ACCT 505 Midterm Exam (Version 2)

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1. (TCO A) Direct material cost is a part of:
2. (TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n):
3. (TCO A) The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n):
4. (TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following?
5. (TCO F) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to:
6. (TCO F) Which of the following statements about process costing system is incorrect?
7. (TCO F) The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method:
8. (TCO B) The contribution margin ratio always increases when the:
9. (TCO B) The unit sales needed to attain the target profit is found by:
10. (TCO E) In an income statement prepared using the variable costing method, variable selling and administrative expenses would:
    

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Page 2

1. (TCO A). The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just completed year.
2. (TCO F) The Indiana Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below: Percent completed
   Units Materials Conversion
3. (TCO B) A tile manufacturer has supplied the following data: Boxes of tile produced and sold 625,000
   Sales revenue $2,975,000….Variable manufacturing expense $1,720,000….Fixed manufacturing expense $790,000….Variable selling and admin expense $152,000….Fixed selling and admin expense $133,000
   Net operating income $180,000
4. (TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations: ……The company produces the same number of units every month, although the sales in units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month.