Linda,I have these 20 questions I need your help on for

Question

Linda, I have these 20 questions I need your help on for a take home exam. I
have 2 hours.

1. Nelson Company's activity for the first six months of 2004 is as follows:

Month
 Machine

Hours

Electrical

Cost

January
 4,000
 $3,120

February
 6,000
 4,460

March
 4,800
 3,500

April
 3,800
 3,040

May
 3,600
 2,900

June
 4,200
 3,200

Using the high-low method, the variable rate per machine hour would be (Points :
5)

$.40
       $.65
       $.67
       $.70

Question 2.2. In the decision to replace an old machine with a new machine,
which of the following would be considered a relevant cost? (Points : 5)

The current disposal price of the old equipment
       The loss on the disposal of the old equipment
       Depreciation expense on the old equipment
       The book value of the old equipment

Question 3.3. Clarkson Industries produces an electronic calculator that sells
for $75 per unit. Variable costs are $45 per unit and fixed costs are $150,000
annually. The company has been averaging an annual income of $100,000 over the
past five years. The break-even point for Clarkson Industries would be: (Points
: 5)

2,000 units.
       3,333 units.
       5,000 units.
       10,000 units.

4. Contribution margin is the amount remaining after (Points : 5)

variable expenses have been deducted from sales revenue.
       fixed expenses have been deducted from sales revenue.
       fixed expenses have been deducted from variable expenses.
       cost of goods sold has been deducted from sales revenues.

Question 5.5. The Pohl Company uses a standard cost system in which
manufacturing overhead is applied to units of product on the basis of machine
hours. For June, the company's manufacturing overhead flexible budget showed the
following total budgeted costs at a denominator activity level of 20,000 machine
hours:

Variable overhead 
 $26,000

Fixed overhead
 30,000

During June, 17,000 machine hours were used to complete 13,000 units of product,
and the following actual total overhead costs were incurred:

Variable overhead 
 $25,330

Fixed overhead
28,820

At standard, each unit of finished product requires 1.4 hours of machine time.
 
The fixed overhead budget variance for June was: (Points : 5)

$3,230 F.
       $3,230 U.
       $1,180 F.
       $1,180 U.

Question 6.6. Newmax Co. is a manufacturing business. When it pays the workers
who assemble its products, the cash account should be decreased and what account
should be increased? (Points : 5)

Cost of goods sold
       Work-in-process inventory
       Manufacturing overhead
       Finished goods inventory

Question 7.7. The Talbot Company produces wheels that are used in the production
of bicycles. Talbot's costs to produce 100,000 wheels annually are:

Direct materials 
$ 30,000

Direct labor
 50,000

Variable overhead
20,000

Fixed overhead
 70,000

Total
 $170,000

An outside supplier has offered to sell Talbot similar wheels for $1.25 per
wheel. If the wheels were purchased from the outside supplier, $15,000 of annual
fixed factory overhead could be avoided.
 
What is the highest price that Talbot could pay the outside supplier for the
wheel and still be economically indifferent between making or buying the wheels?
(Points : 5)

$1.70
       $1.15
       $1.00
       $ .80

Question 8.8. The cost of goods sold in a merchandising firm typically would be
classified as a (Points : 5)

variable cost.
       fixed cost.
       mixed cost.
       step-variable cost.

9. Questions 9 and 10 refer to the following:
 
Jones Co. is considering buying a machine that cost $100,000. If purchased,
Jones believes the new machine will reduce its operating cost by $20,000 per
year for the next 10 years. At the end of 10 years the machine will have $0
salvage value. If acquired, Jones will depreciate the machine using the
straight-line method.
 
Jones’ cost of capital is 12%. From present value tables, Jones had identified
that the present value factor for an amount of 1, discounted at 12%, is .322,
while the present value of a 10 year annuity of 1, discounted at 12%, is 5.65.

Ignoring income taxes, what is the payback period of this project? (Points : 5)

5.0 years
       4.5 years
       4.4 years
       4.0 years

Question 10.10. Ignoring income taxes, what is the net present value of this
project? (Points : 5)

$ 5,760
       $ 6,440
       $12,200
       $13,000

Question 11.11. The individual generally responsible for explaining the
direct-labor efficiency variance is the: (Points : 5)

the purchasing agent.
       the sales manager.
       the production manager.
       the industrial engineering department.

12. Allen Company collects 25% of a month's sales in the month of sale, 70% in
the month following sale, and 4% in the second month following sale. The
remainder is uncollectible. Budgeted sales for the next three months are:

April 
 May
June

Budgeted sales 
 $100,000
 $120,000
 $110,000

Cash collections in June are budgeted would be: (Points : 5)

$115,500.
       $111,000.
       $110,000.
       $113,400.

Question 13.13. Young Enterprises has budgeted sales in units for the next four
months as follows:

June 
 10,000 units

July
8,000 units

August
 12,000 units

September
 14,800 units

Past experience has shown that the ending inventory for each month should be
equal to 20% of the next month's sales in units. Budgeted production for July
should be: (Points : 5)

8,800 units.
       8,400 units.
       8,000 units.
       7,200 units.

14. The Collins Company applies overhead to production orders on the basis of
machine hours. At the beginning of 2002, the company made the following
estimates:

Estimated

Amount

Direct labor cost
$100,000

Indirect labor cost
25,000

Advertising expense
30,000

Direct materials
 50,000

Indirect materials
10,000

Depreciation on factory equipment
40,000

Machine hours to be worked
10,000

What predetermined overhead rate should Collins Co. use? (Points : 5)

$ 3.50
       $ 7.50
       $ 9.00
       $12.00

Question 15.15. The purpose of a flexible budget is to: (Points : 5)

reduce the total time in preparing the annual budget.
       compare actual and budgeted results at virtually any level of production.
       eliminate cyclical fluctuations in production reports by ignoring
variable costs.
       allow management some latitude in meeting goals

16. Following is information relating to Kew Co.'s Vale Division for 2001:

Sales 
$500,000

Variable expenses
300,000

Fixed expenses
50,000

Average operating assets
1,000,000

Minimum desired return
12%

What was Vale's residual income? (Points : 5)

$120,000
       $150,000
       $ 30,000
       $ 80,000

Question 17.17. The labor time required to assemble a product is an example of
a: (Points : 5)

Unit-level activity.
       Batch-level activity.
       Product-level activity.
       Facility-level activity.

Question 18.18. Anola Company has two products: A and B. The company uses
activity- based costing to determine product costs. The estimated overhead costs
and expected activity for each of the company's three overhead activity centers
are as follows:

Activity

Center

Estimated

Overhead

Costs

Expected Activity

Total
Product A
Product B

Activity 1 
$18,000
500
300
200

Activity 2
$16,000
600
500
100

Activity 3
$27,000
900
600
300

The predetermined overhead rate under the activity-based costing system for
Activity 3 is closest to: (Points : 5)

$30.00.
       $30.50.
       $90.00.
       $67.78.

Question 19.19. A standard is: (Points : 5)

unrelated to budgeting since standards are used for control purposes
only.
       normally set at the ideal rather than the practical level of cost,
efficiency, or quantity.
       normally not applied to the variable portion of overhead.
       the budgeted cost for one unit of product.

Question 20.20. Which of the following would be most appropriate for evaluating
a cost center? (Points : 5)

Return on investment
       Contribution margin percentage
       A static budget
       A standard costing system

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