# ACCT 505 Final Exam 3

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**ACCT 505 Week 8 Final Exam 3**

1. A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be:

2.Turnover is computed by dividing average operating assets into:

3.A segment of a business responsible for both revenues and expenses would be called:

4.All other things being equal, if a division's traceable fixed expenses increase:

5.In computing the margin in a ROI analysis, which of the following is used?

6.Net operating income is defined as:

7.Suppose a manager is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager, assuming other factors remain constant?

8. During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000. Division D's sales were closest to:

9. Cable Company had the following results for the year just ended: Net operating income $2,500 Turnover 4 Return on investment 20%

10. Use the following to answer question 10:

Ieso Company has two stores: J and K. During November, Ieso Company reported a net income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales.

11.Company A's residual income is:

12.Company A's return on investment (ROI) is:

13. The following data are available for the South Division of Redride Products, Inc. and the single product it makes: Unit selling price $20 Variable cost per unit $12 Annual fixed costs $280,000

14. The following selected data pertain to Beck Co.'s Beam Division for last year: Sales $400,000 Variable expenses $100,000 Traceable fixed expenses $250,000 Average operating assets $200,000

15.Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products. A cost that is not relevant is:

16.A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year.

17.Manor Company plans to discontinue a department that has a contribution margin of $24,000 and $48,000 in fixed costs. Of the fixed costs, $21,000 cannot be avoided.

18.Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $21,000 cannot be eliminated. The effect on the profit of Manor Company of discontinuing this department would be:

19.Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: The part can be purchased from an outside supplier at $20 per unit.

20.Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows: Direct materials $12 Direct labor 8 Variable manufacturing overhead 3 Fixed manufacturing overhead.

21. Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available: Cost to Cardinal to make the part: Direct materials $ 4 Direct labor 16 Variable manufacturing overhead . 8 Fixed manufacturing overhead .

22. Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period.

23. The Tolar Company has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000.

24. Aholt Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $11.30 Direct labor 22.70 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 24.70 Unit product cost $59.90

25. The Madison Company produces three products with the following costs and selling prices: A B C Selling price per unit $16 $21 $21 Variable cost per unit 7 11 13

26.If Austin chooses to produce 4,000 afghans each month, the change in the monthly net operating income as compared to selling 4,000 spindles of yarn is:

27. What is the lowest price Austin should be willing to accept for one afghan as long as it can sell spindles of yarn to the outside market for $12 each?

28.(Ignore income taxes in this problem.) How is depreciation handled by the following capital budgeting techniques? Internal Simple Rate of Return Rate of Return Payback

29. The payback method measures:

30.The evaluation of an investment having uneven cash flows using the payback method:

31.If the net present value of a project is zero based on a discount rate of sixteen percent, then the time-adjusted rate of return:

32. (Ignore income taxes in this problem.) A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000

33.(Ignore income taxes in this problem.) Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine.

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