AC 203 Final Exam Review Worksheet

AC 203 Principles of Accounting III Final Exam Worksheet 5 Points Extra Credit Available Multiple Choice
1. One cost which is part of both manufacturing overhead and total manufacturing costs is a. b. c. d. direct labor. direct materials. selling and administrative costs. factory utilities.
2. A job order cost system would most likely be used by a(n) a. b. c. d. cement manufacturer. paint manufacturer. specialty printing company. automobile manufacturer.
3. An example of a period cost, as opposed to a product cost, is a. b. c. d. factory utilities. wages of factory workers. salesmen's commissions. depreciation on the factory building
4. The formula for computing a predetermined overhead rate is a. b. c. d. estimated annual overhead costs estimated annual operating activity. estimated annual overhead costs actual annual operating activity. actual annual overhead costs actual annual operating activity. actual annual overhead costs estimated annual operating activity.
5. Given the following data, compute equivalent units of production for conversion costs: Beginning Work in Process8,000 units, 40% complete Units Completed and Transferred Out90,000 units Ending Work in Process6,000 units, 20% complete. a. b. c. d. 88,000 91,200 94,400 96,00
6. The first step in activity-based costing is to a. assign overhead costs for each activity cost pool to products. b. compute the activity-based overhead rate. c. identify cost drivers that accurately measure each activity's contribution to the finished product. d. identify and classify the major activities involved in the manufacture of specific products. 7. A cost which remains constant per unit at various levels of activity is a a. b. c. d. variable cost. fixed cost. mixed cost. manufacturing cost.
8. Fixed costs normally will not include a. b. c. d. property taxes. direct labor. supervisory salaries. depreciation on buildings and equipment.
9. The break-even point is where a. b. c. d. total sales equal total variable costs. contribution margin equals total fixed costs. total variable costs equal total fixed costs. total sales equal total fixed costs.
10.
A revenue that differs between alternatives and makes a difference in decision-making is called a(n) a. b. c. d. sales revenue. incremental revenue. unavoidable revenue. irrelevant revenue.
11.
Which of the following is an irrelevant cost? a. b. c. d. An avoidable cost An incremental cost A sunk cost An opportunity cost
12.
A responsibility report for a profit center shows a. b. c. d. gross profit and income from operations. contribution margin and controllable margin. contribution margin, controllable margin, and return on investment. gross profit, income from operations, and net income.
13.
A flexible budget a. is, in essence, a series of static budgets at different levels of activity. b. can be prepared for each of the types of budgets included in a master budget. c. increases budget allowances both directly and proportionately for variable costs as production increases. d. all of the above.
14.
Responsibility centers are generally classified as either a. b. c. d. divisions, departments, or branches. segments, subunits, or subdivisions. cost centers, profit centers, or divisions. cost centers, profit centers, or investment centers.
15.
The initial budget prepared in the master budget is the a. b. c. d. sales budget. production budget. budgeted balance sheet. budgeted income statement.
16.
Which of the following is true with regard to budgeting vs. long-range planning? a. Both tend to be very detailed. b. They are the same in all significant aspects. c. The maximum length for both usually is a year, with shorter periods of time also common. d. Budgeting is oriented more toward short-term goals; long-range planning toward longterm goals.
17.
A static budget is a. b. c. d. applicable to cost budgets but not to a sales budget. modified or adjusted for changes in activity during the year. appropriate in evaluating a manager's effectiveness in controlling fixed costs. appropriate in evaluating a manager's effectiveness in controlling variable costs.
18. The Muffin House produces and sells a variety of muffins. The selling price per dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. How many dozen muffins must The Muffin House sell to breakeven? a. 10,500 b. 700 c. 280 d. 175
19. The Muffin House produces and sells a variety of muffins. The selling price per dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. What are breakeven sales in dollars? a. $10,500 b. $2,625 c. $700 d. $6,300
20. Washington Bottling Company provides the following information about its single product. Targeted operating income Selling price per unit Variable cost per unit Total fixed cost $659,930 $7.55 $5.55 $112,200
How many units must be sold to earn the targeted operating income? a. 329,965 b. 56,100 c. 58,941 d. 386,065
True or False
T T F F 1. The flow of costs is essentially the same in a job order and a process cost system. 2. The method of assigning costs is essentially the same in a job order and a process cost system. 3. Non-value-added activities are production-related activities that add cost to a product without increasing its market value. 4. If volume increases, all costs will increase. 5. A mixed cost has both selling and administrative cost elements.
T T
F F
6. If variable costs per unit are 70% of sales, fixed costs are $290,000 and target net income is $70,000, required sales are $1,200,000. 7. The CVP income statement shows contribution margin instead of gross profit. 8. Standard cost is the industry average cost for a particular item. 9. Actual costs that vary from standard costs always indicate inefficiencies. 10. The overhead volume variance relates only to fixed overhead costs.
T T T T
F F F F
Problem 1
Classify the following manufacturing costs and expenses by using the following code letters: A. B. C. D. Direct materials cost Direct labor cost Manufacturing overhead cost Period cost
Abel Manufacturing Company incurs the following costs and expenses in making furniture: ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 1. Insurance on factory building 2. Oak and pine wood used in desks and chairs 3. Lubricants, rosin, and polishing compounds used in manufacturing 4. Advertising in trade magazines 5. Rent on leased factory machinery 6. Wages of assembly line workers 7. Salesperson's commissions 8. Depreciation on delivery equipment 9. Depreciation on factory machinery 10. Wages of factory maintenance workers
Problem 2
Ecker, Inc. produces milk at a total cost of $66,000. The production generates 60,000 gallons of milk which can be sold for $1 per gallon to a pasteurization company, or the milk can be processed further
into ice cream and then sold for $2.50 per gallon. It costs $75,000 more to turn the annual milk supply into ice cream. Instructions If Ecker processes the milk into ice cream, how much is the incremental profit or loss? Should Ecker process the milk into ice cream or sell it as is?
Problem 3 Loomis Company uses both standards and budgets. The company estimates that production for the year will be 200,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor. Instructions Compute the estimates for (a) a standard cost and (b) a budgeted cost.
Problem 4 During March, Odle Company purchases and uses 6,300 pounds of materials costing $25,830 to make 3,000 tiles. Odle Companys standard material cost per tile is $8 (2 pounds of material $4.00). Instructions Compute the total, price, and quantity material variances for Odle Company for March.

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AC 203 Principles of Accounting III Final Exam Worksheet 5 Points Extra Credit Available Multiple Choice

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