Introduction to Managerial Accounting-An activity based costing system should include all of the activities..

Introduction to Managerial Accounting college course.Assignment will cover the following areas:Cost-Volume-Profit RelationshipsJob-Order CostingVariable Costing and Segment ReportingActivity Based CostingAssignment is multiple choice and fill in problems1. An activity-based costing system
should include all of the activities carried out in an organization because any
simplification will inevitably result in inaccuracy.

True

False

2. Ladanza Corporation is a wholesaler that sells a single
product. Management has provided the following cost data for two levels of
monthly sales volume. The company sells the product for $135.00 per unit.

Sales
volume (units)

11,000

12,120

Cost of sales

$935,000

$1,030,200

Selling
and administrative costs

$627,000

$644,920

The best estimate of the total contribution margin when 11,410 units are sold
is:

$244,250

$501,970

$167,570

$387,940

3.The following costs
were incurred in September:

Direct
materials

$42,700

Direct
labor

$29,400

Manufacturing
overhead

$27,300

Selling
expenses

$23,600

Administrative
expenses

$33,700

Conversion costs during the month totaled:

$156,700

$72,100

$70,000

$56,700

4. The wages of factory
maintenance personnel would usually be considered to be:

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Option B

Option D

Option C

Option A

5.

South Company sells a
single product for $30 per unit. If variable expenses are 60% of sales and
fixed expenses total $13,600, the break-even point in sales dollars will
be:(Do not round
intermediate calculations.)

$13,600

$22,667

$34,000

$20,400

6.Variable cost:

increases on a per
unit basis as the number of units produced increases.

remains constant on a
per unit basis as the number of units produced increases.

decreases on a per
unit basis as the number of units produced increases.

remains the same in
total as production increases.

7.

The contribution margin ratio is 20% for Grain Company and the
break-even point in sales is $254,500. To obtain a target net operating
income of $69,000, sales would have to be:(Do not round intermediate calculations.)

$323,500

$287,300

$333,000

$599,500

8.At the break-even point:
Sales ? Variable expenses = Fixed expenses.

True

False

9.Within the relevant
range, variable cost per unit will:

increase as the level
of activity increases.

remain constant.

decrease as the level
of activity increases.

none of these.

10.

The contribution margin ratio of Thronson Corporation’s only
product is 69%. The company’s monthly fixed expense is $455,400 and the
company’s monthly target profit is $41,400.

Required:

Determine the dollar sales to attain the company’s target
profit.(Omit
the “$” sign in your response.)

Target
profit

$

11.Washtenaw Corporation uses a job-order costing system. The
following data are for last year:

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Washtenaw applies overhead using a predetermined rate based on direct
labor-hours. What predetermined overhead rate was used last year?

$3.36 per direct
labor-hour

$3.25 per direct
labor-hour

$3.55 per direct
labor-hour

$3.08 per direct
labor-hour

12.Wert Corporation uses a
predetermined overhead rate based on direct labor cost to apply manufacturing overhead
to jobs. Last year, the company’s estimated manufacturing overhead was
$1,200,000 and its estimated level of activity was 50,000 direct labor-hours.
The company’s direct labor wage rate is $12 per hour. Actual manufacturing
overhead amounted to $1,240,000, with actual direct labor cost of $650,000. For
the year, manufacturing overhead was:

overapplied by $60,000

overapplied by $40,000

underapplied by
$60,000

underapplied by
$44,000

13.A company has provided
the following data:

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If the sales volume decreases by 25%, the variable cost per unit increases by
15%, and all other factors remain the same, net operating income will:

decrease by $3,125.

decrease by $15,000.

increase by $20,625.

decrease by $31,875.

14.Slonaker Inc. has provided the following data concerning its
maintenance costs:

Machine-Hours

Maintenance
Cost

April

5,820

$30,400

May

5,803

$30,310

June

5,785

$30,258

July

5,782

$30,254

August

5,738

$30,099

September

5,816

$30,381

October

5,851

$30,430

November

5,822

$30,399

December

5,806

$30,339

Management believes
that maintenance cost is a mixed cost that depends on machine-hours.

Required:

Estimate the variable
cost per machine-hour and the fixed cost per month using the high-low method.(Round your “Variable cost” to 2
decimal places. Omit the “$” sign in your response.)

Variable
cost per machine-hour

$

Fixed cost
per month

$

15.Jurper Corporation used $150,000 of
direct materials during April. At the end of April, Jurper’s direct materials
inventory was $25,000 more than it was at the beginning of the month. Direct
materials purchases during the April amounted to:

$150,000

$175,000

$0

$125,000

16.Butteco Corporation has
provided the following cost data for last year when 100,000 units were produced
and sold:

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All costs are variable except for $100,000 of manufacturing overhead and
$100,000 of selling and administrative expense. There are no beginning or
ending inventories. If the selling price is $10 per unit, the net operating
income from producing and selling 110,000 units would be:

$385,000

$560,000

$405,000

$450,000

17.

Mark
Corporation produces two models of calculators. The Business model sells for
$56, and the Math model sells for $35. The variable expenses are given below:

Business
Model

Math
Model

Variable production
costs per unit

$12

$12

Variable selling and
administrative expenses per unit

$10

$
6

The
fixed expenses are $76,300 per month. The expected monthly sales of each
model are: Business, 1,000 units; Math, 400 units.

The break-even point in unit sales
for the expected sales mix is closest to: (Do
not round intermediate calculations.)

1,870 Business Model
and 748 Math Model

1,870 of each product

748 of each product

748 Business Model and
1,870 Math Model

18.Christiansen Corporation uses an
activity-based costing system with the following three activity cost pools:

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The Other
activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
The company
has provided the following data concerning its costs:

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The
distribution of resource consumption across activity cost pools is given below:

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The activity
rate for the Order Processing activity cost pool is closest to:

$676 per order

$780 per order

$312 per order

$560 per order

19.Underapplied or overapplied
manufacturing overhead represents the difference between actual overhead costs
and applied overhead costs.

True

False

20.An activity-based
costing system that is designed for internal decision-making will not conform
to generally accepted accounting principles because:

some manufacturing
costs (i.e., the costs of idle capacity and organization-sustaining costs)
will not be assigned to products.

some non-manufacturing
costs are assigned to products.

first-stage
allocations may be based on subjective interview data.

all of the above are
reasons why an activity-based costing system that is designed for internal
decision-making will not conform to generally accepted accounting principles.

23.In a contribution format income
statement, sales minus cost of goods sold equals the gross margin.

True

False

24.In activity-based
costing, some manufacturing costs may be excluded from product costs.

True

False

25.Activity-based costing is a costing
method that is designed to provide managers with product cost information for
external financial reports.

True

False

26.

Umanzor Corporation uses activity-based costing to assign
overhead costs to products. Overhead costs have already been allocated to the
company’s three activity cost pools as follows: Processing, $51,500;
Supervising, $35,800; and Other, $26,600. Processing costs are assigned to
products using machine-hours (MHs) and Supervising costs are assigned to
products using the number of batches. The costs in the Other activity cost
pool are not assigned to products. Activity data appear below:

MHs (Processing)

Batches (supervising)

Product S5

15,300

1,060

Product F5

1,180

820

Total

16,480

1,880

The activity rate for
the Processing activity cost pool under activity-based costing is closest to:

$2.81 per MH

$3.13 per MH

$7.56 per MH

$3.43 per MH

27.

McCaskey Corporation uses an
activity-based costing system with the following three activity cost pools:

Activity
Cost Pool

Total Activity

Fabrication

10,000

machine-hours

Order processing

125

orders

Other

N/A

The Other activity cost pool is
used to accumulate costs of idle capacity and organization-sustaining costs.

The company has provided the
following data concerning its costs:

Wages and salaries

$435,000

Depreciation

134,000

Occupancy

182,000

Total

$751,000

The distribution of resource
consumption across activity cost pools is given below:

Activity Cost Pools

Fabrication

Order
Processing

Other

Total

Wages and salaries

10%

80%

10%

100%

Depreciation

25%

25%

50%

100%

Occupancy

5%

75%

20%

100%

The activity rate for the
Fabrication activity cost pool is closest to:

$2.56 per machine-hour

$0.96 per machine-hour

$18.78 per
machine-hour

$8.61 per machine-hour

28. Desrevisseau Inc., a
manufacturing company, has provided the following data for the month of August.
The balance in the Work in Process inventory account was $10,000 at the
beginning of the month and $22,000 at the end of the month. During the month,
the company incurred direct materials cost of $63,000 and direct labor cost of
$39,000. The actual manufacturing overhead cost incurred was $40,000. The
manufacturing overhead cost applied to Work in Process was $43,000. The cost of
goods manufactured for August was:

$142,000

$130,000

$133,000

$145,000

29.In a job-order costing
system, direct labor cost is ordinarily debited to:

Finished Goods.

Manufacturing
Overhead.

Work in Process.

Cost of Goods Sold.

30.The break-even point in
unit sales is found by dividing total fixed expenses by:

the sales price per
unit.

the contribution
margin per unit.

the variable expenses
per unit.

the contribution
margin ratio.

31.Supply costs at Lattea
Corporation’s chain of gyms are listed below:

Client-Visits

Supply Cost

March

11,653

$28,567

April

11,449

$28,401

May

11,981

$28,825

June

12,600

$28,904

July

11,713

$28,628

August

11,199

$28,227

September

11,993

$28,826

October

11,684

$28,584

November

11,832

$28,709

Management believes
that supply cost is a mixed cost that depends on client-visits. Using the
high-low method to estimate the variable and fixed components of this cost,
those estimates would be closest to:(Round your Variable cost per unit to 2 decimal
places.)

$1.06 per
client-visit; $15,798 per month

$0.52 per
client-visit; $22,351 per month

$0.48 per
client-visit; $22,856 per month

$2.17 per
client-visit; $28,629 per month

32.In May, Hervey Inc.
incurred $60,000 of direct labor costs and $3,000 of indirect labor costs. The
journal entry to record the accrual of these wages would include a:

debit to Work in
Process of $63,000

credit to
Manufacturing Overhead of $3,000

credit to Work in
Process of $63,000

debit to Manufacturing
Overhead of $3,000

33.

At the beginning of the year, manufacturing overhead for the
year was estimated to be $266,400. At the end of the year, actual direct
labor-hours for the year were 22,500 hours, the actual manufacturing overhead
for the year was $264,300, and manufacturing overhead for the year was
overapplied by $5,700. If the predetermined overhead rate is based on direct
labor-hours, then the estimated direct labor-hours at the beginning of the
year used in the predetermined overhead rate must have been:(Round your intermediate calculations to 2
decimal places.)

21,800 direct
labor-hours

22,200 direct
labor-hours

20,700 direct
labor-hours

22,500 direct
labor-hours

34.

Nikkel Corporation, a
merchandising company, reported the following results for July:

Sales

$464,000

Cost of
goods sold (all variable)

$173,500

Total
variable selling expense

$ 24,600

Total
fixed selling expense

$ 23,000

Total variable
administrative expense

$ 8,900

Total
fixed administrative expense

$ 38,200

The contribution
margin for July is:

$257,000

$195,800

$402,800

$290,500

35.

[The following information applies
to the questions displayed below.]

Bakker Corporation applies
manufacturing overhead on the basis of direct labor-hours. At the beginning
of the most recent year, the company based its predetermined overhead rate on
total estimated overhead of $77,250 and 2,500 estimated direct labor-hours.
Actual manufacturing overhead for the year amounted to $79,000 and actual
direct labor-hours were 2,400.

The predetermined overhead rate for the year
was:

$29.66

$30.90

$32.92

$31.60