ACCT
505 Midterm Exam 100% Correct Answers
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(TCO A) Wages paid to an assembly
line worker in a factory are a
(TCO A) A cost incurred in the past
that is not relevant to any current decision is classified as a(n)
(TCO A) Depreciation of office
buildings and office equipment is also known as
(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?
(TCO F) Which of the following
statements is true?
(TCO F) A job-order cost system is
employed in those situations where
(TCO F) The FIFO method only
provides a major advantage over the weighted-average method in that
(TCO B) The contribution margin
ratio always decreases when the
(TCO B) Which of the following would
not affect the break-even point?
(TCO E) In an income statement
prepared using the variable costing method, variable selling and administrative
expenses would
(TCO F) The Illinois 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
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
The department started 475,000 units
into production during the month and transferred 480,000 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.
(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
Required:
a. Calculate the company’s unit
contribution margin.
b. Calculate the company’s unit
contribution ratio.
c. If the company increases its unit
sales volume by 5% without increasing its fixed expenses, what would the
company’s net operating income be?
(TCO E) Lehne Company, which has
only one product, has provided the following data concerning its most recent
month of operations:
|
Selling price
|
$ 125
|
|
|
Units in beginning inventory
|
600
|
|
|
Units oroduced
|
3000
|
|
|
Units sold
|
3500
|
|
|
Units in ending inventory
|
100
|
|
|
Variable costs per unit:
|
||
|
Direct materials
|
$ 15
|
|
|
Direct labor
|
$ 50
|
|
|
Variable manufacturing overhead
|
$ 8
|
|
|
Variable selling and admin
|
$ 12
|
|
|
Fixed costs:
|
||
|
Fixed manufacturing overhead
|
$ 75,000
|
|
|
Fixed selling and admin
|
$ 20,000
|
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.
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.
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.
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