ACCOUNTING

____ 59. Under which inventory costing method could increases or decreases in income from operations be
misinterpreted to be the result of operating efficiencies or inefficiencies?
a. Variable costing
b. Absorption costing
c. Incremental costing
d. Differential costing
Name: ________________________ ID: A
14
____ 60. It would be acceptable to have the selling price of a product just above the variable costs and expenses of
making and selling it in:
a. the long run
b. the short run
c. both the short run and long run
d. monopoly situations
____ 61. In contribution margin analysis, the effect of a change in the number of units sold, assuming no change in
unit sales price or unit cost, is referred to as the:
a. sales factor
b. cost of goods sold factor
c. quantity factor
d. price factor
____ 62. In contribution margin analysis, the quantity factor is computed as:
a. the increase or decrease in the number of units sold multiplied by the planned unit sales
price or unit cost
b. the increase or decrease in unit sales price or unit cost multiplied by the planned number
of units to be sold
c. the increase or decrease in the number of units sold multiplied by the actual unit sales
price or unit cost
d. the increase or decrease in the unit sales price or unit cost multiplied by the actual
number of units sold
____ 63. The difference between the planned and actual contribution margin can be caused by:
a. an increase or decrease in the amount of sales
b. an increase in the amount of variable costs and expenses
c. a decrease in the amount of variable costs and expenses
d. A, B, or C
____ 64. The systematic examination of the differences between planned and actual contribution margin is termed:
a. gross profit analysis
b. contribution margin analysis
c. sales mix analysis
d. volume variance analysis
____ 65. In which of the following types of firms would it be appropriate to prepare contribution margin reporting and
analysis?
a. Boat manufacturing
b. A chain of beauty salons
c. Home building
d. A, B, and C
Name: ________________________ ID: A
15
Problem
66. The inventory at June 1 and costs charged to Work in Process – Department 60 during June are as follows:
3,800 units, 80% completed $ 60,400
Direct materials, 32,000 units 368,000
Direct labor 244,000
Factory overhead 188,000
Total cost to be accounted for $860,400
========
During June, 32,000 units were placed into production and 31,200 units were completed, including those in
inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40%
completed. Inventories are costed by the first-in, first-out method and all materials are added at the
beginning of the process.
Determine the following, presenting your computations:
(a) equivalent units of production for conversion cost
(b) conversion cost per equivalent unit
(c) total and unit cost of finished goods started in prior period and completed in the current
period
(d) total and unit cost of finished goods started and completed in the current period
(e) total cost of work in process inventory at June 30
Name: ________________________ ID: A
16
Name: ________________________ ID: A
17
67. The estimated total factory overhead cost and total machine hours for Department 40 for the current year are
$225,000 and 56,250 respectively. During January, the first month of the current year, actual machine hours
used totaled 5,100 and factory overhead cost incurred totaled $19,800.
(a) Determine the factory overhead rate based on machine hours.
(b) Present the entry to apply factory overhead to production in Department 40 for
January.
(c) What is the balance of Factory Overhead – Department 40 at January 31?
(d) Does the balance of Factory Overhead – Department 40 at January 31 represent
overapplied or underapplied factory overhead?
Name: ________________________ ID: A
18
68. Chang Co. manufacturers its products in a continuous process involving two departments, Machining and
Assembly. Present entries to record the following selected transactions related to production during June:
(a) Materials purchased on account, $225,000.
(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect
materials; Assembly, $4,900 indirect materials.
(c) Direct labor used by Machining, $23,000, Assembly, $47,000.
(d) Depreciation expenses: Machining, $2,000; Assembly, $8,000.
(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300.
(f) Machining Department transferred $98,300 to Assembly Department; Assembly
Department transferred $83,400 to finished goods.
(g) Cost of goods sold, $72,000.
Name: ________________________ ID: A
19
Name: ________________________ ID: A
20
69. The inventory at June 1 and costs charged to Work in Process – Department 60 during June are as follows:
3,800 units, 80% completed ($25,000 Materials, $35,400 conversion) $ 60,400
Direct materials, 32,000 units 368,000
Direct labor 244,000
Factory overhead 188,000
Total cost to be accounted for $860,400
=======
During June, 32,000 units were placed into production and 31,200 units were completed, including those in
inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40%
completed. Inventories are costed by the average cost method and all materials are added at the beginning of
the process.
Determine the following, presenting your computations:
(a) equivalent units of production for conversion cost
(b) conversion cost per equivalent unit and material cost per equivalent unit.
(c) total and unit cost of finished goods completed in the current period
(d) total cost of work in process inventory at June 30
Name: ________________________ ID: A
21
Name: ________________________ ID: A
22
70. For the current year ending January 31, Bell Company expects fixed costs of $178,500 and a unit variable
cost of $41.50. For the coming year, a new wage contract will increase the unit variable cost to $45. The
selling price of $50 per unit is expected to remain the same.
(a) Compute the break-even sales (units) for the current year.
(b) Compute the anticipated break-even sales (units) for the coming year, assuming the
new wage contract is signed.
71. For the past year, Holcomb Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit
selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new
wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for (a) the
past year and (b) the coming year.
72. A company with a break-even point at $900,000 in sales revenue and had fixed costs of $225,000. When
actual sales were $1,000,000 variable costs were $750,000. Determine (a) the margin of safety expressed in
dollars, (b) the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d)
the operating income.
Name: ________________________ ID: A
23
73. A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.
(a) What was the break-even point?
(b) What was the operating income?
(c) If neither the relationship between variable costs and sales nor the amount of fixed
costs is expected to change in the next year, how much additional operating income
can be earned by increasing sales by $110,000?
Name: ________________________ ID: A
24
74. On August 31, the end of the first year of operations, during which 18,000 units were manufactured and
13,500 units were sold, Finberg Inc. prepared the following income statement based on the variable costing
concept:
Finberg Inc.
Income Statement
For Year Ended August 31, 20–
Sales $297,000
Variable cost of goods sold:
Variable cost of goods manufactured $279,000
Less ending inventory 67,500
Variable cost of goods sold 211,500
Manufacturing margin $ 85,500
Variable selling and administrative
expenses 40,500
Contribution margin $ 45,000
Fixed costs:
Fixed manufacturing costs $ 12,000
Fixed selling and administrative
expenses 10,800 22,800
Income from operations $ 22,200
========
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the
absorption costing concept.
Name: ________________________ ID: A
25
75. Based upon the following data taken from the records of Willis Inc., prepare a contribution margin analysis
report for the year ended December 31, 2002.
For Year Ended
December 31, 2005
Actual Planned
Difference
Increase
(Decrease)
Sales $312,000 $325,000 ($13,000)
Less:
Variable cost of goods sold $169,200 $182,000 ($12,800)
Variable selling and administrative
expenses 32,400 39,000 (6,600)
Total $201,600 $221,000 ($19,400)
Contribution margin $110,400 $104,000 $ 6,400
======= ======= =======
Number of units sold 120,000 130,000
Per unit:
Sales price $2.60 $2.50 .10
Variable cost of goods sold 1.41 1.40 .01
Variable selling and administrative
expenses .27 .30 (.03)

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»