final review i _ spring 2016-2

8/19/2019 Final Review I _ Spring 2016-2

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Oklahoma City UniversityACCT 5213-10 Accounting for Business ecision !aking

"all 2015

"inal #evie$

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1. (2.5 pts) Within the relevant range, variable cost per unit will:a. Increase as the level of activity increasesb. Remain constant

c. Decreases as the level of activity increases. !one of these

2. (2.5 pts) Which of the following costs is often i"portant in ecision "a#ing, but is o"itte fro" conventional accounting recors$a. %i&e 'osts

b. un# 'ostsc. Opportunity Costs

. Inirect 'osts

. (2.5 pts) *he ifference between total sales in ollars an total variable e&penses is callea. !et operating inco"e

b. !et profitc. *he gross "argind. The contribution margin

+. (2.5 pts) co"pany using lean prouction "ethos li#ely woul show appro&i"ately the sa"e net operating inco"e uner bothabsorption an variable costing because:

a. -ning inventory woul be value in the sa"e "anner for both "ethos uner leant prouctionb. Production is geared to sales under lean production and thus there would be little or no ending inventory

c. ner lean prouction fi&e "anufacturing overhea costs are charge to the perio incurre rather than to the prouct prouce

. *here is no istinction "ae uner lean prouction between fi&e an variable cost

5. (2.5 pts) !et operating inco"e reporte uner absorption costing will e&cee net operating inco"e reporte uner variable costing for a given perio if:

a. /rouction e0uals sales for the periob. Production exceeds sales for that period

c. ales e&cee prouction for that perio. *he variable "anufacturing overhea e&cees the fi&e "anufacturing overhea

. (+ pts) Describe + #ey ifferences between financial an "anagerial accounting.

. (+ pts) Define the following as either prouct or perio cost.a. 3333/rouct33333333 4anufacturing facility cafeteria e&pense

b. 3333/erio33333333 '- alaryc. 3333/rouct33333333 4anufacturing overhea

. 3333/erio33333333 hipping to custo"erse. 3333/rouct33333333 -lectricity for the 6/ of 4anufacturing7s officef. 3333/rouct33333333 ecurity guar for the "anufacturing builing

8. ( pts) Define the following as either variable, fi&e, "i&e, or step costs.a. 33334i&e33333333 Water bill

b. 3333%i&e33333333 ccountant7s salaryc. 33336ariable33333333 Direct "aterials. 3333tep33333333 9unct professor e&pense if classes are li"ite at 5 stuentse. 3333%i&e33333333 entf. 33336ariable33333333 hipping to custo"ers


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;. (+ pts) Define the following as either unit level, batch level, prouct level, custo"er level, or organi


3/12

1?. (;.5 points) ally wants to open a cany shop, but she is afrai that she will loose "oney. he has foun a location that she can rentfor @2,??? per "onth in the "all an she believes that she can rent containers, tables, an e0uip"ent for @8?? per "onth. ally wantsto sell the cany by the poun an iscovere that other si"ilar stores sell cany by the poun for @12. ally7s cost per poun ofcany is @.5?. ally will be the only e"ployee at the store.

a. Aow "any pouns of cany oes ally have to sell each "onth to brea# even$ b. If ally sells 1,??? pouns of cany, what is her 4argin of afety over her fi&e costs$c. If ally wants to "a#e @,5?? per "onth in profit to cover her living e&penses what is the total a"ount of cany she has to

sell each "onth in pouns$

. ally wants to print an a in the unay paper with a coupon for @1.?? off per poun. *he a costs @5??, but she believes it will increase sales by 125 pouns. =ase on the nu"bers, shoul ally run the a$ upport your answer.e. What woul be a 0ualitative reason to go against your answer in part '$

11.


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12.

(;.5 points) Dr. Auson operates a "inor "eical center in his ho"etown. ver the last 5 years, he has recore the infor"ation below regaring his operating costs an nu"ber of patients.

1.

14. 1. Patients 1!. Total

Cost

1". #$$% 18. 15 1;. 2,2;,125

#$. #$1$ 21. 118 22. 2,+?;,185

#&. #$11 2+. ?5 25. 2,1,;1?

#!. #$1# 2. 812 28. 2,515,5

#%. #$1& ?. 518 1. 2,+2?,81?

2.a. sing the highBlow "etho of cost esti"ation, eter"ine the variable cost per patient

b. sing the highBlow "etho of cost esti"ation, eter"ine the fi&e cost per year.c. What is the total cost for"ual using the highBlow "etho of cost esti"ation$. If Dr. Auson e&pects to see ,8?? patients in 2?1+, what is his esti"ate cost going to be$e. If Dr. Auson is going to see 15,??? patients in 2?1+, woul you e&pect the cost esti"ation e0uation in part

' to wor#$ Why or Why not$.+.


5/12

5.

(.5 pts) a"one owns a custo" paint shop an is consiering opening up a secon shop in another town. Ae believes that he can buya builing an all of the neee e0uip"ent with an invest"ent of @1,8??,???. n average, a"one charges @1,?? for each 9ob whichcosts hi" @??.

a. Aow "uch revenue will a"one have to earn to recoup his initial invest"ent$ b. a"one is only intereste in opening the new shop if he can "a#e a profit of @??,??? over the ne&t + years. Aow "uch

will a"one nee to earn in revenue over the ne&t four years to generate a profit of @??,???.c. a"one can invest an aitional @25?,??? in robotic e0uip"ent that he believes will generate an aitional @??,??? in

revenue. houl a"one invest in the new e0uip"ent base on the nu"bers..


6/12

.

(1 pts) Cightning 4anufacturing /roucts has the following infor"ation available to its investors for the prior year. In aition, itisclose that its cost of goos sol are 5 variable an its selling, general, an a"inistrative e&penses are ? variable.

8.;. ales 1,5??,???+?. 'ost of Eoos ol 5?,???+1. Eross 4argin 5?,???+2. elling Eeneral an "inistrative ??,???+. !et Inco"e +5?,???

++.a. /repare a contribution for"at inco"e state"ent for Cightning 4anufacturing /roucts.

b. What is the contribution "argin ratio for Cightning 4anufacturing /roucts$c. What is the brea# even sales for Cightning 4anufacturing /roucts. What is the "argin of safety for Cightning 4anufacturing /roucts+5.


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+.

(1? pts) Cuigi owns a tire shop with three pri"ary custo"er typesF racing, corporate, an iniviual custo"ers. Cuigi woul li#e to oso"e irect avertising targeting the custo"er type with the best returns, but he is unsure of who that is. se activity base costing toallocate the overhea for the cost pools below an eter"ine the allocate cost for each custo"er type. If current sales an cost ofsales (e&cluing overhea) are the sa"e for all three custo"er types, which custo"er type shoul Cuigi invest "ore in to get thehighest return$

+.4'. (ctivity 4%. Cost Pool $. (ctivity )rivers

1. *nvoicing 52. @15?,??? 5. ,??? Invoices

4. Customer +etup 55. @5?,??? 5. 1,8?? custo"ers

". Customer +ervice 58. @2??,??? 5;. 1,??? calls

?.

!1. (ctivity !#. Racing !&. Corporate !4. *ndividual

!. *nvoicing . 2?? . +?? 8. 2,+??

!%. Customer

+etup

?. 5 1. 5? 2. 1,5

"&. Customer

+ervice

+. +?? 5. 2?? . +??

.


8/12

1.

( pts) Which of the following represents the nor"al se0uence in which the inicate bugets are prepare$a. Direct "aterials, cash, salesb. +ales, production, cash, income statement

c. ales, balance sheet, irect labor . /rouction, "anufacturing overhea, sales

8.2. ( pts) Which of the following is not a benefit of bugeting$

a. *t reduces the need for trac-ing actual cost activity

b. It sets bench"ar#s for evaluation perfor"ancec. It uncovers potential bottlenec#s. It for"ali


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8.

+. (8 pts) D-% 'o"pany has capacity to bottle 1??,??? bottles of water per "onth. It currently sells ;5,??? bottles to"a9or retailers in the region for @1.?? per bottle. *he owner7s al"a "ater has recently as#e D-% 'o"pany if they can

buy ,??? bottles for @?.? per bottle. *he bottles will re0uire a special label that will cost an aitional @?.?5 per bottle.D-%7s nor"al cost structure per bottle is as follows.

88.8;. Direct 4aterials B @?.+?;?. Direct Cabor B @?.?;1. 6ariable verhea B @?.?5;2. %i&e verhea B @?.1?;.

a. houl D-% accept the orer base on the 0uantitative facts$ upport your answer. b. If the al"a "ater wants to buy 8,??? bottles, shoul D-% accept the special orer base on 0uantitative facts$

upport your answer.

c. What are two 0ualitative facts that D-% shoul consier$;+.;5.;.


10/12

;.

(1? pts) Due to a isruption in the supply chain, co"pany EAI is only able to get 1,??? units of co"ponent 1 which it usesto "a#e proucts , =, ', G D.

;8.;;.

1??. /rouct 1?1. 1?2. = 1?.

'

1?+.

D1?5. ales /rice 1?. 1

?1?. 2?

1?8.?

1?;.+?

11?. 6ariable 'ost 111. 112. 12

11.18

11+.2+

115. De"an for /rouct 11. 2??

11. +?

118.?

11;.?

12?. 'o"ponent 1 per nit 121. 2 122. 8 12.18

12+.12

125.a. If EAI wants to "a&i"i


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12;.

(5 pts) 'o"pany HC has the following infor"ation available for its proucts. Which proucts shoul be sol at the splitoff an which proucts shoul be processe further base on the 0uantitative facts$ 'ost incurre prior to split off were@15,???.1?.

11. /rouct 12. ales /rice at plitoff

1. itional/rocessing 'osts

1+. %inal ales /rice

15. 1. 1?? 1. 5? 18. 15

1;. = 1+?. 2?? 1+1. 1?? 1+2. 25

1+. ' 1++. ?? 1+5. 15? 1+. 5??

1+. D 1+8. +?? 1+;. 2?? 15?. 5?

151. - 152. 5?? 15. 25? 15+. ??

155.


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final review i _ spring 2016-2

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