Acct 2 Final Exam

a. 3,425 units b. 2,381 units c. 2,000 units [[d. 4,808 units]]

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

a. sales commissions b. office supply costs c. interest expense [[d. direct materials]]

Which of the following would NOT be included in the cost of a product manufactured according to variable costing?

a. must follow GAAP [[b. may rely on estimates and forecasts]] c. is prepared for users outside the organization d. always reports on the entire entity

Which of the following is most associated with managerial accounting?

a. canned soup processor b. oil refinery c. lumber mill [[d. hospital]]

. For which of the following businesses would the job order cost system be appropriate?

a. trend balance sheet b. comparative balance sheet c. condensed balance sheet [[d. common-sized balance sheet]]

A balance sheet that displays only component percentages is a

a. classified as fixed costs b. classified as variable costs c. classified as period costs [[d. separated into their variable and fixed cost components]]

For purposes of analysis, mixed costs are

a. $10.00 b. $0.67 c. $0.63 [[d. $0.11]]

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent. Cost Machine Hours March $3,100 15,000 April 2,700 10,000 May 2,900 12,000 June 3,600 18,000

[[a. 30,000 units]] b. 8,710 units c. 12,273 units d. 20,000 units

If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sales (units) if fixed costs are reduced by $30,000?

[[a. factory overhead and product costs]] b. factory overhead and period costs c. operating costs and period costs d. operating costs and product costs

Indirect labor and indirect materials are classified as

[[a. vertical analysis]] b. solvency analysis c. profitability analysis d. horizontal analysis

The percent of fixed assets to total assets is an example of

a. direct labor b. direct materials cost c. variable and fixed overhead cost [[d. variable and fixed selling and administrative expenses]]

Under absorption costing, which of the following costs would NOT be included in finished goods inventory?

[[a. direct labor cost and factory overhead cost]] b. direct materials cost and direct labor cost c. factory overhead cost d. direct materials cost and factory overhead cost

Which of the following costs are conversion costs?

[[a. decreases with increasing production]] b. decreases with decreasing production c. remains constant with changes in production d. increases with increasing production

Which of the following describes the behavior of the fixed cost per unit?

a. investing activities [[ b. financing activities]] c. noncash investing and financing activities d. operating activities

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

[[a. $400]] b. $406 c. $2,000 d. $2,400

On June 1, $40,000 of treasury bonds were purchased between interest dates. The broker commission was $600. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. How much interest revenue will be recorded on July 1?

a. steel b. fabric [[c. glue]] d. lumber

All of the following could be considered a direct material except

[[a. increase by $1,700,000]] b. decrease by $1,700,000 c. increase by $3,400,000 d. decrease by $3,400,000

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

[[a. product costs and expensed when the goods are sold]] b. product costs and expensed when incurred c. period costs and expensed when incurred d. period costs and expensed when the goods are sold

Direct labor and direct materials are

a. a direct cost and an indirect cost b. a direct cost [[c. an indirect cost]] d. a period cost

A plant manager's salary is

a. buy $75,000 more in profits [[b. make $275,000 increase in profits]] c. buy $275,000 more in profits d. make $350,000 increase in profits

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard Inc. at a price of $65 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows; direct materials, $32 per unit; direct labor, $10 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why?

a. the same cost structure in total b. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000 c. total variable costs of $148,000 [[d. direct materials pf $60,000, direct labor of $6,000, and supervisor salaries of $24,000]]

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show

a. current assets on the balance sheet b. current liabilities on the balance sheet c. operating costs that are shown on the income statement when products are sold [[ d. operating costs that are shown on the income statement in the period in which they are incurred]]

Period costs include

[[a. $80,000 decrease]] b. $80,000 increase c. $104,000 decrease d. $104,000 increase

The level of inventory of a manufactured product increases by 8,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs during the period $24.00 $10.00 Unit operating expenses during the period 8.00 3.00 What would be the effect on income from operations if variable costing is used rather than absorption costing?

a. $30,000 decrease b. $180,000 increase [[c. $30,000 increase]] d. $180,000 decrease

Piper Corp. is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36 including fixed costs and $26 excluding fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part of rather than purchasing it?

a. the cash flows from financing activities section b. the cash flows from investing activities section [[c. a separate schedule]] d. the cash flows from operating activities section

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

a. $150,000 [[b. $275,000]] c. $550,000 d. $125,000

Rylan Corporation received an offer from an exporter for 25,000 units of a product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 11 Fixed 6 What is the differential cost from the acceptance of the offer?

a. $1,000,000 overapplied b. $1,000,000 underapplied [[ c. $500,000 overapplied]] d. $500,000 underapplied

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is

a. exceed units sold b. equal units sold [[c. are less than units sold]] d. are equal to or greater than units sold

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

a. $140,000 increase b. $5,000 increase c. $5,000 decrease [[d. $140,000 decrease]]

The condensed income statement of Hayden Corp. for the past year is as follows: Product T U Sales $680,000 $320,000 Costs: Variable costs: $540,000 $220,000 Fixed costs: 145,000 40,000 Total costs: $685,000 $260,000 Income (loss) : $(5,000) $60,000 Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?

a. debit Factory Overhead, credit Work in Process b. debit Finished Goods, credit Wages Payable [[ c. debit Work in Process, credit Wages Payable]] d. debit Factory Overhead, credit Wages Payable

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

a. flexible budgeting b. continuous budgeting [[c. zero-based budgeting ]] d. master budgeting

The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as

a. variable costs, product costs, and sunk costs [[b. fixed costs, variable costs, and mixed costs]] c. variable costs, period costs, and differential costs d. variable costs, sunk costs, and opportunity costs

The three most common cost behavior classifications are

a. $125,000 loss b. $25,000 income [[c. $125,000 income]] d. $25,000 loss

What is the amount of income or loss from the acceptance of the offer?

a. absorption costing b. differential costing c. standard costing [[d. variable costing]]

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?

a. budgetary slack b. padding [[c. goal conflict]] d. cushions

When the management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing

a. process cost and general accounting systems [[ b. job order cost and process cost systems]] c. job order and general accounting systems d. process cost and replacement cost systems

Which of the following are the two main types of cost accounting systems for manufacturing operations?

a. purchase of noncurrent assets b. purchase of treasury stock [[c. discarding an asset that had been fully depreciated]] d. payment of cash dividends

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

a. salary of a sales manager b. advertising for a particular product [[c. drill bits for a drill press used in the plant assembly area]] d. salary of the company receptionist

Which of the following is a product cost?

a. to determine the amounts charged to customers for services provided [[b. to determine service quality]] c. to determine profitability of services provided d. all of the above

Which of the following is not a reason for banks to use activity-based costing?

[[a. raw materials, work in process, finished goods, cost of goods sold]] b. raw materials, finished goods, cost of goods sold, work in process c. work in process, finished goods, raw materials, cost of goods sold d. cost of goods sold, raw materials, work in process, finished goods

Which of the following is the correct flow of manufacturing costs?

a. a custom furniture manufacturer b. an auto body repair shop c. a law firm [[d. a lawn fertilizer manufacturer]]

Which of the following would be most likely to use process costing?