products.............. $10... Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. $39 c......... $38 d.......... $40 ............ $30 Total fixed costs .....000 units of the part each period.....000 Capacity in units ............. Division A is already selling all of the units it can produce to outside customers... What is the lowest acceptable transfer price from the standpoint of the selling division? Answer: a.... 20....... the variable cost per unit would be $1 lower....

10 Marks: 16 The Consumer Products Division of Goich Corporation had average operating assets of $800. The minimum required rate of return for performance evaluation purposes is 10%. .300 b.000 and net operating income of $81. $8. $1.300 Correct Marks for this submission: 16/16.130 c. What was the Consumer Products Division's residual income in May? Answer: a.Correct Marks for this submission: 16/16.300 in May.130 d. -$8. -$1.

($52) c. emerge from the crushing process. Data concerning these products appear below: . Two intermediate products. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. beet fiber and beet juice. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. ($17) b. Joint processing costs up to the split-off point total $35. $19 d. $1 Incorrect Marks for this submission: 0/16.11 Marks: 16 Boney Corporation processes sugar beets that it purchases from farmers.000 a year. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is? Answer: a. 12 Marks: 16 Dodd Company makes two products from a common input. Each product may be sold at the split-off point or processed further. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Sugar beets are processed in batches.

$23.900 $40.........Product X Product Y Total Allocated joint processing costs ..000 What is the minimum amount the company should accept for Product X if it is to be sold at the splitoff point? Answer: a.500 b...500 $47..500 $93....500 $16.. $37........000 $30..000 .....000 Sales value at split-off point .........400 Sales value after further processing .... $14..000 $21....000 Costs of further processing ...... $45......000 $35.....000 $50...... $20........ $22.

. 13 Marks: 16 (Ignore income taxes in this problem. $50.... $10............ ? What annual cash savings would be needed in order to satisfy the company's 12% required rate of return (rounded to the nearest one hundred dollars)? ........) Para Corporation is reviewing the following data relating to an energy saving investment proposal: Initial investment .000 Life of the project ..000 Annual cash savings .......... $14....... $45......500 Correct Marks for this submission: 16/16....c........... 5 years Salvage value ..000 d.

600 c.100 Correct Marks for this submission: 16/16. $54. The incremental net operating income and incremental net cash flows that would be produced by the machine are: Incremental net operating income Incremental net cash flows Year 1 .000 $128. is considering the acquisition of a new machine that costs $370.300 b.900 d... $13.000 . $10. $12.000 and has a useful life of 5 years with no salvage value.) Vandezande Inc. $11.Answer: a.. 14 Marks: 16 (Ignore income taxes in this problem..

. the net present value of the investment is closest to: Answer: a.000 If the discount rate is 10%... $87.... $52..000 $126.479 ..000 Year 5 .000 $122. $457... $49..000 b. $234..000 Year 4 .000 $105. $48.Year 2 ..479 c.000 d..000 $123. $31. $370..000 Year 3 ..

B.. 15 Marks: 16 The Golden Company is analyzing projects A.....000 $503.. and C as possible investment opportunities........ 16% 20% 18% Consider the following statements: I... The following information has been obtained: Project A Project B Project C Initial investment .... .. $290.........000 Present value of future net cash inflows ..................000 $475.. II..... Each of these projects has a useful life of eight years...000 $380.Incorrect Marks for this submission: 0/16.... Project A has the highest ranking according to the project profitability index criterion.....000 $422.000 Internal rate of return .. $250.............. Project B has the highest ranking according to the internal rate of return criterion..

Only II and III d. Project C has the highest ranking according to the net present value criterion. 16 Marks: 16 The most recent balance sheet and income statement of Ganim Corporation appear below: Comparative Balance Sheet Ending Balance Beginning Balance . Only II Correct Marks for this submission: 16/16. I. II and III c. Only I and III b. Which is true? Answer: a.III.

............................ 54 63 Plant and eq ................................. 73 75 Inventory .................. $ 35 $ 34 Accounts receivable ................................Assets: Cash and cash equivalents .

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