Posted: October 20th, 2022

ACC 312 Fundamentals of Managerial Accounting Midterm Exam I

.gif”>ACC 312 Fundamentals of Managerial Accounting
Midterm Exam ITest FormA

Name UTEID

Instructor ClassDay_____________Time

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Instructions
Confirmthatyou have 25
multiple-choice questions
and6 workout problems
(16 pages).

1. Answers toMultiple-Choicequestions should be recordedontheScantron.

A.
Onyour Scantronanswersheet, writeand bubbleinyour
name, UTEID, and the “Test Form” letternoted
above.

B. Usea#2
pencil onlytomark your responses onyour
Scantronanswer sheet.Markclearlyanderase
completelyas needed.Onlymultiple
choice answersmarkedon
your Scantronanswer
sheetwill be graded.

C.
The time allotted
for
an examincludesthetime required
to “bubble-in” yourScantron answersheets.
It
is cheatingtotake extratime
to bubble inthe answersheetaftertime is
up forthe exam.

2. Answers to
Problems
should be recordedontheexam where
indicated.Show your workinthespaceprovidedor
attach scratch paper.

3. Cellphones,
books,notes,PDAsand
programmable calculatorsare
NOT
allowed at yourdeskduring
the exam.Calculatorscapable
of storing text are NOT
allowed.

4. Inthe interestofminimizingdisruptions
and
makingsureallstudents
have exactlythe same informationonthe exam, wewillanswer onlythe followingkinds of questions duringthe exam:
a. Vocabularyquestions relatingto
non-managerial-specificwords;
b. Questions abouta possible mistakeinthe exam.
Inthe latter case,ifamistakeisconfirmed, we willanswer
bymakinganannouncement
to the whole class.If no
announcementismadeina
short period of time, you mayassume thatthe problemiscorrectaswritten.

5.
Bringyour entire exam,scratch paper, Scantronanswer sheet, and studentID to
the front of the roomwhenyou
have finished.

6.
You are remindedof the University’shonor policywhich
requires youdo your own
work and not giveorreceive Helpanceon this exam.

SECTIONI-MULTIPLE
CHOICE (50points–25questions,2pointseach)-PleasechoosetheONE
BEST
answerforeachquestionand
recordyouranswer
ontheScantronanswersheet.
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1.
FancyTechnologycurrentlysells
100 units, incurs fixed costs, generates
aprofit
and has aunitcontribution
margin of$4. FancyTechnologycan automateits production process, whichwill
increaseitsfixed costs an additional
$100 and decreaseits variable costs
by
$1 perunit. Also, if
FancyTechnologydecreases
its priceby$1,it will
sell 20% moreunits. Byhow
much will FancyTechnology’s
profit change(compared to current profit)ifit automates theproduction process
AND decreases theprice
by$1?
A. Increaseby$180
B. Increaseby$480
C. Decreaseby$100
D. Decreaseby$20
E. Noneoftheabove

2.
Dent Manufacturinghas31,000 labor
hours available forproducingMandN. Considerthe followinginformation:

ProductM

ProductN

Requiredlabortimeperunit(hours)

2

3

Totaldemand(units)

6,500

8,000

SalesPrice

$7.50

$9.00

Contributionmarginperunit

$5.00

$5.70

IfDentmakestheoptimalproduction
scheduletomaximize
profit,howmuchcontributionmarginwouldthecompanyexpecttogenerate?

A.

$102,750

B.

$32,500

C.

$66,700

D.

$78,100

E.

Noneoftheabove.

Skip- this topicnot coveredinSpr2014.

3.
The
Gilligan Companyincurs
total fixed costs of$1,400,000 forthe
production of50,000 units or less, and
$1,500,000 iftheyproduce
more than 50,000 units (additional
$100,000). Theyhavea contributionmarginratio
of 40%. Theproduct will sell for
$80 perunit. What is the smallest numberofunits that must besoldto earn a
pre-taxprofit of$420,000?

A.

56,875

B.

100,000

C.

58,000

D.

44,375

E.

60,000

4.
Taylor
Companyhad
thefollowingdata(in
millions of$) fora
recent period.There werenobeginningorendinginventories.

Sales

$990

DirectMaterialsused

$360

Directlabor(variable)

$190

Factoryoverhead

Variable

$125

Fixed

$75

Sellingand
administrativeexpenses Variable $60
Fixed $40

Whichofthefollowingiscorrect(inmillionsof$)?

CostofGood Sold

ContributionMargin

OperatingIncome

A.
$360

$240

$140

B.

$750

$240

Cannot
be determined

C.

$550

$255

$140

D.

$550

$240

$140

E.

$750

$255

$140

5.
RockyProduction
Specialists (RPS)is considering whetherto makeorbuya component that is usedin theproduction of faxmachines.
Theannual cost of
producingthe100,000 units ofthe component needed
by
thecompanyis as
follows:

Fax
machinecomponentvariablemanufacturingcosts $300,000Fixedmanufacturingcostsofthecomponent-makingfactory $100,000AllocatedRPScorporateoverhead $
50,000

IfRPSweretodiscontinueproductionofthecomponent,fixedmanufacturingcostswouldbereducedby80%.Corporate
overheadisallocated
basedonfactory
squarefootageandwouldnotdecrease.

RPSshouldbuythe100,000componentsiftheper-unit
costofthepurchasedcomponentislessthanwhat
amount?

A.

$3.20

B.

$3.50

C.

$3.80

D.

$4.30

E.

$4.50

6.
MedTech is studyingtheprofitabilityofachange
in operation and hasgathered
thefollowinginformation:

CurrentOperation

AnticipatedOperation

Fixed
costs

$38,000

$48,000

Sellingprice

$16

$22

Variablecost

$10

$12

Sales
(units)

9,000

6,000

Should MedTech makethe
change?
A. Yes, becausethecompanywill be
better offby$6,000.
B. Yes, becausethecompanywill be
better offby$4,000.
C. No, becausethecompanywill be
worse offby$22,000.
D. Yes, becausethecompanywill be
better offby$12,000.
E. Noneoftheabovecorrectlylists the changein
profit.

7.
Western ShirtsInc.
makes t-shirts for teenagers.In2011, the
companyhadafter-tax
profits of$6,027,462and sold t-shirts for
$26.50 each. Acorporate
taxrateof25%was
levied on Western ShirtsInc. duringtheyear.Ifthe variable costper t-shirt is $16 and 1,320,768 t-shirts weresold,what
is the total amount offixed costs for
thecompanyduring
2011? Roundto the
nearest dollar.

A.

$5,831,448

B.

$5,247,870

C.

$4,680,535

D.

$4,904,560

E.

$4,510,680

8.
As production increases,what happens to VariableCosts per unit?
A. Decreases
B. Increases
C. Stays the same
D. Either increases ordecreases, dependingon the
fixed costs
E. Noneoftheabove

9. An examination of Aquafloat Corporation’s
inventoryaccounts revealed thefollowinginformation:Raw
materials, June1: 46,000
units
Raw materials,
June30: 51,000 units
Purchases ofrawmaterials
duringJune: 185,000 unitsThereis no beginningorending
work-in-process inventory.
Aquafloat Corporation’s finished product requires
fourunits of rawmaterials and it sells for$10. On
thebasis ofthis information, howmanyfinished products were manufacturedduring
June?

A.

45,000.

B.

47,500.

C.

57,750.

D.

70,500.

E.

180,000.

10.
Chelsea
Corporation, which uses
least-squares regression analysis, has derived the following regressionequation for
estimates ofmanufacturingoverhead: Y=495,000 + 5.65X.Which ofthe
followingstatements is trueiftheprimary
cost driveris machine hours?

A. Total manufacturingoverhead is represented
by
the variable“X”.
B.
The
companyanticipates$495,000 offixed manufacturingoverhead.
C.
“X”
is commonlyknownas
the dependent variable.
D.
“X”
represents the
numberofmachine hours.
E.
Both “B” and“D”aretrue
11. WhitfieldInc. has
thefollowinginformation regarding
activityforthis
year:Finishedgoods
inventorydecreased by$100,000
Work-in-process inventoryincreased
by
$350,000Total manufacturing
costs were$525,000
What are cost ofgoodsmanufactured
and
cost ofgoods
sold, respectively?A.
$175,000 &$275,000
B.
$100,000&$350,000C. $525,000
&$350,000 D. $875,000 &$775,000
E. We need
more information about actual
inventorybalances to determine answer

12. CarpoolInc. hasfixed costs
perunit of$10 when thecompany
produces 50,000 units. At the
same level ofproduction, total variablecosts
are$400,000. What is the total cost
whenCarpool produces 100,000 units?(Assume that 100,000 units is in the relevant range.)

A.

$1,800,000

B.

$800,000

C.

$900,000

D.

$1,300,000

E.

$1,000,000

13.
Acompanyproducesandsellstwoproductsatunitcontributionmarginsof$4forJand$6forK.Fixedcostsare$140,000.
IftheplannedsalesmixistwounitsofJforeachunitofK,thebreakeven
pointwouldbe(selectthebestanswers):
A. 17,500unitsofJand8,750unitsofK
B. 7,500unitsofJ and15,000unitsofK
C. 10,000unitsofJand20,000unitsofK
D. 20,000unitsofJand10,000unitsofK

14.
RenaissanceInc. uses the
high-low method to analyze cost behavior.Thecompany’s
relevant rangeofactivityvaries
from 500 to 1,200 machine-hourswith the
followinginformation forthe first six-months oftheyear:
Month Machine-hours Utilities costs

January

720

$8,000

February

900

8,810

March

790

8,315

April

680

7,820

May

970

9,125

June

830

8,495

Thefixed utilities cost permonth is estimated to be:

A.

$4,760

B.

$4,400

C.

$5,300

D.

$3,520

E.

An
amount other than those listed
above

15.
Assume
the following
forthe MNS Company:

Sales
(20,000 units)

$800,000

Fixed
Expenses

$210,000

Break-even
point (revenue)

$700,000

Ifthe sales
price weretoincreaseby10% and variable expenses increased$2.00 per
unit, which ofthefollowing
would be true?

A. The new break-even point is $700,000
B. Theold break-even pointis 7,500 units
C. The new variableexpenses are$44 perunit
D. The new break-even point is 15,000 units
E. The newsellingprice
is $30 perunit

16. Companycan sell all
theunits it can produceofeither
latteorcappuccino but not both.Latte
hasaunitcontribution margin of$45 and takes
threemachine hours to make andcappuccino
has aunit contributionmargin of$32 and
takes two machine hours to make. Thereare
1,200 machine hours availabletomanufactureaproduct. What should the company
do?
Skip- this topicnot coveredinSpr2014.
A. Make latte whichcreates$13 more
profit perunit than cappuccino does
B. Make latte becausecappuccino is overrated asabeverage
C. Make cappuccino whichcreates
$1 moreprofit per machinehourthan lattedoes
D. Make cappuccino because moreunits can be madeand sold than
latte
E. The same total
profits exists regardless ofwhich product is made

(Usethefollowinginformation forthe
next two questions)A partial listingofcosts incurred
duringDecemberat Gagnier
Corporation appears below

Factorysupplies(Indirect Materials)………………………………..

$8,000

Administrative wages and salaries………………………………….

$105,000

Direct
materials………………………………………………………

$153,000

Sales
staffsalaries……………………………………………………

$68,000

Factorydepreciation…………………………………………………

$49,000

Corporate headquarters buildingrent……………………………………

$34,000

Indirect
labor…………………………………………………………

$32,000

Marketing…………………………………………………………….

$103,000

Direct
labor…………………………………………………………..

$83,000

17.
The
total ofthe manufacturingoverhead costs listed above
forDecemberis:

A.

$325,000

B.

$635,000

C.

$89,000

D.

$40,000

E.

Noneofthe
above

18.
The
total ofthe periodcosts
listed above for Decemberis:

A.

$89,000

B.

$310,000

C.

$325,000

D.

$399,000

E.

Noneofthe
above

19.
Iadanza
Corporation is a
wholesaler that sells a singleproduct. Management has provided
thefollowingcost data for two levels ofmonthlysales
volume.Thecompanysells
theproduct for$195.70 perunit.

Sales volume
(units)………………………

6,000

7,000

Cost
of sales………………………………

$457,800

$534,100

Sellingand
administrative costs…………..

$621,000

$639,100

The best estimateofthetotal contribution marginwhen 6,300 units aresold is:

A.

$752,220

B.

$638,190

C.

$100,170

D.

$177,030

E.

Noneofthe
above

20.
BuckeyeCompanyhas
provided thefollowingdata
for maintenancecost:

Prior
Year

Current
Year

Machinehours.………………

12,500

15,000

Maintenancecosts…………..

$27,000

$31,000

What is our best estimateof total costs?

A. $21,625 peryearplus $0.625 per machinehour
B. $7,000 peryearplus $0.625 per machinehour
C. $7,000 peryearplus $1.60 per machinehour
D. $27,000 peryearplus $1.60 per machinehour
E. Noneoftheabove

21. The followingmonthlydataare available fortheEagerCompanyand
its onlyproduct:

Unit
sales price……………………………………………….

$75

Unit
variableexpenses……………………………..…………

$30

Total
fixed expenses…………………………….……………

$180,000

Budgeted
sales forthemonth of March………..……………..

7,000 units

Thesafetymargin
forthecompanyfor March was:

A.

$315,000

B.

$225,000

C.

$135,000

D.

$495,000

E.

Noneofthe
above

22.

North

South

Sales…………………………………………

$900,000

$800,000

Variableexpenses…………………………..

450,000

300,000

Traceablefixed expenses……………………

260,000

210,000

Allocated common corporate expenses…….

240,000

190,000

Operatingincome(loss)………………..

$(50,000)

$100,000

The Kelsh
Companyhastwo divisions–North
and
South. Thedivisions havethe
following revenuesandexpenses:

Management at Kelsh is ponderingthe
elimination of North Division.
IfNorth Division were eliminated,its traceablefixed expenses
could be avoided.Thetotal common
corporateexpenses would be
unaffected.Given these
data, theelimination of North Division
would result in an overall companyoperatingincome
of:

A.

$100,000

B.

$150,000

C.

$(140,000)

D.

$50,000

E.

Noneofthe
above

23.
Wright Corporation’s
contribution format income statement for last month appears
below.

Sales…………………………………

$45,000

Variableexpenses……………………….

$27,000

Contribution
margin…………………

18,000

Fixed
expenses………………………

12,000

Operatingincome……………….

$6,000

There wereno
beginning orendinginventories.
Thecompanyproduced and sold
3,000 units duringthemonth.Ifsales decrease by500
units next month,calculatethereduction in fixed expenses that
would berequired to maintain thecurrent operatingincome.

A.

$7,500

B.

$6,000

C.

$2,000

D.
E.

$3,000
Noneofthe
above

24.
Ellis Television makes and
sells portable televisions. Each
television regularlysells for$210. Thefollowing
cost data pertelevision is based on a full
capacityof10,000 televisions produced
each period.

Direct materials………………………………………………………………..

$80

Direct
labor…………………………………………………………………………………………

$60

Manufacturingoverhead(70%
variable and 30%unavoidablefixed)…………

$40

A special order has been
received byEllis for
asaleof2,000 televisions to an overseas customer. Theonlyselling
costs that would be
incurred on this orderwould
be$6 pertelevision for shipping.
Ellis is nowselling6,000 televisions
throughregular channels each period. What should betheminimum
sellingpriceper
television in negotiatingapriceforthis
specialorder?

A.

$174

B.

$168

C.

$210

D.

$180

E.

Noneofthe
above

25.
Wright Companyproduces products
I, J, and Kfrom a
singleraw materialinput. Budgeted
dataforthenext
month follows:

ProductI

Product
J

Product
K

Units
produced………………………………….

1,500

2,000

3,000

Perunit
sales value at split-off………………….

$10

$12

$15

Added
processing costs perunit………………..

$2

$4

$4

Perunit
sales valueif processes further………..

$15

$15

$20

Ifthejoint cost
oftheraw material input
is $78,000, which oftheproducts
should be processed beyond thesplit-off
point?

ProductI

Product J

Product K

A)

Yes

Yes

No

B)

Yes

No

Yes

C)

No

Yes

No

D)

No

Yes

Yes

Skip- this topicnot coveredinSpr2014.

SECTIONII(50points)
YouMUST
showyourworkto
receiveanypartialcredit/Pleasetrytobeasneatandorganizedaspossible.
Unlessstatedroundtotwodecimal
places.
.gif”>

QUESTIONONE(8 points)
.gif”>Determine
the missing amounts
for eachofthe following companiesbyfilling
in theopenblanksbelow.

Sales
Revenue

XYZ
Company

ABC
Company
$245,000

Beginning
inventory,raw material

$8,500

Ending
inventory,raw material

$180,000

$20,000

Purchasesofraw material

$190,000

Direct
raw materialused

$140,000

Directlabor

$62,500

Manufacturing
overhead

$490,000

$80,000

Total
manufacturingcosts

$1,040,000

$170,000

Beginning inventory,work-in-process

$60,000

Ending
inventory, work-in-process

$2,500

Costof goods
manufactured

$1,050,000

$175,000

Beginning inventory,finishedgoods

$100,000

Costof goods
available forsale

$185,000

Ending
inventory, finished goods

$12,500

Costof goods
sold

$1,090,000

Gross
Margin

$510,000

Selling
and administration expenses

Income
before
taxes

$298,000

$50,000

Income
tax expense

$76,000

Net
income

$32,500

QUESTIONTWO(6 points)
.jpg”>Managers in theStampingDepartment havebeenstudying
overhead cost and the relationship with machine
hours. Datafrom themost recent 12
months follow.

The managerofthedepartment
has requested a regression
analysis of thesetwo variables
(labeled no. 1 below).
However, the staffperson performingtheanalysis decided to run
another regression that excluded
February(labeled no. 2). She observed that thevolumeofactivitywas very
lowforthat
month becauseoftwo factors:
asevereflu
outbreakand an electrical fire that disrupted operations
for
about10 workingdays.

.jpg”>

Required:
A. ExcludingFebruaryas an
outlier and usingthehigh-low method determinethe
following (ignoretheregression results).

Total Fixed Costs $

VariableCost perUnit
$

B. Prepare anestimateofoverhead
cost foravolume
of3,000 machinehours byusingthe
regression No. 1output. IgnoreA
andregression output No.
2.

QUESTIONTHREE(8 points)

MackenzieInc manufactures and sells threeracquets: Squash, Tennis, and
Racquetball.Annual fixed costs are
$3,440,000
and dataabout the threeproducts
follow.The corporate taxrateis
20%.Round to two decimal
points even forunits.

Squash

Racquetball

Tennis

Sales
mix in units

50%

20%

30%

Sellingprice

$300

$700

$500

Variablecost

150

420

220

Required
A. Determinethe weighted-averageunit contribution margin.

B. Determinethebreak-even volumein units for each product.

C. Determinethe total numberof weighted units that must besold to obtain an
after-taxprofit forthe
companyof$860,000.

D. Assume that
the sales mixfor Squash, Racquetball, and Tennis is changed to
40%, 30%, and 30%,respectively. Will the
numberof weighted units required to break-even increaseor
decrease? Circle
thecorrect response:

Increase Decrease

QUESTIONFOUR(10 points)
Masse Corporation usespart G18
in oneofits products. The company’s
AccountingDepartment reports thefollowing
costs ofproducingthe16,000 units ofthe
part that are needed every year.

.jpg”>

An outside supplier has offered to makethepart and sell it to thecompanyfor$28.00
each.Ifthis offer
isaccepted, the supervisor’s
salaryandall of
the variable costs, including
direct labor, can be avoided.
Thespecial equipment used to makethe
part was purchased many years agoand has
no salvagevalueorotheruse. The
allocatedgeneral overheadrepresents
fixed costs oftheentire company.
Iftheoutside supplier’sofferwere
accepted, only$22,000 of these allocated general
overheadcosts would be
avoided.Inaddition,the
spaceused to produce part G18 could be usedto make moreofoneofthe
company’s otherproducts,generatinganadditional
margin of$22,000 peryear for that product.

Required:

a. Preparea detailed report that shows the
relevant costs of making and
buyingthe G18 part. Include
atotal cost for each option in addition to cost detail.
Also computethe effecton the
company’s totaloperatingincome
ofbuyingthepart
G18 from the supplier ratherthan continuingto make
it insidethecompany.

b. Which alternativeshould
thecompanychoose?

QUESTIONFIVE(9 points)

Skipall of Question Five-
this topic not
coveredinSpr2014.

Glunn
Companymakes threeproducts
in a singlefacility. Theseproducts havethefollowingunit productcosts:

.jpg”>

Additional dataconcerningtheseproducts
are listed below.

.jpg”>

Themixingmachines
arepotentiallythe
constraint in the production facility. A total of24,200 minutes areavailable
permonth on these machines. Direct laboris a variable
cost in this company.

Required:

a. Howmanyminutes
ofmixingmachinetimewould be
required to satisfydemand forall
three products?

b. How much of each product should be produced
to maximize operatingincome?
(Round up to thenearestwhole
unit)

PRODUCTA

PRODUCTB

PRODUCTC

c. Up to how much should thecompanybewilling to payforoneadditional
hourofmixingmachine
timeifthecompanyhas
madethe best useoftheexistingmixing
machinecapacity?(Round
offto the nearestwhole cent.)

QUESTIONSIX(9points)
Marshall Corporation hasreceived a request fora
special orderof9,000 units of productZ74 for
$46.50 each.The
normal sellingpriceofthis product
is $51.60 each, but theunits wouldneed
to be modified slightlyforthecustomer.
Thenormal unit product cost
of productZ74 is computed
as follows:

.jpg”>

Direct laboris avariablecost. The
special orderwould haveno effect
on the company’s total fixedmanufacturingoverhead
costs. The customerwould likesome
modifications madeto productZ74 that wouldincrease
the variablecosts by$6.20
perunit and that would requireaone-time investment of$46,000 in specialmolds that
would haveno salvage value.This
special orderwould have
noeffect on the company’s
other sales.Thecompanyhasamplesparecapacityforproducingthe
special order.

Required:

Determinetheeffect
on the company’s total operatingincomeofaccepting
the special order. Includeamountand
indicateifit increases or decreases operatingincome. Show
yourwork!

.gif”>

Order | Check Discount

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