Principles of Accounting
Principles of Accounting ACCT 202
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This 7 page Class Notes was uploaded by Troy Bins on Saturday September 12, 2015. The Class Notes belongs to ACCT 202 at West Virginia University taught by Denise White in Fall. Since its upload, it has received 66 views. For similar materials see /class/202824/acct-202-west-virginia-university in Accounting at West Virginia University.
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Date Created: 09/12/15
1 Preparing budgets is an example of the management function of A co olling B decisionm 39ng C directing D lanning 2 Which of the following groups are external users of nancial information A Customers of the company B Vendors of the company C Potential investors of the company D All of the above 3 Which ofthe following is TRUE A Managerial accounting reports are audited by CPAs B Managerial accounting reports provide detailed internal information C Managerial accounting reports aid potential investors Managerial accounting reports must follow GAAP 7 The main goal of nancial accounting is to provide information for A potential investors B creditors C governmental regulators D all of the above 3 Which of the following is an example of overhead in a factory A Wages of machine operators B Wages of factory maintenance personnel C Wages of administrators in the corporate of ce D Salaries ofsalespersons 5 MOH costs for Comfy A 324000 B 122000 C 228000 D 252000 8 When manufacturing products which of the following is an example of an inventoriable product cost A Depreciation on of ce equi ment B Depreciation on bui ding C Depreciation on factory equipment D Sales salaries expenses 10 Active Apparel What is the cost A B 428000 C 685000 D 15 A Company mistakenly treated a 20000 product cost as a period cost They produced 2000 units of product amp sold 1000 of them during the year In the year in which the mistake was ma e A net income will be too highB net income will be too low C net income will be correct 17 When manufacturing products DLampDM are classi ed as A period costs amp expensed when incurre B period costs amp expensed when the goods are sold C product costs amp expensed when incurred D product costs amp expensed when the goods are sold 18 Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant A The salary is a xed cost that is directly traceable to the cost of making hamburgers B The salary is a xed cost that is directly traceable to the cost of operating a speci c restaurant C The salary is a variable cost that cannot be traced to the cost of operating a speci c restaurant D None of the above 1 Manufacturing overhead would include A indirect labor costs only B all manufacturing costs except direct materials amp direct labor C all manufacturing costs D indirect materials only 2 Which of the following is most likely NOT to use process costing A DuPont Chemical B Ashley Custom Furnishings C ExxonMobile gasoline D General Mills cereal 3 Which costing system would a manufacturer of plywood use A Job costing B Process costing C Eitherjob or process D Bothjob amp process Before the year began a company estimated that manufacturing overhead for the year would be 160000 amp that 12000 direct labor hours would be worked Actual results for the year included the following Actual direct labor hours 15000 4 The predetermined manufacturing overhead rate per direct labor hour is closest to A 1333 B 1067 C 1167 D 1458 5 The amount of manufacturing overhead allocated for the year based on direct labor hours would have been A 6 000 B 167 500 C 175000 D 200000 made 6 1fthe company A 240000 C 230100 D 400000 7 Actual overhead incurred during the year totaled A 230100 B 300 000 C 283800 D 240000 10 Mountain Made quilts had a predetermined overhead allocation rate of 500 per direct labor hour If 5 direct laborers worked 1 2 hours each to make a batch of 10 quilts how much total overhead would be allocated to the batch of quilts 0 C 3000 D 7500 1 1 Assume that the total cost for the batch of10 quilts made above in 10 was 400 lfMountain Made wants to earn a gross pro t of40 on each guilt what price should be charged for each guilt A 160 B 16 C 56 D560 12 Job 2301 requires 12000 of direct materials 5000 ofdirect labor 500 direct labor hours amp300 machine hours Manufacturing overhead is computed at 15 per direct labor hour used amp 12 per machine hour usedThe total cost of Job 1547 is A 28100 B 11100 D 24500 15 The requisition of direct amp indirect materials into production reduces A nished goods inventory B manufacturing overhea C raw materials inventory D work in process inventory 16 Which of the following represents the ow of costs in a manufacturing rm A Raw materials inventory nished goods inventory COGS B Raw materials inventory WlP nished goods inventory C Finished goods inventory work in process inventory COGS D Work in process inventory COGS nished goods inventory 1 Cost distortion results in the A over costing of all products B under costing of all products C over costing of some products ampunder costing of other products D accurate costing of all products 2 What is the rst step in developing an ABC system A Identify the primary activities amp estimate a total cost pool for each BAllocate the costs to the cost object using the activity cost allocation rates CSelect an allocation base for each activi DCalculate an activity cost allocation rate for each activity 4 Which of the following describes how in ABC the activity allocation rate is computed A The total estimated activity cost pool is divided by the total estimated activity allocation base BThe total estimated activity allocation base is divided by the total estimated activity cost pool CThe total estimated activity allocation base is multiplied by the total estimated activity cost pool DYou take the total estimated activity allocation base amp subtract the total estimated total activity cost pool USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO Company manufactures clocks ampuses an activity based time to produce 5 What is A300 C450 D1250 6 What is the total manufacturing cost per cuckoo clock A 14250 C14400 D 2500 10 Four basic steps are used in an ABC system List the proper order of these steps which are currently scrambled below a Identify the primary activities amp estimate a total cost pool for each b Allocate the costs to the cost object using the activity cost allocation rates c Select an allocation base for each activi dCalculate an activity cost allocation rate for each activity c 11 gtgt a c a c 1 Which of the following statements is TRUE with respect to total variable costs A They will remain the same as production levels change within the relevant rang B They will decrease as production increases within the relevant range C They will decrease as production decreases within the relevant range D They will increase as production decreases within the relevant range 2 Which of the following equations represents the total mixed cost f B y vx C y f D y v f 3 YouCall offers a calling plan that charges 200 per month plus 005 per minute of call time Under this plan what is your monthly cost if you talk for a total of 100 minutes B 500 C 300 D 200 4 The following graph indicates which type of cost behavior Total Cost A Fixed B Mixed C Step D Variable 5 Total costs for Watson amp Company at 100000 units are 350000 while total xed costs are 150000 The total variable costs at a level of 200000 units would be A 700000 B 175000 C 400000 D 300000 6 Harbor Manufacturing is trying to predict the cost associated with producing its anchors At a production level of 4000 anchors Harbor Manufacturing s average cost per anchor is 5000 If 20000 of the costs are xed amp the plant manager uses the cost equation to predict total costs her forecast for 5000 anchors will be A 50000 B 245000 D 200000 7 Using account analysis what type of cost is the rental of a space at 2000 per month A Fixed B Mixed C Step D Variable 10 Traditional income statements organize costs by A function E behavior C discretionary vs committed D no particular manner 11 The contribution margin is equal to A sales minus cost of goods sold B sales minus variable expenses C sales minus xed expenses D sales minus 0 erati 12 A Store buys portable generators for 500 amp sells them for 800 He pays a sales commission of 5 of sales revenue to his sales staff Toby pays 2000 a month rent for his store amp also pays 1800 a month to his staff in addition to the commissions Toby sold 200 generators in June 1f Toby prepares a contribution margin income statement for the month of June what would be his contribution margin A 268000 B 160000 C 52000 D 108000 1 To compute the unit contribution margin should be subtracted from the sales price per unit A only variable period costs B only variable inventoriable product costs C all variable costs D all xed costs 2 Managers can quickly forecast the total contribution margin by multiplying the projected A sales rev by the CM ratio Bsales units by the CM ratio C sales revenue by the unit CMDsales units by the VC ratio 3 Anthony Of ce Supplies sells re lls on printer ink cartridges for 16 per re ll Variable costs are 4 per re ll Fixed costs are 2000 per month What is the contribution margin ratio for the printer ink cartridge re lls A 3 B 12 C 25 D 75 4 lfthe sale price per unit is 38 variable expenses per unit are 21 amp total xed expenses are 56950 what will the breakeven sales in units be A 1499 B 968150 5 If the contribution margin ratio is 32 target operating income is 60000 amp the sales revenue needed to achieve the target operating income is 400000 what are total xed expenses B 128000 D 188000 6 Healthy Greetings Corporation produces amp sells fruit baskets for special events The unit selling price is 60 unit variable costs are 45 amp total xed costs are 2670 What are breakeven sales in dollars A B 10680 7 Which of the following statements is TRUEif the xed costs increase while the sales price per unit amp variable costs per unit remain constant A The CM increases amp the breakeven point decreases B The CM decreases amp the breakeven point increases C CM stays the same amp the breakeven point decreases Whe CM stays the same amp the breakeven point increases 8 Which of the following will decrease the breakeven point in units assuming no other changes in the costvolurnepro t relationship Increase in the sale price per unit B A decrease in the sale price per unit C An increase in total xed costs D An increase in the variable costs per unit 10 Julia39s Cateringhas a monthly target operating income of 6000 Variable expenses are 40 of sales amp monthly xed expenses are 3600 What is the monthly margin of safety in dollars if the business achieves its operating income goal E 22000 C 16000 D 4000 11 The higher the operating leverage factor the A greater the impact of volume on operating income B lesser the impact of volume on operating income C more likely operating income is to stay constant D greater the chance that none of the above occur 1 Which of the following describes a sunk cost A One that is relevant to a decision because it changes depending on the alternative course of action selected BAn outlay expected to be incurred in the future CA historical cost that is always irrelevant DA historical cost that may be relevant 3 Which would be a consideration for making special orders A Available capacity to ll the order B If price will cover incremental costs of lling the order C lfthe order will affect regular sales in the long run D All ofthe above 4 Clear Sky Sailmakers manufactures sails for sailboats The company has the capacity to produce 15000 sails per year but is currently producing amp selling 10000 Ifa special sales order is accepted for 2500 sails at a price of205 per unit xed costs increase by 14000 amp variable marketing amp administrative costs for that order are 25 per unit how would operating income be affected Assume regular sales are not affected by the special order A Increase by 23500 B Decrease by 23500 C Increase by 37500 D Increase by 86000 7 A Company produces a part that is used in the manufacture of one of its products The unit manufacturing costs of this part assuming a production level of 5000 units Assuming no other use for its facilities what is the highest price per unit that the Company should be willing to pay for the part AlO B6 C 3 9 8 ACorporation has in its inventory 4000 damaged radios that cost 50000 The radios can be sold in their present condition for 32000 or repaired at a cost of 43000 amp sold for 66000 What is the opportunity cost of selling the radios in their present condition A 23000 B 109000 C 82000 D 75000 9 When deciding whether to outsource a product or service managers should consider which of the following A Quality of the product or service B Delivery schedule of the product or service C Cost charged for the product or service D All ofthe above 1 The budget is a major part of the master budget amp focuses on the income statement amp its suppor ng schedules A operating B cash C capital expenditures D nancial 2 Which of following budgets is part of the nancial budgets A Production budget B Budgeted balance sheet C Budgeted income statement D Sales budget 3 A Com an expects cash sales for July of15000 amp a 20 monthly increase during August amp September Credit sales of10000 in July should be followed by 25 increases during August amp September What are budgeted cash sales amp budgeted credit sales for September respectively A 18000 amp 12500 B 21600 amp 15376 C 23438 amp 14400 D 18750 amp 12000 4 Kayla s Toys budgeted sales of300000 for the month ofNovember amp cost ofgoods sold equal of70 ofsales Beginning inventory for November was 50000 amp ending inventory for November is estimated at 55000 How much are the budgeted purchases for November A 205000 B 95000 C 215000 D 105000 5 A Company f stuffed ears The number of bears to be produced in the upcomir g three month follows Number ofteddy bears to be nroduced in Iulv 12000 Number ofteddy bears to be nroduced in Augu t 15000 Number of teddy bears to be nroduced in September 10000 Each bear requires 2 pounds of the plastic pellets used as stuf ng The company has a policy that the ending inventory of plastic pellets each month must be equal to 20 of the following month s expected production needs How many pounds of plastic pellets does The Teddy Bear Company need to purchase in August A 20000 B 24000 c 28000 D 40000 6 Latimer Corporation collects 35 of a month s sales in the month of sale 50 in the month following sale amp 10 in the second month following sale The company has found that 5 of their sales are uncollectible Bud eted sales for the u comin four months are August budgeted ale 300000 September budgeted ale 280000 October budgeted ale 330000 I November budgeted ale 260000 The amount of cash that will be collected in Nov is budgeted to be A 91000 B 284000 C285500 D 289000 7 Newton Company is preparing its cash budget for the upcoming month The beginning cash balance for the month is expected to be 12000 Budgeted cash receipts are 84000 while budgeted cash disbursements are 72000 Newton Company wants to have an ending cash balance of 40000 The excess de ciency of cash available over disbursements for the month would be A 24000 B 24000 C 112000 D 168000 8 Thomario s Powder Coatings makes payments on its inventory purchases as follows 25 in the month of purchase 60 in the following month amp 15 in the second month following purchase Budgeted inventory purchases for June July amp August are 15000 19000 amp 24000 respectively At what amount are cash payments for inventory in August budgeted A 18750 B 19650 C 8700 D 7650 12 A Company is preparing its cash budget for the upcoming month The budgeted beginning cash balance is expected to be 30000 Budgeted cash receipts are 101000 while budgeted cash disbursements are 123000 The Company wants to have an ending cash balance of45000 How much would the Company need to borrow to achieve its desired ending cash balance A 8000 B 23000 C 37000 D 53000 1 Which of the following statements regarding static budgets is TRUE A They are designed to estimate revenues o y B Managers use them to help plan for uncertainties C They are prepared for a range of activity levels D They are prepared for one level of sales volume 3 A exible budget variance is the difference between A actual results amp amounts in the static budget B amounts in the exible budget amp the actual results C amounts in the exible budget amp the static budget D the budgeted amounts for each level of sales in the exible budget 4 Which term below is best paired with a budget for a single unit A Static budget B Standard cost C OH exible budget varianceD Production volume variance Use the following information for the next three guestions Zany Brainy projected current year sales of50000 units at a unit sale price of2000 Actual current year sales were 55000 units at 2200 per unit ctual variable costs budgeted at 1400 per unit totaled 1500 per unit Budgeted xed costs totaled 400000 while actual xed costs amounted to 420000 5 What is the sales volume variance for total revenue A 110000 favorable B 100000 unfavorable C 110000 unfavorable D 100000 favorable 6 What is the exible budget variance for variable expenses 55000 favorable B 50000 favorable C 55000 unfavorable D 50000 unfavorable 7 What is the exible budget variance for total expenses A 55000 unfavorable B 75000 unfavorable C 55000 favorable D 75000 favorable 8 If a worker drops the raw material during production amp the raw material must be discarded which variance is directly impacted A Materials price variance B Materials ef ciency variance C Labor price variance D Labor ef ciency variance 9 A company s purchasing department negotiates all of the purchasing contracts for raw materials Which variance is most useful in assessing the performance of the purchasing department A Materials price variance B Materials ef ciency variance C Labor price variance D Labor ef ciency variance 10 An unfavorable direct labor price variance amp a favorable direct labor ef ciency variance might indicate which of the following A Unskilled workers using more actual hours than standard paid at a higher rate per hour than the standard rate B Unskilled workers using less actual hours than standard paid a lesser rate per hour than the standard rate C Skilled workers using more actual hours than standard paid at a higher rate per hour than the standard rate D Skilled workers less actual hours than standard paid at a higher rate per hour than the standard rate 2 lbsunit at 425lb I Direct material Direct labor I 15 hrsunit at 1200hr I I Variable 39 overhead I 5 per unit I Pi ed r 39 overhead 21000 l 1 What is the direct materials price variance A 1250 unfavorable B 2000 favorable C 1250 favorable D 2000 unfavorable 12 What is the direct materials ef ciency variance A 12750 unfavorable B 13500 unfavorable C 13500 favorable D 12750 favorable 13 What is the direct labor price variance A 3000 unfavorable B 3000 favorable C 2250 unfavorable D 2250 favorable 14 What is the direct labor ef ciency variance A 18000 favorable B 17250 favorable C 18000 unfavorable D 17250 unfavorable 3 How does depreciation affect the calculation of a project s accounting rate of return ARR A Depreciation is deducted from the annual cash in ows B Depreciation is added to the annual cash in ows C Depreciation does not affect ARR D Depreciation is only deducted if the AR is less than the minimum required rate ofreturn 4 A Corporation is adding a new product line that will require an investment of 1 20000 The line is estimated to generate cash in ows of 25000 the rst year 23000 the second year amp 18000 each year therea er for ten more years What s the payback period A 480 years B 600 years C 632 years D 667 years 7 If you invest 1000 at the end of every year for ve years at an interest rate of 10 the balance of your investment in 5 years will be closest to A 1611 B 3791 C 5000D 6105 8 You win the lottery amp must decide how to take the payout Use an 8 discount rateWhat is the present value of 1 0000 a year received at the end of each of the next six years A 6300 B 46230 c 49928 D 60000 10 Which of the following is another name for the rate of return A Discount rate B Required rate of return C Hurdle rate D All ofthe above Use the following information for the next two questions Present value tables are needed Miami Marine Enterprises is evaluating the purchase of anhydraulic li system for all of its locations to use for the boats brought in for repair The company has narrowed their choices down to twoithe B14 Model amp the F54 Model Financial data about the two choices follows 11 What is the net A 17395 positive B 21930 negative C 38455 positive D 358455 positive 12 What is the net present value ofthe F54 Model A 21930 negative B 38455 positive C 178070 positive D 218070 positive
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