Grading Summary
These are the automatically
computed results of your exam.
Grades for essay questions, and
comments from your instructor, are
in the "Details" section below.
Date Taken:
Time Spent:
Points Received:
Question Type:
Multiple Choice
Essay
150 / 150 (100%)
# Of Questions:
10
4
# Correct:
10
N/A
Grade Details
Page:
1 2
1. Question :
Student Answer:
(TCO1) ABC systems create
one large cost pool .
homogenous activity-related cost pools.
activity-cost pools with a broad focus.
Instructor
Explanation:
Points Received:
activity-cost pools containing many direct costs.
Chapter 5, Page 144
5 of 5
Comments:
2. Question :
(TCO 1) Merriamn Company provides the following ABC costing
information:
Activities
Total
Costs
Activitycost
drivers
10,000
Account
$400,000
hours
inquiry hours
Account billing
4,000,000
$280,000
lines
lines
Account
verification
accounts
$150,000
Correspondence
$ 50,000
letters
Total costs
40,000
accounts
4,000
letters
$880,000
The above activities are used by Department A and B as follows:
Department Department
A
B
Account
inquiry hours
2,000 hours
4,000 hours
Account billing
400,000 lines 200,000 lines
lines
Account
verification
accounts
10,000
accounts
8,000
accounts
Correspondence
1,000 letters 1,600 letters
letters
How much of the account billing cost will be assigned to Department B?
Student Answer:
$80,000
$14,000
$28,000
Instructor
Explanation:
$280,000
($280,000 / 4,000,000) × 200,000 = $14,000
Chapter 5, Page 150
Points Received:
5 of 5
Comments:
3. Question :
Student Answer:
(TCO 2) A master budget
includes only financial aspects of a plan and excludes nonfinancial
aspects.
includes broad expectations and visionary results.
is an aid to coordinating what needs to be done to implement a plan.
Instructor
Explanation:
Points Received:
should not be altered after it has been agreed upon.
Chapter 6, Page 183
5 of 5
Comments:
4. Question :
Student Answer:
(TCO 2) Dalyrymple Company produces a special spray nozzle.
The budgeted indirect total cost of inserting the spray nozzle is
$80,000. The budgeted number of nozzles to be inserted is
40,000. What is the budgeted indirect cost allocation rate for
this activity?
$.50
$1.00
$1.50
Instructor
Explanation:
$2.00
$80,000 / 40,000 = $2.00
Chapter 8, Page 268
Points Received:
5 of 5
Comments:
5. Question :
Student Answer:
(TCO 3) Which cost estimation method analyzes accounts in the
subsidiary ledger as variable, fixed, or mixed using qualitative methods?
Quantitative analysis
Industrial engineering
Account analysis
Instructor
Explanation:
Points Received:
Conference
Chapter 10, Page 343
5 of 5
Comments:
6. Question :
Student Answer:
(TCO 4) In evaluating different alternatives, it is useful to
concentrate on
variable costs.
fixed costs.
total costs.
Instructor
Explanation:
Points Received:
relevant costs.
Chapter 11, Page 388
5 of 5
Comments:
7. Question :
Student Answer:
(TCO 5) The theory of constraints is used for cost analysis when
a manufacturing company produces multiple products and
uses multiple manufacturing facilities and/or machines.
using a long-term time horizon.
operating costs are assumed fixed.
Instructor
Explanation:
Points Received:
All of the above
Chapter 19, Page 681
5 of 5
Comments:
8. Question :
(TCO 5) Schmidt Corporation produces a part that is used in the
manufacture of one of its products. The costs associated with the
production of 10,000 units of this part are as follows:
$45,000
Direct materials
Direct labor
65,000
Variable factory overhead
30,000
Fixed factory overhead
70,000
Total costs
$210,000
Of the fixed factory overhead costs, $30,000 is avoidable.
Phil Company has offered to sell 10,000 units of the same part to Schmidt
Corporation for $18 per unit. Assuming there is no other use for the
facilities, Schmidt should
Student Answer:
make the part, as this would save $3 per unit.
buy the part, as this would save $3 per unit.
buy the part, as this would save the company $30,000.
Instructor
Explanation:
make the part, as this would save $1 per unit.
Avoidable costs total $170,000 = $45,000 + $65,000 + $30,000 + $30,000
$18 - $170,000 / 10,000 = $1
Chapter 11, Page 394
Points Received:
5 of 5
Comments:
9. Question :
Student Answer:
(TCO 3) The cost function y = 100 + 10X
has a slope coefficient of 100.
is a nonlinear.
has an intercept of 100.
Instructor
Explanation:
Points Received:
represents a fixed cost.
Chapter 10, Page 338
5 of 5
Comments:
10. Question :
Student Answer:
(TCO 4) Sunk costs
are relevant.
are differential.
are ignored when evaluating alternatives.
have future implications.
Instructor
Explanation:
Points Received:
Chapter 11, Page 389
5 of 5
Comments:
Page:
1 2
Grade Details
Page: 1 2
1. Question :
(TCO 1) For each of the following drivers identify an appropriate activity.
a. # of machines
b. # of setups
c. # of inspections
d. # of orders
e. # of runs
f. # of bins or aisles
g. # of engineers
Student Answer:
Instructor Explanation:
1. (TCO 1) For each of the following drivers identify an appropriate
activity. a. # of machines - machine maintenance - machine hours b. # of
setups - machine set up - set up hours c. # of inspections - quality control
- inspection hours d. # of orders - material ordering - ordering hours e. #
of runs - production scheduling - scheduling hours f. # of bins or aisles warehousing - picking hours g. # of engineers - engineering design engineering hours
Activity
Drivers
A. Machine
Maintenance
# of machines Machine hours
Actual times for various
maintenances of various
machines
B. Machine
# of setups
Actual times for various
Setup hours
setups for various
machines
Setup
C. Quality
Control
# of
inspections
Inspection hours Actual times for various
inspections for various
controls
D. Material
Ordering
# of orders
Ordering hours
E. Production
Scheduling
# of runs
Scheduling hours Actual times for various
runs for various
schedules
F. Warehousing # of bins,
aisles
Picking hours
G. Engineering # of engineers Engineering
Design
hours
Actual times for various
orders for various
materials
Actual times for various
parts for various
warehousing activities
Actual times for various
engineering designs
Chapter 5, Page 150
Points Received:
25 of 25
Comments:
2. Question :
(TCO 2) Favata Company has the following information:
Month
Budgeted Sales
June
$60,000
July
51,000
August
40,000
September
70,000
October
72,000
In addition, the cost of goods sold rate is 70% and the desired inventory
level is 30% of next month's cost of sales.
Prepare a purchases budget for July through September.
Student Answer:
Favata Company Purchase Budget July August September Desired Ending
Inventory $8,400 $14,700 $15,120 Add: Cost of Good Sold $35,700
$28,000 $49,000 Less: Opening Inventory $10,710 $8,400 $14,700
Required Purchase $33,390 $34,300 $49,420 Calculations: June July
August September October Sales 60000 51000 40000 70000 72000 Cost
of Goods Sold 42000 35700 28000 49000 50400 Desired Ending
Inventory 10710 8400 14700 15120 0
Instructor Explanation:
July
Desired ending inventory
$15,120 $15,120
Plus COGS
Total needed
127,820
Less beginning inventory
10,710
Total purchases
$117,110
Aug
$ 8,400
35,700
Sept
$14,700
28,000
44,100
49,000 112,700
42,700
10,710
$33,390
Total
8,400
64,120
14,700
$34,300 $49,420
Chapter 6, Page 190
Points Received:
25 of 25
Comments:
3. Question :
(TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has
asked for information about the cost behavior of manufacturing
overhead costs. Specifically, he wants to know how much overhead cost
is fixed and how much is variable. The following data are the only
records available:
Month
Costs
Machine-hours
Overhead
February
1,700
$20,500
March
2,800
22,250
April
1,000
19,950
May
2,500
21,500
June
3,500
23,950
Using the high-low method, determine the overhead cost equation. Use
machine-hours as your cost driver.
Student Answer:
Total Overhead Machine hours Highest observation of cost driver 23,950
3,500 Lowest observation of cost driver 19,950 1,000 Difference 4,000
2,500 Total overhead = a + (b x machine hours) Slope coefficient (b)
=4,000/2500 =1.60 Constant (a) = 23,950-(3,500 x 1.60) = $18,350 or
Constant (a) = 19,950-(1,000 x 1.60) = $18,350 Cost Function = $18,350 +
(1.60 x Machine Hours)
Instructor Explanation: High: June
3,500
$23,950
Low: April
1,000
19,950
Difference
2,500
$ 4,000
Variable cost per MH: $4,000 / 2,500 = $1.60 per MH
Fixed cost: $19,950 = a + $1.60 x 1,000
a = $18,350
Estimated cost equation: y = $18,350 + $1.60 x 1,000
Chapter 10, Page 346
Chapter 10, Page 346
Points Received:
25 of 25
Comments:
4. Question :
(TCO 5) Kirkland Company manufactures a part for use in its production
of hats. When 10,000 items are produced, the costs per unit are:
Direct materials
$0.60
Direct manufacturing labor
3.00
Variable manufacturing overhead
1.20
Fixed manufacturing overhead
1.60
Total
$6.40
Mike Company has offered to sell to Kirkland Company 10,000 units of
the part for $6.00 per 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
original item would be eliminated.
a.
What is the relevant per unit cost for the original part?
b. Which alternative is best for Kirkland Company? By how much?
a. Direct materials Direct manufacturing labor Variable manufacturing
overhead Avoidable fixed manufacturing overhead Total relevant per
unit cost 0.60 3.00 1.20 1.00 5.80 b. Purchase price Savings in space
Direct materials Direct manufacturing labor Variable overhead Fixed
overhead saved Total Make 6,000 30,000 12,000 48,000 Buy 60,000
(9,000) (10,000) 41,000 Effect of buying (60,000) 9,000 6,000 30,000
12,000 10,000 7,000 Buying the parts would be the best alternative by
$7,000
Student Answer:
Instructor Explanation: a.
Direct materials
$0.60
Direct manufacturing labor
3.00
Variable manufacturing overhead
1.20
Avoidable fixed manufacturing. overhead
1.00
Total relevant per unit costs
b.
Make
$5.80
Buy
Effect of Buying
Purchase price
$60,000
($60,000)
Savings in space
(9,000)
9,000
Direct materials
$6,000
6,000
Direct mfg. labor
30,000
30,000
Variable overhead
12,000
12,000
Fixed overhead saved
Totals
(10,000)
$48,000
The best alternative is to buy the part.
Chapter 11, Page 393
Points Received:
Comments:
25 of 25
$41,000
10,000
$7,000
Page: 1 2
1. Question :
(TCO 1) For each of the following drivers identify an appropriate activity.
a. # of machines
b. # of setups
c. # of inspections
d. # of orders
e. # of runs
f. # of bins or aisles
g. # of engineers
Student Answer:
Instructor Explanation:
1. (TCO 1) For each of the following drivers identify an appropriate
activity. a. # of machines - machine maintenance - machine hours b. # of
setups - machine set up - set up hours c. # of inspections - quality control
- inspection hours d. # of orders - material ordering - ordering hours e. #
of runs - production scheduling - scheduling hours f. # of bins or aisles warehousing - picking hours g. # of engineers - engineering design engineering hours
Activity
Drivers
A. Machine
Maintenance
# of machines Machine hours
Actual times for various
maintenances of various
machines
B. Machine
Setup
# of setups
Setup hours
Actual times for various
setups for various
machines
C. Quality
Control
# of
inspections
Inspection hours Actual times for various
inspections for various
controls
D. Material
Ordering
# of orders
Ordering hours
E. Production
# of runs
Scheduling hours Actual times for various
runs for various
Actual times for various
orders for various
materials
Scheduling
schedules
F. Warehousing # of bins,
aisles
Actual times for various
parts for various
warehousing activities
Picking hours
G. Engineering # of engineers Engineering
Design
hours
Actual times for various
engineering designs
Chapter 5, Page 150
Points Received:
25 of 25
Comments:
2. Question :
(TCO 2) Favata Company has the following information:
Month
Budgeted Sales
June
$60,000
July
51,000
August
40,000
September
70,000
October
72,000
In addition, the cost of goods sold rate is 70% and the desired inventory
level is 30% of next month's cost of sales.
Prepare a purchases budget for July through September.
Student Answer:
Instructor Explanation:
Favata Company Purchase Budget July August September Desired Ending
Inventory $8,400 $14,700 $15,120 Add: Cost of Good Sold $35,700
$28,000 $49,000 Less: Opening Inventory $10,710 $8,400 $14,700
Required Purchase $33,390 $34,300 $49,420 Calculations: June July
August September October Sales 60000 51000 40000 70000 72000 Cost
of Goods Sold 42000 35700 28000 49000 50400 Desired Ending
Inventory 10710 8400 14700 15120 0
July
Aug
Sept
Total
Desired ending inventory
$15,120 $15,120
Plus COGS
Total needed
127,820
Less beginning inventory
10,710
Total purchases
$117,110
$ 8,400
35,700
$14,700
28,000
44,100
42,700
10,710
$33,390
49,000 112,700
8,400
64,120
14,700
$34,300 $49,420
Chapter 6, Page 190
Points Received:
25 of 25
Comments:
3. Question :
(TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has
asked for information about the cost behavior of manufacturing
overhead costs. Specifically, he wants to know how much overhead cost
is fixed and how much is variable. The following data are the only
records available:
Month
Machine-hours
Overhead
February
1,700
$20,500
March
2,800
22,250
April
1,000
19,950
May
2,500
21,500
June
3,500
23,950
Costs
Using the high-low method, determine the overhead cost equation. Use
machine-hours as your cost driver.
Student Answer:
Total Overhead Machine hours Highest observation of cost driver 23,950
3,500 Lowest observation of cost driver 19,950 1,000 Difference 4,000
2,500 Total overhead = a + (b x machine hours) Slope coefficient (b)
=4,000/2500 =1.60 Constant (a) = 23,950-(3,500 x 1.60) = $18,350 or
Constant (a) = 19,950-(1,000 x 1.60) = $18,350 Cost Function = $18,350 +
(1.60 x Machine Hours)
Instructor Explanation: High: June
3,500
$23,950
Low: April
1,000
19,950
Difference
2,500
$ 4,000
Variable cost per MH: $4,000 / 2,500 = $1.60 per MH
Fixed cost: $19,950 = a + $1.60 x 1,000
a = $18,350
Estimated cost equation: y = $18,350 + $1.60 x 1,000
Chapter 10, Page 346
Chapter 10, Page 346
Points Received:
25 of 25
Comments:
4. Question :
(TCO 5) Kirkland Company manufactures a part for use in its production
of hats. When 10,000 items are produced, the costs per unit are:
Direct materials
Direct manufacturing labor
$0.60
3.00
Variable manufacturing overhead
1.20
Fixed manufacturing overhead
1.60
Total
$6.40
Mike Company has offered to sell to Kirkland Company 10,000 units of
the part for $6.00 per 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
original item would be eliminated.
a.
What is the relevant per unit cost for the original part?
b. Which alternative is best for Kirkland Company? By how much?
a. Direct materials Direct manufacturing labor Variable manufacturing
overhead Avoidable fixed manufacturing overhead Total relevant per
unit cost 0.60 3.00 1.20 1.00 5.80 b. Purchase price Savings in space
Direct materials Direct manufacturing labor Variable overhead Fixed
overhead saved Total Make 6,000 30,000 12,000 48,000 Buy 60,000
(9,000) (10,000) 41,000 Effect of buying (60,000) 9,000 6,000 30,000
12,000 10,000 7,000 Buying the parts would be the best alternative by
$7,000
Student Answer:
Instructor Explanation: a.
Direct materials
$0.60
Direct manufacturing labor
3.00
Variable manufacturing overhead
1.20
Avoidable fixed manufacturing. overhead
1.00
Total relevant per unit costs
b.
Make
Buy
Effect of Buying
Purchase price
$60,000
($60,000)
Savings in space
(9,000)
9,000
Direct materials
$6,000
6,000
Direct mfg. labor
30,000
30,000
Variable overhead
12,000
12,000
Fixed overhead saved
Totals
(10,000)
$48,000
The best alternative is to buy the part.
Chapter 11, Page 393
Points Received:
$5.80
25 of 25
$41,000
10,000
$7,000
Comments: