BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 5
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1. During the year Leyland Company completed 1,300 units of product. Ending inventory consisted of 400 units that were 50% complete. The total dollar cost associated with production of inventory was $45,000. The cost per equivalent whole unit would be which of the following? (Round all answers to the nearest whole penny.)
2. What is the name of the method of analyzing beginning and ending balances on the balance sheet and inferring the period's transactions from the income statement?
3. In a job-order cost system, as goods are produced, product costs (direct material, direct labor, and overhead) are accumulated in the:
4. The Work in Process account for Monty's Company contained the following entries: Work in Process Account Debit of $40,000 for direct raw materials Debit of $60,000 for direct labor Debit of $30,000 for manufacturing overhead Ending balance, $42,000, associated with Job #2 The company uses a job-order cost system. Work was only performed on two jobs during the period. What was the cost of Job # 1, which was started and completed during the period?
5. Congress Manufacturing is currently working on two jobs. The job order cost sheets for Job 101 and Job 102 showed the following information:
If overhead is applied to jobs at $.80 per direct labor dollar, the total manufacturing cost for the two jobs would be:
6. Assume that a statement of cash flows has been prepared. The sum of the three major components (operating activities, investing activities, financing activities) adds up to the:
7. A hybrid cost system contains:
8. The Ragan Corporation uses a process cost system. The company started March with 2,300 units in Work in Process-Dept. A. During the month 4,000 units were started. At the end of the month there were 3,200 units in ending Work in Process-Dept. A inventory that were 30% complete. The beginning work in process balance was $240,540 and total manufacturing cost for the period was $608,000. Based on this information, the amount of cost transferred from Work in Process-Dept. A to Work in Process-Dept. B was:
9. Alton Company experienced an event that affected its financial statements as indicated below:
What type of product costing system is being used by this company?
10. During the 2007 accounting period the XYZ Company earned $55,000 of sales revenue on account and accrued $32,500 of operating expenses. The company also earned $6,400 of service revenue that had previously been recorded as unearned revenue. In addition, a $2,200 stock dividend was issued to the stockholders. What can be said about cash flows considering these transactions?
11. In preparing the statement of cash flows by the indirect method, which of the following is an incorrect statement of one of the general rules to convert net income to a cash-basis equivalent?
12. Evelyn Company began the accounting period with $13,500 in accounts receivable. The ending balance in accounts receivable was $5,000. If the credit sales during the period were $22,000, what is the amount of cash received from customers?
13. Hatcher Company uses a process cost system. The following data applies to January 2007.
The ending work in process inventory is 90% complete. The total number of equivalent units for January was:
14. In a job-order cost system, the subsidiary accounts for the Work in Process account are the:
15. On January 1, 2008, the ABC Company purchased equipment for $26,000 cash. On December 31, 2008, depreciation of $8,000 was recorded. Which of the following correctly shows the combined effect of these two events on the income statement and statement of cash flows?
ABC uses the direct method to prepare the statement of cash flows.
16. Port Corporation reported a $1,800 balance in accounts receivable on January 1, 2006. During the year, $12,400 of sales on account were made. During the year, Port wrote off as uncollectible, accounts receivable of $850. If the ending balance of accounts receivable is $1,000, what is the amount of cash received from customers?
17. Select the correct formula for computing the cost to be assigned to ending inventory in a process costing system.
18. The entry to dispose of underapplied manufacturing overhead will include a:
19. The following income statement was drawn from the annual report of Hurricane Company:
The amount of cash flow from operating activities is:
20. The Lemmon Corporation reported a beginning balance of $600 in its Prepaid Insurance Account for 2008. During the year, a total of $8,000 was recognized as Insurance Expense and the Prepaid Insurance account had an ending balance of $800. How much cash did Lemmon pay for insurance during 2008?
21. What effect will recording depreciation expense have on net income and cash flows?
22. Which of the following is not a component of process cost systems?
23. Which of the following cash flows would be included under the operating activities section of the cash flow statement? Assume the direct method.
24. Which of the following transactions is a use of cash?
25. Which of the following would NOT be represented in the financing activities section of the statement of cash flows?
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Wednesday, June 30, 2010
BA225 Final Exam: BA 225 Managerial Accounting
BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 FINAL EXAM
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1. Johansson Company developed the following static budget at the beginning of the company's accounting period:
If actual production totals 8,400 units, the flexible budget would show variable costs of:
2. Pace Company makes computer chips. Sam is manager of the company's maintenance department. Because his maintenance technicians are so well trained in maintaining expensive and sensitive circuit board stamping equipment,
3. Which of the following would NOT be represented in the financing activities section of the statement of cash flows?
4. A customary assumption in capital budgeting analysis is that:
5. Lighthouse Tours provide seven-day guided tours along the New England coast. The company pays its guides a total of $100,000 per year.
6. If a company misclassifies a general, selling and administrative cost as a product cost in a period when production exceeds sales
7. Moore Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $6,400 to two different jobs as follows:
8. The following standard cost card is provided for Product Dolce2.
9. Payment of cash for production workers' wages is:
10. Standard cost systems facilitate the management practice known as:
11. Newton Company currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit.
12. Kritzberg Company sells a product at $60 per unit that has unit variable costs of $40.
13. The Mannix Company manufactures and sells two lines of china.
14. A manager refuses to replace an existing asset even though an extensive analysis indicates that replacement is desirable. One possible explanation for the manager's action is that:
15. For the year ended December 31, 2007, The Fell Company paid cash dividends of $13,000, paid cash for interest of $5,200, paid cash to suppliers of $7,500 and paid $17,000 to purchase equipment.
16. A materials requisition in a job-order cost system is used as a:
17. The following income statement was drawn from the annual report of Hurricane Company:
18. All of the following factors should influence the decision to investigate a variance except:
19. Bruce Company's sales budget shows the following expected total sales:
20. An investment that costs $30,000 will produce annual cash flows of $10,000 for a period of 4 years.
21. Moore Company uses process costing. The following information was available for October:
22. Prater Company made a $100,000 investment in new machinery.
23. Robert is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs further from his job.
24. Responsibility reports are prepared:
25. Banks Industries has budgeted the following information for March:
26. Casters, Inc. normally produces between 150,000 and 175,000 units each year.
27. Conger Company recently implemented an activity-based-costing system.
28. During its first year of operations, Martin Company paid $4,000 for direct materials and $8,500 for production workers' wages.
29. Expressing plans for a business in financial terms is commonly called:
30. Kent Company had 800 units of product in its work in process inventory at the beginning of the period.
31. Production in 2007 for Stowe Snow Mobile was at its highest point in the month of June when 40 units were produced at a total cost of $600,000.
32. Select the correct statement from the following.
33. Select the correct statement regarding opportunity costs.
34. Select the incorrect statement regarding postaudits of capital investment decisions.
35. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below:
36. The following information is provided by the Atlantic Company:
37. The preferred method for setting transfer prices generally is some form of:
38. The research and development department of Pepsi-Cola Company would likely be organized as:
39. The statement of cash flows would not disclose the effects of:
40. The Sukahara Company recorded the following costs of quality during the current period:
41. The use of raw materials in production is:
42. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold.
43. Weinger Company has developed the following budgeted income statement:
44. What amount of cash would result at the end of one year, if $17,000 is invested today and the rate of return is 10%?
45. Which of the following statements concerning product costs versus general, selling, and administrative costs is true?
46. Which of the following transactions would cause net income for the period to be lower?
47. Which of the following activity costs would not likely be included in a unit-level activity cost pool?
48. Which of the following budgets needs to be prepared prior to preparing a purchases budget?
49. Which of the following cash transactions would not be shown under operating activities on the statement of cash flows?
50. Zoro, Inc. produces a product that has a variable cost of $6.00 per unit. The company's fixed costs are $30,000.
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University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 FINAL EXAM
Click here for the SOLUTION
1. Johansson Company developed the following static budget at the beginning of the company's accounting period:
If actual production totals 8,400 units, the flexible budget would show variable costs of:
2. Pace Company makes computer chips. Sam is manager of the company's maintenance department. Because his maintenance technicians are so well trained in maintaining expensive and sensitive circuit board stamping equipment,
3. Which of the following would NOT be represented in the financing activities section of the statement of cash flows?
4. A customary assumption in capital budgeting analysis is that:
5. Lighthouse Tours provide seven-day guided tours along the New England coast. The company pays its guides a total of $100,000 per year.
6. If a company misclassifies a general, selling and administrative cost as a product cost in a period when production exceeds sales
7. Moore Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $6,400 to two different jobs as follows:
8. The following standard cost card is provided for Product Dolce2.
9. Payment of cash for production workers' wages is:
10. Standard cost systems facilitate the management practice known as:
11. Newton Company currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit.
12. Kritzberg Company sells a product at $60 per unit that has unit variable costs of $40.
13. The Mannix Company manufactures and sells two lines of china.
14. A manager refuses to replace an existing asset even though an extensive analysis indicates that replacement is desirable. One possible explanation for the manager's action is that:
15. For the year ended December 31, 2007, The Fell Company paid cash dividends of $13,000, paid cash for interest of $5,200, paid cash to suppliers of $7,500 and paid $17,000 to purchase equipment.
16. A materials requisition in a job-order cost system is used as a:
17. The following income statement was drawn from the annual report of Hurricane Company:
18. All of the following factors should influence the decision to investigate a variance except:
19. Bruce Company's sales budget shows the following expected total sales:
20. An investment that costs $30,000 will produce annual cash flows of $10,000 for a period of 4 years.
21. Moore Company uses process costing. The following information was available for October:
22. Prater Company made a $100,000 investment in new machinery.
23. Robert is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs further from his job.
24. Responsibility reports are prepared:
25. Banks Industries has budgeted the following information for March:
26. Casters, Inc. normally produces between 150,000 and 175,000 units each year.
27. Conger Company recently implemented an activity-based-costing system.
28. During its first year of operations, Martin Company paid $4,000 for direct materials and $8,500 for production workers' wages.
29. Expressing plans for a business in financial terms is commonly called:
30. Kent Company had 800 units of product in its work in process inventory at the beginning of the period.
31. Production in 2007 for Stowe Snow Mobile was at its highest point in the month of June when 40 units were produced at a total cost of $600,000.
32. Select the correct statement from the following.
33. Select the correct statement regarding opportunity costs.
34. Select the incorrect statement regarding postaudits of capital investment decisions.
35. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below:
36. The following information is provided by the Atlantic Company:
37. The preferred method for setting transfer prices generally is some form of:
38. The research and development department of Pepsi-Cola Company would likely be organized as:
39. The statement of cash flows would not disclose the effects of:
40. The Sukahara Company recorded the following costs of quality during the current period:
41. The use of raw materials in production is:
42. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold.
43. Weinger Company has developed the following budgeted income statement:
44. What amount of cash would result at the end of one year, if $17,000 is invested today and the rate of return is 10%?
45. Which of the following statements concerning product costs versus general, selling, and administrative costs is true?
46. Which of the following transactions would cause net income for the period to be lower?
47. Which of the following activity costs would not likely be included in a unit-level activity cost pool?
48. Which of the following budgets needs to be prepared prior to preparing a purchases budget?
49. Which of the following cash transactions would not be shown under operating activities on the statement of cash flows?
50. Zoro, Inc. produces a product that has a variable cost of $6.00 per unit. The company's fixed costs are $30,000.
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BA225 Test 3: BA 225 Managerial Accounting
BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 3
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1. Cedar Furniture provided the following information relevant to its sales for December 2007 and the first quarter of 2008:
Based on the company's collection history, 2% of credit sales are uncollectible, 40% are collected in month of sale and the remainder is collected in the following month. Total budgeted cash receipts in February 2008 are expected to be:
2. Select the incorrect statement about the master budget.
3. Select the correct equation format for the purchases budget.
4. The Springer Company provides the following standard cost data:
The materials usage variance was:
5. The standard amount of materials required to make one unit of Product Q is 4 pounds. Tusa's static budget showed a planned production of 4,000 units. During the period the company actually produced 4,100 units of product. The actual amount of materials used averaged 4.1 pounds per unit. The standard price of material is $1 per pound. Based on this information, the materials usage variance was:
6. A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:
7. Standard cost systems facilitate the management practice known as:
8. Budgeting that involves the development of a master budget to direct the firm's activities over the short-term is referred to as:
9. Coronet Company provided the following information related to its inventory sales and purchases for December 2007 and the first quarter of 2008:
Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2008 would be:
10. Select the incorrect statement about budgeting and human behavior.
11. Summer Company's static budget is based on a planned activity level of 25,000 units. At the same time the static budget was prepared, the management accountant prepared two additional budgets, one based on 20,000 units and one based on 30,000. The company actually produced and sold 29,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets?
12. McDavid Company has completed its sales budget for the first quarter of 2007. Projected credit sales for the first four months of the year are shown below:
The company's past records show collection of credit sales as follows: 30% in the month of sale and the balance in the following month. The total cash collection from receivables in March is expected to be:
13. One of the tasks that managers at Greensboro Company have to complete during the budgeting process is to develop a contingency plan for their organization in case a downturn occurs in their business. This budgeting requirement is an example of:
14. Select the correct statement regarding general, selling, and administrative (GS&A) costs.
15. Select the incorrect statement about the planning process.
16. Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job. The difference between inflated and realistic standards is known as:
17. The resources used in the manufacturing process are frequently called:
18. The Russell Company provides the following standard cost data per unit of product:
The direct labor usage variance was:
19. Which manager is usually held responsible for materials usage variances?
20. Which of the following is not considered a pro forma financial statement?
21. Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?
22. Which of the following budgets needs to be prepared prior to preparing a purchases budget?
23. Which of the following can reduce the amount of employees' budget gamesmanship?
24. Which of the following factors should be considered in establishing standards for use with a standard costing system?
25. Which of the following statements is true?
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University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 3
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1. Cedar Furniture provided the following information relevant to its sales for December 2007 and the first quarter of 2008:
Based on the company's collection history, 2% of credit sales are uncollectible, 40% are collected in month of sale and the remainder is collected in the following month. Total budgeted cash receipts in February 2008 are expected to be:
2. Select the incorrect statement about the master budget.
3. Select the correct equation format for the purchases budget.
4. The Springer Company provides the following standard cost data:
The materials usage variance was:
5. The standard amount of materials required to make one unit of Product Q is 4 pounds. Tusa's static budget showed a planned production of 4,000 units. During the period the company actually produced 4,100 units of product. The actual amount of materials used averaged 4.1 pounds per unit. The standard price of material is $1 per pound. Based on this information, the materials usage variance was:
6. A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:
7. Standard cost systems facilitate the management practice known as:
8. Budgeting that involves the development of a master budget to direct the firm's activities over the short-term is referred to as:
9. Coronet Company provided the following information related to its inventory sales and purchases for December 2007 and the first quarter of 2008:
Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2008 would be:
10. Select the incorrect statement about budgeting and human behavior.
11. Summer Company's static budget is based on a planned activity level of 25,000 units. At the same time the static budget was prepared, the management accountant prepared two additional budgets, one based on 20,000 units and one based on 30,000. The company actually produced and sold 29,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets?
12. McDavid Company has completed its sales budget for the first quarter of 2007. Projected credit sales for the first four months of the year are shown below:
The company's past records show collection of credit sales as follows: 30% in the month of sale and the balance in the following month. The total cash collection from receivables in March is expected to be:
13. One of the tasks that managers at Greensboro Company have to complete during the budgeting process is to develop a contingency plan for their organization in case a downturn occurs in their business. This budgeting requirement is an example of:
14. Select the correct statement regarding general, selling, and administrative (GS&A) costs.
15. Select the incorrect statement about the planning process.
16. Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job. The difference between inflated and realistic standards is known as:
17. The resources used in the manufacturing process are frequently called:
18. The Russell Company provides the following standard cost data per unit of product:
The direct labor usage variance was:
19. Which manager is usually held responsible for materials usage variances?
20. Which of the following is not considered a pro forma financial statement?
21. Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?
22. Which of the following budgets needs to be prepared prior to preparing a purchases budget?
23. Which of the following can reduce the amount of employees' budget gamesmanship?
24. Which of the following factors should be considered in establishing standards for use with a standard costing system?
25. Which of the following statements is true?
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BA225 Test 4: BA 225 Managerial Accounting
BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 4
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1. The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:
2. Thanks to her firm's decentralization and use of responsibility accounting, Melanie has more time to review a proposed new joint venture with one of the firm's business partners. What advantage of decentralization does this illustrate?
3. What amount of cash must be invested today in order to have $30,000 at the end of one year assuming the rate of return is 9%?
4. Chartreuse Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows:
The total present value of Investment A's cash inflows assuming a 10% minimum rate of return is (round to the nearest whole dollar):
5. Leon wants to determine the net present value for a proposed capital investment. He has determined the desired rate of return, the expected investment time period, a series of cash inflows of equal amount, the salvage value of the investment, and the required cash outflows. Which of the following tables would most likely be used to calculate the net present value of the investment?
6. A customary assumption in capital budgeting analysis is that:
7. Houston Corporation has two operating divisions, A and B. The following information is provided for Division A:
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $45 to purchase the product from an outside source. If Division A sells internally it can save $1 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
8. The purposes of the postaudit for capital investments include all of the following except:
9. A capital investment project may provide cash inflows from:
10. An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was:
11. A tool that is often used to depict the lines of authority and responsibility within a firm is:
12. A major benefit of a decentralized organization is that:
13. A responsibility report provided to a manager typically includes:
14. Horak Company reported the following information for 2007:
The company's return on investment for 2007 was:
15. Johanssen Company reported the following information for 2007:
The company's operating income for 2007 was:
16. Management recently instituted a new training program for upper level managers. They budgeted the cost of the new program at $1,000 per employee trained but actual costs were $1,250 per employee trained. The difference between the budgeted cost for training and the actual cost of training is called a:
17. Melanie Company is considering a capital project that costs $16,000. The project will deliver the following cash flows:
Using the incremental approach, the payback period for the investment is:
18. Select the incorrect statement concerning the application of the controllability concept to responsibility accounting.
19. The Fairland Restaurant chain had a 12% return on a $60,000 investment in new ovens. The investment resulted in increased sales and an increase in income that was 4% of the increase in sales. The increase in sales was:
20. The rate of return that equates the present value of cash inflows and outflows is the:
21. Which capital budgeting technique defines returns in terms of income instead of cash flows?
22. Which of the following statements about return on investment is false?
23. Which of the following is not a factor in explaining why the present value of a future dollar is less than one dollar?
24. Which of the following would be considered a cash inflow in determining the value of a capital investment?
25. Which one of the following statements describes an ordinary annuity?
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University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 4
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1. The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:
2. Thanks to her firm's decentralization and use of responsibility accounting, Melanie has more time to review a proposed new joint venture with one of the firm's business partners. What advantage of decentralization does this illustrate?
3. What amount of cash must be invested today in order to have $30,000 at the end of one year assuming the rate of return is 9%?
4. Chartreuse Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows:
The total present value of Investment A's cash inflows assuming a 10% minimum rate of return is (round to the nearest whole dollar):
5. Leon wants to determine the net present value for a proposed capital investment. He has determined the desired rate of return, the expected investment time period, a series of cash inflows of equal amount, the salvage value of the investment, and the required cash outflows. Which of the following tables would most likely be used to calculate the net present value of the investment?
6. A customary assumption in capital budgeting analysis is that:
7. Houston Corporation has two operating divisions, A and B. The following information is provided for Division A:
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $45 to purchase the product from an outside source. If Division A sells internally it can save $1 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
8. The purposes of the postaudit for capital investments include all of the following except:
9. A capital investment project may provide cash inflows from:
10. An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was:
11. A tool that is often used to depict the lines of authority and responsibility within a firm is:
12. A major benefit of a decentralized organization is that:
13. A responsibility report provided to a manager typically includes:
14. Horak Company reported the following information for 2007:
The company's return on investment for 2007 was:
15. Johanssen Company reported the following information for 2007:
The company's operating income for 2007 was:
16. Management recently instituted a new training program for upper level managers. They budgeted the cost of the new program at $1,000 per employee trained but actual costs were $1,250 per employee trained. The difference between the budgeted cost for training and the actual cost of training is called a:
17. Melanie Company is considering a capital project that costs $16,000. The project will deliver the following cash flows:
Using the incremental approach, the payback period for the investment is:
18. Select the incorrect statement concerning the application of the controllability concept to responsibility accounting.
19. The Fairland Restaurant chain had a 12% return on a $60,000 investment in new ovens. The investment resulted in increased sales and an increase in income that was 4% of the increase in sales. The increase in sales was:
20. The rate of return that equates the present value of cash inflows and outflows is the:
21. Which capital budgeting technique defines returns in terms of income instead of cash flows?
22. Which of the following statements about return on investment is false?
23. Which of the following is not a factor in explaining why the present value of a future dollar is less than one dollar?
24. Which of the following would be considered a cash inflow in determining the value of a capital investment?
25. Which one of the following statements describes an ordinary annuity?
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BA225 Test 2: BA 225 Managerial Accounting
BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 2
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1. The Euro Company sells two kinds of luggage. The company projected the following cost information for the two products:
The company's total fixed costs are expected to be $280,000.
Based this information, what is the combined number of units of the two products that would be required to breakeven (round your answer to the nearest whole unit)
2. All of the following are variables that could be considered in a decision to outsource a component that is currently being produced in house. Which of the following is not likely to be relevant?
3. Brumlow Company has a contribution margin ratio of 25%. The company is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total fixed costs increase by $20,000?
4. Espy Company is trying to decide between the following two alternatives:
Which of the following conclusions can be drawn from this example?
5. All of the following are internal failure costs except:
6. Barney Company produces and sells two models of speakers for use with desktop computers. The following monthly data are provided:
Total monthly fixed costs are expected to be $15,000. What is the break-even volume in sales dollars at the expected sales mix?
7. A modern cost allocation process that employs multiple cost drivers is:
8. Hartsel Company makes steel and titanium handle bars for bicycles. It requires approximately 1 hour of labor to make one handle bar of either type. During the most recent accounting period, the company made 8,000 steel bars and 2,000 titanium bars. Setup costs amounted to $48,000 for the 24 batches (i.e., 12 of each type) of bars produced during the period. If activity-based costing is used to allocate overhead costs to the two products, the amount of setup cost assigned to the titanium bars will be:
9. Kleinfeldt Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $4,000 to two different jobs as follows: Job 1: (10 hours) = $2,000 Job 2: (10 hours) = $2,000 Assume that, then, the production process for Job 1 was automated. Now Job 1 requires only 2 hours of direct labor but four hours of mechanical processing. As a result, total overhead increased to $6,000. How much overhead cost will be assigned to Job 2 after automation?
10. Managing quality costs to achieve the highest level of customer satisfaction is known as:
11. All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:
12. Hazell Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $4,000 to two different jobs as follows: Job 1: (10 hours) = $2,000 Job 2: (10 hours) = $2,000 Assume that, then, the production process for Job 1 was automated. Now Job 1 requires only 2 hours of direct labor but four hours of mechanical processing. As a result, total overhead increases to $6,000. Select the incorrect statement from the following.
13. Fernando Company reported the following information for its two products:
Due to labor constraints, demand for the products is greater than supply. Product X requires 2 hours of labor to produce and product Y requires 5 hours of labor to produce. Which of the following statements is true?
14. Great Products Company currently outsources an electrical switch that is a component in one of its products. The switches cost $20 each. The company is considering making the switches internally at the following projected annual production costs:
The company expects an annual need for 5,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $1,500 a month. If the company decides to make the parts, total costs will be:
15. Andy is trying to decide which one of two job offers he will accept. Several items are presented below:
Select the items that are relevant to Andy's decision.
16. Gleam Clean cleans and waxes floors for commercial customers. The company is presently working at less than capacity with equipment and employees at times idle. The company recently received an order from a potential customer outside the company's normal geographic service region for a price of $9,000. The size of the proposed job is 22,000 square feet. The company's normal service costs are as follows:
If the company accepts the special offer:
17. Kritzberg Company sells a product at $60 per unit that has unit variable costs of $40. The company's break-even sales volume is $120,000. How much profit will the company make if it sells 4,000 units?
18. Quill Company sets the selling price for its product by adding a markup to the product's variable manufacturing costs. This approach to pricing is referred to as:
19. Select the correct statement regarding quantitative and qualitative information.
20. Select the correct statement regarding activity-based costing (ABC).
21. Serious Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for $20 each. The company is considering making the switches internally and has conducted a study to determine the costs involved. The costs below are projected annual production costs:
Assume that the company needs 10,000 of the switches, which would be produced in two batches. Assume also that the company will still be operating within the relevant range. If Serious Safety decides to make the parts under these conditions, the total relevant costs will be:
22. The costs and revenues associated with two alternatives are listed below:
Which alternative should be selected based on this information?
23. The following information is provided for two products:
Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products. Expected sales for Product X are 8,000 units, and expected sales for Product Y are 6,000 units. Which product should be sold and why?
24. Traditionally, the most popular company-wide base for allocating overhead to products was:
25. Which of the following activity costs would not likely be included in a unit-level activity cost pool?
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University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 2
Click here for the SOLUTION
1. The Euro Company sells two kinds of luggage. The company projected the following cost information for the two products:
The company's total fixed costs are expected to be $280,000.
Based this information, what is the combined number of units of the two products that would be required to breakeven (round your answer to the nearest whole unit)
2. All of the following are variables that could be considered in a decision to outsource a component that is currently being produced in house. Which of the following is not likely to be relevant?
3. Brumlow Company has a contribution margin ratio of 25%. The company is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total fixed costs increase by $20,000?
4. Espy Company is trying to decide between the following two alternatives:
Which of the following conclusions can be drawn from this example?
5. All of the following are internal failure costs except:
6. Barney Company produces and sells two models of speakers for use with desktop computers. The following monthly data are provided:
Total monthly fixed costs are expected to be $15,000. What is the break-even volume in sales dollars at the expected sales mix?
7. A modern cost allocation process that employs multiple cost drivers is:
8. Hartsel Company makes steel and titanium handle bars for bicycles. It requires approximately 1 hour of labor to make one handle bar of either type. During the most recent accounting period, the company made 8,000 steel bars and 2,000 titanium bars. Setup costs amounted to $48,000 for the 24 batches (i.e., 12 of each type) of bars produced during the period. If activity-based costing is used to allocate overhead costs to the two products, the amount of setup cost assigned to the titanium bars will be:
9. Kleinfeldt Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $4,000 to two different jobs as follows: Job 1: (10 hours) = $2,000 Job 2: (10 hours) = $2,000 Assume that, then, the production process for Job 1 was automated. Now Job 1 requires only 2 hours of direct labor but four hours of mechanical processing. As a result, total overhead increased to $6,000. How much overhead cost will be assigned to Job 2 after automation?
10. Managing quality costs to achieve the highest level of customer satisfaction is known as:
11. All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:
12. Hazell Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $4,000 to two different jobs as follows: Job 1: (10 hours) = $2,000 Job 2: (10 hours) = $2,000 Assume that, then, the production process for Job 1 was automated. Now Job 1 requires only 2 hours of direct labor but four hours of mechanical processing. As a result, total overhead increases to $6,000. Select the incorrect statement from the following.
13. Fernando Company reported the following information for its two products:
Due to labor constraints, demand for the products is greater than supply. Product X requires 2 hours of labor to produce and product Y requires 5 hours of labor to produce. Which of the following statements is true?
14. Great Products Company currently outsources an electrical switch that is a component in one of its products. The switches cost $20 each. The company is considering making the switches internally at the following projected annual production costs:
The company expects an annual need for 5,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $1,500 a month. If the company decides to make the parts, total costs will be:
15. Andy is trying to decide which one of two job offers he will accept. Several items are presented below:
Select the items that are relevant to Andy's decision.
16. Gleam Clean cleans and waxes floors for commercial customers. The company is presently working at less than capacity with equipment and employees at times idle. The company recently received an order from a potential customer outside the company's normal geographic service region for a price of $9,000. The size of the proposed job is 22,000 square feet. The company's normal service costs are as follows:
If the company accepts the special offer:
17. Kritzberg Company sells a product at $60 per unit that has unit variable costs of $40. The company's break-even sales volume is $120,000. How much profit will the company make if it sells 4,000 units?
18. Quill Company sets the selling price for its product by adding a markup to the product's variable manufacturing costs. This approach to pricing is referred to as:
19. Select the correct statement regarding quantitative and qualitative information.
20. Select the correct statement regarding activity-based costing (ABC).
21. Serious Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for $20 each. The company is considering making the switches internally and has conducted a study to determine the costs involved. The costs below are projected annual production costs:
Assume that the company needs 10,000 of the switches, which would be produced in two batches. Assume also that the company will still be operating within the relevant range. If Serious Safety decides to make the parts under these conditions, the total relevant costs will be:
22. The costs and revenues associated with two alternatives are listed below:
Which alternative should be selected based on this information?
23. The following information is provided for two products:
Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products. Expected sales for Product X are 8,000 units, and expected sales for Product Y are 6,000 units. Which product should be sold and why?
24. Traditionally, the most popular company-wide base for allocating overhead to products was:
25. Which of the following activity costs would not likely be included in a unit-level activity cost pool?
Click here for the SOLUTION
BA225 Test 1: BA 225 Managerial Accounting
BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 1
Click here for the SOLUTION
1. A cost that contains both fixed and variable elements is referred to as a:
2. Whirl Company sells cordless razors for $50. Variable costs are 40% of sales and total fixed costs are $40,000. What is the firm's magnitude of operating leverage if 2,000 units are sold?
3. Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost:
4. Select the incorrect statement regarding costs and expenses.
5. Choose the answer that is not a distinguishing characteristic of financial accounting information.
6. All of the following are features of managerial accounting except:
7. During her first year with the company, Ann mistakenly accumulated some of the company's period costs in ending inventory. Which of the following indicates how this error affects the company's financial statements assuming number of units produced exceeded number of units sold during the period?
8. As a Certified Management Accountant, Jill is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?
9. The excess of a product's selling price over its variable costs is referred to as:
10. Assuming a company's inventory increased during the period, which of the following misclassifications increases net income?
11. Based on the following cost data, items labeled (a) and (b) in the table below are which of the following amounts, respectively?
12. Identify the true statement regarding how product costs in a manufacturing company differ from product costs in a service company.
13. Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the salespersons' commissions are an example of:
14. Casters, Inc. normally produces between 150,000 and 175,000 units each year. Producing more than 175,000 units alters the company's cost structure. For example, fixed costs increase because more space must be rented, and additional supervisors must be hired. The production range between 150,000 and 175,000 is called the:
15. Gypsy Joe's operates a chain of coffee shops. The company pays rent of $10,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis. The costs of supplies relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost, respectively?
16. Select the correct statement from the following.
17. The following income statement is provided for Barron Company in 2006:
What amount was the company's contribution margin?
18. The following information relates to Minimart's 2007 accounting period:
Based on this information, what is the company's net income for 2007?
19. The following information is provided for Steinberg Company:
What is this company's contribution margin?
20. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold. If the company's volume increases to 2,500 units, the company's total costs will be:
21. What is the effect on the financial statements of recording a $100 purchase of raw materials?
22. Which of the following costs is not considered to be a product cost?
23. Which of the following should be recorded as an asset?
24. Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?
25. Why do accountants normally calculate cost per unit as an average?
Click here for the SOLUTION
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 1
Click here for the SOLUTION
1. A cost that contains both fixed and variable elements is referred to as a:
2. Whirl Company sells cordless razors for $50. Variable costs are 40% of sales and total fixed costs are $40,000. What is the firm's magnitude of operating leverage if 2,000 units are sold?
3. Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost:
4. Select the incorrect statement regarding costs and expenses.
5. Choose the answer that is not a distinguishing characteristic of financial accounting information.
6. All of the following are features of managerial accounting except:
7. During her first year with the company, Ann mistakenly accumulated some of the company's period costs in ending inventory. Which of the following indicates how this error affects the company's financial statements assuming number of units produced exceeded number of units sold during the period?
8. As a Certified Management Accountant, Jill is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?
9. The excess of a product's selling price over its variable costs is referred to as:
10. Assuming a company's inventory increased during the period, which of the following misclassifications increases net income?
11. Based on the following cost data, items labeled (a) and (b) in the table below are which of the following amounts, respectively?
12. Identify the true statement regarding how product costs in a manufacturing company differ from product costs in a service company.
13. Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the salespersons' commissions are an example of:
14. Casters, Inc. normally produces between 150,000 and 175,000 units each year. Producing more than 175,000 units alters the company's cost structure. For example, fixed costs increase because more space must be rented, and additional supervisors must be hired. The production range between 150,000 and 175,000 is called the:
15. Gypsy Joe's operates a chain of coffee shops. The company pays rent of $10,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis. The costs of supplies relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost, respectively?
16. Select the correct statement from the following.
17. The following income statement is provided for Barron Company in 2006:
What amount was the company's contribution margin?
18. The following information relates to Minimart's 2007 accounting period:
Based on this information, what is the company's net income for 2007?
19. The following information is provided for Steinberg Company:
What is this company's contribution margin?
20. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold. If the company's volume increases to 2,500 units, the company's total costs will be:
21. What is the effect on the financial statements of recording a $100 purchase of raw materials?
22. Which of the following costs is not considered to be a product cost?
23. Which of the following should be recorded as an asset?
24. Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?
25. Why do accountants normally calculate cost per unit as an average?
Click here for the SOLUTION
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