Buy New ACCT 505 Practice Midterm


Buy New ACCT 505 Practice Midterm


Page 1
  1. Indirect labor is a part of
  2. Prime cost and conversion cost share what common element of total cost?
  3. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents
  4. Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table?

Page 2
  1. Overapplied overhead means that
  2. Departmental overhead rates are generally preferred to plant-wide overhead rates when
  3. Discretionary fixed costs
  4. An example of a committed fixed cost is

Page 3

The following data were taken from the cost records of the Beca Company for last year.

  •              Depreciation, factory equipment        $30,000
  •              Depreciation, office equipment          7,000
  •              Supplies, factory         1,500
  •              Maintenance, factory equipment        20,000
  •              Utilities, factory          8,000
  •              Sales commissions      30,000
  •              Indirect labor  54,500
  •              Rent, factory building 70,000
  •              Purchases of raw materials     124,000
  •              Direct labor cost         80,000
  •              Advertising expense   90,000
  •             Inventories       Beginning       Ending
  •             Raw materials  $ 9,000           $11,000
  •             Work in process          6,000  21,000
  •             Finished goods            69,000            24,000            

Required: Prepare a schedule of the cost of goods manufactured in good form in the text box below.

Page 4

Banerjee Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month.

Work in process, beginning

  • Units in process 200
  • Stage of completion with respect to materials 60%
  • Stage of completion with respect to conversion 20%
  • Costs in the beginning inventory
  • Materials $756
  • Conversion $1,508
  • Units started into production during the month of 18,000
  • Units completed and transferred out 17,700
  • Costs added to production during the month
  • Materials $116,569
  • Conversion $675,432
  • Work in process, ending
  • Units in process 500
  • Stage of completion with respect to materials 70%
  • Stage of completion with respect to conversion 80%

Required: Using the weighted-average method, do the following.

  1. Determine the equivalent units of production for materials and conversion costs.
  2. ………… equivalent unit for materials and conversion costs.
  3. Determine the cost of units transferred out of the department during the month.
  4. Determine the cost of ending work in process inventory in the department.

Page 5

Solo Company is a small merchandising firm. During the next month, the company expects to sell 500 units. The company has the following revenue and cost structure

  • The selling price per unit is $60
  • Cost per unit $15
  • Sales commissions 10% of sales
  • Advertising expenses are $5,000 per month
  • Administrative expenses are $3,000 per month plus 20% of sales

Page 6
  1. The contribution margin ratio is equal to
  2. To obtain the dollar sales volume necessary to attain a given target profit, which of the following formulas should be used?
  3. The following information relates to the break-even point at Pezzo Corporation. If Pezzo wants to generate a net operating income of $12,000, what will its sales dollars have to be?
  4. The Dog Hut hot dog stand expects the following operating results for next year…..What is Dog Hut’s break-even point next year in sales dollars?

Page 7

Use the following to answer Questions 1–3. Roberts Company bases its budget on the following data.

  1. If the company wants to increase its total contribution margin by 40%, assuming variable and fixed expenses remain the same, it will need to increase its sales by about
  2. …………… margin of safety to equal $40,000, it will need to sell about
  3. If the company’s fixed expenses decrease by 20%, the break-even point will change from its previous level by about a

Page 8
  1. Baker Company has a product that sells for $20 per unit. The variable expenses are $12 per unit, and fixed expenses total $30,000 per year. Required:
  • What is the total contribution margin at the break-even point?
  • What is the contribution margin ratio for the product?
  • If total sales increase by $20,000 and fixed expenses remain unchanged, by how much would net operating income be expected to increase?
  • The marketing manager wants to increase advertising by $6,000 per year. How many additional units would have to be sold to increase overall net operating income by $2,000?
  1. Pacher Company, which has only one product, has provided the following data concerning its most recent month of operations. The company produces the same number of units every month, although the sales of units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month. Required
  • What is the unit product cost for the month under variable costing?
  • Prepare an income statement for the month using the variable costing method.
  • Without preparing an income statement, determine the absorption costing net operating income for the month. (Use the reconciliation method.)

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