ACCT Cost Exam 3 complete solutions correct answers key

Liberty University ACCT Cost Exam 3 complete solutions correct answers key

1.

award:
4 out of
4.00 points

The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,800 direct labor-hours will be required in August. The variable overhead rate is $7.30 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $138,720 per month, which includes depreciation of $24,890. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:

 2.

award:
4 out of
4.00 points

Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $190,000 and budgeted cash disbursements total $189,000. The desired ending cash balance is $32,000. The excess (deficiency) of cash available over disbursements for June will be:

 3.

award:
4 out of
4.00 points

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,300 direct labor-hours will be required in May. The variable overhead rate is $1.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,460 per month, which includes depreciation of $8,890. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

4.

award:
4 out of
4.00 points

Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

Beginning Inventory

Ending Inventory

  Finished goods (units)

31,000            

81,000       

  Raw material (grams)

61,000            

51,000       

Each unit of finished goods requires 3 grams of raw material.

If the company plans to sell 660,000 units during the year, how much of the raw material should the company purchase during the year?

5.

award:
4 out of
4.00 points

Walsh Company expects sales of Product W to be 62,000 units in April, 77,000 units in May and 72,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 27,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be:

6.

award:
4 out of
4.00 points

The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,600 direct labor-hours will be required in September. The variable overhead rate is $7 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,100 per month, which includes depreciation of $3,660. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

7.

award:
4 out of
4.00 points

Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

Beginning Inventory

Ending Inventory

  Finished goods (units)

21,000            

71,000       

  Raw material (grams)

51,000            

41,000       

Each unit of finished goods requires 2 grams of raw material.

If the company plans to sell 560,000 units during the year, the number of units it would have to manufacture during the year would be:

8.

award:
4 out of
4.00 points

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.8 hours of direct labor at the rate of $17.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

  
The budgeted direct labor cost per unit of Product WZ would be:

9.

award:
4 out of
4.00 points

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.1 hours of direct labor at the rate of $27.00 per direct labor-hour.

The company plans to sell 50,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 620 and 180 units, respectively. Budgeted direct labor costs for June would be: (Do not round intermediate calculations.)

10.

award:
4 out of
4.00 points

Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.78 direct labor-hours. The direct labor rate is $10.30 per direct labor-hour. The production budget calls for producing 7,000 units in October and 6,800 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

11.

award:
3 out of
3.00 points

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 3,600 client-visits, but its actual level of activity was 3,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

Fixed element per month

Variable element per client-visit

  Revenue

—

$39.80  

  Personnel expenses

$35,800  

$11.00  

  Medical supplies

1,800  

7.80  

  Occupancy expenses

8,800  

1.80  

  Administrative expenses

5,800  

0.9  

  Total expenses

$52,200  

$21.50  

 
The activity variance for administrative expenses in August would be closest to:

 12.

award:
3 out of
3.00 points

Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 4,700 tenant-days, but its actual level of activity was 4,780 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Fixed element
per month

Variable element per tenant-day

  Revenue

—

$35.20     

  Wages and salaries

$3,600   

$8.60     

  Expendables

1,100   

15.10     

  Facility expenses

7,500   

4.10     

  Administrative expenses  

7,600   

0.50     

  Total expenses

$19,800   

$28.30     

Actual results for September:
 

  Revenue

$144,230   

  Wages and salaries

$28,660   

  Expendables

$74,070   

  Facility expenses

$27,220   

  Administrative expenses

$7,106   

The spending variance for expendables in September would be closest to:

13.

award:
3 out of
3.00 points

Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 6,200 units, but its actual level of activity was 6,150 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element
per month

Variable element
per unit

  Revenue

$33.70       

  Direct labor

$0      

$5.70       

  Direct materials

0      

13.30       

  Manufacturing overhead

32,000      

1.20       

  Selling and administrative expenses

25,000      

4.00       

  Total expenses

$ 57,000      

$24.20       

Actual results for October:

  Revenue

$208,220  

  Direct labor

$34,550  

  Direct materials

$82,900  

  Manufacturing overhead

$41,000  

  Selling and administrative expenses

$30,420  

The spending variance for direct materials in October would be closest to:

14.

award:
3 out of
3.00 points

Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 6,000 units, but its actual level of activity was 5,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element
per month

Variable
element per tenant-day

  Revenue

—

$33.50     

  Direct labor

$0  

$5.50     

  Direct materials

0  

13.10     

  Manufacturing overhead

30,000  

1.00     

  Selling and administrative expenses

24,800  

0.20     

  Total expenses

$54,800  

$19.80     

Actual results for October:

  Revenue

$200,050   

  Direct labor

$32,500   

  Direct materials

$80,100   

  Manufacturing overhead

$40,000   

  Selling and administrative expenses

$30,400   

The revenue variance in October would be closest to:

15.

award:
3 out of
3.00 points

Schlick Framing's cost formula for its supplies cost is $1,770 per month plus $11 per frame. For the month of August, the company planned for activity of 617 frames, but the actual level of activity was 625 frames. The actual supplies cost for the month was $8,950. The activity variance for supplies cost in August would be closest to:

16.

award:
3 out of
3.00 points

Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,830 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Fixed element
per month

Variable element per tenant-day

  Revenue

—

$34.70      

  Wages and salaries

$2,700  

$7.70      

  Expendables

1,700  

14.20      

  Facility expenses

8,200  

3.20      

  Administrative expenses  

6,700  

0.20      

  Total expenses

$19,300  

$25.30      

Actual results for September:
 

  Revenue

$120,321   

  Wages and salaries

$28,570   

  Expendables

$56,975   

  Facility expenses

$19,989   

  Administrative expenses

$7,097   

The spending variance for facility expenses in September would be closest to:

 17.

award:
3 out of
3.00 points

Lizana Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 5,200 client-visits, but its actual level of activity was 5,220 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December

Data used in budgeting:

Fixed element
per month

Variable element per tenant-day

  Revenue

—

$37.20     

  Wages and salaries

$29,200  

$13.20     

  Expendables

1,500  

7.20     

  Facility expenses

10,200  

1.00     

  Administrative expenses  

6,700  

0.30     

  Total expenses

$47,600  

$21.70     

Actual results for December:

  Revenue

$150,200   

  Wages and salaries

$70,080   

  Expendables

$20,224   

  Facility expenses

$14,090   

  Administrative expenses

$7,570   

The activity variance for net operating income in December would be closest to:

Because the flexible budget net operating income is Greater than the planning budget, the variance is favorable (F).

18.

award:
3 out of
3.00 points

Cadavieco Detailing's cost formula for its materials and supplies is $1,890 per month plus $8 per vehicle. For the month of November, the company planned for activity of 84 vehicles, but the actual level of activity was 49 vehicles. The actual materials and supplies for the month was $2,450.

The materials and supplies in the planning budget for November would be closest to:

19.

award:
3 out of
3.00 points

Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 7,000 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element
per month

Variable element per tenant-day

  Revenue

—

$34.50     

  Direct labor

$0  

$6.50     

  Direct materials

0  

14.10     

  Manufacturing overhead

40,000  

2.00     

  Selling and administrative expenses

25,800  

0.50     

  Total expenses

$65,800  

$23.10     

Actual results for October:

  Revenue

$241,350   

  Direct labor

$45,210   

  Direct materials

$99,030   

  Manufacturing overhead

$45,000   

  Selling and administrative expenses

$30,500   

The direct materials in the flexible budget for October would be closest to:

 20.

award:
3 out of
3.00 points

Cadavieco Detailing's cost formula for its materials and supplies is $2,080 per month plus $14 per vehicle. For the month of November, the company planned for activity of 88 vehicles, but the actual level of activity was 48 vehicles. The actual materials and supplies for the month was $2,570.

The materials and supplies in the flexible budget for November would be closest to:

21.

award:
3 out of
3.00 points

The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:

  Sales

$936,000  

  Variable expenses

$415,000  

  Fixed manufacturing expenses

$350,000  

  Fixed selling and administrative expenses

$257,000  

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $217,000 of the fixed manufacturing expenses and $128,000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.

According to the company's accounting system, what is the net operating income earned by product C11B?

22.

award:
3 out of
3.00 points

Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 260,000 wheels annually are as follows:

  Direct material

$ 52,000  

  Direct labor

78,000  

  Variable manufacturing overhead

39,000  

  Fixed manufacturing overhead

79,000  

  Total

$248,000  

An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $34,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $93,400 per year.

If Talboe chooses to buy the wheel from the outside supplier, then the change in annual net operating income is a:

23.

award:
3 out of
3.00 points

Wright Company produces products I, J, and K from a single raw material input. Budgeted data for the next month follows:

Product I

Product J

Product K

  Units produced

2,400      

2,900      

3,900     

  Per unit sales value at split-off

$21      

$24      

$24     

  Added processing costs per unit

$3      

$5      

$5     

  Per unit sales value if processed further

$25      

$25      

$30     

If the cost of the raw material input is $77,000, which of the products should be processed beyond the split-off point?

Product I

Product J

Product K

  A)

yes

yes

no

  B)

yes

no

yes

  C)

no

yes

no

  D)

no

yes

yes

24.

award:
3 out of
3.00 points

Two products, IF and RI, emerge from a joint process. Product IF has been allocated $27,300 of the total joint costs of $48,000. A total of 2,200 units of product IF are produced from the joint process. Product IF can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,200 and then sold for $13 per unit. If product IF is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

 25.

award:
3 out of
3.00 points

The Tingey Company has 400 obsolete microcomputers that are carried in inventory at a total cost of $576,000. If these microcomputers are upgraded at a total cost of $200,000, they can be sold for a total of $260,000. As an alternative, the microcomputers can be sold in their present condition for $40,000.

What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

26.

award:
3 out of
3.00 points

Austin Wool Products purchases raw wool and processes it into yarn. The spindles of yarn can then be sold directly to stores or they can be used by Austin Wool Products to make afghans. Each afghan requires one spindle of yarn. Current cost and revenue data for the spindles of yarn and for the afghans are as follows:

  Data for one spindle of yarn:

  Selling price

$11  

  Variable production cost

$7  

  Fixed production cost (based on 3,200 spindles of yarn produced)

$1  

  Data for one afghan:

  Selling price

$29  

  Production cost per spindle of yarn

 $8  

  Variable production cost to process the yarn into an afghan 

$7  

  Avoidable fixed production cost to process the yarn into an afghan
  (based on 3,200 afghans produced)

$3  

Each month 3,200 spindles of yarn are produced that can either be sold outright or processed into afghans.

If Austin chooses to produce 3,200 afghans each month, the change in the monthly net operating income as compared to selling 3,200 spindles of yarn is:

 27.

award:
3 out of
3.00 points

Lusk Company produces and sells 15,900 units of Product A each month. The selling price of Product A is $29 per unit, and variable expenses are $23 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $71,000 of the $109,000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:

28.

award:
3 out of
3.00 points

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

FE

MB

WP

  Selling price per unit

$251.00   

$356.80   

$172.40   

  Variable cost per unit

$195.00   

$278.88   

$136.44   

  Minutes on the constraint

4.30   

6.10   

3.10   

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of this constrained resource? (Round your intermediate calculations and final answer to 2 decimal places.)

29.

award:
3 out of
3.00 points

An automated turning machine is the current constraint at Naik Corporation. Three products use this constrained resource. Data concerning those products appear below:

KU

OP

YY

  Selling price per unit

$105.01  

$528.21  

$558.15  

  Variable cost per unit

$ 81.99  

$429.66  

$419.96  

  Minutes on the constraint

2.00  

9.90  

10.10  

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)

30.

award:
3 out of
3.00 points

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $47 to buy from farmers and $21 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $23 or processed further for $15 to make the end product industrial fiber that is sold for $35. The beet juice can be sold as is for $43 or processed further for $39 to make the end product refined sugar that is sold for $81. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?