ACCT 434 (Advanced Cost Management) Devry

Week 8 Final Exam

• (TCO 1) If products are alike, then for costing purposes (Points : 5)
• (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)
• (TCO 2) Fixed overhead costs include (Points : 5)
• (TCO 2) Information pertaining to Brenton Corporation’s sales revenue: ………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………(Points : 5)
• (TCO 2) Budgeting provides all of the following EXCEPT (Points : 5)
• (TCO 3) The cost function y = 1,000 + 5X (Points : 5)
• (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods? (Points : 5)
• (TCO 4) Sunk costs (Points : 5)
• (TCO 5) In the theory of constraints, the only direct costs are (Points : 5)
• (TCO 5) Keeping the bottleneck operation busy and subordinating allnonbottleneck operations to the bottleneck operation involves (Points : 5
• (TCO 6) What type of cost is the result of an event that results in more than one product or service simultaneously? (Points : 5)
• (TCO 6) Which of the following is a disadvantage of the physical-measure method…..? (Points : 5)
• (TCO 7) An understanding of life-cycle costs can lead to (Points : 5)
• (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)
• (TCO 8) The costs used in cost-based transfer prices (Points : 5)
• (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)
• (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)
• (TCO 9) To guide cost allocation decisions, the benefits-received criterion (Points : 5)
• (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 lamp division? (Points : 5)
• (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 (Points : 5)
• (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)
• (TCO 11) The four cost categories in a cost of quality program are (Points : 5)
• (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………? (Points : 5)
• (TCO 12) The costs associated with storage are an example of which…..? (Points : 5)
• (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…………(Points : 5)
• (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)
• (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)
• (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)
• (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………..(Points : 25)
• (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………Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs. (Points : 25)