acct505 multiple choice answers larden corporation the colorado company a cement man 495988

1.(TCO A) The variable portion of advertising costs is a (Points : 6)

Conversion YES… Period NO.

Conversion YES …. Period YES.

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Conversion NO…. Period YES.

Conversion NO…. Period NO.

Question 2.2.(TCO A) Fixed costs expressed on a per-unit basis (Points : 6)

will increase with increases in activity.

will decrease with increases in activity.

are not affected by activity.

should be ignored in making decisions because they cannot change.

Question 3.3.(TCO A) The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n):(Points : 6)

period cost.

direct material cost.

indirect manufacturing cost.

direct labor cost.

None of the above

Question 4.4.(TCO A) Within the relevant range, variable costs can be expected to(Points : 6)

vary in total in direct proportion to changes in the activity level.

remain constant in total as the activity level changes.

increase on a per-unit basis as the activity level increases.

increase on a per-unit basis as the activity level decreases.

None of the above

Question 5.5.(TCO F) When manufacturing overhead is applied to production, it is added to (Points : 6)

the Cost of Goods Sold account.

the Raw Materials account.

the Direct Labor account.

None of the above

Question 6.6.(TCO F) Which of the following statements about the process-costing system is incorrect(Points : 6)

In a process-costing system, each processing department has a work-in-process account.

In a process-costing system, equivalent units are separately computed for materials and for conversion costs.

In a process-costing system, overhead can be under- or overapplied just as in job-order costing.

In a process-costing system, materials costs are traced to units of products.

Question 7.7.(TCO F) The FIFO method only provides a major advantage over the weighted-average method in that (Points : 6)

the calculation of equivalent units is less complex under the FIFO method.

the FIFO method treats units in the beginning inventory as if they were started and completed during the current period.

the FIFO method provides measurements of work done during the current period.

the weighted-average method ignores units in the beginning and ending work-in-process inventories.

Question 8.8.(TCO B) The contribution margin equals (Points : 6)

sales – expenses.

sales – cost of goods sold.

sales – variable costs.

sales – fixed costs.

Question 9.9.(TCO B) To obtain the break-even point in terms of dollar sales, total fixed expenses are divided by which of the following? (Points : 6)

Variable expense per unit

Variable expense per unit/Selling price per unit

Fixed expense per unit

(Selling price per unit – Variable expense per unit) /Selling price per unit.

Question 10.10.(TCO E) In an income statement prepared using the variable costing method, variable selling and administrative expenses would (Points : 6)

be used in the computation of the contribution margin.

be used in the computation of net operating income but not in the computation of the contribution margin.

be treated differently from variable manufacturing expenses.

not be used.

1.(TCO A) The following data (in thousands of dollars) have been taken from the accounting records ofLarden Corporation for the just-completed year.

	Sales	$950
	Purchases of raw materials	$170
	Direct labor	$210
	Manufacturing overhead	$220
	Administrative expenses	$180
	Selling expenses	$140
	Raw materials inventory, beginning	$70
	Raw materials inventory, ending	$80
	Work-in-process inventory, beginning	$30
	Work-in-process inventory, ending	$20
	Finished goods inventory, beginning	$100
	Finished goods inventory, ending	$70

Required:Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.

(Points : 15)

Question 2.2.(TCO F) The Colorado Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed

Units Materials Conversion

Work in process, June 1 80,000 65% 45%

Work in process, Jun 30 65,000 75% 65%

The department started 325,000 units into production during the month and transferred 340,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

(Points : 20)

Question 3.3.(TCO B) A cement manufacturer has supplied the following data:

Tons of cement produced and sold 220,000

Sales revenue $924,000

Variable manufacturing expense $297,000

Fixed manufacturing expense $280,000

Variable selling and admin expense $165,000

Fixed selling and admin expense $82,000

Net operating income $100,000

Required:

a. Calculate the company’s unit contribution margin.

b. Calculate the company’s contribution margin ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company’s net operating income be?

(Points : 25)

Question 4.4.(TCO E) Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price		$ 175

Units in beginning inventory		0
Units produced		9,500
Units sold		8,000
Units in ending Inventory		1,500

Variable costs per unit:
Direct materials		$ 55
Direct labor		$ 38
Variable manufacturing overhead		$ 2
Variable selling and admin		$ 10

Fixed costs:
Fixed manufacturing overhead		$ 300,000
Fixed selling and admin		$ 125,000

Required:

a.What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?

c. Prepare an income statement for the month using the variable costing method.

d. Prepare an income statement for the month using the absorption costing method.

(Points : 30)

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