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DeVry ACCT 505 Midterm Exam

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1.
Question :
(TCO A) Wages paid to an assembly line worker in a factory are a
Student Answer:
Prime Cost YES..Conversion Cost NO.
Prime Cost YES..Conversion Cost YES.
Prime Cost NO.Conversion Cost NO.
Prime Cost NO..Conversion Cost YES.

2.
Question :
classified as a(n)
Student Answer:
incremental cost.
opportunity cost.
None of the above

(TCO A) A cost incurred in the past that is not relevant to any current decision is

3.
Question :
Student Answer:
conversion costs.
product costs.
period costs.

(TCO A) Depreciation of office buildings and office equipment is also known as


variable costs.

period cost.

4.
Question :
(TCO A) When the activity level is expected to increase within the relevant
range, what effects would be anticipated with respect to each of the following?
Student Answer:
Fixed costs per unit increase and variable costs per unit increase.
Fixed costs per unit decrease and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit increase.

5.
Question :
(TCO F) Which of the following statements is true?I. Overhead application may
be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the time of completion of the job.

III. Overhead application should be made to any job not completed at year end in order to properly
value the work in process inventory.
Student Answer:
Only statement I is true.
Only statement II is true.
Both statements I and II are true.
Statements I, II, and III are all true.

6.
Question :
(TCO F) A job-order cost system is employed in those situations where
Student Answer:
many different products, jobs, or batches of production are being
produced each period.
manufacturing involves a single, homogeneous product that flows evenly through the production
process on a continuous basis.
the product moves from department to department before being completed.
the unit cost of production is computed by dividing the total production costs by the number of units
produced.

7.
Question :
(TCO F) The FIFO method only provides a major advantage over the weightedaverage method in that
Student Answer:
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.

8.
Question :
(TCO B) The contribution margin ratio always decreases when the
Student Answer:
break-even point increases.
break-even point decreases.
variable expenses as a percentage of net sales increase.
variable expenses as a percentage of net sales decrease.

9.
Question :
(TCO B) Which of the following would not affect the break-even point?
Student Answer:
Number of units sold
Variable expense per unit
Total fixed expenses
Selling price per unit

10.
Question :
(TCO E) In an income statement prepared using the variable costing method,
variable selling and administrative expenses would
Student Answer:
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.
Question :
(TCO A) The following data (in thousands of dollars) have been taken from the
accounting records of Larop Corporation for the just-completed year:
Sales
$910
Purchases of raw materials $225
Direct labor..
$245
Manufacturing overhead. $265
Administrative expenses. $150
Selling expenses.
$140
Raw materials inventory, beginning.$15
Raw materials inventory, ending.. $45
Work-in-process inventory, beginning $20
Work-in-process inventory, ending. $55
Finished goods inventory, beginning.. $100
Finished goods inventory, ending $135
Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

2.
Question :
(TCO F) The Illinois 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
150,000
75%
55%
Work in process, Jun 30
145,000
85%
75%The department started 475,000 units into
production during the month and transferred 480,000 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.

3.
Question :
produced and sold
Sales revenue

(TCO B) A tile manufacturer has supplied the following data:Boxes of tile


625,000
$2,975,000

Variable manufacturing expense

$1,720,000

Fixed manufacturing expense

$790,000

Variable selling and admin expense

$152,000

Fixed selling and admin expense

$133,000

Net operating income


Required:

$180,000

a. Calculate the companys unit contribution margin.


b. Calculate the companys unit contribution ratio.
c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what
would the companys net operating income be?

4.
Question :
(TCO E) Lehne Company, which has only one product, has provided the following data concerning its
most recent month of operations:
Selling price
$
125
Units in beginning inventory
600
Units oroduced
3000
Units sold
3500
Units in ending inventory
100
Variable costs per unit:
Direct materials
$
15
Direct labor
$
50
Variable manufacturing overhead
$
8
Variable selling and admin
$
12
Fixed costs:
Fixed manufacturing overhead
$ 75,000
Fixed selling and admin
$ 20,000
The company produces the same number of units every month, although the sales in units vary from
month to month. The companys variable costs per unit and total fixed costs have been constant from
month to month.
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.

DeVry ACCT 505 Midterm Exam


Click on the link below for the solution:
https://devryfinalexams.com/products/acct-505-midterm-exam/