ACCT 434 (Advanced Cost Management) Devry

Week 4 Midterm Exam

Midterm Set 1

1. Page: One (TCO1) ABC systems create
2. (TCO 1) Merriamn Company provides the following ABC costing information:…………………. How much of the account billing cost will be assigned to Department B?
3. (TCO 2) A master budget
4. (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. (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?
6. (TCO 4) In evaluating different alternatives, it is useful to concentrate on
7. (TCO 5) The theory of constraints is used for cost analysis when
8. (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:……………..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. (TCO 3) The cost function y = 100 + 10X
10. (TCO 4) Sunk costs
11. Page: Two (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
12. (TCO 2) Favata Company has the following information:……………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.
13. (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:…………………Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.
14. (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: ………….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?
15. (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
16. (TCO 2) Favata Company has the following information: ………… 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.
17. (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: …………… Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.
18. (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: …………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?

Midterm Set 2

1. (TCO 1) Which of the following is a sign that an ABC system may be useful?
2. (TCO 1) Merriamn Company provides the following ABC costing information:…………How much of the account billing cost will be assigned to Department B?
3. (TCO 2) Budgeting provides all of the following EXCEPT
4. (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 flexible-budget variance is
5. (TCO 3) The conference method estimates cost functions
6. (TCO 4) In evaluating different alternatives, it is useful to concentrate on
7. (TCO 5) Producing more nonbottleneck output
8. (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: ………..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. (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?
10. (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design
11. (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period ………………………………… Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.
12. (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department: ………….Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
13. (TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year……? Justify your answer.
14. (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design
15. (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-mont
    h period ……Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.
16. (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.
17. (TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $4 each. If the bicycle company accepts this offer……
18. (TCO 4) Sunk costs Answer; Are past costs.