ACC 349 Final Exam (100% Answer)

1) What is the best way to handle
manufacturing overhead costs in order to get the most timely job cost
information?
A. The
company should add actual manufacturing overhead costs to jobs as soon as the
overhead costs are incurred.
B. The company should determine an allocation
rate as soon as the actual costs are known, and then apply manufacturing
overhead to jobs.
C. The company should account for only the
direct production costs.
D. The company should apply overhead using an
estimated rate throughout the year.
2) At the end of the year, manufacturing
overhead has been overapplied. What occurred to create this situation?
A. The company incurred more manufacturing
overhead costs than the manufacturing overhead assigned to jobs.
B. The actual manufacturing overhead costs
were less than the manufacturing overhead assigned to jobs.
C. The company incurred more total job costs
than the amount budgeted for the job.
D. Estimated manufacturing overhead was less
than actual manufacturing overhead costs.
3) Luca Company overapplied manufacturing
overhead during 2006. Which one of the following is part of the year end entry
to dispose of the overapplied amount assuming the amount is material?
A. A decrease to work in process inventory
B. A decrease to applied overhead
C. An increase to finished goods
D. An increase to cost of goods sold
4) Which of the following would be accounted
for using a job order cost system?
A. The production of textbooks
B. The production of town homes
C. The pasteurization of milk
D. The production of cans of spinach
5) Which one of the following is NEVER part
of recording the issuance of raw materials in a job order cost system?
A. Debit Manufacturing Overhead
B. Debit Finished Goods Inventory
C. Debit Work in Process Inventory
D. Credit Raw Materials Inventory
6) What is unique about the flow of costs in
a job order cost system?
A. It involves accumulating material, labor,
and manufacturing overhead costs as they are incurred in order to determine the
job cost.
B. Each job is costed separately in a Work in
Process subsidiary ledger.
C. Job costs cannot be measured until all
overhead costs are determined.
D. There are no costs remaining in Work in
Process at year end.
7) Which one of the following costs would be
included in manufacturing overhead of a lawn mower manufacturer?
A. The cost of the fuel lines that run from
the motor to the gas tank
B. The cost of the wheels
C. Depreciation on the testing equipment
D. The wages earned by motor assemblers
8) What broad functions do the management of
an organization perform?
A. Planning, directing, and controlling
B. Directing, manufacturing, and controlling
C. Planning, directing, and selling
D. Planning, manufacturing, and controlling
9) Which of the following represents the
correct order in which inventories are reported on a manufacturer’s balance
sheet?
A. Work in process, finished goods raw
materials
B. Raw materials, work in process, finished
goods
C. Finished goods, work in process, raw
materials
D. Work in process, raw materials, finished
goods
10) In traditional costing systems, overhead
is generally applied based on
A. machine hours
B. direct labor
C. direct material dollars
D. units of production
11) An activity that has a direct
cause-effect relationship with the resources consumed is a(n)
A. overhead rate
B. product activity
C. cost driver
D. cost pool
12) A well-designed activity-based costing
system starts with
A. computing the activity-based overhead rate

B. analyzing the activities performed to
manufacture a product
C. identifying the activity-cost pools
D. assigning manufacturing overhead costs for
each activity cost pool to products
13) Which of the following factors would
suggest a switch to activity-based costing?
A. Overhead costs constitute a significant
portion of total costs.
B. Production managers use data provided by
the existing system.
C. Product lines similar in volume and
manufacturing complexity.
D. The manufacturing process has been stable.

14) All of the following statements are
correct EXCEPT that
A. the objective of installing ABC in service
firms is different than it is in a manufacturing firm
B. the general approach to identifying
activities and activity cost pools is the same in a service company as in a
manufacturing company
C. activity-based costing has been widely
adopted in service industries
D. a larger proportion of overhead costs are
company-wide costs in service industries
15) What sometimes makes implementation of
activity-based costing difficult in service industries is
A. identifying activities, activity cost
plus, and cost drivers
B. attempting to reduce or eliminate nonvalue-added
activities
C. the labeling of activities as value-added
D. that a larger proportion of overhead costs
are company-wide costs
16) One of Astro Company’s activity cost
pools is machine setups, with estimated overhead of $150,000. Astro produces
sparklers (400setups) and lighters (600
setups). How much of the machine setup cost pool should be assigned to
sparklers?
A. $60,000
B. $90,000
C. $150,000
D. $75,000
17) Poodle Company manufactures two products,
Mini A and Maxi B. Poodle’s overhead costs consist of setting up machines,
$800,000;machining, $1,800,000; and
inspecting, $600,000. Information on the two products is:
Mini AMaxi B
Direct labor hours15,00025,000
Machine setups600400
Machine hours24,00026,000
Inspections800700
Overhead applied to Mini A using
activity-based costing is
A. $1,536,000
B. $1,664,000
C. $1,920,000
D. $1,200,000
18) Poodle Company manufactures two products,
Mini A and Maxi B. Poodle’s overhead costs consist of setting up machines,
$800,000;machining, $1,800,000; and
inspecting, $600,000. Information on the two products is:
Mini
A Maxi B
Directlabor hours 15,000
25,000
Machinesetups 600
400
Machinehours 24,000
26,000
Inspections 800 700

Overhead applied to Maxi B using
activity-based costing is
A. $1,536,000
B. $1,664,000
C. $2,000,000
D. $1,280,000
19) Seran Company has contacted Truckel Inc.
with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes
the wickets,variable costs are $11 per
unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should
Truckel make or buy the wickets?
A. Buy; savings = $10,000
B. Make; savings = $20,000
C. Make; savings = $10,000
D. Buy; savings = $25,000
20) Rosen, Inc. has 10,000 obsolete
calculators, which are carried in inventory at a cost of $20,000. If the
calculators are scrapped, they can be sold for $1.10 each (for parts). If they
are repackaged, at a cost of $15,000, they could be sold to toy stores for
$2.50 per unit. What alternative should be chosen, and why?
A. Repackage; revenue is $5,000 greater than
cost.
B. Scrap; incremental loss is $9,000.
C. Repackage; receive profit of $10,000.
D. Scrap; profit is $1,000 greater.
21) The cost to produce Part A was $10 per
unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier
Company has offered to supply Part A for $9 per unit. For the make-or-buy
decision,
A. incremental costs are $1 per unit
B. net relevant costs are $1 per unit
C. differential costs are $2 per unit
D. incremental revenues are $2 per unit
22) Hartley, Inc. has one product with a
selling price per unit of $200, the unit variable cost is $75, and the total
monthly fixed costs are $300,000. How much is Hartley’s contribution margin
ratio?
A. 37.5%
B. 150%.
C. 266.6%
D. 62.5%.
23) Which statement describes a fixed cost?
A. The amount per unit varies depending on
the activity level.
B. It varies in total at every level of
activity.
C. It remains the same per unit regardless of
activity level.
D. Its total varies proportionally to the
level of activity.
24) Disney’s variable costs are 30% of sales.
The company is contemplating an advertising campaign that will cost $22,000.
If sales are expected to increase $40,000, by how much will the
company’s net income increase?
A. $28,000
B. $18,000
C. $6,000
D. $12,000
25) Variable costing
A. is required under GAAP
B. is used for external reporting purposes
C. is also known as full costing
D. treats fixed manufacturing overhead as a
period cost
26) Which cost is NOT charged to the product
under variable costing?
A. Direct labor
B. Direct materials
C. Fixed manufacturing overhead
D. Variable manufacturing overhead
27) Orbach Company sells its product for $40
per unit. During 2005, it produced 60,000 units and sold 50,000 units (there
was no beginning inventory). Costs per unit are: direct materials $10,
direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing
overhead, and $60,000 selling and administrative expenses. The per unit
manufacturing cost under absorption costing is
A. $18
B. $16
C. $27
D. $26
28) Which of the following is NOT considered
an advantage of using standard costs?
A. Standard costs can be useful in setting
prices for finished goods.
B. Standard costs can reduce clerical costs.
C. Standard costs can make employees
“cost-conscious.”
D. Standard costs can be used as a means of
finding fault with performance.
29) The difference between a budget and a
standard is that
A. a budget expresses management’s plans,
while a standard reflects what actually happened
B. standards are excluded from the cost
accounting system, whereas budgets are generally incorporated into the cost
accounting system
C. a budget expresses a total amount while a
standard expresses a unit amount
D. a budget expresses what costs were, while
a standard expresses what costs should be
30) If a company is concerned with the
potential negative effects of establishing standards, they should

A. offer wage incentives to those
meeting standards
B. set tight standards in order to motivate
people
C. not employ any standards
D. set loose standards that are easy to
fulfill
31) The per-unit standards for direct
materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct
materials that actually cost $42,400 were used to produce 6,000 units of
product. The direct materials quantity variance for last month was
A. $2,400 favorable
B. $5,600 unfavorable
C. $3,200 unfavorable
D. $3,200 favorable
Materials quantity variance = SP * (AQ – SQ)
= $4 * (11,200 – 12,000) = – $ 3,200 (Favorable)
32) The standard number of hours that should
have been worked for the output attained is 8,000 direct labor hours and the
actual number of direct labor hours worked was 8,400. If the direct labor price
variance was $8,400 unfavorable, and the standard rate of pay was $18 per
direct labor hour, what was the actual rate of pay for direct labor?
A. $15 per direct labor hour
B. $18 per direct labor hour
C. $19 per direct labor hour
D. $17 per direct labor hour
33) The total variance is $10,000. The total
materials variance is $4,000. The total labor variance is twice the total
overhead variance. What is the total overhead variance?
A. $2,000
B. $4,000
C. $3,000
D. $1,000
34) Manufacturing overhead costs are applied
to work in process on the basis of
A. standard hours allowed
B. actual overhead costs incurred
C. ratio of actual variable to fixed costs
D. actual hours worked
35) The overhead volume variance relates only
to
A. variable overhead costs
B. both variable and fixed overhead costs
C. all manufacturing costs
D. fixed overhead costs
36) If the standard hours allowed are less
than the standard hours at normal capacity,
A. the overhead volume variance will be unfavorable

B. the overhead controllable variance will be
favorable
C. variable overhead costs will be
overapplied
D. variable overhead costs will be
underapplied
37) Gottberg Mugs is planning to sell 2,000
mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin
and a half hour of direct labor. Resin costs $1 per pound and employees of the
company are paid $12.50 per hour. Manufacturing overhead is applied at a rate
of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning
inventory and wants to have 2,400 pounds in ending inventory. How much is the
total amount of budgeted direct labor for April?
A. $12,500
B. $25,000
C. $27,500
D. $13,750
38) Lewis Hats is planning to sell 600 straw
hats. Each hat requires a half pound of straw and a quarter hour of direct
labor. Straw costs $0.20 per pound and employees of the company are paid $22
per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and
wants to have 50 pounds of straw and 60 hats in ending inventory. How many
units should Lewis Hats produce in April?
A. 600
B. 580
C. 630
D. 620
39) At January 1, 2004, Barry, Inc. has
beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units
during the first quarter of 2004 with a 10% increase in sales each quarter.
Barry’s policy is to maintain an ending inventory equal to 25% of the next quarter’s
sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales
revenue for the third quarter of 2004?
A. $57,525
B. $63,525
C. $42,350
D. $63,000
40) In most cases, prices are set by the A.
customers B. largest competitor C. selling company D. competitive market 41) A
company must price its product to cover its costs and earn a reasonable profit
in
A. all cases
B. its early years
C. the long run
D. the short run
41) A company must price its product to cover
its costs and earn a reasonable profit in
a. all cases.
b. its early years.
c. the long run.
d. the short run.
42) The cost-plus pricing approach’s major
advantage is
A. it considers customer demand
B. that sales volume has no effect on per
unit costs
C. it is simple to compute
D. it can be used to determine a product’s
target cost