Midterm Exam 2 (Form 1) Flashcards
Midterm 2 question and answers for Final
Andrew Industries purchased $172,000 of raw materials on account during the month of March. The beginning raw materials inventory balance was $23,400, and the materials used to complete jobs during the month were $147,000 of DM and $13,700 of indirect materials. What is the ending raw materials inventory balance for March?
a) 34,400
b) 12,400
c) 9,700
d) 48,100
e) 24,700
B raw materials + raw materials purchased - DM used - Indirect used = E raw materials
23,400 + 172,000 -147,300 - 13,700 = E raw materials
= 34,400 (A)
Cadillac Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected OH costs and related data shown below to compute departmental OH rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C.
A1A B2B C3C
DLH 90000, 80000, 72000
MH 54000, 32000, 54000
BOH 540000, 160000, 216000
A) A 6, B 5, C 4
B) A 10, B 2, C 4
C) A 10, B 5, C 4
D) A 6, B 5, C 3
E) A 10, B 2, C 3
A: OH/MH = 540000/54000 = 10
B: OH/DL = 160000/80000 = 2
C: OH/MH = 216000/54000 = 4
(B)
Minstrel Manufacturing uses a job order costing system. During the month, Minstrel purchased $198,000 of raw materials on credit, issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined OH rate of 150% of DL cost. The journal entry to record INDIRECT LABOR COST is:
A) Debit WIP Inventory 40000, Credit Wages Payable 40000
B) Debit FOH 40000, Credit Wages payable 40000
C) Debit WIP Inv 40000, Credit Cash 40000
D) Debit FOH 40000, Credit WIP Inv 40000
E) Debit FOH 110000, Credit Wages Payable 110000
(B) Debit FOH 40000, Credit Wages payable 40000
If one unit of Product Z2 used 41.60 of direct materials and $3.80 of direct labor, sold for $11.00, and was assigned OH at the rate of 21% of DL costs, how much gross profit was realized from this sale (round 2 decimal places)
A) 5.40
B) 5.60
C) 11.00
D) 0.80
E) 4.80
Cost = DM + DL + OH
Cost = 1.60 + 3.80 + 0.80
Cost = 6.20
GP = Sell $ - Cost
GP = 11.00 - 6.20
Gross Profit = 4.80 (E)
W&W Tax Service offers tax and consulting services to individuals and small businesses. Dara for fees and costs for three types of tax returns is presented in the table below. Fixed costs total $43,520
Type SalesMix Fee Var
Easy, 50%, 116, 68
Moderate, 30%, 266, 158
Business, 20%, 566, 208
The weighted average CM is:
A) 272
B) 251
C) 948
D) 128
E) 474
WACM = (116-68).5 + (266-158).3 + (566-298)*.2 = 128 (D)
Which one of the following statements is FALSE?
A) Total fixed costs remain the same regardless of the volume within the relevant range
B) Total variable costs decrease as the volume increases
C) Fixed costs per unit increase as the volume decreases
D) Variable costs per unit remain the same regardless of the volume
E) Total variable costs change with volume
(B) Total variable costs decrease as the volume increases
Which of the following statements is TRUE with regard to activity-based costing?
A) All cost drivers used to determine the rates will be unit-level drivers
B) activity-based costing often results in low-volume complex products being undercosted, and high-volume simpler products to be overcosted
C) activity-based costing rates are the same as departmental OH rates
D) activity rates are computed by dividing budgeted activity usage by budgeted activity cost
E) the basic principle underlying activity-based costing is that activities are what cause OH cost to be incurred
(E) the basic principle underlying activity-based costing is that activities are what cause OH cost to be incurred
Oxford Company uses a job order costing system. This month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. The journal entry to record DIRECT labor consists of a:
A) Debit WIP Inv 24600, Credit Wages Payable 24600
B) Debit Payroll Exp 24600, credit wages payable 24600
C) Debit WIP Inv 28900, credit wages payable 28900
D) Debit Payroll EXP 24600, credit cash 24600
E) Debit WIP Inv 4300, Credit Wages Payable 4300
(A) Debit WIP Inv 24600, Credit Wages Payable 24600
During a recent fiscal year, Creek Company reported income of $117,00, a contribution margin ratio of 20% and total contribution margin of $320,00. Total variable costs must have been:
A) 1280000
B) 1015000
C) 1600000
D) 585000
E) 2185000
Sales = CM/CM ratio
Sales = 320000/0.20
Sales = 1600000
CM = Sales - Variable Costs
320000 = 1600000 - V
1280000 = Variable Costs (A)
Morris Company applies OH based on DL costs. For the current year, Morris Company estimated total OH to be $412,000, and DL costs to be $2,060,000. Actual OH costs for the year totaled $389,000, and actual DL costs totaled $1,830,000. At year-end, the balance in the FOH account is a:
A) 412000 Credit
B) 23000 Credit
C) 366000 Debit
D) 23000 Debit
E) 389000 Debit
Predetermined OH rate = 412000 estimated OH / 2060000 estimated DL
Predetermined OH rate = 20%
389000 OH incurred - (1830000*20%) OH applied
= 23,000 DEBIT (D)
Henderson Company has fixed costs of $32,000 and a CM ratio of 25%. If expected salesa re $200,000, what is the margin of safety as a percent of sales?
A) 56%
B) 64%
C) 28%
D) 17%
E) 36%
Break-Even Sales = 32000/0.25
BE Sales = 128000
Margin of Safety % = (Sales - BE Sales) / Sales
= (200000 - 128000) / 200000 = 36% (E)
A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activitied:
Activity, Cost, Driver, BudgetAct
Act1, 54000, Sqft, A1: 1800, B2: 5400
Act2, 69000, Units Repaired, A1: 2840, B2: 5360
Act3, 92000, Orders, A1: 7800, B2: 1400
Annual production and sales level of A1 is 9080 units, and the annual production and sales level of B2 is 22910 units. What is the approximate OH cost per unit of A1 under activity-based costing?
A) 7.50
B) 12.71
C) 4.35
D) 10.00
E) 8.41
All to Product A1
Act1 = (540001800)/7200
Act1 = 13500
Act2 = (690002840)/8200
Act2 = 23898
Act3 = (92000*7800)/92000
Act3 = 78000
Total OH allocated = 115398
OH per unit A1 = 115398/9080
OH per unit A1 = 12.71 (B)
Carver Packing Company reports total CM of $96,600 and income of $21,000 for the current month. In the next month, the company expects sales volume to increase by 5%. The degree of operating leverage and the expected percent change in income, respectively, are:
A) 4.6 and 5%
B) 0.22 and 5%
C) 0.22 and 4.1%
D) 2.5 and 13%
E) 4.6 and 23%
Degree of Op Leverage = Total CM / Income
DOL = 96600 / 21000
DOL = 4.6
% Change in Income = DOL * % change in sales
% Change Income = 4.6 * 5%
% Change Income = 23%
(E) 4.6 and 23%
Which of the following companies would be best served by a PLANTWIDE OH RATE?
A) A company that manufactures many different products and whose operations are highly mechanized
B) A company whose products differ in batch size and complexity and consume different amounts of OH resoures
C) A company that manufactures many different products and whose operations are an equal mix of labor and mechanized work
D) A company that manufactures few products and whose operations are labor intensive
E) A company whose products use OH resources in very different ways
(D) A company that manufactures few products and whose operations are labor intensive
The following data relates to Coachman Company’s budgeted amounts for next year
Budgeted Data, Dept 1, Dept 2
OH Costs, 400000, 560000
DLH, 65000, 85000
MH, 1500, 2500
What is the company’s plantwide OH rate if machine hours are the allocation base?
A) 4.13 per MH
B) 106.67 per MH
C) 160.00 per MH
D) 240.00 per MH
E) 6.15 per MH
(400000+560000)/(1500+2500) = 240.00 per MH (D)
