NATIONAL CHENGCHI UNIVERSITY – IMBA PROGRAM
ACCOUNTING FALL 2021
FINAL EXAM
December 16, 2021
Instructions
1. This is a closed book exam. Materials other than writing utensils and calculators (without
saving functions) are not permitted for this exam.
2. This exam has two parts with a total of 17 pages. Please be sure to hand in all pages before
leaving the examination hall.
3. Part A consists of 30 multi-choice questions (MCQs) worth a total of 60 marks. Answer these
MCQs ONLY in the answer box provided below.
4. Part B consists of 4 computational and short-answer questions worth a total of 40 marks.
Answer these questions ONLY in the spaces after each question provided in this booklet.
5. Provide your name and student number in the space below.
Name: _________________________
Student Number: ___________________
Multiple-choice Answer Box
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*Please write your answers for the multiple choice questions
here. Failure to do so will result in questions not being
marked.
Score
Part A: Multiple Choice (60%)
1. When costs can be traced to a particular cost object in an economically feasible way, the
cost is a:
A.
B.
C.
D.
direct cost
indirect cost
allocated cost
budgeted cost
2. Which of the following statements about the direct/indirect cost classification is true?
A.
B.
C.
D.
Indirect costs are always traced.
Indirect costs are always allocated.
The design of sales target affects the direct/indirect classification.
The direct/indirect classification depends on the cost control measures.
3. A manufacturing plant produces two product lines: golf equipment and soccer equipment.
An example of a direct cost for the golf equipment line is:
A. beverages provided daily in the plant break room for the entire staff
B. monthly lease payments for a specialized piece of equipment needed to manufacture
the golf driver
C. salaries of the clerical staff that work in the company administrative offices
D. overheads incurred in producing both golf and soccer equipment
4. A manufacturing plant produces two product lines: golf equipment and soccer equipment.
An example of indirect cost for the soccer equipment line is the:
A.
B.
C.
D.
material used to make the soccer balls
labor to shape the leather used to make the soccer ball
material used to manufacture the soccer studs
property taxes paid on the land and building (plant)
5. The East Company manufactures several different products. Unit costs associated with
Product ORD105 are as follows:
Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
Sales commissions (2% of sales)
Administrative salaries
Total
$92
32
12
32
26
6
$200
What is the percentage of the total variable costs per unit associated with Product
ORD105 with respect to total cost?
A.
B.
C.
D.
81%
68%
84%
71%
6. Orion Company sells several products. Information of average revenue and costs is as
follows:
Selling price per unit
Variable costs per unit:
Direct material
Direct manufacturing labor
Manufacturing overhead
Selling costs
Annual fixed costs
$21
$6
$1.80
$0.50
$2
$96,000
The company sells 12,000 units at the end of the year.
If direct labor and direct material costs increase by $1 each, contribution margin:
A.
B.
C.
D.
increases by $24,000
increases by $12,000
decreases by $24,000
decreases by $12,000
7. Bell Company sells several products. Information of average revenue and costs is as
follows:
Selling price per unit
Variable costs per unit:
Direct material
Direct manufacturing labor
Manufacturing overhead
Selling costs
Annual fixed costs
The company sells 11,000 units.
The contribution margin per unit is:
A.
B.
C.
D.
$11.25
$21.70
$23.95
$24.25
$32.00
$5.25
$2.50
$0.30
$2.25
$115,000
8. Firebird Ltd. sells packaged birdseed for $5.50 per package. Variable product costs are
$4.50 per package. Fixed costs are $12,000 per period. How many packages must
Firebird sell to earn a target operating income of $7,700?
A.
B.
C.
D.
12,000 packages
7,700 packages
19,700 packages
3,582 packages
9. How many units would have to be sold to yield a target operating income of $24,000,
assuming variable costs are $26 per unit, total fixed costs are $4,000, and the unit selling
price is $31?
A.
B.
C.
D.
800 units
1,077 units
5,600 units
1,334 units
10. Which of the following most accurately describes the contrast between process and job
costing?
A. In process costing, they include all the factors of production but job costing
includes only materials and labor
B. Job costing includes materials, labor and overhead while process costing only
considers conversion costs
C. The main difference is the extent of averaging used to compute the unit costs
D. Job costing measures the variable cost of identical jobs while process costing
measures the cost of identical products using average units costs of materials and
conversion costs, some of which are fixed costs
11. Which if the following are not conversion costs?
A.
B.
C.
D.
the cost of direct laborers who assemble the parts of an automobile
the cost of tires on an automobile
the cost of depreciation on an automobile assembly plant
the cost of electricity to run the tools in the automobile assembly plant
12. Which of the following statements best describes conversion costs?
A.
B.
C.
D.
Conversion costs are all manufacturing and nonmanufacturing costs.
Conversion costs are all manufacturing costs other than direct materials costs.
Conversion costs are all nonmanufacturing costs including marketing costs.
Conversion costs are all nonmanufacturing costs other than fixed selling and
distribution costs.
13. Process-costing systems separate costs into cost categories according to:
A.
B.
C.
D.
when costs are introduced into the process
cost behavior (fixed versus variable)
the specific job being worked on
customer being served
14. Overcosting a particular product may result in:
A.
B.
C.
D.
pricing the product too high
pricing the product too low
operating efficiencies
understating total product costs
15. Extreme Manufacturing Company provides the following ABC costing information:
Activities
Account inquiry
Account billing
Account verification accounts
Correspondence letters
Total costs
Total Costs
$140,000
$120,000
$198,000
$33,000
$491,000
Activity-cost drivers
14,000 hours
6,000,000 lines
80,000 accounts
6,000 letters
The above activities are used by Departments A and B as follows:
Account inquiry hours
Account billing lines
Account verification accounts
Correspondence letters
Department A
2,700 hours
800,000 lines
8,000 accounts
1,200 letters
Department B
4,200 hours
650,000 lines
6,000 accounts
1,600 letters
How much of account verification costs will be assigned to Department A?
A.
B.
C.
D.
$14,850
$19,800
$198,000
$99,000
16. Columbus Company provides the following ABC costing information:
Activities
Labor
Gas
Invoices
Total costs
Total Costs
$368,000
$72,000
$130,000
$570,000
The above activities used by their three departments are:
Activity-cost drivers
8,000 hours
6,000 gallons
6,500 invoices
Labor
Gas
Invoices
Lawn Department Bush Department Plowing Department
2,600 hours
1,300 hours
4,100 hours
1,700 gallons
800 gallons
3,500 gallons
1,100 invoices
300 invoices
5,100 invoices
If labor hours are used to allocate the non-labor, overhead costs, what is the overhead
allocation rate? (Round the final calculation to the nearest cent.)
A.
B.
C.
D.
$71.25 per hour
$27.80 per hour
$46.00 per hour
$25.25 per hour
17. Columbus Company provides the following ABC costing information:
Activities
Labor
Gas
Invoices
Total costs
Total Costs
$410,000
$40,000
$56,000
$506,000
Activity-cost drivers
10,000 hours
4,000 gallons
3,500 invoices
The above activities used by their three departments are:
Labor
Gas
Invoices
Lawn Department Bush Department Plowing Department
2,600 hours
1,500 hours
5,900 hours
1,900 gallons
1,000 gallons
1,100 gallons
1,100 invoices
100 invoices
2,300 invoices
How much of invoice cost will be assigned to the Bush Department?
A.
B.
C.
D.
$1,600
$36,800
$17,600
$56,000
18. All of the following are ways to calculate different versions of ROI EXCEPT:
A.
B.
C.
D.
Revenues/Total Assets
Return on sales × investment turnover
Income/Investments
Operating Income/Revenues × Revenues/Total Assets
19. The return on investment is usually considered the most popular approach to measure
performance because:
A.
B.
C.
D.
it blends all the ingredients of profitability into a single percentage
once determined, there is no need to use it with other measures of performance
it throws light on the company's working capital
it measures the cash balance of the company in the most efficient manner
20. Return on investment can be increased by:
A.
B.
C.
D.
increasing current assets
increasing return on sales
decreasing revenues
increasing the debt portion of the capital
21. Beginning raw materials inventory was $32,000. During the month, $276,000 of raw
material was purchased. A count at the end of the month revealed that $28,000 of raw
material was still present. What is the cost of direct material used?
A.
B.
C.
D.
$276,000
$272,000
$280,000
$2,000
22. Direct materials used in production totaled $280,000. Direct labor was $375,000, and
$180,000 of manufacturing overhead was added to production for the month. What were
total manufacturing costs incurred for the month?
A.
B.
C.
D.
$555,000
$835,000
$655,000
Cannot be determined
23. Tiger, Inc., had actual manufacturing overhead costs of $1,210,000 and a predetermined
overhead rate of $4.00 per machine-hour. Tiger, Inc., worked 290,000 machine-hours
during the period. Tiger’s manufacturing overhead is:
A.
B.
C.
D.
$50,000 overapplied.
$50,000 underapplied.
$60,000 overapplied.
$60,000 underapplied
24. What effect will the overapplied overhead have on net operating income?
A. Net operating income will increase
B. Net operating income will be unaffected
C. Net operating income will decrease
25. Job WR53 at NW Fab, Inc., required $200 of direct materials and 10 direct labor-hours at
$15 per hour. Estimated total overhead for the year was $760,000, and estimated direct
labor-hours were 20,000. What would be recorded as the cost of Job WR53?
A.
B.
C.
D.
$200
$350
$380
$730
Use the following information for questions 25-27
Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a
cup of coffee is $1.49, and the average variable expense per cup is $0.36. The average fixed
expense per month is $1,300. An average of 2,100 cups are sold each month.
26. What is the CM ratio for Coffee Klatch?
A.
B.
C.
D.
1.319
0.758
0.242
4.139
27. What is the break-even sales dollars?
A.
B.
C.
D.
$1,300
$1,715
$1,788
$3,129
28. What is the break-even sales in units?
A.
B.
C.
D.
872 cups
3,611 cups
1,200 cups
1,150 cups
29. Which method will produce the highest values for work in process and finished goods
inventories?
A.
B.
C.
D.
Absorption costing
Variable costing
They produce the same values for these inventories
It depends
30. Redmond Awnings, a division of Wrap-Up Corp., has a net operating income of $60,000
and average operating assets of $300,000. The required rate of return for the company is
15%. What is the division’s ROI?
A.
B.
C.
D.
25%
5%
15%
20%
- End of Part A -
Part B - Short Answer Questions (40%)
Problem 1 (5%)
Jolly’s Fixtures produced 100 cabinets and sold 85 cabinets at a selling price of $700 per unit. The
variable cost is $350 per unit and the overall fixed cost is $20,000 (of which $15,000 consists of
manufacturing).
Provide your answers and show your computations below.
(a) Fill in the blanks
Line Item
Contribution
Margin
Line Item
Sales
Sales
Variable Costs
Cost of Goods Sold
Contribution Margin
Gross Margin
Fixed Manufacturing
Costs
Non-Manufacturing
Costs
Fixed NonManufacturing Costs
Operating Income
Operating Income
(b) Compare the two figures: ____________________
Gross Margin
Problem 2 (10%)
Willy Wonka, Inc., uses the weighted-average method in its process costing system. It
manufactures a product that passes through two departments. Data for a recent month for the first
department follow:
Work in process inventory, Beginning
Units started in process
Units transferred out
Work in process inventory, ending
Cost added during the month
Units
30,000
65,000
86,000
9,000
Materials
$9,500
Labor
$4,250
Overhead
$7,790
$52,720
$21,514
$32,212
The beginning work in process inventory was 90% complete with respect to materials and 50%
complete with respect to labor and overhead. The ending work in process inventory was 80%
complete with respect to materials and 20% complete with respect to labor and overhead.
Provide your answers and show your computations below.
(a) Compute the first department’s equivalent units of production
For materials: ________________________
For labor: ________________________
For overhead: ________________________
(b) Compute for first department’s cost per equivalent unit
For materials: ________________________
For labor: ________________________
For overhead: ________________________
Problem 3 (15%)
YTC Company manufactures and sells one product. The following information pertains
to each of the company’s first two years of operations:
Variable costs per unit:
Manufacturing:
Direct materials
$20
Direct labor
$10
Variable manufacturing overhead
$7
Variable selling and administrative
$1
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative
$600,000
$110,000
During its first year of operations, YTC produced 75,000 units and sold 60,000 units.
During its second year of operations, it produced 60,000 units and sold 75,000 units. The selling
price of the company’s product is $58 per unit.
Provide your answers and show your computations below.
(a) Assume the company uses variable costing, compute the unit product cost
For Year 1: ________________________
For Year 2: ________________________
(b) Prepare an income statement under variable costing for Year 1 and Year 2
(c) Assume the company uses absorption costing, compute the unit product cost
For Year 1: ________________________
For Year 2: ________________________
(d) Prepare an income statement under absorption costing for Year 1 and Year 2
Problem 4 (10%)
ClinicSphere buys medical supplies from a variety of manufacturers and then resells and
delivers these supplies to hundreds of hospitals. ClinicSphere sets its prices for all hospitals by
marking up its cost of goods sold to those hospitals by 10%. For example, if a hospital buys
supplies from ClinicSphere that cost ClinicSphere $100 to buy from manufacturers, ClinicSphere
would charge the hospital $110 to purchase these supplies.
For years, ClinicSphere believed that the 10% markup covered its selling and
administrative expenses and provided a reasonable profit. However, in the face of declining profits
ClinicSphere decided to implement an activity-based costing system to help improve its
understanding of customer profitability. The company broke its selling and administrative
expenses into five activities as shown in the table on the below.
Activity Cost Pool (Activity Measure)
Customer deliveries (# of deliveries)
Manual Order processing (# of manual orders)
Electronic order processing (# of electronic orders)
Line item picking (# of line items picked)
Other organization-sustaining costs (None)
Total selling and administrative expenses
Total Cost
$ 800,000
$ 333,000
$ 252,000
$ 1,000,000
$ 800,000
$ 3,185,000
Total Activity
2,500
5,000
14,000
475,000
ClinicSphere gathered the data below, in the table below, for two of the many hospitals
that it serves—Hopkins and Smith (each hospital purchased medical supplies that had cost
ClinicSphere $40,000 to buy from manufacturers):
Activity Measure
# of deliveries
# of manual orders
# of electronic orders
# of line items picked
Activity
Hopkins
Smith
8
20
0
25
35
0
140
300
Provide your answers and show your computations below.
(a) Total revenue that ClinicSphere will receive from Hopkins: ___________________
Total revenue that ClinicSphere will receive from Smith: ___________________
(b) Total activity rate for each activity cost pool: ______________________
(c) Total activity cost assigned to Hopkins: _________________
Total activity cost assigned to Smith: __________________
(d) ClinicSphere’s customer margin for Hopkins: ________________
ClinicSphere’s customer margin for Smith: __________________
(Hint: Do not overlook the $40,000 cost of goods sold that ClinicSphere incurred serving each
hospital.)
- End of Part B –
Worksheet Page 1 of 2
* You may use the worksheet pages to compute the answers but MUST write your answers in the
space specified. Please hand in your exam and any worksheets to your TA or CA.
Worksheet Page 2 of 2