ACCT301 final exam 2015

Student Name: ________________________________________

If
you find it helpful, you may create an Excel file to show your work for
numerical problems. You must show your
work including calculations to receive full credit.

Additionally,
your work must be presented in a logical, easy to follow manner for full
credit. Partial credit will be given for
incorrect answers if you show your work.

The
point breakout of the questions is as follows:

Question
1

6

Question
10

6

Question
2

6

Question
11

25

Question
3

6

Question
12

10

Question
4

6

Question
13

15

Question
5

6

Question
14 1214114

10

Question
6

6

Question
15

15

Question
7

6

Question
16

10

Question
8

6

Question
17

10

Question
9

6

Question
18

20

Total

175

Part 1:
Multiple Choice
Questions 1 –
10 are each worth 6 points. Please place
your answer in the chart below.

Question #

Answer

Question #

Answer

1

6

2

7

3

8

4

9

5

10

Question 1
Of the following
manufacturing operations, which is best suited to the utilization of a job
order system?
a. Helicopter manufacturing.
b. Soft drink bottling operation.
c. Crude oil refining.
d. Plastic molding operation.

Question 2
Costs that do not
change when the activity base fluctuates are known as:
a. Variable costs
b. Discretionary costs
c. Fixed costs
d. Mixed costs

Question 3
The basic
difference between a static budget and a flexible budget is that:
a. A flexible budget considers only
variable costs, but a static budget considers all costs.
b.
Flexible budgets allow management latitude in meeting goals, whereas a static
budget is based on a fixed standard.
c. A
static budget is for an entire production facility, but a flexible budget is
applicable only to a single department.
d. A
static budget is based on one specific level of production and a flexible
budget can be prepared for any production level within a relevant range.

Question 4
Blackhat Chimney
Builders constructed 80 units during 19X1. The total sales value for these 80
units was $460,000. Variable costs associated with each unit was $4,000 and the
company’s fixed costs for 19X1 amounted to $50,000. How much was the per-unit
contribution margin?
a. $750
b. $1,125
c. $1,750
d. $5,125

Question 5
If a unit manager
made a decision to purchase raw materials that were of superior quality and
cost $1 more than was anticipated, and this decision resulted in less spoilage
than normal, the effect on the quantity and price variances, respectively,
would be:
a. Unfavorable, unfavorable
b. Favorable, unfavorable
c. Favorable, favorable
d. Unfavorable, favorable

Question 6
Which of the
following factors would cause the break-even point to change?
a. Increased sales volume.
b. Fixed costs increased due to addition of
physical plant.
c. Total variable costs increased as a
function of higher production.
d. Total production decreased.

Question 7
Which cost
accumulation procedure is best suited to the continuous mass production of
similar units?
a. Job order
b. Process
c. Standard
d. Actual

Question 8
An equivalent unit
of material is equal to:
a. The amount of material necessary to
complete one unit of production.
b. The amount of material necessary to
start a unit of production into work in process.
c. Half of the material necessary to
complete one unit of finished goods.
d. An equivalent unit of conversion cost.

Question 9
Beginning work in
process was 1,200 units, 2,800 additional units were put into production, and
ending work in process was 500 units. How many units were completed?
a. 500
b. 3,000
c. 3,300
d. 3,500

Question 10
There are a number
of benefits associated with budgeting. Which of the following is not frequently
cited as a benefit of the budget process?
a. Budgets can help identify production
bottlenecks.
b. Budgets are useful tools in performance
evaluation.
c. Budgets help provide an early warning
for periods during which cash may be in short supply.
d. Budgets eliminate the opportunity for
slack or padding within an organization.
Question 11 (25
points)
Sunshine Company
had, at the beginning of 20X1, a work in process of 10,000 units. During 20X1,
57,500 additional units were started into production. Ending work in process on
December 31, 20X1, was 7,500 units. The beginning work in process was 100%
complete as to direct materials and 75% complete as to conversion costs. The
ending work in process was 100% complete as to direct materials and 50%
complete as to conversion costs. Total direct material put into process cost
$57,500. Total conversion cost put into process cost $84,375. Beginning work in
process cost $21,250; $10,000 for materials and $11,250 for conversion. All
materials are added at the start of the production process, and conversion
costs are incurred uniformly throughout manufacturing. Sunshine Company uses a
weighted-average process cost system.

(a)
The cost
per equivalent unit (rounded to the nearest cent) for conversion cost for 20X1
was:

(b)
The
value assigned to ending Work is Progress is:

Question 12 (10 points)
The Environmental
Filter Company is planning to sell air filter systems for $2,500 per unit.
Variable costs are $1,500 per unit and total fixed costs are $1,000,000. What
is the dollar value of sales necessary to break even?

Question 13 (15
points)
Deep Channel Ferry
Company is evaluating whether to purchase a more fuel-efficient boat or
continue to use the boat they currently own. Both boats are identical except
for the engine. The fuel-efficient boat costs $620,000, has an estimated
service life of five years, has no salvage value, and will have variable
operating costs of $100,000 per year. The boat currently owned had an original
cost of $320,000, has an existing book value of $160,000, has an estimated
remaining service life of five years, has no salvage value at the end of its
service life, has a current disposal value (now) of $120,000, and has variable
operating costs of $200,000 per year. Ignoring present value and tax
considerations, what should Deep Channel do – Buy the fuel-efficient boat, keep
the existing boat, or be indifferent between the fuel-efficient boat and the
existing boat. Be sure to include your
rationale and numerical calculations in your response.

Question 14 (10
points)
Moore Company
reported sales of $150,000 (20,000 units). Fixed costs amounted to $20,000 and
income for the period was $90,000. Determine the per-unit variable cost.

Question 15 (15
points)
Air Mall
produces a catalog that is placed in airline seatbacks during international
flights. Passengers typically skim the
catalog during flights and can buy selected merchandise from flight attendants,
duty and tax free, while over international waters. Below is a report for a recent period:

Total

Beverages

Jewelry

Electronics

Sales

$
2,600,000

$
1,400,000

$
500,000

$
700,000

Variable expenses

1,635,000

980,000

200,000

455,000

Contribution margin

$
965,000

$
420,000

$
300,000

$
245,000

Fixed expenses

900,000

300,000

300,000

200,000

Income (loss)

$ 65,000

$ 120,000

$ –

$ (45,000)

The fixed
expense is the amount paid for printing the catalog and paying the airline to
include the item in seatbacks.
Management is evaluating discontinuing the sale of electronics
products. Fixed costs will not change;
however, jewelry sales are expected to increase by 50%.

Determine if
overall income will be improved if the sale of electronics products is ceased.

Question 16 –
Question 17
Renaissance
Gallery converts photographs to portraits via a tedious hand painting
process. Costs are tracked for each
painting, with gallery overhead being applied at 125% of direct labor cost.

Renaissance
Gallery began June with one job in process.
This job related to the Price Wedding photo, and beginning work in
process included total costs of $14,400 (direct labor, direct material, and
applied overhead).

During June,
four new jobs were begun. These
consisted of the Ramirez family portrait, the Oberweiss farm photo, the
Ravenwood big fish picture, and the Zhang baby picture. The only job remaining in process at the end
of June was the Ravenwood big fish picture.
To date, $13,000 in direct labor and $3,500 of direct materials had been
committed to the Ravenwood job.

Total direct
labor incurred on all jobs during June was $60,900. Total direct material incurred on all jobs
during June was $11,700.

Question 16 (10
points)
Compute the
ending work in process inventory balance

Question 17 (10
points)
Compute the total
cost assigned to finished jobs

Question 18 (20
points)
Pure Comfort
manufactures and sells mattresses with adjustable air chambers. Pure Comfort has been producing and selling
approximately 500,000 units per year.
Each units sells for $600, and there are no variable selling, general,
or administrative costs. The company has
been approached by a foreign supplier who wishes to provide the air compressor
component for $90 per unit. Total annual
manufacturing costs, including air compressors, is as follows:

Direct materials

$
50,000,000

Direct labor

80,000,000

Variable factory overhead

16,000,000

Fixed factory overhead

35,000,000

If Pure Comfort
outsources the air compressor, it is expected that direct materials will be
reduced by 20%, direct labor by 30%, and variable factory overhead by 25%. There will be no reduction in fixed factory
overhead.

Should Pure
Comfort outsource the air compressor?

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