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Devry ACCT 505 Week 4 Midterm Exam

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Devry ACCT 505 Week 4 Midterm Exam

11. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just-completed year

  • Sales $920
  • Purchases of raw materials $215
  • Direct labor $170
  • Manufacturing overhead $275
  • Administrative expenses $180
  • Selling expenses $140
  • Raw materials inventory, beginning $100
  • Raw materials inventory, ending $65
  • Work-in-process inventory, beginning $75
  • Work-in-process inventory, ending $35
  • Finished goods inventory, beginning $130
  • Finished goods inventory, ending $165

Prepare a Schedule of Cost of Goods Manufactured statement in the text box below. (Points : 15)

12. (TCO B) The Alabama Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed

[table id=4 /]

The department started 237,500 units into production during the month and transferred 240,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs. (Points : 20)

Question 13, 25 pts

(TCO C) Drake Company has supplied the following data.

  • Selling price $50
  • Variable costs $15
  • Total fixed expenses $700,000
  • Desired target profit $280,000

Required:

  1. Calculate the breakeven in units.
  2. Calculate the breakeven in sales dollars.
  3. Calculate the units needed to reach the target profit.
  4. If actual sales are expected to be 24,000 units, what is the margin of safety in sales dollars?
  5. If actual sales are expected to be 24,000 units, what is the margin of safety as a percentage?
  • Selling price $50
  • Variable costs $15
  • Contribution Margin $35

Question 1430 pts

(TCO D) Johnson Company, which has only one product, has provided the following data concerning its most recent month of operations.

  • Selling price $175
  • Units in beginning inventory 0
  • Units produced 9,500
  • Units sold 8,000
  • Units in ending Inventory 1,500

Variable costs per unit: 

  • Direct materials $50
  • Direct labor $36
  • Variable manufacturing overhead $2
  • Variable selling and admin $10

Fixed costs: 

Fixed manufacturing overhead  $300,000
Fixed selling and admin $100,000

Required:

a: What is the unit product cost for the month under variable costing?
b: What is the unit product cost for the month under absorption costing?
c: Prepare an income statement for the month using the variable costing method.
d: Prepare an income statement for the month using the absorption costing method

[INSERT_ELEMENTOR id=”15770″]

 

Question 16 pts

(TCO A)  Direct material cost is a part of

  • Conversion Cost NO…. Prime Cost NO.
  • Conversion Cost YES…. Prime Cost NO.
  • Conversion Cost YES…. Prime Cost YES.
  • Conversion Cost NO…. Prime Cost YES.

Question 26 pts

(TCO A)  A cost incurred in the past that is not relevant to any current decision is classified as a(n)

  • period cost.
  • incremental cost.
  • opportunity cost.
  • sunk cost.

Question 36 pts

(TCO A) Property taxes on a company’s factory building would be classified as a(n)

  • variable cost.
  • prime cost.
  • period cost.
  • product cost.

Question 46 pts

(TCO C) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following?

  • Fixed costs per unit decrease and variable costs per unit do not change.
  • Fixed costs per unit increase and variable costs per unit do not change.
  • Fixed costs per unit do not change and variable costs per unit do not change.
  • Fixed costs per unit do not change and variable costs per unit increase.

Question 56 pts

(TCO B) When manufacturing overhead is applied to production, it is added to

  • the cost of goods sold account.
  • the raw materials account.
  • the direct labor account.
  • work-in-process account.

Question 66 pts

(TCO B) Which of the following statements about the process-costing system is/are correct?

  • In a process-costing system, each processing department has a work-in-process account.
  • In a process-costing system, equivalent units are separately computed for materials and for conversion costs.
  • In a process-costing system, overhead can be under- or over-applied just as in job-order costing.
  • All of the statements above are correct.

Question 76 pts

(TCO B) Equivalent units of production for a process costing system using the weighted-average method would be equal to

  • units in beginning work in process inventory plus units started less units in ending work-in-process inventory.
  • units completed during the period and transferred out less equivalent units in ending work-in-process inventory.
  • units in beginning work in process inventory plus units started plus units in ending work-in-process inventory.
  • units completed during the period and transferred out plus equivalent units in ending work-in-process inventory.

Question 86 pts

(TCO C) The contribution margin equals

  • sales – expenses.
  • sales – variable costs.
  • sales – cost of goods sold.
  • sales – fixed costs.

Question 96 pts

(TCO C) The unit sales needed to attain the target profit is found by

  • dividing fixed costs by the contribution margin.
  • adding variable expenses to fixed expenses and dividing the total by the contribution margin.
  • adding target profit to the fixed expenses and then dividing the total by the contribution margin for the division or segment.
  • adding target profit to the fixed expenses and then dividing the total by the unit contribution margin.

Question 106 pts

(TCO D) In an income statement prepared using the variable costing method, fixed manufacturing overhead would

  • not be used.
  • be used in the computation of the contribution margin.
  • be used in the computation of net operating income but not in the computation of the contribution margin.
  • be treated the same as variable manufacturing overhead