student questions f22 part #1

Question 1

Question 1 – Chapter 5
How do you determine equivalent units of production for a department?

By adding together the number of units transferred out plus the equivalent units in ending WIP

By subtracting the number of units transferred out minus the equivalent units in ending WIP

By adding together the number of units transferred out plus the equivalent units in beginning WIP

By adding the number of units transfer out and subtract the equivalent units in ending WIP

Answer 1

By adding together the number of units transferred out plus the equivalent units in ending WIP

Question 2

Question 2 – Chapter 11
determine which scenario will be considered as relevant cost for a round trip to California via car or plane.
Maintenance, cost of gas

Depreciation, cost of gas

Insurance, depreciation

Maintenance, insurance

Answer 2

Maintenance, cost of gas

Question 3

Question 3 – Chapter 1
Starbucks is experimenting with a new coffee grinder the cost more but use less coffee beans. The machine raises the fixed cost to $1400 from $1300 and decreases variable cost from 0.20 to 0.15. Is it worth the upgrade and what is the difference in average cost per cup? Assume a level of activity of 1,000 units.

No, 0.05

Yes, 0.05

No, 0.34

Yes, 0.34

Answer 3

No, 0.05

Question 4

Question 4 – Chapter 2
Which of the following is true regarding cost drivers related to the calculation and impact on predetermined overhead rate.

If the cost driver increases, the total overhead applied increases.

Added to the variable overhead when calculating profit

The estimates that direct labor hours needed to complete a job

If the cost drivers increases the total overhead applied decreases

Answer 4

If the cost driver increases, the total overhead applied increases.

Question 5

Question 5 – Chapter 12
A magazine company wants to buy a new printing press. It will cost $12,000 and have a useful life of 10 years. It will cost the company $200 a year after installation of the printing press. The company has a rate of return or loss of 10%.
PV $1 = 1.00
PVOA (n=10, I = 10%) = 6.14

What is the NPV?
(13,228)

(12,000)

(14,000)

(10,772)

Answer 5

(13,228)

(12k1.0)+(200 6.14)=-13,228

Question 6

Question 7 – Chapter 1
Which of the following are the functions of management in managerial accounting?

Planning, controlling, and decision making

Controlling, staffing, and planning

Leading, overseeing and decision making

Organizing, leading and staffing

Answer 6

Planning, controlling, and decision making

Question 7

Question 8 – Chapter 9
Based on the information below, what is the actual variable overhead amount, assuming that direct labor is the cost driver?

Units produced – 20,500#
DL (17,800* $10 per hour) = $178,000
VOH cost incurred – $50,000

2.81
2.44
1.15
10

Answer 7

2.81

Actual of 50,000 / 17,800 = 2.81

Question 8

Between the current fiscal year and the prior fiscal year, accounts receivable increased by $1,000, inventories decreased by $2,000, and accounts payable decreased by $4000.

The company uses the indirect method for calculating cash flow from operations and net income for the year is $5,000. What is the cash from operations?

$2,000
$8,000
$6,000
$10,000

Answer 8

$2,000

Decrease, Increase, Decrease
When AR Increases, cash will decrease
When inventory decreases, cash will increase
When AP decreases, cash will decrease.

Question 9

Question 10 – Chapter 5
If using process costing for cost accumulation and the final calculation is correct, what will the reconciliation differences be?

Always 0

Greater than total cost

Less than total cost

Depends on situation

Answer 9

Always 0

Correct Answer:
It is used as a tool to check that financial amounts are correct. If the amounts are correct, reconciliation difference should always be 0.

Question 10

Question 11 – Chapter 5
In a manufacturing department, 65,000 units were completed and transferred out while the ending WIP is 30,000. If materials are 100% completed but conversion is 30% completed. What are the equivalent units of production for conversion?

9,000 units

21,000 units

39,000 units

35,000 units

Answer 10

9,000 units

Correct Answer:
30,000 WIP * 30% conversion rate = 9,000 units

Question 11

Question 13 – Chapter 7
What costs are included in the accumulation of the cost object when using variable costings?

Direct material, direct labor, variable overhead.

Direct material, direct labor, variable overhead, and fixed overhead costs

Direct material and variable overhead.

Only fixed overhead costs.

Answer 11

Direct material, direct labor, variable overhead.

Correct Answer:
For variable costing, only DM, DL, VMOH are included.

Question 12

Question 14 – Chapter 12
Which of the following can be seen as an advantage for the payback method?

It is an easy screening tool and helpful for the identifying process.

It will ignore the cash flow after the payback.

The payback method ignores the time value of money.

It compares the present value of projected cash flows with the present value of the inflows.

Answer 12

It is an easy screening tool and helpful for the identifying process.

Correct Answer:
It is an advantage of the payback method

Question 13

Question 16 – Chapter 13

Calculate free cash flow:
Net cash provided by operating activities: $300
Net cash used in investing activities: ($120)
Capital expenditure: ($140)
Net change in cash: $400
Dividend Paid: $50

110

(10)

560

130

Answer 13

110

Correct Answer:
FCF = Net cash – capital expenditure – dividend

Question 14

Question 17 – Chapter 9

Kathy Corporation uses a job ordering cost system for a makeup production line. The overhead rate is based on machine hours. Prior to the start of the year, the company made the following estimates with a $2 variable manufacturing overhead cost per machine hour.

Machine hours required to support estimated production = 50,000#
Fixed manufacturing overhead cost = #450,000

What is the predetermined overhead rate?

$11
$5.5
$19
$1.06

Answer 14

$11

Correct Answer:
50,000 *2 = 100,000
100,000 + 450,000 = 550,000
550,000/50,000 = 11

Question 15

Question 21 – Chapter 6
The local sandwich shop sells an average of 1,500 sandwiches a month. The average selling price for a sandwich is $5.50. The average variable expense per sandwich is $1.30. The average fixed expense is $500 per month. Find the contribution margin ratio.

0.76 or 76%

$4.20

0.24 or 24%

$1.30

Answer 15

0.76 or 76%

Correct Answer:
CMR = CM / sales
$5.5 - $1.3 =$ 4.2
$4.2 / $5.5 = 0.76 or 76%

Question 16

Question 22 – Chapter 2
The production of XYZ required $400 of direct material along with 25 direct labor hours at $14.00 per hour. Estimated total overhead for the year was $900,000 and estimated direct labor overhead is 45,000. What will be recorded as the cost of job for XYZ?

$1,250

$750

$900

$850

Answer 16

$1,250

Correct Answer:
DM + DL + Manufacturing OH = cost of job
Manufacturing OH = 900,000 / (45,000/25) = 500
400 + 350 (14*25) + 500 = 1,250

Question 17

Question 25 – Chapter 8
What is the difference between operating budget and continuous budget?

Continuous budget roll forward after each month is completed

Continuous budget covers one year and corresponds to a company’s fiscal year

Operating budget is used half of the year

Continuous budget is used at the beginning of the business operation

Answer 17

Continuous budget roll forward after each month is completed

Correct Answer:
This is the correct definition.