Principles of Managerial Accounting
Principles of Managerial Accounting ACCT 2101
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This 17 page Class Notes was uploaded by Ms. Demetrius Hane on Thursday September 17, 2015. The Class Notes belongs to ACCT 2101 at University of Connecticut taught by Staff in Fall. Since its upload, it has received 58 views. For similar materials see /class/205909/acct-2101-university-of-connecticut in Accounting at University of Connecticut.
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Date Created: 09/17/15
University of Connecticut School of Business Managerial Accounting Accounting 200 W Exam 1 Fall 2008 September 24 2008 Some questions have 4 options to select and others have 5 Use the following to answer questions 12 The following data in thousands of dollars have been taken from the accounting records of Drydock Corporation for the just completed year Administrative expenses 120 Direct labor 140 Finished goods inventory beginning 80 Finished goods inventory ending 100 Manufacturing overhead actual and applied 160 Purchases of raw materials 150 Sales 830 Raw Material Inventory beginning 50 Raw Material Inventory ending 40 Selling expenses 150 Work in process inventory beginning 30 Work in process inventory ending 50 Use these data to answer the following series of questions 1 The cost of the raw materials used in production during the year in thousands of dollars was A 190 B 160 C 140 D 200 N The cost of goods manufactured finished for the year in thousands of dollars was assume Direct Material Usage is 200 A 520 B 530 C 480 D 550 Page 1 3 Which of the following ethical standards requires being knowledgeable of the accounting rules and what are considered ethical violations A Competence B Confidentiality C Integrity D Credibility 4 Dale Company which applies overhead at the rate of 190 of direct labor cost began work on job no 101 during June The job was completed in July and sold during August having accumulated direct material and labor charges of 27000 and 15000 respectively On the basis of this information the total overhead applied to job no 101 amounted to A 0 B 28500 C 51300 D 70500 E 79800 5 When deciding whether to expand a bank with three new local offices which of the following is least needed to make this decision A Cost of land and buildings the new sites B Pro le of potential customers in the new areas C The bank39s annual report showing a profitable position D Potential additional revenue ea1ned by adding the additional local office 6 Which of the following statements represents a similarity between financial and managerial accounting A Both focus on providing information for external users B Both are primarily governed by GAAP C Both draw upon data from an organization39s accounting system D Both focus heavily on published financial statements E Both are primarily concerned with historical transactions Page 2 7 Job no C12 was completed in November at a cost of 18500 subdivided as follows direct material 3500 direct labor 6000 and manufacturing overhead 9000 The journal entry to record this information is A FinishedGoods Inventory 18500 WorkinProcess Inventory 18500 B WorkinProcess Inventory 18500 FinishedGoods Inventory 18500 C WorkinProcess Inventory 18500 RawMaterial Inventory 3500 Wages Payable 6000 Manufacturing Overhead 9000 D Finished Goods Inventory 18500 Cost of Goods Sold 18500 E Cost of Goods Sold 18500 FinishedGoods Inventory 18500 Use the following to answer question 8 Fox Flaxseed Company specializes in regular and high protein axseed for grocery stores and pet shops The company has provided the following data concerning its annual overhead costs and its activity based costing system The company39s overhead costs are 80000 for wages and salaries and 50000 for other expenses From an Activity Based Costing perspective each product is a separate pool The wages and salaries are broken out as 65 for regular and 35 for high protein The Other Expenses are broken out as 60 for regular and 40 for high protein In total there are 20000 boxes of regular ax and 5000 boxes of high protein produced each year 8 What would be the total overhead cost per box for regular according to the activity based costing system In other words what would be the total pool rate for the regular seed activity cost pool Round to the nearest whole cent A 390 B 423 C 410 D 406 Page 3 gt0 0 N Which of the following answers best fits the following scenario changes occasionally when capacity limitations are reached A Semi variable cost B Step variable cost C Step fixed cost D Marginal cost A cost that only During the month of April direct labor cost totaled 19000 and direct labor cost was 30 of prime cost If total manufacturing costs during April were 79000 the manufacturing overhead was A 63333 B 15667 C 60000 D 44333 Which of the following is a period cost Direct material Advertising expense Depreciation on trucks used to move parts from one manufacturing department to another Miscellaneous supplies used in production activities 3 B C D The Donaldson Company uses a joborder cost system The following data were recorded for July July 1 Added During June Work in Process Direct Direct Job Number Inventory Materials Labor 475 1500 500 300 476 1000 700 900 477 900 1000 1500 478 700 1200 2000 Overhead is applied to jobs at the rate of 80 percent of direct materials cost Jobs 475 477 and 478 were completed during July and transferred to finished goods Jobs 475 and 478 have been delivered to the customer Donaldson s Work in Process inventory balance on July 31 was A 7280 B 2600 C 3160 D 3320 Page 4 Use the following to answer questions 1314 Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70 of direct labor cost Any under or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month During August the following transactions were recorded by the company Raw materials all direct materials Purchased during the month 30000 Used in production 31000 Labor Direct labor hours worked during the month 3000 Direct labor cost incurred 27000 Indirect labor cost incurred 6000 Actual manufacturing overhead costs incurred total 19000 Inventories Raw materials all direct August 31 8000 Work in process August 1 7600 Work in process August 31 15000 E The balance on August 1 in the Raw Materials inventory account was A 4500 B 7000 C 9000 D 11500 The entry to dispose of the under or overapplied overhead cost for the month would include A a credit of 100 to Cost of Goods Sold B a credit of 6000 to Manufacturing Overhead C a debit of 6000 to Cost of Goods Sold D A credit of 100 to the Manufacturing Overhead Account Page 5 15 The president of the company stated that the strategic plan should not be seen by anyone except for the executives who were involved in developing the plan Which of the following Ethics Categories best ts this example 00 A B C D Competence Con dentiality Inte grity Credibility The accounting records of Westcott Company revealed the following costs Factory utilities 3 5000 Wages of assemblyline personnel 170000 Customer entertainment 45000 Indirect materials used 19000 Depreciation on salespersons cars 51000 Production equipment rental costs 110000 Costs that would be considered in the calculation of manufacturing overhead total A B C D E 3 B C D E A B C D E V 164000 215000 385000 430000 some other amount Which of the following perspectives is normally not included in a balanced scorecard Financial Customer Intemal operations Learning and innovation None of the above Which of the following statements about raw materials is false Acquisitions of materials are normally charged to the Purchases account The use of direct materials gives rise to a debit to WorkinProcess Inventory The use of indirect materials gives rise to a debit to Manufacturing Overhead The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory Direct materials are accounted for in a different manner than indirect materials Page 6 19 RingRider Inc began operations on January 1 20x8 with all of its activities 2 2 2 O N conducted from a single facility The company39s accountant concluded that the year s building depreciation should be allocated as follows selling activities 20 administrative activities 35 and manufacturing activities 45 If RingRider sold 60 of 20x8 production during that year what percentage of the depreciation would appear either directly or indirectly on the 20x8 income statement A 27 B 45 C 55 D 82 E 100 Kansas Plating Company reported a cost of goods manufactured of 260000 with the firm s yearend balance sheet revealing work in process and finished goods of 35000 and 67000 respectively If supplemental information disclosed raw materials used in production of 40000 direct labor of 70000 and manufacturing overhead of 120000 the company39s beginning work in process must have been A 5000 B 37000 C 65000 D 97000 E some other amount In an activitybased costing system direct materials used would typically be classified as a A unitlevel cost B batchlevel cost C productsustaining cost D facilitylevel cost E matrixlevel cost Of the following organizations activitybased costing cannot be used by A manufacturers B financialservices firms C book publishers D hotels E none of the above as all are able to use this costing system Page 7 2 LA Which of the following is leist likely to be classi ed as a facilitylevel activity in an activitybased costing system A Plant maintenance B Property taxes C Machine processing cost D Plant depreciation E Plant management salaries 24 Property taxes and insurance is an example of a cost that would be considered to be A Unitlevel B Batchlevel C Productlevel D Facilitylevel 25 Which of the following costs should be ignored when choosing among alternatives A Opportunity costs B Sunk costs C Outofpocket costs D Differential costs E None of the above 26 Which of the following is a product cost A Glass in an automobile B Advertising C The salary of the vice presidentfinance D Rent on a factory E Both glass in an automobile and rent on a factory 27 Hawthome has the following budgeted costs at its anticipated production level expressed in hours variable overhead 150000 fixed overhead 240000 If Hawthome now revises its quot 391 J J quot slightly downward it would expect A total fixed overhead of 240000 and a lower hourly rate for variable overhead B total fixed overhead of 240000 and the same hourly rate for variable overhead C total fixed overhead of 240000 and a higher hourly rate for variable overhead D total variable overhead of less than 150000 and a lower hourly rate for variable overhead total variable overhead of less than 150000 and a higher hourly rate for variable overhead E V Page 8 28 Managerial accounting N gt0 O 3 focuses only on historical data is governed primarily by GAAP focuses on the needs of personnel within a company provides information for parties external to a company such as investment bankers or credit unions focuses on financial statements and other financial reports such as a company39s annual report B C D E V Sofritz Corporation manufactures a variety of products In the past Sofritz had been using a traditional overhead allocation system based on machinehours For the current year Sofritz decided to switch to an activitybased costing system using machinehours and the number of setups as measures of activity Information on these measures of activity and related overhead rates for the current year are as follows Estimated Predetermined Activity Overhead Rate Machinehours 50000 8 per machinehour Number of setups 3000 40 per inspection Job 812 for the current year required 15 machinehours and 2 inspections Would this job have been overcosted or undercosted under the traditional system and by how much A undercosted by 36 B undercosted by 44 C overcosted by 80 D undercosted by 80 Which of the following is an opportunity cost A Advertising expense that provides the opportunity to earn more profit B The contribution margin of the Beta Product which was rejected for introduction to the market in favor of the Alpha Product Idle assembly line labor costs that could be more productively used to build more units of the product The expenditure of product research that could open many doors to exciting new products C V D V Page 9 31 LA L U 4 pg In rms using normal costing the total nrndnctinn Eng cost of a iob is composed of direct material and direct labor only direct material direct labor manufacturing overhead and outlays for selling costs direct material direct labor manufacturing overhead and outlays for both selling and administrative costs direct material direct labor and applied manufacturing overhead direct material direct labor and actual manufacturing overhead Vanguard combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours Activitybased costing would likely show that with Vanguard39s current procedures A all of the company39s products are undercosted B the company39s highvolume products are undercosted C all of the company39s products are overcosted D the company39s highvolume products are overcosted E the company39s lowvolume products are overcosted Consider the following statements regarding traditional costing systems 1 Overhead costs are applied to products on the basis of volumerelated measures 11 All manufacturing costs are easily traceable to the goods produced 111 Traditional costing systems tend to distort unit manufacturing costs when diverse goods are made that have widely varying production requirements Which of the above statements is are true A I only B 11 only C 111 only D Iand III E II and III Which of the following inventories would a discount retailer such as WalMart report as an asset A Raw materials B Work in process C Finished goods D Merchandise inventory E All of the above Page 10 Use the following to answer questions 3536 Adelberg Company has two products Soft and Fluffy The annual production and sales of Soft is 500 units and Fluffy is 1000 units The company has traditionally used direct laborhours as the basis for applying manufacturing overhead to products The total estimated overhead for next period is 68756 The company is considering switching to an activitybased costing system for the purpose of computing unit product costs for reporting The new activitybased costing system would have three overhead activity cost poolsDevelopment Assembly and General Factorywith estimated overhead costs and expected activity as follows The drivers for Development is machine hours for Assembly is parts and for General Factory is total direct labor hours Estimated Expected Activity Overhead Activity CostPool Costs So t F lu jg Total Development 31031 1000 300 1300 Assembly 22249 1600 300 1900 General Factory 15476 200 200 400 Total 68756 35 The overhead cost per unit of Fluffy under the traditional costing system is closest to A 234 B 774 C 477 D 3438 36 The overhead cost per unit of Fluffy under the activitybased costing system is closest to A 4584 B 774 C 3438 D 1841 LA 1 Which of the following is both a Product Cost and Fixed Cost Tomatoes used in the manufacture of Heinz ketchup B Administrative salaries of executives employed by Southwest Airlines C Wages of assemblyline workers at a Ford plant D Marketing expenditures for the Los Angeles Dodgers baseball club E Insurance costs related to a Mary Kay Cosmetics manufacturing plant 3 Page 11 38 The fixed costs per unit are 20 when a company produces 20000 units of product What are the fixed costs per unit when 25000 units are produced A 8 B 12 C 16 D 20 E Some other amount 39 Fog Company which uses labor hours to apply overhead to manufacturing may have increased amounts of underapplied overhead at monthend if A suppliers of direct materials have an acrosstheboard price increase B an accountant failed to record the periods charges for plant maintenance and security C fabrication workers are hit hard with a widespread outbreak of the u D direct laborers are granted a wage increase E outlays for advertising expenditures are increased 4 O Maher Inc applies manufacturing overhead at the rate of 60 per machine hour Budgeted machine hours for the current period were anticipated to be 80000 however a lengthy strike resulted in actual machine hours being worked of only 65000 Budgeted and actual manufacturing overhead figures for the year were 4800000 and 4180000 respectively On the basis of this information the company39s yearend overhead was A overapplied by 280000 B underapplied by 280000 C overapplied by 620000 D underapplied by 620000 E underapplied by 900000 Page 12 41 Consider the graphs that follow the horizontal aXis represents level of activity the vertical aXis represents total dollars I F V L 63 Which of the above charts above re ect the following 8 Equipment leasing costs that are computed at 2 per machine hour worked The company pays a maximum of 120000 per month Chart a B Chart c C Chart e D Chart f E Chart i 3 42 The Managerial Accountant noticed that computer rental costs were extremely high and worked with the manager to determine who has been purchasing computer equipment within the organization was it properly authorized what is the equipment being used for and is the equipment being used enough to justify keeping it Which of the following managerial accounting roles best fits this scenario Provides information for Flaming often part of ateam B Assists Managers in Directing and Controlling Operational Activities day to day C Motivates Managers D Assesses Competitive Position Works with Managers to assure longterm competitiveness in the market 3 Page 13 43 The Buttondown Company has two products TechnoHome Protection Devices and Buttons The company applies overhead based on machine hours for all products The TechnoHome Device is a lowvolume complex product and Buttons is a highvolume product that has a very simple straightforward process What would an activitybased costing system likely disclose about TechnoHome and Buttons as a result of Buttondown s current accounting procedures Both TechnoHome and Buttons are undercosted B Both TechnoHome and Buttons are overcosted C TechnoHome is undercosted and Buttons are overcosted D TechnoHome is overcosted and Buttons are undercosted E None of the above as both products are costed correctly 3 4 4 Within the relevant range of activity costs can usually be estimated with reasonable accuracy B can be expected to change radically C exhibit decreasing marginal cost patterns D exhibit increasing marginal cost patterns E cannot be estimated satisfactorily 3 4 UI Conversion costs are A direct material direct labor and manufacturing overhead B direct material and direct labor C direct labor and manufacturing overhead D prime costs E period costs 4 9 A customhome builder would likely utilize A joborder costing B process costing C mass customization D process budgeting E joint costing 4 l A cost that can increase at an increasing rate A stepfixed cost B stepvariable cost C semivariable cost D curvilinear cost E discretionary cost Page 14 48 If a company sells goods that cost 70000 for 82000 the rm will A 4 O 0 V reduce FinishedGoods Inventory by 70000 reduce FinishedGoods Inventory by 82000 report sales revenue on the balance sheet of 70000 reduce Cost of Goods Sold by 70000 follow more than one of the above procedures 13 C D E Which of the following costs are product sustaining costs for the Babcock Winery in northern California A Truckload shipping costs B Building maintenance costs C Bottle and cork cost D Development cost of new after dinner wine E Tasting and testing costs Fletcher Inc disposes of under or overapplied overhead at yearend as an adjustment to cost of goods sold Prior to disposal the rm reported cost of goods sold of 590000 in a year when manufacturing overhead was underapplied by 15000 If sales revenue totaled 1400000 determine 1 Fletcher s adjusted cost of goods sold and 2 gross margin Adjusted Cost of Goods Sold Gross Margin A 575000 810000 B 575000 825000 C 590000 810000 D 605000 795000 E 605000 810000 Page 15 Answer Key 1 B 2 C 3 A 4 B 5 C 6 C 7 A 8 C 9 C 10 B 11 B 12 C 13 C 14 D 15 B 16 A 17 E 18 A 19 D 20 C 21 A 22 E 23 C 24 D 25 B 26 E 27 B 28 C B B D D D D D D E C C B E B C A Page 16 45 46 47 49 50 UUDgtUDgt0 Page 17
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