Accounting Analysis & Control Exam 1

The Murphy Corp. had the following information available for the year. What is cost of direct material used? Direct Material purchased $40,000 Overhead 33,000 Direct labor (2,500 hours @ $8.00) Begin WIP Inventory $10,000 End WIP Inventory $15,000 Begin Finished Goods Inventory $21,000 End Finished Goods Inventory $17,000 Begin Direct Material Inventory $5,000 End Direct Material Inventory $8,000

$37,000

Maxwell Shipping has a total cost per shipment of $2.00 at 16,000 shipments and total cost per shipment of $1.95 at 21,000 shipments. Estimate total cost for 19,000 shipments

$37,370

Maxwell Shipping has a total cost per shipment of $2.00 at 16,000 shipments and total cost per shipment of $1.95 at 21,000 shipments. Estimate total cost for 19,000 shipments.

$37,370

What is break-even? Sales (200,000 units) $500,000 Manufacturing costs Variable 170,000 Fixed 30,000 Selling and admin costs Variable 80,000 Fixed 20,000

$40,000 units

A company has contribution margin per unit of $18.00 and a contribution margin ratio of 40.0%. What is the unit selling price?

$45.00

The Murphy Corp. had the following information available for the year. What is conversion cost? Direct Material purchased $40,000 Overhead 33,000 Direct labor (2,500 hours @ $8.00) Begin WIP Inventory $10,000 End WIP Inventory $15,000 Begin Finished Goods Inventory $21,000 End Finished Goods Inventory $17,000 Begin Direct Material Inventory $5,000 End Direct Material Inventory $8,000

$53,000

Variable costs are $27,000, fixed costs are $18,000 and the loss is $4,500. What is break-even?

$54,000

Begin and end inventory balances for the Rude, Inc. is shown below. Purchases of direct materials were $18,000. Direct labor and factory overhead costs were $20,000 and $28,000, respectively. The cost of goods manufactured was Raw materials $9,000 $ 7,000 Work in process 16,000 12,400 Finished goods 36,000 30,000

$71,600

Based on the following, ending direct materials inventory is direct materials purchases $225,000 direct materials used 275,000 Beginning direct materials inventory 125,000

$75,000

Based on the following, ending direct materials inventory is direct materials purchases $225,000 direct materials used 275,000 Beginning direct materials inventory 125,000

$75,000

Dirth Company sells one product for $7.50 per unit. Variable expenses are 60.0% of sales and fixed expenses are $30,000. What is break even sales?

$75,000

Use the following, cost of goods manufactured was Direct materials $38,000 Direct labor 24,000 Manufacturing overhead 17,000 Beginning work in process 10,000 Ending work in process 11,000

$78,000

The following data is for cost driver and cost of cleaning and maintenance for two recent months. Estimate total variable cost for month 1 month 1 month 2 hours 2,000 2,500 cost $900 $1,100

$800.00

During January, the cost of goods manufactured was $93,000. The beginning finished goods inventory was $16,000 and the ending finished goods inventory was $20,000. What was the cost of goods sold for the month?

$89,000

Shipping expense is $9,000 for 8,000 pounds shipped and $11,250 for 11,000 pounds shipped. If the company ships 9,000 pounds, what is estimated shipping expense?

$9,750

The beginning balance in raw materials inventory was $20,000. The company made raw materials purchases of $69,000. At period end, the balance in raw materials inventory was $32,000. Direct labor cost was $24,000 and manufacturing overhead was $71,000. The beginning balance in the work in process account was $24,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $53,000 and the ending balance was $58,000. Selling expense was $20,000 and administrative expense was $35,000. Conversion cost was

$95,000

The margin of safety percentage is computed as:

(objective sales - break-even sales) divided by objective sales.

The standards of ethical conduct for management accountants include

competence, confidentiality, integrity, and credibility.

compared to high-low, regression is superior because it

considers a greater number of data points

Management of the accounting function within an organization is the responsibility of the

controller

The chief accounting officer of an organization is the

controller or CFO

On a profit graph (profit=contribution margin-fixed cost), the intersection of the profit line with the vertical axis provides a

loss equal to fixed costs

A corporate controller's salary would be considered a(n):

period cost

The salary paid to the president of King Company would be classified on the income statement as

period cost

Sales commissions are classified as

period costs

Management accounting information is primarily concerned with

producing information to managers for decision making and control

Assuming total cost on the vertical axis and cost driver activity is on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis?

rent on exhibit space at a convention if the cost driver is number of attendees

In resolving an ethical conflict, which of the following would NEVER be appropriate? talking to the press where there is no legal requirement discussing the matter with the chief executive officer discussing the matter with an external member of the board of directors resigning from the position because of a conflict

talking to the press where there is no legal requirement

Which of the following costs is not relevant to a special-order decision? all are relevant the variable manufacturing overhead incurred to manufacture the special-order units none are relevant the portion of the cost of leasing the factory that is allocated to the special order the direct labor costs to manufacture the special-order units

the portion of the cost of leasing the factory that is allocated to the special order

The slope of the total revenue line is

the selling price per unit

If a firm has made a correct decision to discontinue a division, which of the following should NOT decline? total corporate income total corporate sales total corporate cost of goods sold total corporate fixed costs

total corporate income

In a graph of total revenue and total cost, the break-even point is at the intersection of the total revenue line and the

total cost line

An opportunity cost is a

benefit foregone by choosing one alternative over another

What is cost of goods sold? Sales $2,250 Cost of goods manufactured 1,350 Beginning finished goods 450 Ending finished goods 495 S&A 300

$1,305

Begin and end inventory balances for the James Enterprises is shown below. Purchases of direct materials were $36,000. Direct labor and factory overhead costs were $60,000 and $84,000, respectively. What is prime cost? Raw materials $27,000 $21,000 Work in process 48,000 37,200 Finished goods 108,000 90,000

$102,000

Carver Company sells a product for $30.00. Variable manufacturing costs are $15.00 per unit. Fixed manufacturing and fixed S&A costs are $5.00 per unit and $4.00 per unit, respectively at the current volume. A sales commission of 10.0% of selling price is paid on each unit. The contribution margin per unit is

$12.00

Using the following information, what is the high/low estimate of variable cost per account? Cost Driver Total Cost 80 accounts $1,200 88 accounts $1,300 96 accounts $1,400

$12.50

Anderwald Corporation has provided the following production and unit-cost data for two levels of production volume. Production volume (units) is the cost driver. Estimate total fixed cost production (units) 2,000 3,000 direct materials $72.30 72.30 direct labor 19.70 19.70 overhead 88.40 65.60

$136,800

Angel's Shop had variable costs of $27,000, fixed costs of $18,000, and a net loss of $4,500. Angel's tax rate is 40.0%. Sales required for an after-tax income of $18,000 is closest to

$144,000

Jordan Company budgeted sales of 400,000 calculators at $40.00 per unit last year. Variable costs were budgeted at $16.00 per unit, and fixed costs at $10.00 per unit. An order for 40,000 calculators at $23.00 each was received in March. Jordan has sufficient plant capacity to make and sell the additional quantity but production would be done on overtime at an additional cost of $3.00 per calculator. What would be the earnings effect of the order?

$160,000 increase

Fixed costs per mile is $9.00 when 20,000 miles are driven and $6.00 when 30,000 miles are driven. What is the total cost when zero miles are given?

$180,000

Acme Cleaning Supply sells VeryKleen. Materials cost $4.50 per bottle and there is a 5.0% sales commission. Plan sales are 40,000 units at $9.00 per bottle. Fixed costs total $1.25 per bottle at the planned sales level. The company's tax rate is 35.0%. Sales for $25,000 in income after tax is closest to

$196,581

An analysis of past maintenance cost indicates that it averages $0.20 per hour at a cost driver level of 10,000 hours and $0.25 per hour a cost driver level of 8,000 hours. What is estimated maintenance cost at 8,700 hours?

$2,000

What is the cost of direct materials used during November if $20,000 were purchased during the month and inventory balances were as follows. Nov 1 Nov 30 Raw materials $4,000 $3,000 Work in process 12,000 15,000 Finished goods 24,000 27,000

$21,000

Baker Airlines developed a cost function for food costs of TC = $8,000 + $1.60*miles flown. The best estimate of food costs at 10,000 miles is

$24,000

In November, at a cost driver level of 7,000, power cost was $12,000. In April, at a cost driver level of 2,000, power costs was $6,000. Using high-low, estimated fixed cost is

$3,600

Wynne Company recorded 60,000 maintenance hours in May and 20,000 maintenance hours in November. Maintenance costs were $39,000 in May and $15,000 in November. Using maintenance hours as the cost driver, estimate total maintenance cost when 45,000 maintenance hours are planned.

$30,000

Relay Corporation manufactures batons. Relay can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Relay's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, an order was placed for 60,000 batons at a 40.0% discount. By what amount would the company's pre-tax earnings increase or decrease from the order?

$30,000 increase

Malone Printing Company projected the following information for next year. What is break-even? Selling price per unit $75.00 Contribution margin per unit 30.00 Total fixed costs 120,000 Tax rate 40.0%

$300,000

What sales is needed to break even? Variable cost ratio 80.0% Total fixed cost $60,000

$300,000

Barkley Company had target sales of $500,000 and a break-even point of $400,000. Its margin of safety ratio was

20%

What is the degree of operating leverage?sales (8,000 units) $800,000 variable cost 500,000 fixed cost 200,000

3.0

How many units must be sold to earn an after-tax profit of $120,000? Tax rate is 40.0%. Selling price per unit is $60.00, VC per unit $40.00, and FC is $400,000.

30,000

Assume the following information. How many units must be sold for a pre-tax profit of $45,000? Selling price per unit $150.00 Contribution margin ratio 40.0% Total fixed costs $225,000

4,500 unites

Baker Company sells its product for $60.00. In addition, it has a variable cost ratio of 40.0% and total fixed costs of $9,000. The company's tax rate is 40.0%. What are sales for after tax earnings of $12,000?

806 units

Molly Madison makes and sells 30,000 statues of "The Thinker" each year for $60.00. Unit costs, based on this quantity are shown below. An art dealer wants 5,000 statues bearing his private label. All costs will be incurred on this order, plus the label will cost Molly an additional $1.00. Molly can make the additional units with present facilities and would incur no selling expenses. What is the minimum price Molly should charge the art dealer? Direct material $7.00 Direct labor 5.00 Variable overhead 12.00 Fixed overhead 10.00 Variable selling expenses 5.00

??? not $40

The following plan costs pertain to a component part manufactured by Ashby Company. The company can purchase the part from an outside supplier for $25.00 per unit. The manufacturing overhead is 60.0% fixed and allocated. What is the relevant unit cost to make the part in a decision to make the part or buy it from the external supplier? Direct materials $ 2.00 Direct labor 5.00 Overhead 20.00

??? not 19.00

Modugno Corporation is considering whether to purchase a new model 370 machine costing $441,000 or a new model 240 machine costing $387,000 to replace a machine that was purchased 7 years ago for $429,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A. Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $387,000 in the new machine, the money could be invested in a project that would return a total of $430,000. In making the decision to invest in the model 240 machine, the opportunity cost was:

??? not 387,000

Boss Company currently leases a delivery van from Check Enterprises for a fee of $250.000 per month plus $0.40 per mile. Management is evaluating the desirability of switching to a modern, fuel-efficient van, which can be leased from David, Inc. for a fee of $600.000 per month plus $0.05 per mile. All operating costs and fuel are included in the rental fees. In general,

A lease from Check Enterprises is economically preferable to a lease from David, Inc. regardless of the monthly use

Which of the following is a true statement about sales mix? Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell more of the lower contribution margin product. Profits will remain constant with an increase in total dollars of sales if the total sales in units remains constant. Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell more of the high contribution margin product. Profits will remain constant with a decrease in total dollars of sales if the sales mix also remains constant.

Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell more of the lower contribution margin product.

Publicly-traded companies preparing financial accounting reports must follow the accounting procedures established by the

SEC and the FASB

Which of the following is a period cost? Raw material none of these Selling expense Conversion cost Prime cost

Selling expense

If Y = a + bX is the cost function, which of the following is FALSE? The a term represents fixed cost The X term is the cost driver that causes total cost to change The y term represents the level of cost driver The b term represents the rate of change in total cost

The y term represents the level of cost driver

A manufacturing company reports cost of goods manufactured as

a component in the calculation of cost of goods sold on the income statement

the term relevant range is where

a particular cost relation is valid

On the costs of goods manufactured schedule, raw materials inventory ending, appears as

a subtraction from raw materials available for use

The Titanic hit an iceberg and sank. In deciding whether or not to salvage the ship, its book value is

a sunk cost

Manufacturing overhead consists of:

all manufacturing costs, except direct materials and direct labor

On the costs of goods manufactured schedule, depreciation on factory equipment

appears in the manufacturing overhead section

Which of the following does NOT appear on the cost of goods manufactured statement? direct materials used beginning work in process inventory beginning finished goods inventory factory overhead

beginning finished goods inventory

Cost of goods sold is computed as

beginning finished goods inventory plus cost of goods manufactured less ending finished goods inventory.

A study has been conducted to determine if Product A should be dropped. Revenue for the product is $200,000 per year; VC is $140,000 per year. FC is $90,000 per year. $40,000 of the FC is allocated. If Product A is dropped, the company earnings would: *Duplicate question by reworded*

decrease by $10,000 per year

Product A sales are $200,000 per year; variable cost is $140,000 per year. Fixed cost charged to Product A is $90,000 per year and $40,000 of the fixed cost is allocated. If Product A is dropped, the company's earnings would

decrease by $10,000 per year

Assuming all other things are the same, contribution margin per unit must have _______________ if there was an increase in the break-even point.

decreased

Each of the following would be a period cost EXCEPT the salary of the company president's secretary. sales commissions. depreciation of a machine used in manufacturing. the cost of a general accounting office.

depreciation of a machine used in manufacturing.

In an outsource (make-or-buy) decision, relevant costs include

direct fixed costs

Prime product costs include

direct materials and direct labor

Salinas Corporation has operating leverage of 8.0. This means that a 1.0% change in sales dollars at Salinas will generate an 8.0% change in

earnings

The activity found LEAST often within the controller's department is establishing and maintaining markets for the organization's debt and equity securities performance report preparation maintaining accounts receivable reports updating the general ledger budget preparation

establishing and maintaining markets for the organization's debt and equity securities

If calculations indicate that the intercept was $30.00 and the slope was $20.00 for a cost function, then

estimated costs would be $230.00 at 10 units of cost driver

At a hospital, when the cost driver is number of patients served, a nursing supervisor's salary of $2,000 per month in an example of a

fixed cost

The high-low method is criticized because it

ignores available data

If cost driver increases 10%, total variable costs will

increase 10.0%

The relevant range of activity refers to

levels of activity over which cost relations are expected to be valid

Which of the following activities is NOT associated with the cost management information system? using future expected earnings to estimate the price of a share of common stock preparing a cost of quality report preparing a performance report that compares actual costs to budgeted costs determining the administrative cost cost associated with a customer

using future expected earnings to estimate the price of a share of common stock

Management accounting and financial accounting differ in that management accounting information is prepared

using methods the company finds beneficial

The following is from a computer printout showing the results for an analysis of overhead (OHD) cost using regression. Select the correct statement Parameter Estimate t-stat p-stat intercept 10,000.41 4.81 0.0003 labor hours 14.05 6.78 0.0001 R-Square 0.80 Standard Error 25.03 Observations 17

when 1,000 labor hours are worked, total OHD will be more than $24,000