ACCT 434 Midterm Exam (Updated)
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DeVry <strong>ACCT</strong> <strong>434</strong> <strong>Midterm</strong> <strong>Exam</strong> (<strong>Updated</strong>)<br />
Click on the link below for the solution:<br />
https://devryfinalexams.com/products/acct-<strong>434</strong>-midterm-examupdated/<br />
1. (TCO 1) ABC systems create (Points : 5)<br />
one large cost pool .<br />
homogenous activity-related cost pools.<br />
activity-cost pools with a broad focus.<br />
activity-cost pools containing many direct costs.<br />
Question 2.2. (TCO 1) Merriamn Company provides the following ABC costing information:<br />
Activities Total Costs Activity-cost drivers<br />
Account inquiry hours$400,000 10,000 hours<br />
Account billing lines $280,000 4,000,000 lines<br />
Account verification accounts$150,000 40,000 accounts<br />
Correspondence letters $ 50,000 4,000 letters<br />
Total costs $880,000<br />
The above activities are used by Department A and B as follows:<br />
Department A Department B<br />
Account inquiry hours2,000 hours 4,000 hours<br />
Account billing lines 400,000 lines 200,000 lines<br />
Account verification accounts10,000 accounts 8,000 accounts<br />
Correspondence letters 1,000 letters 1,600 letters<br />
How much of account verification costs will be assigned to Department A? (Points : 5)<br />
$14,000<br />
$150,000<br />
$10,000<br />
$37,500<br />
Question 3.3. (TCO 2) <strong>Exam</strong>ples of nonfinancial budgets include all of the following EXCEPT<br />
(Points : 5)<br />
cash collections from customers.<br />
units sold.<br />
units manufactured.<br />
number of new products introduced.
Question 4.4. (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted<br />
indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to<br />
be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity? (Points<br />
: 5)<br />
$.50<br />
$1.00<br />
$1.50<br />
$2.00<br />
Question 5.5. (TCO 3) The conference method estimates cost functions (Points : 5)<br />
by mathematically analyzing the relationship between inputs and outputs in physical terms.<br />
using quantitative methods that can be very time consuming and costly.<br />
based on analysis and opinions gathered from various departments.<br />
using time-and-motion studies.<br />
Question 6.6. (TCO 4) Relevant costs of a make-or-buy decision include all of the following<br />
EXCEPT (Points : 5)<br />
fixed salaries that will not be incurred if the part is outsourced.<br />
current direct material costs of the part.<br />
special machinery for the part that has no resale value.<br />
material-handling costs that can be eliminated.<br />
Question 7.7. (TCO 5) One-time-only special orders should only be accepted if ________.<br />
(Points : 5)<br />
incremental revenues exceed incremental costs<br />
differential revenues exceed variable costs<br />
incremental revenues exceed fixed costs<br />
total revenues exceed total costs<br />
Question 8.8. (TCO 5) Konrade’s Engine Company manufactures part TE456 used in several of<br />
its engine models. Monthly production costs for 1,000 units are as follows:<br />
Direct materials $40,000<br />
Direct labor 10,000<br />
Variable overhead costs 30,000<br />
Fixed overhead costs 20,000<br />
Total costs $100,000<br />
It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred<br />
if the company purchases TE456 from the outside supplier. Konrade’s Engine Company has the<br />
option of purchasing the part from an outside supplier at $85 per unit.<br />
If Konrade’s Engine Company accepts the offer from the outside supplier, the monthly avoidable<br />
costs (costs that will no longer be incurred) total (Points : 5)<br />
$82,000<br />
$98,000<br />
$50,000<br />
$100,000
Question 9.9. (TCO 3) The cost function y = 100 + 10X (Points : 5)<br />
has a slope coefficient of 100.<br />
is a nonlinear.<br />
has an intercept of 100.<br />
represents a fixed cost.<br />
Question 10.10. (TCO 4) Sunk costs (Points : 5)<br />
are future costs.<br />
are past costs.<br />
have future implications<br />
(TCO 1) For each of the following drivers identify an appropriate activity.<br />
# of machines<br />
# of setups<br />
# of inspections<br />
# of orders<br />
# of runs<br />
# of bins or aisles<br />
# of engineers<br />
(TCO 2) Favata Company has the following information<br />
Month Budgeted Sales<br />
June $60,000<br />
July 51,000<br />
August 40,000<br />
September 70,000<br />
October 72,000<br />
In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next<br />
month’s cost of sales.<br />
Prepare a purchases budget for July through September. (Points : 30)<br />
(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000<br />
items are produced, the costs per unit are:<br />
Direct materials $0.60<br />
Direct manufacturing labor 3.00<br />
Variable manufacturing overhead 1.20<br />
Fixed manufacturing overhead 1.60<br />
Total $6.40<br />
Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per<br />
unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if
Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the<br />
original item would be eliminated.<br />
What is the relevant per unit cost for the original part<br />
Which alternative is best for Kirkland Company? By how much?<br />
(TCO 3) The Wildcat Company has provided the following information:<br />
Units of Output 30,000 Units 42,000 Units<br />
Direct materials $180,000 $252,000<br />
Workers’ wages 1,080,000 1,512,000<br />
Supervisors’ salaries 312,000 312,000<br />
Equipment depreciation 151,200 151,200<br />
Maintenance 81,600 110,400<br />
Utilities 384,000 528,000<br />
Total $2,188,800 $2,865,600<br />
Using the high-low method and the information provided above, identify the linear cost function<br />
equation. (Points : 30)<br />
DeVry <strong>ACCT</strong> 324 <strong>Midterm</strong> <strong>Exam</strong> (<strong>Updated</strong>)<br />
Click on the link below for the solution:<br />
https://devryfinalexams.com/products/acct-<strong>434</strong>-midterm-examupdated/