Islamic university Gaza College of commerce Accounting department

Final exam 2008/2009

Cost accounting 2 Sunday 21/06/2009

50 marks

The .1 master budget :is

Name: Id.:.. Question 1: choose the best answer . (20 marks)

(A

a flexible budget (B

a static budget (C

developed at the end of the period (D

ed on the actual level of output

b a s

:A flexible budget .2 (A

is another name for management by exception (B

is developed at the end of the period (C

is based on the budgeted level of output (D

provides favorable operating results

:Management by exception is the practice of concentrating on .3 (A

the master budget (B

areas not operating as anticipated (C

favorable variances (D

avorable variances

u n f

:A variance is .4 (A

the gap between an actual result and a benchmark amount (B

the required number of inputs for one standard output (C

the difference between an actual result and a budgeted amount (D

ference between a budgeted amount and a standard amount

t h e d i f

:An unfavorable variance indicates that .5 (A

actual costs are less than budgeted costs (B

actual revenues exceed budgeted revenues (C

the actual amount decreased operating income relative to the budgeted amount (D

of these answers are .correct

A l l

:A favorable variance indicates that .6 (A

budgeted costs are less than actual costs (B

actual revenues exceed budgeted revenues (C

the actual amount decreased operating income relative to the budgeted amount (D

.All of these answers are correct :Overhead costs have been increasing due to all of the following EXCEPT .7 (A

increased automation (B

more complexity in distribution processes (C

tracing more costs as direct costs with the help of technology (D

product proliferation

.8

Effective planning of variable overhead costs means that a company performs those variable :overhead costs that primarily add value for (A

the current shareholders (B

the customer using the products or services (C

plant employees (D

r suppliers of component parts .9

m a j o

:Variable overhead costs include (A

plant-leasing costs (B

the plant manager's salary (C

depreciation on plant equipment (D

hine maintenance

m a c

:Fixed overhead costs include .10 (A

the cost of sales commissions (B

property taxes paid on plant facilities (C

energy costs (D

direct materials .11

i n

:Effective planning of fixed overhead costs includes all of the following EXCEPT (A

planning day-to-day operational decisions (B

eliminating nonvalue-added costs (C

planning to be efficient (D

sing the appropriate level of capacity .12

c h o o

:Effective planning of variable overhead includes all of the following EXCEPT (A

choosing the appropriate level of capacity (B

eliminating nonvalue-adding costs (C

redesigning products to use fewer resources (D

igning the plant layout for more efficient processing .13

r e d e s

All costs incurred beyond the splitoff point that are assignable to one or more individual :products are called (A

byproduct costs (B

joint costs (C

main costs (D

parable costs .14

s e

:In joint costing (A

costs are assigned to individual products as assembly of the product occurs (B

costs are assigned to individual products as disassembly of the product occurs (C

a single production process yields two or more products (D

h B and C are .correct .15

B o t

The ________ point is the juncture in a joint production process when two or more products .become separately identifiable (A

splitoff (B

joint product (C

process (D

e n d .16

:The focus of joint costing is on allocating costs to individual products (A

before the splitoff point (B

after the splitoff point (C

at the splitoff point (D

at the end of production .17

When a single manufacturing process yields two products, one of which has a relatively high :sales value compared to the other, the two products are respectively known as (A

joint products and byproducts (B

joint products and scrap (C

main products and byproducts (D

n products and joint products .18

m a i

When a joint production process yields two or more products with high total sales values, :these products are called (A

main products (B

joint products (C

byproducts (D

rap .19

s c

Unacceptable units of production that are subsequently repaired and sold as acceptable :finished goods are (A

reworked units (B

spoilage (C

scrap (D

fective units .20

d e

:Costs of poor quality production include the (A

opportunity cost of the plant and workers (B

effect on current customers (C

effect on potential customers (D

All of these defects. Inspection occurs when units are 50% converted. Spoiled units generally answers are constitute 5% of the good units. Data for December 20X5 are as follows: correct.

Q. 1 2 3WIP, beginning inventory 12/1/20X5 Direct materials (100% complete) Conversion costs (75% complete) A. Started during December Question Completed and transferred out 12/31/20X5 2: Answer WIP, ending inventory 12/31/20X5 the Direct materials (100% complete) following Conversion costs (65% complete) questions using the informatio n below: (12 marks) Craft Concept manufactur es small tables in its Processing Department . Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectibl e materials

10,000 units 40,000 units 38,400 units 8,000 units

Costs for December: WIP, beginning Inventory: Direct materials Conversion costs Direct materials added Conversion costs added

$ 50,000 30,000 100,000 140,000 .1

is the number of total spoiled ?units

W h a t .2

:(Normal spoilage totals(units .3

l spoilage :(totals(units

A b n o r m a

What is the total cost per equivalent unit using the weighted-average method of process .4 ?costing

ormal spoilage using the weightedaverage processcosting ?method

5 . W h a t c o s t

What are .6 the amounts of direct materials and conversion costs assigned to ending work in process using the weightedaverage processcosting ?method

i s a l l o c a t e d t o a b n

Name: Id.:.. Question 3: Answer the following questions using the information below: (12 marks) Peters' Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: Actual Results 225,000 $84,160 (C) $16,560 $35,480 Flexible Budget Variances $2,000 F $400 U $1,720 F (D) Flexible Budget 225,000 (A) $31,720 $18,280 $32,160 Sales-Volume Variances $2,800 U $4,680 F 0 (E) Static Budget 206,250 (B) $36,400 $18,280 $30,280

Units sold Revenues Variable costs Fixed costs Operating income

?(What amounts are reported for revenues in the flexible-budget (A .1

?(What amounts are reported for revenues in the static-budget (B .2

are the actual variable costs ((C

3 . W h a t

is the total flexible-budget ?(variance (D

4 . W h a t

is the total sales-volume ?(variance (E

5 . W h a t

6. What is the total staticbudget varianc e?

Question 4: Answer the following questions using the information below: (10 marks) Russo Corporation manufactured 16,000 space heaters during November. The overhead costallocation base is $15.75 per machine-hour. The following variable overhead data pertain to November: Production Machine-hours Variable overhead cost per machine-hour: Actual 16,000 units 7,875 hours $15.50 Budgeted 18,000 units 9,000 hours $15.75 .1

e actual variable ?overhead cost

W h a t is t h .2

the flexible?budget amount

W h a t is .3

?What is the variable overhead spending variance

.4

he variable overhead efficiency ?variance

W h a t i s t .5

?What is the total variable overhead variance

bonus marks for all students 4 With best wishes Mohammad Marwan Al ashi