WGU- C202 UFC 1 Managerial Accounting Pre-assessment with Complete Solution

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Which Feature of managerial accounting improves a company's ability to plan and control operations? a) It requires strict adherence to GAAP. b) It allows comparability across businesses. c) It pr... ovides earnings per share. d) It generates detailed information on product cost. - ANSWER It generates detailed information on product cost. Which statement describes period costs? a) They flow directly to the balance sheet as expenses. b) They pertain to costs necessary to manufacture the product. c) They flow directly to the current income statement as expenses. d) They include direct materials, direct labor, and manufacturing overhead costs. - ANSWER They flow directly to the current income statement as expenses. A company has the following costs associated with a job: Direct materials: $400 Direct labor: $450 Work in process: $950 Revenue from job: $1,450 What is the amount of overhead applied to this job? a) $100. b) $500. c) $600. d) $1,000. - ANSWER $100. Management wants to assess how many units must be sold to earn a profit. The most useful analysis will separate costs into which categories? a) Fixed and variable. b) Direct and indirect. c) Product and period. d) Controllable and not controllable. - ANSWER Fixed and variable. A manufacturing company budgeted for $1,240,000 in manufacturing overhead and expected 400,000 direct labor hours. Actual overhead was $1,200,000, and actual direct labor hours were 390,000. Was manufacturing overhead over - or under-applied and by how much? a) Over-applied by $9,000. b) Under-applied by $9,000. c) Over-applied by $40,000. d) Under-applied by $40,000. - ANSWER Over-applied by $9,000. Cost of goods manufactured equals $87,000 for the year. Finished goods inventory is $10,000 at the beginning of the year and $4,000 at the end of the year. Beginning and ending work in process are $4,000 and $5,000, respectively. How much is cost of goods sold for the year? a) $83,000. b) $87,000. c) $93,000. d) $97,000. - ANSWER $93,000. The following information relates to a company's production activities for the month of October: Estimated cost of direct labor: $18,500 Estimated cost of manufacturing overhead: $22,000 Estimated direct labor hours: 900 Actual cost of direct labor: $19,000 Actual cost of manufacturing overhead: $24,000 Actual direct labor hours: 920 Using direct labor hours as the allocation base, what is the predetermined overhead rate? a) $20.56 per direct labor hour. b) $20.65 per direct labor hour. c) $24.44 per direct labor hour. d) $26.09 per direct labor hour. - ANSWER $24.44 per direct labor hour. The following amounts were reported by a company before adjusting its over-applied manufacturing overhead of $48,000: Cost of goods sold: $730,000 Applied overhead: $368,000 Actual overhead: $320,000 What is the company's adjusted cost of goods sold? a) $682,000. b) $778,000. c) $1,050,000. d) $1,098,000. - ANSWER $682,000. The manufacturing operations of a company had the following balances for the year: Beginning raw materials: $84,000 Beginning work in process: $45,000 Beginning finished goods: $28,000 Ending raw materials: $91,000 Ending work in process: $59,000 Ending finished goods: $23,000 The company transferred $918,000 of completed goods out of work in process during the year. The overhead is under-applied by $3,000. What is the adjusted cost of goods sold for the year? a) $946,000. b) $926,000. c) $923,000. d) $920,000. - ANSWER $926,000. A company provides the following data for its process costing system: Equivalent units for materials: 10,000 Material costs for units in beginning inventory: $20,000 Material costs for units started during the period: $80,000 Conversion costs for units in beginning inventory: $30,000 Conversion costs for units started during period: $80,000 What is the cost per equivalent unit for materials if the weighted average cost method is used? a) $3. b) $8. c) $10. d) $11. - ANSWER $10. What is the emphasis of activity-based costing systems? a) Individual activities. b) Continuous production. c) Raw materials purchases. d) Department indirect cost rates. - ANSWER Individual activities. Which common activity cost pool is driven by number of units produced? a) Units assembled. b) Orders processed. c) Customers served. d) Employees engaged. - ANSWER Units assembled. A company uses an activity-based costing system composed of three processes: tooling, processing, and resources. The company has the following firm-wide totals from its costing system: Tooling driver quantity: 25 setups Tooling costs per pool: $500,000 Processing driver quantity: 20,000 direct labor hours Processing costs per pool: $2,000,000 Resources driver quantity: 40,000 sq. ft. Resources costs per pool: $800,000 Product D uses 3 setups, 3,000 direct labor hours, and 8,000 square feet. What is the total overhead cost that should be assigned to product D? a) $160,000. b) $300,000. c) $360,000. d) $520,000. - ANSWER $520,000. What are the relevant costs in the managerial decision-making process? a) Sunk costs. b) Historical costs. c) Opportunity costs. d) Depreciation costs. - ANSWER Opportunity costs. The accountant of a local retailer prepared the following income statement for this month: Sales revenue $600,000 Cost of goods sold $250,000 Gross margin $350,000 Less operating expenses Selling expense $73,000 Administrative expense $65,000 $138,000 Net operating income $212,000 The retailer sells its coats for $150 each Selling expenses consist of a commission of $5 per coat plus fixed costs. Each coat costs $62.50 from the distributor. Administrative expenses consist of a variable component equal to 5% of sales plus fixed costs. In order to increase net operating income in the coming year, management is considering increasing advertising expenses. What would be the total contribution margin reported on this retailer's contribution format income statement? a) $212,000. b) $300,000. c) $350,000. d) $550,000. - ANSWER $300,000. A merchandise company reported the following results for the year: Number of units sold: 1,000 Selling price per unit: $400 Variable manufacturing costs per unit: $120 Variable selling costs per unit: $90 Total fixed selling costs: $10,000 Variable administrative cost per unit: $50 Fixed administrative costs: $30,000 What is the contribution margin? a) $100,000. b) $140,000. c) $280,000. d) $400,000. - ANSWER $140,000. A company sells a product for $18 per unit. The variable cost is $6 per unit. The company has fixed costs of $42,000. How many units must it sell in order to break even? a) 1,750. b) 2,334. c) 3,500. d) 7,000. - ANSWER 3,500. A company reports the following annual information for a product: Sales price: $48 per unit Variable costs: $15 per unit Fixed costs: $150,000 Units produced and sold: 30,000 units If the sales price is increased to $50 per unit and nothing else changes, how much will net income increase? a) $60,000. b) $900,000. c) $1,050,000. d) $1,500,000. - ANSWER $60,000. A company reports the following annual information for a product: Sales price: $48 per unit Variable costs: $15 per unit Fixed costs: $150,000 Units produced and sold: 30,000 If fixed costs decreased to $120,000, what is the break-even point in units? (Round up to the nearest whole unit.) a) 2,500 units. b) 3,125 units. c) 3,637 units. d) 4,546 units. - ANSWER 3,637 units. Why does direct labor cost affect the make-or-buy decision? a) It is an overhead cost. b) It is an opportunity cost. c) It is a mixed cost. d) It is a variable cost. - ANSWER It is a variable cost. Last year, a company spent $25 per unit to make widgets. This year, however, the cost has increased to $40 per unit. The company has recently learned it can buy widgets for $38 per unit. Which differential cost should be considered for this make-or-buy decision? a) $2 per unit. b) $13 per unit. c) $15 per unit. d) $25 per unit. - ANSWER $2 per unit. A company manufactures bird feeders, which they normally sell for $30 each. The company compiles the following information relating to the production of the bird feeders: Plant capacity: 280,000 feeders Current production level: 200,000 feeders Direct materials: $9/unit Hourly labor: $6/unit Variable overhead: $3/unit Fixed overhead: $400,000 The company receives a request from a large buyer to purchase 12,000 feeders at a reduced price. What is the minimum price per unit that the company should charge for this order? a) $9. b) $15. c) $18. d) $20. - ANSWER $18. It costs a company $6 of variable costs to produce one flag, which normally sells for $20. A customer offers to purchase 30,000 flags at $10 each. The company would incur special shipping costs of $1 per flag if the order were accepted. The company has sufficient unused capacity to produce the 30,000 flags The company is currently profitable. If the special order is accepted, what will be the increase in net income? a) $30,000. b) $90,000. c) $120,000. d) $300,000. - ANSWER $90,000. A company is deciding whether equipment currently in use should be replaced by new equipment. Which information is relevant to this decision? a) The cost of the new equipment. b) The salvage value of the new equipment. c) The net book value of the new equipment. d) The annual depreciation of the new equipment. - ANSWER The cost of the new equipment. A company is considering whether to eliminate a segment and has compiled the following information: Total Segment Proposed (existing) (drop) (remaining) Sales ($210/unit) $26.50 $13,125 $13,125 Variable costs $10,500 $6,300 $4,200 Contribution margin $15,750 $6,825 $8,925 Fixed costs $11,100 $2,250 $8,850 Net Income $4,650 $4,575 $75 Should the company eliminate or keep the segment? a) Keep the segment since the segment's total avoidable expenses are $4,500. b) Eliminate the segment since unavoidable expenses are $2,250 of fixed costs. c) Eliminate the segment since the contribution margin of the segment is $1,725 less than total allocated expenses. d) Keep the segment since eliminating it will result in a $4,575 reduction in net income compared to the existing business. - ANSWER Keep the segment since eliminating it will result in a $4,575 reduction in net income compared to the existing business. A company has the capacity to produce 20,000 units of its product per year. It is currently only producing 13,000 units per year, with a sell price of $70 per unit. A customer has placed a special order for 6,500 units at $62 per unit. The incremental cost of accepting the special order is $382,000. Should the company accept the special order? a) No, because the incremental contribution margin would be $32,000. b) No, because the incremental contribution margin would be $53,000. c) Yes, because the incremental contribution margin would be $21,000. d) Yes, because the incremental contribution margin would be $73,000. - ANSWER Yes, because the incremental contribution margin would be $21,000. A company has inventory that cost $50,000. Its scrap value is $65,000. The inventory could be sold for $150,000 if manufactured further at an additional cost of $80,000. What should this company do? a) Sell the inventory for $65,000 scrap value. [Show More]

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