ACCT 2082 - Final Exam Review PDF

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ACCT 2082 - Final Exam Review...

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1 1.) A) B) C) D)

Which of the following is not a characteristic of managerial accounting? Information is used by internal parties. Information is subjective, relevant, future-oriented. Reports are prepared as needed. Information is reported for the company as a whole.

Answer: D. Financial, not managerial, accounting information is reported for the company as a whole. 2.) Which of furniture? A) The cost B) The cost C) The cost D) The cost

the following is an indirect cost of manufacturing a table made of wood and glass, for a firm that manufactures of of of of

the wood in the table. the labor used to assemble the table. the glass in the table. rent on the factory where the table is manufactured.

Answer: D. Costs that cannot be traced to a specific cost object, or that are not worth the effort of tracing, are indirect costs, such as the cost of rent on the factory. 3.) Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture? A) The cost of the wood in the table. B) The cost of rent on the factory where the table is manufactured. C) The salary of the supervisor who oversees all production for the firm. D) Depreciation on the tools used to manufacture the table. Answer: A. Costs that can be traced directly to a specific cost object are direct costs, such as the cost of the wood in the table. 4.) A) B) C) D)

Variable costs are costs that stay the same, in total, regardless of activity level. costs that vary inversely, per unit, with the number of units produced. costs that vary inversely, in total, with the number of units produced. costs that change, in total, in direct proportion to changes in activity levels.

Answer: D. Variable costs are those that change, in total, in direct proportion to changes in activity levels. Examples include the cost of direct materials and direct labor. 5.) A) B) C) D)

A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced. This is an example of a(n) fixed cost. direct cost. variable cost. indirect cost.

Answer: C. Variable costs are those that change, in total, in direct proportion to changes in activity levels. This cost increases in total as production increases, at a rate of $2 for every unit produced. 6.) A) B) C) D)

A cost is $50,000 when 25,000 units are produced, and $50,000 when 50,000 units are produced. This is an example of a(n) fixed cost. direct cost. variable cost. indirect cost.

Answer: A. Fixed costs are those that stay the same, in total, regardless of activity level. This cost remains at $50,000, in total, even when production increases. 7.) A) B) C)

What determines the difference between a variable and a fixed cost? Whether it changes when activity levels change. Whether it is relevant to a particular decision. Whether it can be traced to a specific cost object.

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2 D) Whether it is related to manufacturing or nonmanufacturing activities. Answer: A. Variable costs are those that change, in total, in direct proportion to changes in activity level. Fixed costs are those that stay the same, in total, regardless of activity level. 8.) A cost that has already been incurred is called a(n) _______________ cost. indirect sunk relevant opportunity Answer: Sunk. A sunk cost is one that has already been incurred. 9.) For a cost to be relevant, it must be a differential cost and a sunk cost. a differential cost, but not a sunk cost. a sunk cost, but not a differential cost. neither a differential cost nor a sunk cost. Answer: a differential cost, but not a sunk cost.. -A relevant cost must differ between the decision alternatives (a differential cost), and it must be incurred in the future rather than in the past. Sunk costs occur in the past. 10.) Product costs are reported A) only on the balance sheet. B) only on the income statement. C) on the balance sheet before goods are sold, and on the income statement after goods are sold. D) on the income statement before goods are sold, and on the balance sheet after goods are sold. Answer: C. Product costs are counted as inventory (an asset) until the product is sold, at which point they are reported as Cost of Goods Sold on the income statement. 11.) Ajax Company had the following information for the year: Direct Materials Used: $190,000 Direct labor incurred (7,000 hours): $245,000 Actual manufacturing overhead incurred: $ 273,000 Ajax Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $9,000. How much overhead was applied during the year? A) $245,000 B) $273,000 C) $280,000 D) $320,000 Answer: C. Predetermined overhead rate = $320,000/8,000 = $40.00. Applied manufacturing overhead = $40.00 × 7,000 = $280,000. 12.) Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $215,000, and actual labor hours were 21,000. Which of the following would be correct? A) Overhead is underapplied by $15,000 B) Overhead is underapplied by $5,000 C) Overhead is overapplied by $5,000 D) Overhead is overapplied by $15,000 Answer: B. Predetermined overhead rate = $200,000/20,000 = $10.00. Applied manufacturing overhead = $10.00 × 21,000 = $210,000. Underapplied overhead = $215,000 - $210,000 = $5,000. 13.) Manufacturing overhead was estimated to be $250,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was $225,000, and actual direct labor hours were 19,000. Which of the following would be correct? A) Overhead is underapplied by $25,000

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3 B) Overhead is underapplied by $12,500 C) Overhead is overapplied by $12,500 D) Overhead is overapplied by $25,000 Answer: C. Predetermined overhead rate = $250,000/20,000 = $12.50. Applied manufacturing overhead = $12.50 × 19,000 = $237,500. Overapplied overhead = $237,500 - $225,000 = $12,500. 14.) Analu, Inc. has formed four activity cost pools: Product Design, Machining and Production, Machine Setup, and Inspection. George Wembley, Production Manager at Analu, oversees process that are considered part of Machining and Production, Machine Setup, and Inspection. Wembley's salary should be A) assigned to the activity he spends the most time on. B) considered as a separate activity. C) expensed in the period incurred. D) allocated among Machining and Production, Machine Setup, and Inspection. Answer: D. Wembley's salary should be allocated among the activities he participates in using a Stage 1 allocation driver such as time spent on each activity. 15.) Bervine, Inc. produces two different products (bompers and woobles) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The activity rate for Machining is $125 per machine hour, and the activity rate for Inspection is $500 per batch. Usage of the activity drivers are as follows: Bompers Woobles Total Machine Hours 1000 3000 4000 Number of batches 45 15 60 What is the amount of Inspection cost assigned to bompers? A) $7,500 B) $22,500 C) $30,000 D) $125,000 Answer: B. 45 × $500 = $22,500 16.) Volume-based cost systems tend to A) Under-cost low-volume products and under-cost high-volume products. B) Under-cost low-volume products and over-cost high-volume products. C) Over-cost low-volume products and under-cost high-volume products. D) Over-cost low-volume products and over-cost high-volume products. Answer: B. Volume-based systems assign more indirect costs to high-volume products and less to low-volume products regardless of complexity, so high-volume costs are over-costed, while low-volume products are under-costed. 17.) A cost that changes, in total, in direct proportion to changes in activity levels is a(n) absorption cost. contribution margin. fixed cost. variable cost. Answer: variable cost. this is the definition. 18.) Which A) A cost B) A cost C) A cost D) A cost

of the following is a variable cost? that is $20,000 when production is 50,000, that is $20,000 when production is 50,000, that is $20,000 when production is 50,000, that is $40,000 when production is 50,000,

and and and and

$20,000 $28,000 $40,000 $40,000

when when when when

production production production production

is is is is

70,000. 70,000. 70,000. 70,000.

Answer: B. A variable cost increases in total when activity increases, but stays the same per unit....