Accounting 4210: Practice Exam

Topics: Costs, Variable cost, Cost Pages: 10 (1426 words) Published: March 12, 2015
Accounting 4210, Practice Exam 1 Solution Name______________ Section___

Instructions:
You have 75 minutes to complete 11 questions on this exam.
The 10 multiple choice questions are worth 4 points each.
a. Credit will only be given for clearly circling one of the four options. The workout questions are worth a total of 60 points.
a. Credit will only be given if you clearly show your work, and clearly indicate the final answer. Good luck!

1. SuperFine Restaurant Supply Company reported the following information for the year just ended.
EstimatedActual
Units sold1,0001,100
Direct labor hours2,0002,050

Sales Revenue$140,000$145,000
Direct materials cost30,00031,000
Direct labor cost20,00022,000
Manufacturing overhead cost60,00062,000
Selling and administrative costs20,00019,000

SuperFine uses a normal costing system with direct labor cost as the allocation basis.

By how much is manufacturing overhead misapplied?

A) $4,000 underapplied
B) $4,000 overapplied
C) $2,000 underapplied
D) $2,000 overapplied

The correct answer is $4,000 overapplied

The POHR = $60,000 / $20,000 = $3 per dollar spent on direct labor.

Applied overhead = $3 x 22,000 = $66,000
Actual overhead = $62,000
Difference = $4,000 overapplied

2. Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to the regular 1,000 customers:

Direct materials$200
Direct manufacturing labor30
Variable manufacturing overhead60
Fixed manufacturing overhead40
Total manufacturing costs$330

The plant has capacity for 2,000 axles.

What would be the total cost of producing 1,500 axles?

A) $495,000
B) $375,000
C) $330,000
D) $475,000
[($200 + $30 + $60) × 1,500 units] + ($40 x 1,000 units) = $475,000 3. Ekmark Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:

  

Data for one of the company's products follow:

  

How much overhead cost would be assigned to Product P59G using the activity-based costing system? 

A) $54,482.56
B) $5,301.76
C) $10,014.40
D) $154.78

The overhead cost charged to Product P59G is:

Activity Rate
Activity
ABC Cost
Assembling products
$6.56
Per assembly
240
Hours
$1,574.40
Processing customer orders
$65.38
Per customer order
48
Orders
3,138,24.00
Setting up batches
$82.84
Per batch
64
Batches
5,301.76
Total overhead cost

$10,014.40

4. A single indirect-cost rate (traditional costing) may distort product costs because:

A) there is an assumption that all support activities affect all products B) it recognizes specific activities that are required to produce a product C) costs are not consistently recorded
D) it fails to measure the correct amount of total costs

Use the following information to answer the next two questions:

The following data are available for Ruggles Company for the year ended September 30, 2011.

Sales:24,000 units at $50 each
Expected and actual production:30,000 units
Manufacturing costs incurred:
Variable:$525,000
Fixed:$372,000
Nonmanufacturing costs incurred:
Variable:$144,800
Fixed:$77,400
Beginning inventories:none

5. What is the operating income using the variable-costing approach?

A) $185,800
B) $260,200
C) $635,200
D) $482,400

The correct answer is 185,800.
Sales revenue ($50 per unit x 24,000 units sold)$1,200,000
Less:
Var. manufacturing costs [($525,000 / 30,000 units) x 24,000 units sold]$420,000 Var. nonmanufacturing costs$144,800
Contribution margin635,200
Fixed manufacturing costs$372,000
Fixed nonmanufacturing costs$77,400
Net operating income$185,800

6. What is the operating income using the absorption-costing approach?

A) $185,800
B) $260,200
C) $635,200
D) $482,400

The correct answer is 260,200.
Sales revenue ($50 per unit x 24,000 units sold)$1,200,000
Less:...
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