ACCT 349 Week 4 Midterm Exam

ACCT 349 Week 4 Midterm Exam

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ACCT 349 Week 4 Midterm Exam

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1.      (TCO 5) The following information is available from the Taylor Company. Actual factory overhead $15,000 Fixed overhead expenses, actual $7,200 Fixed overhead expenses, budgeted $7,000 Actual hours 3,500 Standard hours 3,800 Variable overhead rate per direct labor hour $2.50 Assuming that Taylor uses a three-way analysis of overhead variances, what is the spending variance? (Points : 11)      $750 favorable $750 unfavorable $950 favorable $200 unfavorable 2. (TCO 5) In an activity-based costing system, what should be used to assign a department’s manufacturing overhead costs to products produced in varying lot sizes? (Points : 11) A single cause-and-effect relationship      Multiple cause-and-effect relationships Relative net sales value of the products A product’s ability to bear cost allocations 3. (TCO 1) An examination of Boener Company’s past maintenance records disclosed the following costs and volume measures the following. Highest Lowest Cost per month $39,200 $32,000 Machine hours 24,000 15,000 Using the high-low technique, estimate the annual fixed cost for maintenance expenditures. (Points : 11) $447,360 $384,000       $240,000 $230,400 4. (TCO 1) Serendipity Co. uses regression analysis to develop a model for prediction overhead costs. Two different cost drivers (machine hours and direct materials weight) are under consideration as the independent variable. Relevant data were run on a computer using one of the standard regression programs, with the following results. Machine hours Coefficient Y intercept 2,500 B 5.0 r-squared = .70 Direct materials weight Y intercept 4,600 B 2.6 r-squared = .50 Which regression equation should be used? (Points : 11)      y = 2.500 + 5.0x y = 2500 + 3.5x y = 4,600 + 2.6x y = 4,600 + 1.3x 5. (TCO 2) Relevant or differential cost analysis (Points : 11) takes all variable and fixed costs into account to analyze decision alternatives. considers only variable costs as they change with each decision alternative. considers the change in reported net income for each alternative to arrive at the optimum decision for the company.       considers all variable and fixed costs as they change with each decision alternative. 6. (TCO 2) McConnell is a manufacturer of industrial components. One of its products that is used as a subcomponent in auto manufacturing is JC-46. This product has the following financial structure per unit. Selling price $150 Direct materials 20 Direct labor 15 Variable manufacturing overhead 12 Fixed manufacturing overhead 30 Shipping and handling 3 Fixed selling and administrative 10 Total costs $ 90 McConnell has received a special, one-time order for 1,000 JC-46 parts. Assuming McConnell has excess capacity, the minimum price that is acceptable for this one-time special order must be greater than (Points : 11) $47.       $50. $60. $77. 7. (TCO 5) Janice Foeld Company manufactures part Z for use in its production cycle. The costs per unit for 10,000 units of part Z are as follows. Direct materials $3 Direct labor 15 Variable overhead 6 Fixed overhead 8 TOTAL $32 Baloney Company has offered to sell Janice Foeld 10,000 units of part Z for $30 per unit. If Janice Foeld accepts Baloney’s offer, the released facilities can be used to save $45,000 in relevant costs in the manufacture of part A. In addition, $5 per unit of the fixed overhead applied to part Z would be totally eliminated. The total relevant costs to buy part Z are (Points : 11) $320,000. $300,000.       $290,000. $250,000. 8. (TCO 2) Bieber Company has excess capacity on two machines, 24 hours on Machine 105 and 16 hours on Machine 107. To use this excess capacity, the company has two products, known as Product D and Product F, that must use both machines in manufacturing. Both have excess product demand, and the company can sell as many units as it can manufacture. The company’s objective is to maximize profits. Product D has an incremental profit of $6 per unit, and each unit utilizes 2 hours of time on Machine 105 and then 2 hours of time on Machine 107. Product F has an incremental profit of $7 per unit, and each unit utilizes 3 hours of time on Machine 105 and then 1 hour of time on machine 107. Let D be the number of units for Product D, F be the number of units for product F, and P be the company’s profit. A feasible solution for Bieber Company is (Points : 11) D = 2 and F = 8.      D = 6 and F = 4. D = 12 and F = 0. D = 8 and F = 3. 9. (TCO 4) Which of the following criteria would be most useful to a sales department manager in evaluating the performance of the manager’s customer service group? (Points : 11) The customer is always right. Customer complaints should be processed promptly. Employees should maintain a positive attitude when dealing with customers.      All customer inquiries should be answered within 7 days of receipt. 10. (TCO 6) The sales quantity variance equals (Points : 11) actual units x (budgeted weighted-average UCM for planned mix – budgeted weighted-average UCM for actual mix).       (actual units – master budget units) x budgeted weighted-average UCM for the planned mix. budgeted market share percentage x (actual market size in units – budgeted market size in units) x budgeted weighted-average UCM. (actual market share percentage – budgeted market share percentage) x  actual market size in units x budgeted weighted-average UCM. 11. (TCO 6) The following are relevant data for calculating sales variances for Lumber Co., which sells its sole product in two countries. John  Quincy  Total Budgeted selling price per unit $6.00 $10.00 NA Budgeted variable cost per unit   3.00 7.50 NA Budgeted contribution margin per unit $3.00 $ 2.50 NA Budgeted unit sales 300 200 500 Budgeted mix percentage 60% 40% 100% Actual units sold 260 260 520 Actual selling price per unit $6.00 $9.50 NA The sales volume variance for John and Quincy is (Points : 11) $130 U. $120 U.        $30 F. $150 F. 12. (TCO 4) Nonfinancial performance measures are important to engineering and operations managers in assessing the quality levels of their products. Which of the following indicators can be used to measure product quality? I.   Returns and allowances II.  Number and types of customer complaints III. Production cycle time (Points : 11)      I and II only I and III only II and III only I, II, and III 13. (TCO 6) For a single-product company, the sales volume variance is (Points : 11) the difference between actual and master budget sales volume, times actual unit contribution margin. the difference between flexible budget and actual sales volume, times master budget unit contribution margin. the difference between flexible budget and master budget sales volume, times actual budget unit contribution margin.      the difference between flexible budget and master budget sales volume, times master budget unit contribution margin. 14. (TCO 5) Variable factory overhead is applied on the basis of standard direct labor hours. If, for a given period, the direct labor efficiency variance is unfavorable, the variable factory overhead efficiency variance will be (Points : 11) favorable.      unfavorable. zero. the same amount as the labor efficiency variance. . 15. (TCO 1) Bubba company has developed a learning (improvement) curve for one of its newer processes from its accounting and production records. Management asked for an internal audit to review the curve. Which of the following events tend to mitigate the effects of the learning curve? (Points : 11) Labor costs incurred for overtime hours were charged to an overhead account. The number of preassembled purchased parts that were used exceeded the plan. Newly developed processing equipment with improved operating characteristics was used.        All of the above

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1. (TCO 3) How do companies determine target costs? (Points : 15)

2.     (TCO 2) How and why are capacity constraints relevant when trying to decide which products to produce? (Points : 35)

3.     (TCO 1) Outline the six steps involved in estimating a cost function using quantitative analysis. (Points : 35)