Towson MGMT 650 Final exm 2015

Question 1
A typical use of managerial accounting is to:
( ) help investors and creditors assess
the financial position of the company.
( ) help management get a clean audit
() help the marketing manager decide which product
promotion to implement
( ) help the SEC decide whether
management is in compliance of its policies.
Question 2
Three costs incurred by Pitt Company are summarized below:
units 2,000 units
Cost A
Cost B
Cost C
Which of these costs are variable?
( ) A, B, and C
( ) A and B
( ) A only
() C only

Question 3
Bubba’s Steakhouse has budgeted the following costs for a
month in which 1,600 steak dinners will be produced and sold: Materials,
$4,080; hourly labor (variable), $5,200; rent (fixed), $1,680; depreciation,
$710; and other fixed costs, $590. Each steak dinner sells for $12.80 each. How
much would Shula’s profit increase if 10 more dinners were sold?
Question 4
Bellfont Company produces door stoppers. August production
costs are below:
Door Stoppers produced 74,000
Direct material (variable)
Direct labor (variable)
Supplies (variable)
Supervision (fixed)
Depreciation (fixed)
Other (fixed)
In September, Bellfont expects to produce 100,000 door
stoppers. Assuming no structural changes, what is Bellfont’s production cost
per door stopper for September?

Question 5
Aaron’s chairs is in the process of preparing a production
cost budget for August. Actual costs in July for 120 chairs were:
Materials cost $4,790
Labor cost 2,810
Rent 1,500
Depreciation 2,500
Other fixed costs 3,200

Materials and labor are the only variable costs. If
production and sales are budgeted to change to 130 chairs in August, how much
is the expected total variable cost on the August budget?
Question 6
Carry-ALL plans to sell 1,300 carriers next year and has
budgeted sales of $46,000 and profits of $22,000. Variable costs are projected
to be $20 per unit. Michael Co. offers to pay $23,400 to buy 690 units from
Carry-ALL. Total fixed costs are $7,000 per year. This offer does not affect
Carry-ALL’s other planned operations. The incremental revenues for this
situation are
Question 7
Stellar Company has the following sales, variable cost, and
fixed cost. If sales increase by $10,000
then their profit increases/decreases by how much?

Sales $50,000
Variable Costs $9,400
Fixed Costs $27,000
Question 8
Susan is trying to decide whether or not to attend college
during the next 12-week session. She has the following options:
1. Attend college full-time at a cost of $1,200.
2. Attend college part-time at a cost of $700 and work
part-time earning $1,900.
3. Work full-time earning $5,000.
What is Susan’s incremental profit if she chooses option 3
over option 2?
Question 9
Total costs were $72,600 when 28,000 units were produced and
$93,800 when 39,000 units were produced. Use the high-low method to find the
estimated total costs for a production level of 32,000 units.
Question 10
Professional University teaches a large range of
undergraduate courses. It is interested in determining the cost equation for
the facilities cost as a function of student credit hours so that it an more
accurately budget its facilities costs as enrollment grows. Information for the
high and low cost semesters and volumes for last 5 years appears below
Semester Student
Credit Hours Facilities Cost
Spring 2007 250,000$500,000
Fall 2004 300,000$530,000
Using the high low method, with student credit hours as the
activity driver, what is the equation for facilities cost (FC) as a function of
student credit hours?
( ) FC = $350,000 + $0.60 / student credit hour
( ) FC = -$585,100 + $1.67 / student
credit hour
( ) FC = $1.77 / student credit hour
() FC = $2 / student credit hour
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Question 11
Randy’s tireland makes a product that sells for $66 per unit
and has $52 per unit in variable costs. Annual fixed costs are $24,000. If
Rambles sells 10 units less than breakeven, how much loss would the company recognize
on its income statement?
Question 12
Ritz Furniture has a contribution margin ratio of 0.17. If
fixed costs are $163,300, how many dollars of revenue must the company generate
in order to reach the break-even point?
Question 13
U.S. Telephone Cellular sells phones for $100. The unit
variable cost per phone is $50 plus a selling commission of 10% (based on the
unit sales price per phone). Fixed manufacturing costs total $1,010 per month,
while fixed selling and administrative costs total $2,430. How many phones must
be sold to achieve the breakeven point?
Question 14
Swimkids is a swimsuit manufacturer. They sell swim suits at
a selling price is $30 per unit. Swimkids variable costs are $18 per unit.
Fixed costs are $86,300. Swimkids expects sales of $274,700 next year. What is
Swimkids’s margin of safety (in dollars)?
Question 15
Lambardi Company sells 3 types of bags. Bag A sells for $16 and has variable cost of
$9.00 per unit. Bag B sells for $14 and
has variable cost of $12.00 per unit.
Bag C sells for $7 and has variable costs of $6.00 per unit. Lambardi sells in a mix of 2 units of A, 3
units of B and 5 units of C. What is the
weighted average contribution margin per unit for Lambardi?
Question 16
Product A has a contribution margin per unit of $500 and
required 2 hours of machine time. Product B has a contribution margin per unit
of $1,000 and requires 5 hours of machine time. How much of each product should
be produced given there are 100 hours of available machine time?
( ) 50 units of A and 25 units of B.
( ) 25 units of B.
() 50 units of A.
( ) None of the above

Question 17
Delfi Company produces two models of seats, Toro and Prep.
Information regarding these products for May follows:
Toro Prep
Number of units 3,000 7,000
Sales revenue $120,000 $140,000
Variable costs 60,000 42,000
Fixed costs 24,000 50,000
Net Income $36,000$48,000
Pounds of plastic to produce one bucket 4.0 1.6
Contribution margin per unit $20 $14
Due to increased demand of plastic in the market, Delfi
Company can obtain only 9,000 pounds of plastic per month. Delfi can sell as
many seats as it can produce of either model. How many of each model should
Delfi produce to maximize profit in May considering the constraint?
( ) Toro: 0; Prep: 4,375
( ) Toro: 2,250; Prep: 0
() Toro: 1,125; Prep: 2,812
( ) Toro: 0; Prep: 5,625
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Question 18
Abagail Corp. uses activity-based costing system with three
activity cost pools. The following information is provided:
Costs: Wages and salaries $ 216,000
Depreciation 116,000
Utilities 119,000
Total $440,000

Activity Cost Pools
Assembly Setting Up Other

Wages and salaries
0.54 30% 10%
0.39 45% 20%
Utilities 0.29 40% 30%

How much total cost would be allocated to the Assembly
activity cost pool?

Question 19
Which of the following is not a goal of Managerial
( ) Provide information managers need
for planning.
() Provide information managers need for market wide
interest rates.
( ) Provide information managers need
for control.
( ) Provide information managers need
for decision making.
Question 20
Which one of the following is least likely to be a fixed
( ) Rent for buildings
( ) Rent for land
( ) Cost of commodity inputs
() Cost of property, plant and equipment



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