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ACCT 434 Entire Course

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ACCT 434 Week 1-7 All Discussion Questions ACCT-434 Week 1 Quiz Activity Based Costing ACCT-434 Week 2 Master Budget Flexible Budgets ACCT-434 Week 3 Cost Behavior Decision Making Quality ACCT-434 Week 4 Midterm Exam ACCT-434 Week 5 Pricing Decisions Management Control Systems ACCT-434 Week 6 Customer Profitability Capital Budgeting ACCT-434 Week 7 Quality Control Inventory Management ACCT 434 Week 1 Quiz (New) ACCT 434 Week 2 Quiz (New) ACCT 434 Week 3 Quiz (New) ACCT 434 Week 4 Quiz (New) ACCT 434 Week 5 Quiz (New) ACCT 434 Week 6 Quiz (New)


ACCT 434 Week 7 Quiz (New) ACCT 434 Midterm Exam (New) ACCT 434 Final Exam Set 1 ACCT 434 Final Exam Set 2 ACCT 434 Final Exam Set 3 ACCT 434 Final Exam Set 4 ACCT 434 Final Exam Set 5 ===============================================

ACCT 434 Final Exam All 5 Sets

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This Tutorial contains All 5 Sets of Final Exam, Details could be found on below mentioned links ACCT 434 Final Exam Set 1 ACCT 434 Final Exam Set 2 ACCT 434 Final Exam Set 3 ACCT 434 Final Exam Set 4 ACCT 434 Final Exam Set 5 ===============================================


ACCT 434 Final Exam Set 1

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ACC 434 Final Exam 1. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? (Points: 5) 2. (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? (Points: 5) 3. (TCO 2) Fixed overhead costs include: (Points: 5) 4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April re collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Brenton's budgeted total cash receipts in April are (Points: 5) 5. (TCO 2) Financing decisions PRIMARILY deal with: (Points: 5) 6. (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? (Points: 5) 7. (TCO 3) Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms? (Points: 5) 8. (TCO 4) Sunk costs 9. (TCO 5) Throughput contribution equals


revenues minus: (Points: 5) 10. (TCO 5) Keeping the bottleneck operation busy and subordinating all nonbottleneck operations to the bottleneck operation involves: (Points: 5) 11. (TCO 6) What type of cost is the result of an event that results in more than one product or service simultaneously (Points: 5) 12. (TCO 6) Which of the following is a disadvantage of the physical-measure method of allocating joint costs? (Points: 5) 13. (TCO 7) Life-cycle costing is the name given to: (Points: 5) 14. (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000. The markup percentage on full cost to arrive at the target (exisitng) selling price is (Points: 5) 15. (TCO 8) The costs used in cost-based transfer prices 16. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound? (Points: 5) 17. (TCO 8) Transferring products or services at market prices generally leads to optimal decisions when 18. (TCO 9) To guide cost allocation decisions, the benefits-received criterion 19. (TCO 9) The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $20,000,000 bond issuance, the Electric Mixer Division used $14,000,000 and the Electric Lamp Division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Points: 5) 20. (TCO 10) The net present value method focuses on: (Points: 5) 21. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered. (Points: 5) 22. (TCO 11) Nonfinancial measures for internal quality performance include all but which of the


following? 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by onethird. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? 24. (TCO 12) Obsolescence is an example of which cost category? 25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $30. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is the estimated total setup cost for the flag displays for the coming year is (Points: 5) (TCO 5) Robert's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $400,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is


introducing a new hospital bed similar to Deluxe that will sell for $4,000. Management believes it must lower the price to compete. Marketing believes that the new price will increase sales by 25% a year. The plant manager thinks that production can increase by 25% with the same level of fixed costs. The company currently sells all the Deluxe beds it can produce. Question 1: What is the annual operating income from Deluxe at the current price of $5,000? Question 2: What is the annual operating income from Deluxe if the price is reduced to $4,000 and sales in units increase by 25%? Sales (25,000 x $4,000) $100,000,000 (TCO 7) Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ Sixteen times each year, a new card design will be put into production. Each new design will require $600 in setup costs. 4. (TCO 8) Sportswear Company manufactures socks. The Athletic Division sells its socks for $6 a pair to outsiders. Socks have manufacturing costs of $2.50 each for variable and $1.50 for fixed. The division's total fixed manufacturing costs are $105,000 at the normal volume of 70,000 units. The European Division has offered to buy 15,000 socks at the full cost of $4. The Athletic Division has excess capacity and the 15,000 units can be produced without interfering with the current outside sales of 70,000. The 85,000 volume is within the division's relevant operating range. Explain whether the Athletic Division should accept the offer. Support your decision showing all calculations. (Points: 25) Question 1. 1. (TCO 2) Russell Company has the following projected account balances for June 30, 20X9:…..Prepare a budgeted income statement AND a budgeted balance sheet as of June 30, 20X9. Russell Company Income Statement Question 2. 2. (TCO 5) Steven's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $600,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar ……..? (Points : 25) Question 3.


3. (TCO 7) Dulce Greeting Cards Incorporated is starting a new business venture and is in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ For 16 times each year, a new card design will be put into production. Each new design will require $300 in setup costs. ∙ The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over the next four years. …………… (Points : 25) Question 4. 4. (TCO 8) Novacar Company manufactures automobiles. The red car division sells its red cars for $25,000 each to the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed costs. The division's total fixed manufacturing costs are $25,000,000 at the normal volume of 5,000 units……………. (Points : 25) Question 5. 5. (TCO 11) For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:……Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs. (Points : 25) Russell.Company.has.the.following.projected.account.balances.for.June. 30,.20X5: Accounts payable $40,000 Sales $800,000 Accounts receivable $100,000 Capital stock $400,000 Depreciation, factory $24,000 Retained earnings ? Inventories (5/31 & 6/30) $180,000 Cash $56,000 Direct materials used $200,000 Equipment, net $240,000 Office salaries $80,000 Buildings, net $400,000 Insurance, factory $4,000 Utilities, factory $16,000 Plant wages $140,000 Selling expenses $60,000 Bonds payable $160,000 Maintenance, factory $28,000 Required a.. Prepare.a.budgeted.income.statement.for.June.20X5. b.. Prepare.a.budgeted.balance.sheet.as.of.June.30,.20X5. ===============================================


ACCT 434 Final Exam Set 2

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1. (TCO 1) If products are alike, then for costing purposes (Points : 5) 2. (TCO 1) Ireland Company produces a special spray nozzle. The budgetedindirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 80,000. What is the budgeted indirect cost allocation rate for this activity? (Points : 5) 3. (TCO 2) Variable overhead costs include (Points : 5) 4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue ispresented in the following table: February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 75% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 80% of the next month's projected total sales. All purchases of inventory are on account; 50% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Brenton's budgeted total cash receipts in March are (Points : 5) 5. (TCO 2)Budgeting provides all of the following except (Points : 5) 6. (TCO 3) For January, the cost components of a picture frame include $0.20for the glass, $0.85 for the wooden frame, and $0.60 for assembly. The assembly desk and tools cost $200. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs? (Points : 5) 7. (TCO 3) Which cost estimation method uses a formal mathematical methodto develop cost functions based on past data? (Points : 5) 8. (TCO 4)Sunk costs (Points : 5) 9. (TCO 5) The theoryof constraints is


used for cost analysis when (Points : 5) 10. (TCO 5) Producingmore nonbottleneck output (Points : 5) 11. (TCO 6) What type of cost is the result of an event that results in morethan one product or service simultaneously? (Points : 5) 12. (TCO 6) Which of the following is a disadvantage of the physical-measuremethod of allocating joint costs? (Points : 5) 13. (TCO 7) An understanding of life-cycle costs can lead to (Points : 5) 14. (TCO 7) Each month, Haddon Company has $300,000 total manufacturingcosts (20% fixed) and $125,000 distribution and marketing costs (75% fixed). Haddon's monthly sales are $600,000. The markup percentage on full cost to arrive at the target (existing) selling price is (Points : 5) 15. (TCO 8) Transfer prices should be judged by whether they promote (Points : 5) 16. (TCO 8) Division A sells soybean paste internally to Division B, which inturn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.80 per pound while Division B incurs additional costs of $3 per pound. Which of the following formulas correctly reflects the company's operating income per pound? (Points : 5) 17. (TCO 8) When companies do not want to use market prices or find it toocostly, they typically use ________ prices, even though suboptimal decisions may occur. (Points : 5) 18. (TCO 9)To guide cost allocation decisions, the fairness or equity criterion is (Points : 5) 19. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. Which corporate costs should be allocated to divisions? (Points : 5) 20. (TCO 10) A "what-if" technique that examines how a result will change ifthe original predicted data are not achieved or if an underlying assumption changes is called (Points : 5) 21. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $400,000 in annual cash flows for a period of four years. The required rate of return is 12%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes


are not considered. (Points : 5) 22. (TCO 11) The four cost categories in a cost of quality program are (Points : 5) 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 200,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? (Points : 5) 24. (TCO 12) The costs associated with storage are an example of which cost category? (Points : 5) 25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $60. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is (Points : 5) 1. (TCO 2) Russell Company has the following projected account balances for June 30, 20X9: Accounts payable $ 60,000 Sales $ 800,000 Accounts receivable $ 100,000 Capital stock $ 400,000 Depreciation, factory $ 36,000 Retained earnings ? Inventories (5/31 & 6/30) $ 180,000 Cash $ 56,000 Direct materials used $ 210,000 Equipment, net $ 260,000 Office salaries $ 92,000 Buildings,


net $ 400,000 Insurance, factory $ 4,000 Utilities, factory $ 16,000 Plant wages $ 140,000 Selling expenses $ 50,000 Bonds payable $ 160,000 Maintenance, factory $ 28,000 Prepare a budgeted income statement AND a budgeted balance sheet as of June 30, 20X9. (Points : 25) budgeted income statement: 2. (TCO 5) Paul's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $500,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar to Deluxe that will sell for $4,000. Management believes it must lower the price to compete. Marketing believes that the new price will increase sales by 25% a year. The plant manager thinks that production can increase by 25% with the same level of fixed costs. The company sells all the Deluxe beds it can produce. Question 1: What is the annual operating income from Deluxe at the price of $5,000? Question 2: What is the annual operating income from Deluxe if the price is reduced to $4,000 and sales in units increase by 25%? (Points : 25) Question 1: (TCO 7) Mercy Greeting Cards Incorporated is starting a new business venture and is in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ For 16 times each year, a new card design will be put into production. Each new design will require $100 in setup costs. ∙ The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over the next four years. ∙ Direct costs of producing the designs average $0.50 each. ∙ Indirect manufacturing costs are estimated at $50,000 per year. ∙ Customer service expenses average $0.10 per card. ∙ Current sales are expected to be 2,500 units of each card design. Each card sells for $3.50. ∙ Sales units equal production units each year. What is the total estimated life-cycle operating income? 4. (TCO 8) Motormart Company manufactures automobiles. The red car division sells its red cars for $25,000 each to the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed costs. The division's total fixed manufacturing costs are


$25,000,000 at the normal volume of 5,000 units. The blue car division has been unable to meet the demand for its cars this year. It has offered to buy 1,000 cars from the red car division at the full cost of $16,000. The red car division has excess capacity and the 1,000 units can be produced without interfering with the outside sales of 5,000. The 6,000 volume is within the division's relevant operating range. 5. (TCO 11) For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units 250 Days used per year 250 Lead time, in days 13 Ordering costs $100 Annual unit carrying costs $20 ===============================================

ACCT 434 Final Exam Set 3 \

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ACC 434 Final Exams 1. (TCO 1) a significant limitation of activitybased costing is the (Points: 5) 2. (TCO 1) Ireland Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 80,000. What is the budgeted indirect cost allocation rate for this activity? (Points: 5) 3. (TCO 2) Overhead costs have been increasing due to all of the following except (Points: 5) 4. (TCO 2) Information


pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 75% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month is 80% of the next month's projected total sales. All purchases of inventory are on 5. (TCO 2) Budgeting provides all of the following EXCEPT 6. (TCO 3) the cost components of an air conditioner include $35 for the compressor, $15 for the sheet-molded compound frame, and $100 per unit for assembly. The factory machines-and-tools cost is $80,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? 7. (TCO 3) which cost estimation method uses a formal mathematical method to develop cost functions based on past data? 8. (TCO 4) Sunk costs 9. (TCO 5) in the theory of constraints, the only direct costs are 10. (TCO 5) Producing more non bottleneck output 11. (TCO 6) which of the following methods of allocating costs use market-based data? 12. (TCO 6) the benefits-received criteria for allocating joint costs indicates market-based measures are preferred because 13. (TCO 7) Life-cycle budgeting is particularly important when 14. (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $2,000,000, allocated on the basis of the number of units produced. Selling price is computer by adding a 12% markup to full cost. How much should the selling price be per unit for 300,000 units? 15. (TCO 8) the costs used in cost-based transfer prices 16. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.80 per pound while Division B incurs additional costs of $3 per pound. What is Division A's operating income per pound, assuming the transfer price of the soybean paste is set at $1.25 per pound? 17. (TCO 8) Transferring products or services at market prices generally leads to optimal decisions when 18. (TCO 9) to guide cost allocation decisions, the benefits-received criterion 19. (TCO 9) The Hassan Corporation has an electric mixer division and an electric


lamp division. Of a $50,000,000 bond issuance, the electric mixer division used $24,000,000 and the electric lamp division used $26,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric mixer division? 20. (TCO 10) A "what-if" technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes is called 21. (TCO 10) Upper Darby Park Department is considering a new capital investment. The cost of the machine will be $200,000. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a fiveyear life, at which time the terminal disposal value is expected to be $20,000. Upper Darby Park Department is assuming no tax consequences. If Upper Darby Park Department has a required rate of return of 10%, which of the following is closest to the present value of the project? 22. (TCO 11) nonfinancial measures for internal quality performance include all but which of the following? 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change, assuming the new prevention methods reduce material failures by 40% in the appraisal phase? 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs.


The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 200,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs 24. (TCO 12) Obsolescence is an example of which cost category? 25. (TCO 12) Liberty Celebrations, Inc. manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $100. There are no flag displays on hand but Liberty had scheduled 70 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. The estimated total setup cost for the flag displays for the coming year is 1. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is 100000/60 = 1667 units per run Russell.Company.has.the.following.projected.account.balances.for.June. 30,.20X5: Accounts payable $40,000 Sales $800,000 Accounts receivable $100,000 Capital stock $400,000 Depreciation, factory $24,000 Retained earnings ? Inventories (5/31 & 6/30) $180,000 Cash $56,000 Direct materials used $200,000 Equipment, net $240,000 Office salaries $80,000 Buildings, net $400,000 Insurance, factory $4,000 Utilities, factory $16,000 Plant wages $140,000 Selling expenses $60,000 Bonds payable $160,000 Maintenance, factory $28,000 Required a) Prepare.a.budgeted.income.statement.for.June.20X5. b) Prepare.a.budgeted.balance.sheet.as.of.June.30,.20X5. (Points: 25) 2. (TCO 5) Steven's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an


average production run of 5,000 units. It normally has four production runs a year, with $600,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar to Deluxe that will……..? (Points: 25) 2. (TCO 5) Robert's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $400,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar to Deluxe that will sell for $4,000. Management believes it must lower the price to compete. Marketing believes that the new price will increase sales by 25% a year. The plant manager thinks that production can increase by 25% with the same level of fixed costs. The company currently sells all the Deluxe beds it can produce. Question 2: What is the annual operating income from Deluxe if the price is reduced to $4,000 and sales in units increase by 25%? Sales (25,000 x $4,000) $100,000,000 3. (TCO 7) Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ Sixteen times each year, a new card design will be put into production. Each new design will require $600 in setup costs. ∙ The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over the next four years. ∙ Direct costs of producing the designs average $0.50 each. ∙ Indirect manufacturing costs are estimated at $50,000 per year. ∙ Customer service expenses average $0.10 per card. ∙ Current sales are expected to be 2,500 units of each card design. Each card sells for $3.50. ∙ Sales units equal production units each year. What is the estimated life-cycle operating income for the first year? What are the estimated life-cycle revenues? workings 4. (TCO 8) Novacar Company manufactures automobiles. The red car division sells its red cars for $25,000 each to the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed costs. The division's total fixed manufacturing costs are


$25,000,000 at the normal volume of 5,000 units. ……………………………. (Points: 25) 4. Colorfull Autocar Company manufactures automobiles. The Red Car Division sells its red cars for $25,000 each to the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed costs. The division's total fixed manufacturing costs are $25,000,000 at the normal volume of 5,000 units. The Blue Car Division has been unable to meet the demand for its cars this year. It has offered to buy 1,000 cars from the Red Car Division at the full cost of $17,500. The Red Car Division has excess capacity and the 1,000 units can be produced without interfering with the current outside sales of 5,000. The 6,000 volume is within the division's relevant operating range. Explain whether the Red Car Division should accept the offer. Support your decision showing all calculations 4. (TCO 8) Sportswear Company manufactures socks. The Athletic Division sells its socks for $6 a pair to outsiders. Socks have manufacturing costs of $2.50 each for variable and $1.50 for fixed. The division's total fixed manufacturing costs are $105,000 at the normal volume of 70,000 units. The European Division has offered to buy 15,000 socks at the full cost of $4. The Athletic Division has excess capacity and the 15,000 units can be produced without interfering with the current outside sales of 70,000. The 85,000 volume is within the division's relevant operating range. Explain whether the Athletic Division should accept the offer. Support your decision showing all calculations. (Points: 25) 5. (TCO 11) For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to start using the economicorder-quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units 250 ===============================================

ACCT 434 Final Exam Set 4


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FINAL EXAM – D 1. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? (Points: 5) 2. (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? (Points: 5) 3. (TCO 2) Fixed overhead costs include: (Points: 5) 4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. 5. (TCO 2) Financing decisions PRIMARILY deal with: (Points: 5) 6. (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? (Points: 5) 7. (TCO 3) Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms? (Points: 5) 8. (TCO 4) Sunk costs: (Points: 5) 9. (TCO 5) Throughput


contribution equals revenues minus: (Points: 5) 10. (TCO 5) Keeping the bottleneck operation busy and subordinating all nonbottleneck operations to the bottleneck operation involves: (Points: 5) 11. (TCO 6) What type of cost is the result of an event that results in more than one product or service simultaneously (Points: 5) 12. (TCO 6) Which of the following is a disadvantage of the physical-measure method of allocating joint costs? (Points: 5) 13. (TCO 7) Life-cycle costing is the name given to: (Points: 5) 14. (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000. The markup percentage on full cost to arrive at the target (exisitng) selling price is 15. (TCO 8) Transfer prices should be judged by whether they promote: (Points: 5) 16. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound? (Points: 5) 17. (TCO 8) When companies do not want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur. (Points: 5) 18. (TCO 9) To guide cost allocation decisions, the benefits-received criterion: (Points: 5) 19. (TCO 9) The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $20,000,000 bond issuance, the Electric Mixer Division used $14,000,000 and the Electric Lamp Division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Points: 5) 20. (TCO 10) The net present value method focuses on: (Points: 5) 21. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine?


Income taxes are not considered. (Points: 5) 22. (TCO 11) The four cost categories in a cost of quality program are (Points: 5) 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? (Points: 5) 24. (TCO 12) Obsolescence is an example of which cost category? (Points: 5) 25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $30. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is the estimated total setup cost for the flag displays for the coming year is (Points: 5) (TCO 5) Robert's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $400,000 in setup costs


each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar to Deluxe that will sell for $4,000. Management believes it must lower the price to compete. Marketing believes that the new price will increase sales by 25% a year. The plant manager thinks that production can increase by 25% with the same level of fixed costs. The company Question 2: What is the annual operating income from Deluxe if the price is reduced to $4,000 and sales in units increase by 25%? (TCO 7) Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ Sixteen times each year, a new card design will be put into production. Each new design will require $600 in setup costs. ∙ The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over the next four years. ∙ Direct costs of producing the designs average $0.50 each. ∙ Indirect manufacturing costs are estimated at $50,000 per year. ∙ Customer service expenses average $0.10 per card. ∙ Current sales are expected to be 2,500 units of each card design. Each card sells for $3.50. ∙ Sales units equal production units each year. What is the estimated life-cycle operating income for the first year? Please check the attached excel sheet for computations 4. (TCO 8) Sportswear Company manufactures socks. The Athletic Division sells its socks for $6 a pair to outsiders. Socks have manufacturing costs of $2.50 each for variable and $1.50 for fixed. The division's total fixed manufacturing costs are $105,000 at the normal volume of 70,000 units. The European Division has offered to buy 15,000 socks at the full cost of $4. The Athletic Division has excess capacity and the 15,000 units can be produced without interfering with the current outside sales of 70,000. The 85,000 volume is within the division's relevant operating range. Explain whether the Athletic Division should accept the offer. Support your decision showing all calculations. (Points: 25) ===============================================


ACCT 434 Final Exam Set 5

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1. (TCO 1) If products are alike, then for costing purposes (Points: 5) 1) If products are different, then for costing purposes: 1. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? (Points: 5) 2. (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? (Points: 5) 3. (TCO 2) Fixed overhead costs include (Points: 5) 4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 5. (TCO 2) Budgeting provides all of the following EXCEPT (Points: 5) 5. Budgeting is used to help companies: 5. (TCO 2) Financing decisions PRIMARILY deal with: (Points: 5) s 6. (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? (Points: 5) 7. (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods? (Points: 5) 8. (TCO 4) Sunk costs: (Points: 5) 9. (TCO 5) In the theory of constraints, the only direct costs are (Points: 5) 9. (TCO 5)


Throughput contribution equals revenues minus: (Points: 5) 10. (TCO 5) Keeping the bottleneck operation busy and subordinating all nonbottleneck operations to the bottleneck operation involves: (Points: 5) 11. (TCO 6) What type of cost is the result of an event that results in more than one product or service simultaneously (Points: 5) 12. (TCO 6) Which of the following is a disadvantage of the physical-measure method of allocating joint costs? (Points: 5) 13. (TCO 7) An understanding of life-cycle costs can lead to (Points: 5) 13. (TCO 7) Life-cycle costing is the name given to: (Points: 5) 14. (TCO 7) Each month, Haddon Company has $300,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (75% fixed). Haddon's monthly sales are $600,000. The markup percentage on full cost to arrive at the target (existing) selling price is (Points: 5) 14. (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000. The markup percentage on full cost to arrive at the target (exisitng) selling price is 15. (TCO 8) The costs used in cost-based transfer prices (Points: 5) 15. (TCO 8) Transfer prices should be judged by whether they promote: (Points: 5) There is a mistake in number 15. the correct answer should be 1 & 3 16. (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $25 per unit. Outlay cost is $10. What is the opportunity cost, assuming the seller………? (Points: 5) 16. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound? (Points: 5) 16. (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.80 per pound while Division B incurs additional costs of $3 per pound. Which of the following formulas correctly reflects the company's operating income per pound? (Points : 5) 17. (TCO 8) When companies do not want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur. (Points:


5) 17. #TCO 8# A benefit of using a market-based transfer price is the (Points : 5) economic viability and profitability of each division can be evaluated individually. 18. (TCO 9) To guide cost allocation decisions, the benefits-received criterion: (Points: 5) 19. (TCO 9) The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $20,000,000 bond issuance, the Electric Mixer Division used $14,000,000 and the Electric Lamp Division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Points: 5) 20. (TCO 10) The net present value method focuses on: (Points: 5) 20. (TCO 10) An important advantage of the netpresent-value method of capital budgeting over the internal rate-ofreturn method is (Points : 5) the net present values of individual projects can be added to determine the effects of accepting a combination of projects. 21. (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $500,000. The required rate of return is 12% and the current machine is expected to last for four years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also four……….. (Points: 5) 21. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered. (Points: 5) 21. #TCO 10# The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $400,000 in annual cash flows for a period of four years. The required rate of return is 12%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. 22. (TCO 11) The four cost categories in a cost of quality program are (Points: 5) 22. (TCO 11) An advantage of financial cost of quality measures is that they (Points : 5)


23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new 24. (TCO 12) The costs associated with storage are an example of which‌..? (Points: 5) 25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $30. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is the estimated total setup cost for the flag displays for the coming year is (Points: 5) Essay 1. (TCO 2) Russell Company has the following projected account balances for June 30, 20X9:.Prepare a budgeted income statement AND a budgeted balance sheet as of June 30, 20X9. (Points: 25) Russell.Company.has.the.following.projected.account.balances.for.June. 30,.20X5: Accounts payable $40,000 Sales $800,000 Accounts receivable $100,000 Capital stock $400,000 Depreciation, factory $24,000 Retained earnings ? Inventories (5/31 & 6/30) $180,000 Cash $56,000 Direct materials used $200,000 Equipment, net $240,000 Office salaries $80,000 Buildings, net $400,000 Insurance, factory $4,000 Utilities, factory $16,000 Plant wages $140,000 Selling expenses $60,000 Bonds payable $160,000 Maintenance, factory $28,000 Required a) Prepare.a.budgeted.income.statement.for.June.20X5. b) Prepare.a.budgeted.balance.sheet.as.of.June.30,.20X5. (Points: 25) Balance Sheet 2. (TCO 5) Steven's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for


$5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $600,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar to Deluxe that will……..? (Points: 25) 3. (TCO 7) Dulce Greeting Cards Incorporated is starting a new business venture and is in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ For 16 times each year, a new card design will be put into production. Each new design will require $300 in setup costs. ∙ The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over the next four years. …………… (Points: 25) 4. (TCO 8) Novacar Company manufactures automobiles. The red car division sells its red cars for $25,000 each to the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed costs. The division's total fixed manufacturing costs are $25,000,000 at the normal volume of 5,000 units. ……………………………. (Points: 25) 5. (TCO 11) For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units 250 Days used per year 250 Lead time, in days 13 Ordering costs $100

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ACCT 434 Midterm Exam (New)


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Multiple Choice 10 9 Essay 4 Question 1. Question : (TCO 1) Which of the following is a sign that an ABC system may be useful? Question 2. Question : (TCO 1) Merriamn Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $400,000 10,000 hours Account billing lines $280,000 4,000,000 lines Account verification accounts $150,000 40,000 accounts Correspondence letters $ 50,000 4,000 letters Total costs $880,000 How much of account verification costs will be assigned to Department A? Question 3. Question : (TCO 2) Budgeting provides all of the following EXCEPT Question 4. Question : (TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units. The sales-volume variance is Question 5. Question : (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods? Question 6. Question : (TCO 4) In evaluating different alternatives, it is useful to concentrate on Question 7. Question : (TCO 5) Which of the following is a relevant cost to be included in a make-or-buy decision? Question 8. Question :(TCO 5) Konrade's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials $40,000 Direct labor 10,000 Variable overhead costs 30,000 Fixed overhead costs 20,000 Total costs $100,000 It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Konrade's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer


be incurred) total Question 9. Question : (TCO 3) The cost function y = 100 + 10X Question 10. Question : (TCO 4) Opportunity costs Question 1. Question : (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control material ordering d. production scheduling e. warehouse expense f. engineering design Question 2. Question : (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period: Month Unit Sales There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Prepare production budgets in units for July, August, and September. Question 3. Question : (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department: Observation Machine-hours Total Operating Costs January 4,000 $45,000 February 4,600 49,500 March 3,800 45,750 April 4,400 48,000 May 4,500 49,800 Use the high-low method to determine the estimating cost function with machine-hours as the cost driver. Question 4. Question : (TCO 5) Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are: Direct materials $12 Direct manufacturing labor 60 Variable manufacturing overhead 24 Fixed manufacturing overhead 32 Total $128 Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated. A. What is the relevant per unit cost for the original part? B. Which alternative is best for Lewis Auto Company? By how much? ===============================================


ACCT 434 Week 1 Quiz (New)

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1. Question : (TCO 1) Production-cost cross-subsidization results from Question 2. Question : (TCO 1) The allocation of indirect costs in an activity-based costing system Question 3. Question : (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? Question 4. Question : (TCO 1) Undercosting a particular product may result in Question 5. Question : (TCO 1) The most likely example of an output unit-level cost is Question 6. Question : (TCO 1) Unit-level cost drivers are most appropriate as an overhead assignment base when Question 7. Question : (TCO 1) Activity-based management (ABM) includes decisions about all EXCEPT Question 8. Question : (TCO 1) The unique feature of an ABC system is the emphasis on Question 9. Question : (TCO 1) One department indirect-cost rate is sufficient when Question 10. Question : (TCO 1) Rumpole Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $100,000. The budgeted number of nozzles to be inserted is 25,000. What is the budgeted indirect cost allocation rate for this activity? ===============================================


ACCT 434 Week 1 Quiz Activity Based Costing (Devry)

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1. Question : (TCO 1) The average cost data are for In-Sync Fixtures Company's (a retailer) only two product lines, Marblette and Italian Marble. Marblette Italian Marble Purchase volume 20,000 1,000 Purchase cost per unit $50 $250 Shipments received 12 12 Hours used per shipment * 5 3 * These data were accumulated after a careful activity analysis. Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. InSync Fixtures is considering refining the allocation of its receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires


more care than the Marblette but that the Marblette comes in larger volume. Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures? 2. Question : (TCO 1) The allocation of indirect costs in an activity-based costing system 3. Question : (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? 4. Question : (TCO 1) A company produces three products; if one product is overcosted then 5. Question : (TCO 1) To set realistic selling prices 6. Question :


(TCO 1) Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT 7. Question : (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis 8. Question : (TCO 1) Companies use ABC system information to 9. Question : (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help to 10. Question : (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? ===============================================


ACCT 434 Week 1-7 All Discussion Questions (Devry)

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Week 1 DQ1 ABC Journey Week 1 DQ2 Workout Room Week 2 DQ1 Flexible versus Static Budgets Week 2 DQ2 Workout Room Week 3 DQ1 Relevant Costs Week 3 DQ2 Workout Room Week 4 DQ1 Accounting for Primary Products Week 4 DQ2 Workout Room Week 5 DQ1 Pricing Decision Week 5 DQ2 Workout Room Week 6 DQ1 Evaluating Managers Week 6 DQ2 Workout Room Week 7 DQ1 Quality and Performance Week 7 DQ2 Workout Room


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ACCT 434 Week 2 Master Budget Flexible Budgets (Devry)

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1. Question : (TCO 2) Operating budgets and financial budgets 2. Question : (TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget. 3. Question : (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet? 4. Question :


(TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to be worked on during the period can be computed at the start of that period. This feature of standard costing makes it possible to 5. Question : (TCO 2) An unfavorable variance indicates that 6. Question : (TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing? 7. Question : (TCO 2) Overhead costs have been increasing due to all of the following except 8. Question : (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and


that operating expenses are a fixed cost. What is budgeted sales for 20X9? 9. Question : (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009. July 1, 2008 June 30, 2009 Raw material (note) 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 (note) Three units of raw material are needed to produce each unit of finished product. If Hester Company plans to sell 600,000 units during the 2008-2009 fiscal year, the number of units it would have to manufacture during the year would be 10. Question : (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April Cash Sales $160,000 $150,000 $120,000


Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.

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ACCT 434 Week 2 Quiz (New)

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1.

Question : (TCO 2) Benchmarking is Question 2. Question : (TCO 2) To gain the benefits of budgeting, _____ must understand and support the budget. Question 3. Question : (TCO 2) Financial budgets include the Question 4. Question : (TCO 2) A flexible budget Question 5. Question : (TCO 2) A favorable variance indicates that Question 6. Question :(TCO 2) Performance evaluation using variance analysis should guard against Question 7. Question : (TCO 2) Overhead costs have been increasing due to all of the following except


Question 8. Question : (TCO 2) Katie Enterprises reports the yearend information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X2 budget. In 20X2, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted cost of goods sold for 20X2? Question 9. Question : (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 20x2, through June 30, 20x3. July 1, 20x2 June 30, 20x3 Raw material (note) 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 (note) Three units of raw material are needed to produce each unit of finished product. If Hester Company plans to sell 600,000 units during the 20x2-20x3 fiscal year, the number of units it would have to manufacture during the year would be Question 10. Question : (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table. February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. 11 purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Brenton's budgeted total cash payments in March for inventory purchases are ===============================================


ACCT 434 Week 3 Cost Behavior Decision Making Quality (Devry)

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1. Question : (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified? 2. Question : (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs? 3. Question : (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?


4. Question : (TCO 3) Penny's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 20X8 operations: Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager's salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated total costs if Penny's expects to sell 3,000 units next year? 5. Question : (TCO 4) The formal process of choosing among alternatives is known as a(n) 6. Question : (TCO 4) When using the five-step decision process, which one of the following steps should be done last? 7. Question : (TCO 4) Sunk costs 8. Question :


(TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods' policy to add a 50% markup to full costs. A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order? 9. Question : (TCO 5) Throughput contribution equals revenues minus 10. Question : (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines. ===============================================

ACCT 434 Week 3 Quiz (New)

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1.

Question : (TCO 1) ABC systems create Question 2. Question : (TCO 1) Merriamn Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours$400,000 10,000 hours Account billing lines $280,000 4,000,000 lines Account verification accounts $150,000 40,000 accounts Correspondence letters $ 50,000 4,000 letters Total costs $880,000 The above activities are used by Department A and B as follows: Department A Department B Account inquiry hours2,000 hours 4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters How much of the account billing cost will be assigned to Department B? Question 3. Question : (TCO 2) Examples of nonfinancial budgets include all of the following EXCEPT Question 4. Question : (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity? Question 5. Question : (TCO 3) The conference method estimates cost functions Question 6. Question : (TCO 4) Relevant costs of a make-orbuy decision include all of the following EXCEPT Question 7. Question : (TCO 5) With a constraining resource, managers should choose the product with the ________. Question 8. Question : (TCO 5) Konrade's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials $40,000 Direct labor 10,000 Variable overhead costs 30,000 Fixed overhead costs 20,000 Total costs $100,000 It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Konrade's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total Question 9. Question : (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet-molded


compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? Question 10. Question : (TCO 4) Opportunity costs ===============================================

ACCT 434 Week 4 Midterm Exam (Devry)

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1. Question : (TCO1) ABC systems create 2. Question : (TCO 1) Merriamn Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers


Account inquiry hours $400,000 10,000 hours Account billing lines $280,000 4,000,000 lines Account verification accounts $150,000 40,000 accounts Correspondence letters $ 50,000 4,000 letters Total costs $880,000 The above activities are used by Department A and B as follows: Department A Department B Account inquiry hours 2,000 hours


4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters How much of the account billing cost will be assigned to Department B? 3. Question : (TCO 2) A master budget 4. Question : (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?


5. Question : (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods? 6. Question : (TCO 4) In evaluating different alternatives, it is useful to concentrate on 7. Question : (TCO 5) The theory of constraints is used for cost analysis when 8. Question : (TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $45,000 Direct labor 65,000 Variable factory overhead


30,000 Fixed factory overhead 70,000 Total costs $210,000 Of the fixed factory overhead costs, $30,000 is avoidable. Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should 9. Question : (TCO 3) The cost function + 10X 10. Question : (TCO 4) Sunk costs 1. Question : (TCO 1) For each of the following drivers identify an appropriate activity. a. # of machines


b. # of setups c. # of inspections d. # of orders e. # of runs f. # of bins or aisles g. # of engineers 2. Question : (TCO 2) Favata Company has the following information: Month Budgeted Sales June $60,000 July 51,000 August 40,000 September 70,000 October 72,000 In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Prepare a purchases budget for July through September. 3. Question :


(TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available: Month Machine-hours Overhead Costs February 1,700 $20,500 March 2,800 22,250 April 1,000 19,950 May 2,500 21,500 June 3,500 23,950 Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver. 4. Question : (TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are: Direct materials $0.60 Direct manufacturing labor 3.00 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 1.60 Total $6.40


Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated. a. What is the relevant per unit cost for the original part? b. Which alternative is best for Kirkland Company? By how much? ===============================================

ACCT 434 Week 4 Quiz (New)

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1. Question : (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified? Question 2. Question : (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs? Question 3. Question : (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data? Question 4. Question : (TCO 3) Penny's TV and Appliance Store is a small company that has hired you to perform some management


advisory services. The following information pertains to 20X2 operations: Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager's salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated total costs if Penny's expects to sell Question 5. Question : (TCO 4) A decision model involves Question 6. Question : (TCO 4) When using the fivestep decision process, which one of the following steps should be done last? Question 7. Question : (TCO 4) Sunk costs Question 8. Question : (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods' policy to add a 50% markup to full costs. Northwoods is invited to bid on a one-timeonly special order to supply 100 rustic tables. What is the lowest price Northwoods should bid on this special order? Question 9. Question : (TCO 5) Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows. Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead 60,000 Fixed factory overhead 140,000 Total costs $420,000 Of the fixed factory overhead costs, $60,000 is avoidable. Assuming no other use of their facilities, the highest price that Piels should be willing to pay for 10,000 units of the part is _____. If there are 600 machine-hours available per week, how many rockers of each model should Jim Helmer produce to maximize profits? ===============================================

ACCT 434 Week 5 Pricing Decisions Management Control Systems (Devry)


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1. Question : (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of 2. Question : (TCO 7) The first step in implementing target pricing and target costing is 3. Question : (TCO 7) The markup percentage is usually higher if the cost base used is 4. Question : (TCO 7) An understanding of life-cycle costs can lead to 5. Question :


(TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units? 6. Question : (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as 7. Question : (TCO 8) Transfer prices should be judged by whether they promote 8. Question : (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called 9. Question : (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that 10. Question :


(TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally? ===============================================

ACCT 434 Week 5 Quiz (New)

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Question 1. Question : (TCO 7) When companies do not want to use market prices or find it too costly, they typically use _____ prices, even though suboptimal decisions may occur. Question 2. Question : (TCO 7) The price of movie tickets for opening day and the few days following compared to the price 6 months later is an example of Question 3. Question :(TCO 7) A product's markup percentage needs to cover operating profits when the cost base is Question 4. Question : (TCO 7) Life-cycle budgeting is particularly important when Question 5. Question : (TCO 7) Each month, Haddon Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddon's monthly sales are $500,000. The markup percentage on full cost to arrive at the target (existing) selling price is Question 6. Question : (TCO 8) The benefits of a decentralized organization are greater when a company Question 7. Question : (TCO 8) The costs used in cost-based transfer prices Question 8. Question :TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop


is temporary, it is called Question 9. Question : (TCO 8) When companies do not want to use market prices or find it too costly, they typically use _____ prices, even though suboptimal decisions may occur. Question 10. Question : (TCO 8) Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound and Division B incurs an additional cost of $2.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound? ===============================================

ACCT 434 Week 6 Customer Profitability Capital Budgeting (Devry)

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1. Question : (TCO 9) To guide cost allocation decisions,the benefits-received criterion 2. Question :


(TCO 9) A challenge to using cost-benefit criteria for allocating costs isthat 3. Question : (TCO 9) The MOST likely reason for NOT allocating corporate costs todivisions include that 4. Question : (TCO 9)Identifying homogeneous cost pools 5. Question : (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division? 6. Question : (TCO 10) All of the following are methods that aid management in analyzingthe expected results of capital budgeting decisions EXCEPT the 7. Question :


(TCO 10) Assume your goal in life is to retire with $1.5 million. Howmuch would you need to save at the end of each year if interest ratesaverage 5% and you have a 25-year work life? 8. Question : (TCO 10) Thedefinition of an annuity is 9. Question : (TCO 10) A "what-if" technique that examines how a result will change ifthe original predicted data are not achieved or if an underlying assumptionchanges is called 10. Question : (TCO 10) Shirt Company wants to purchase a new cutting machine for itssewing plant. The investment is expected to generate annual cash inflowsof $300,000. The required rate of return is 12% and the current machine isexpected to last for four years. What is the maximum dollar amount ShirtCompany would be willing to spend for the machine, assuming its life isalsofour years? Income taxes are not considered. ===============================================

ACCT 434 Week 6 Quiz (New)


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1. Question : (TCO 9) To guide cost allocation decisions, the benefits-received criterion Question 2. Question : (TCO 9) Which costallocation criterion is superior when making an economic decision? Question 3. Question : (TCO 9) The MOST likely reason for allocating all corporate costs to divisions include that Question 4. Question : (TCO 9) Identifying homogeneous cost pools Question 5. Question : (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division? Question 6. Question : (TCO 10) The capital budgeting method, which calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present using the required rate of return, is the Question 7. Question : (TCO 10) Assume your goal in life is to retire with $1 million. How much would you need to save at the end of each year if investment rates average 9% and you have a 15-year work life? Question 8. Question : (TCO 10) The net-present-value method focuses on Question 9. Question : (TCO 10) In situations in which the required rate of return is not constant for each year of the project, it is advantageous to use Question 10. Question : (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of 4 years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the 4-year period. What is the net present value of the


investment? Would the company want to purchase the new machine? Income taxes are not considered. ===============================================

ACCT 434 Week 7 Quality Control Inventory Management (Devry)

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1. Question : (TCO 11)The four cost categories in a cost of quality program are 2. Question : (TCO 11) ________ is a formal means ofdistinguishing between random and nonrandom variation in an operatingprocess. 3. Question :


(TCO 11) Which of the following is NOT one of the steps in managingbottlenecks under the theory of constraints? 4. Question : (TCO 11)Scrap is an example of 5. Question : (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management iswilling to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3%of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failuresaverage 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase? 6. Question :


(TCO 12) Which of the following is NOT a major feature of a just-intimeproduction system? 7. Question : (TCO 12)Quality costs include 8. Question : (TCO 12) Which of the following statements about theeconomic-orderquantity decision model is FALSE? 9. Question : (TCO 12) When using a vendor-managed inventory system to enhance thefeatures of supply-chain management, a challenging issue is 10. Question : (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $40. There are no flag displays on hand butLiberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.


If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is d. ===============================================

ACCT 434 Week 7 Quiz (New)

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1. Question : (TCO 11) Nonfinancial measures for internal quality performance include all but which of the following? Question 2. Question : (TCO 11) Which of the following is NOT a nonfinancial performance measure for customer satisfaction? Question 3. Question : (TCO 11) Which of the following is NOT one of the three main measurements in the theory of constraints? Question 4. Question : (TCO 11) Scrap is an example of Question 5. Question : (TCO 11) Regal Products has a budget of $900,000 in 20X3 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-


third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume that all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase? Question 6. Question : (TCO 12) Which of the following categories of costs are important when managing inventories of goods for sale, according to the authors of the text? Question 7. Question : (TCO 12) The costs associated with storage are an example of which cost category? Question 8. Question : (TCO 12) Which of the following statements about the economic-order-quantity decision model is FALSE? Question 9. Question : (TCO 12) The _____ describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers. Question 10. Question : (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $40. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is ===============================================


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