Project #28642 - finance final

Remember this is a timed assignment...you have 4 hours to do it. Thanks

 

 

Question 1 (1 point)

 

A typical use of managerial accounting is to:

 

Question 1 options:

 

help investors and creditors assess the financial position of the company.

help management get a clean audit report

help the marketing manager decide which product promotion to implement

help the SEC decide whether management is in compliance of its policies.

 

Question 2 (1 point)

 

Three costs incurred by Pitt Company are summarized below:

 

1,000 units 2,000 units

 

Cost A $10,000 $15,000

 

Cost B $21,000 $21,000

 

Cost C $16,000 $32,000

 

Which of these costs are variable?

 

Question 2 options:

 

A, B, and C

A and B

A only

C only

 

 

 

 

 

 

 

 

 

Question 3 (1 point)

 

Bubba's Steakhouse has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,710; depreciation, $600; and other fixed costs, $400. Each steak dinner sells for $14.00 each. How much would Shula’s profit increase if 10 more dinners were sold?

 

Your Answer:

 

 

 

Question 4 (1 point)

 

Bellfont Company produces door stoppers. August production costs are below:

 

Door Stoppers produced 78,000

 

Direct material (variable) $20,000

 

Direct labor (variable) 40,000

 

Supplies (variable) 20,000

 

Supervision (fixed) 27,100

 

Depreciation (fixed) 20,400

 

Other (fixed) 4,700

 

In September, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont’s production cost per door stopper for September?

 

Your Answer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 5 (1 point)

 

Aaron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were:

 

Materials cost

$4,570

Labor cost

2,840

Rent

1,500

Depreciation

2,500

Other fixed costs

3,200

   

 

Materials and labor are the only variable costs. If production and sales are budgeted to increase to 140 chairs in August, how much is the expected total variable cost on the August budget?

 

Your Answer:

 

Question 6 (1 point)

 

Carry-ALL plans to sell 1,300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. Variable costs are projected to be $20 per unit. Michael Co. offers to pay $22,200 to buy 690 units from Carry-ALL. Total fixed costs are $7,000 per year. This offer does not affect Carry-ALL's other planned operations. The incremental revenues for this situation are

 

Your Answer:

 

Question 7 (1 point)

 

Stellar Company has the following sales, variable cost, and fixed cost. If sales increase by $10,000 then their profit increases/decreases by how much?

 

Sales $50,000

 

Variable Costs $8,700

 

Fixed Costs $30,000

 

Your Answer:

 

 

 

 

 

 

 

 

 

Question 8 (1 point)

 

Susan is trying to decide whether or not to attend college during the next 12-week session. She has the following options:

 

1. Attend college full-time at a cost of $1,200.

 

2. Attend college part-time at a cost of $500 and work part-time earning $1,500.

 

3. Work full-time earning $4,900.

 

What is Susan's incremental profit if she chooses option 3 over option 2?

 

Your Answer:

 

Question 9 (1 point)

 

Total costs were $72,300 when 27,000 units were produced and $94,300 when 37,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.

 

Your Answer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 10 (1 point)

 

Professional University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below

 

Semester

Student Credit Hours

Facilities Cost

Spring 2007

250,000

$500,000

Fall 2004

300,000

$530,000

 

Using the high low method, with student credit hours as the activity driver, what is the equation for facilities cost (FC) as a function of student credit hours?

 

Question 10 options:

 

FC = $350,000 + $0.60 / student credit hour

FC = -$585,100 + $1.67 / student credit hour

FC = $1.77 / student credit hour

FC = $2 / student credit hour

 

 

 

Question 11 (1 point)

 

Randy's tireland makes a product that sells for $72 per unit and has $43 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement?

 

Your Answer:

 

 

 

 

 

 

 

 

 

 

 

Question 12 (1 point)

 

Ritz Furniture has a contribution margin ratio of 0.10. If fixed costs are $161,100, how many dollars of revenue must the company generate in order to reach the break-even point?

 

Your Answer:

 

Question 13 (1 point)

 

U.S. Telephone Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total $1,090 per month, while fixed selling and administrative costs total $2,220. How many phones must be sold to achieve the breakeven point?

 

Your Answer:

 

Question 14 (1 point)

 

Swimkids is a swimsuit manufacturer. They sell swim suits at a selling price is $30 per unit. Swimkids variable costs are $18 per unit. Fixed costs are $71,100. Swimkids expects sales of $288,700 next year. What is Swimkids's margin of safety?

 

Your Answer:

 

Question 15 (1 point)

 

Lambardi Company sells 3 types of bags. Bag A sells for $19 and has variable cost of $9.00 per unit. Bag B sells for $12 and has variable cost of $12.00 per unit. Bag C sells for $8 and has variable costs of $6.00 per unit. Lambardi sells in a mix of 2 units of A, 3 units of B and 5 units of C. What is the weighted average contribution margin per unit for Lambardi?

 

Your Answer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 16 (1 point)

 

Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time?

 

Question 16 options:

 

50 units of A and 25 units of B.

25 units of B.

50 units of A.

None of the above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 17 (1 point)

 

Delfi Company produces two models of seats, Toro and Prep. Information regarding these products for May follows:

 

 

Toro

Prep

Number of units

3,000

7,000

Sales revenue

$120,000

$140,000

Variable costs

60,000

42,000

Fixed costs

24,000

50,000

Net Income

$36,000

$48,000

Pounds of plastic to produce one bucket

4.0

1.6

Contribution margin per unit

$20

$14

 

Due to increased demand of plastic in the market, Delfi Company can obtain only 9,000 pounds of plastic per month. Delfi can sell as many seats as it can produce of either model. How many of each model should Delfi produce to maximize profit in May considering the constraint?

 

Question 17 options:

 

Toro: 0; Prep: 4,375

Toro: 2,250; Prep: 0

Toro: 1,125; Prep: 2,812

Toro: 0; Prep: 5,625

 

 

 

 

 

 

 

 

 

 

 

Question 18 (1 point)

 

Abagail Corp. uses activity-based costing system with three activity cost pools. The following information is provided:

 

Costs: Wages and salaries $ 206,000

 

Depreciation 107,000

 

Utilities 111,000

 

Total $440,000

 

Activity Cost Pools

 

Assembly Setting Up Other

 

Wages and salaries 0.56 30% 10%

 

Depreciation 0.34 45% 20%

 

Utilities 0.20 40% 30%

 

How much total cost would be allocated to the Assembly activity cost pool?

 

Your Answer:

 

Question 19 (1 point)

 

Maxx Inc. has provided the following data from its activity-based costing system:

 

Activity Cost Pools Total Cost Total Activity

 

Designing products $374,700 6,530 product design hours

 

Setting up batches $52,678 7366 batch set-ups

 

Assembling products $25,122 4,018 assembly hours

 

The activity rate for the “designing products” activity cost pool is:

 

Your Answer:

 

 

 

 

 

 

 

 

 

Question 20 (1 point)

 

Sasha Company allocates the estimated $193,700 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows:

 

Department

Employees

Accounting

4

Production

28

Sales

15

 

How much of the accounting department costs will be allocated to the production?

 

Your Answer:

 

Question 21 (1 point)

 

Medusa Company allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory. Information about the departments is presented below:

 

   

Number of

Number of Square

Department

Costs

Employees

Feet Occupied

Payroll (S1)

$135,000

2

2,000

Maintenance (S2)

$220,000

8

64,000

Molding (P1)

 

63

100,000

Finishing (P2)

 

45

60,000

Packaging (P3)

 

25

40,000

 

Medusa uses the direct method to allocate costs. Round all answers to the nearest dollar.
What amount of the payroll department costs will be allocated to the molding department?

 

Your Answer:

 

Question 22 (1 point)

 

The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $6,700, they could be sold for $19,900. Alternatively, the keyboards could be sold “as is” for $8,100. What is the net advantage or disadvantage of re-working the keyboards?

 

Your Answer:

 

Question 23 (1 point)

 

Ritz Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:

 

Cost Pool

Total Costs

Cost Driver

Annual Activity

Packaging and shipping

$163,500

Number of boxes shipped

20,900 boxes

Final inspection

$203,200

Number of individual items shipped

97,400 items

General operations and supervision

$82,400

Number of orders

8,400 orders

 

During the period, the Far East sales office generated 667 orders for a total of 6,180 items. These orders were shipped in 1,391 boxes. What amount of shipping department costs should be allocated to these sales?

 

Your Answer:

 

 

 

 

 

 

 

 

 

 

 

Question 24 (1 point)

 

Baller Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools:
Annual number of accounts = 57,000 accounts Checking account cost pools:

 

Cost Pool

Cost

 

Cost Drivers

Returned check costs

$2,900,000

 

Number of returned checks

Checking account reconciliation costs

52,000

 

Number of account reconciliation requests

New account setup

640,000

 

Number of new accounts

Copies of cancelled checks

387,000

 

Number of cancelled check copy requests

Online banking web site maintenance

182,000

 

Per product group (type of account)

       

 

Annual activity information related to cost drivers:

 

Cost Pool

All Products

Money Market Checking

Returned check

196,000 returned checks

18,000

Check reconciliation costs

387,000 checking account

420

New accounts

51,000 new accounts

15,000

Cancelled check copy requests

97,000 cancelled check

60,000

Web site costs

4 types of accounts

1

 

Calculate the overhead cost per account for the Money Market Checking.

 

Your Answer:

 

Question 24 options:

 

 

Question 25 (1 point)

 

Sosa Company has $39 per unit in variable costs and $1,900,000 per year in fixed costs. Demand is estimated to be 138,000 units annually. What is the price if a markup of 35% on total cost is used to determine the price?

 

Your Answer:

 

Question 26 (1 point)

 

Bob's Company sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to maximize profits?

 

Units Sold Price

 

30,000 $10

 

40,000 $9

 

50,000 $8

 

60,000 $7

 

Question 26 options:

 

$10

$9

$8

$7

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 27 (1 point)

 

A retailer purchased some trendy clothes that have gone out of style and must be marked down to 30% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation?

 

Question 27 options:

 

the original selling price

the anticipated profit

the original purchase price

the current selling price

 

Question 28 (1 point)

 

Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results appear below:

 

Cost Pool

Annual Cost

Cost Driver

Annual Driver Quantity

 

 

 

Processing electronic orders

$1,000,000

Number of orders

500,000

Processing non-electronic orders

$2,000,000

Number of orders

400,000

Picking orders

$3,000,000

Number of different products ordered

800,000

Packaging orders

$1,500,000

Number of items ordered

50,000,000

Returns

$2,000,000

Number of returns

50,000

 

If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?

 

Your Answer:

 

 

 

 

 

 

 

Question 29 (1 point)

 

Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Barton Company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?

 

Question 29 options:

 

Profits would increase $40,000.

Profits would increase $60,000.

Profits would decrease $200,000.

Profits would increase $80,000

 

Question 30 (1 point)

 

A company has $6.80 per unit in variable costs and $4.80 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.46, what price should be charged if 70,000 units are expected to be sold?

 

Your Answer:

 

Question 31 (1 point)

 

Customer profitability analysis might result in:

 

Question 31 options:

 

dropping some customers that are unprofitable.

lowering price or offering incentives to profitable customers.

giving incentives to all customers to place orders online.

All of the above.

 

 

 

 

 

Question 32 (1 point)

 

The Estrada Company uses cost-plus pricing with a 0.47 mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $4.50. In addition, the company incurs $198,300 in fixed costs annually. If demand falls to 70,200 units and the company wants to continue to earn a 0.47 return, what price should the company charge?

 

Your Answer:

 

Question 33 (1 point)

 

A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $123.00 per unit. The company requires a profit of 0.28 of selling price. How much is the target cost per unit?

 

Your Answer:

 

Question 34 (1 point)

 

A company using activity based pricing marks up the direct cost of goods by 0.22 plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.40 per order placed; $2.80 per separate item ordered; $27.00 per return. A customer places 8 orders with a total direct cost of $2,800, orders 292 separate items, and makes 6 returns. What will the customer be charged?

 

Your Answer:

 

Question 35 (1 point)

 

A law firm uses activity-based pricing. The company’s activity pools are as follows:

 

Cost Pool

Annual Estimated Cost

Cost Driver

Annual Driver Quantity

 

 

 

Consultation

194,000

Number of consultations

90 consultations

Administrative Costs

147,000

Admin labor hours

9,800 labor hours

Client Service

90,000

Number of clients

110 clients

 

The firm had two consultations with this client and required 130 administrative labor hours. What additional costs will be charged to this customer?

 

Your Answer:

 

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