ACCT434 Midterm Exam

1.

Question :

(TCO1) ABC systems create

Points Received:

5 of 5

2.

Question :

(TCO 1) Merriamn Company provides the following ABC costing information:

Activities

Total Costs

Activity-cost drivers

Account inquiry hours

$400,000

10,000 hours

Account billing lines

$280,000

4,000,000 lines

Account verification accounts

$150,000

40,000 accounts

Correspondence letters

$ 50,000

4,000 letters

Total costs

$880,000

The above activities are used by Department A and B as follows:

Department A

Department B

Account inquiry hours

2,000 hours

4,000 hours

Account billing lines

400,000 lines

200,000 lines

Account verification accounts

10,000 accounts

8,000 accounts

Correspondence letters

1,000 letters

1,600 letters

How much of the account billing cost will be assigned to Department B?

Points Received:

5 of 5

3.

Question :

(TCO 2) A master budget

Points Received:

5 of 5

4.

Question :

(TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?

Points Received:

5 of 5

5.

Question :

(TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?

Points Received:

5 of 5

6.

Question :

(TCO 4) In evaluating different alternatives, it is useful to concentrate on

Points Received:

5 of 5

7.

Question :

(TCO 5) The theory of constraints is used for cost analysis when

Points Received:

5 of 5

8.

Question :

(TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:

Direct materials

$45,000

Direct labor

65,000

Variable factory overhead

30,000

Fixed factory overhead

70,000

Total costs

$210,000

Of the fixed factory overhead costs, $30,000 is avoidable.

Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should

Points Received:

5 of 5

9.

Question :

(TCO 3) The cost function + 10X

Points Received:

5 of 5

10.

Question :

(TCO 4) Sunk costs

Points Received:

5 of 5

Page:

1 2

1.

Question :

(TCO 1) For each of the following drivers identify an appropriate activity.

a. # of machines

b. # of setups

c. # of inspections

d. # of orders

e. # of runs

f. # of bins or aisles

g. # of engineers

Points Received:

25 of 25

2.

Question :

(TCO 2) Favata Company has the following information:

Month Budgeted Sales

June $60,000

July 51,000

August 40,000

September 70,000

October 72,000

In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.

Prepare a purchases budget for July through September.

Points Received:

25 of 25

3.

Question :

(TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Month Machine-hours Overhead Costs

February 1,700 $20,500

March 2,800 22,250

April 1,000 19,950

May 2,500 21,500

June 3,500 23,950

Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

Points Received:

25 of 25

4.

Question :

(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are:

Direct materials $0.60

Direct manufacturing labor 3.00

Variable manufacturing overhead 1.20

Fixed manufacturing overhead 1.60

Total $6.40

Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.

a. What is the relevant per unit cost for the original part?

b. Which alternative is best for Kirkland Company? By how much?

Points Received:

25 of 25

Photos

ACCT434 Midterm Exam
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