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ACCT 505 WEEK 4 MIDTERM - NEW 2016
1. (TCO A) The variable portion of advertising costs is a
2. (TCO A) The costs of staffing and operating the accounting department at Central Hospital would be considered by the
department of surgery to be
3. (TCO A) Property taxes on a company's factory building would be classified as a(n)
4. (TCO C) Within the relevant range, variable costs can be expected to
5. (TCO B) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing
the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The
effect of this misclassification will be to
6. (TCO B) A job-order cost system is employed in those situations when
7. (TCO B) The weighted-average method of process costing differs from the FIFO method of process costing in that the
weighted-average method
8. (TCO C) The contribution margin ratio always increases when the
9. (TCO C) To obtain the break-even point in terms of dollar sales, total fixed expenses are divided by which of the
following?
10. (TCO D) In an income statement prepared using the variable costing method, fixed manufacturing overhead would
11. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop
Corporation for the just-completed year.
Sales
$950
Purchases of raw materials
$225
Direct labor
$250
Manufacturing overhead
$295
Administrative expenses
$150
Selling expenses
$140
Raw materials inventory, beginning
$30
Raw materials inventory, ending
$45
Work-in-process inventory, beginning
$20
Work-in-process inventory, ending
$55
Finished goods inventory, beginning
$100
Finished goods inventory, ending
$135
Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.
12. (TCO B) The Florida Company manufactures a product that goes through three processing departments. Information
relating to activity in the first department during June is given below.
Percentage Completed

3. Units
Materials
Conversion
Work in process, June 1
160,000
65%
45%
Work in process, Jun 30
130,000
75%
65%
The department started 650,000 units into production during the month and transferred 680,000 completed units to the next
department.
Required: Compute the equivalent units of production for the first department for June, assuming that the company uses
the weighted-average method of accounting for units and costs.
13. (TCO C) A cement manufacturer has supplied the following data.
Tons of cement produced and sold
220,000
Sales revenue
$924,000
Variable manufacturing expense
$297,000
Fixed manufacturing expense
$280,000
Variable selling and admin expense
$165,000
Fixed selling and admin expense
$82,000
Net operating income
$100,000
Required:
Calculate the company's unit contribution margin.
Calculate the company's contribution margin ratio.
If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net
operating income be?
14. (TCO D) Johnson Company, which has only one product, has provided the following data concerning its most recent
month of operations.
Selling price
$175
Units in beginning inventory
0
Units produced
9,500
Units sold
8,000
Units in ending Inventory
1,500
Variable costs per unit:
Direct materials
$50

4. Direct labor
$36
Variable manufacturing overhead
$2
Variable selling and admin
$10
Fixed costs:
Fixed manufacturing overhead
$300,000
Fixed selling and admin
$100,000
Required:
What is the unit product cost for the month under variable costing?
What is the unit product cost for the month under absorption costing?
Prepare an income statement for the month using the variable costing method.
Prepare an income statement for the month using the absorption costing method.