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ACC 256 Final Cramer's, Inc

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ACC 256 Final

1. Cramer's, Inc., is a wholesale distributor of a unique business software application. The company's traditional income statement for the month follows:
   
   Cramer's, Inc.
   Traditional Format Income Statement
   For the Month Ended July 31
   Sales $58,000
   Cost of goods sold 34,000
   
   
   Gross margin 24,000
   Selling and administrative expenses:
   Selling $12,600
   Administrative 8,200 20,800
   
   
   Net operating income $3,200
   
   
   
   A total of $3,800 of the selling expenses and $1,400 of the administrative expenses are variable; the remainder are fixed. What is the company's contribution margin?
2. Which of the following would be considered an indirect cost?
   The cost of wood for the production of furniture
   Lubricants for a machine
   Manager's salary
   Wages for servers in a restaurant
3. Which of the following would be considered a direct cost?
   Manager's salary
   The cost of wood for the production of furniture
   Wages for servers in a restaurant
   Lubricants for a machine
4. The cost of quality training is an example of...
5. The cost of warranty repairs is an example of...
6. You are given the following information about Ozark:
   
   Year 1 Year 2
   Sales $50,000 $62,500
   Quality Training Costs $2,000 $1,750
   Inspections $1,000 $1,500
   Reliability Testing $625 $625
   Warranty Repairs $1,750 $1,875
   Cost of Field Services $1,125 $885
   
   What happened to the inspection costs?
   Remained unchanged as a percentage of sales
   Increased from Year 1 to Year 2, but decreased as a percentage of sales
   Decreased from Year 1 to Year 2
   Increased from Year 1 to Year 2 both in total amount and as a percentage of sales
7. You are given the following information about Ozark:
   
   Year 1 Year 2
   Sales $54,000 $67,500
   Quality Training Costs $2,160 $1,890
   Inspections $1,080 $1,620
   Reliability Testing $675 $675
   Warranty Repairs $1,890 $2,025
   Cost of Field Services $1,125 $945
   
   What happened to the total quality costs?
   Remained unchanged as a percentage of sales
   Increased from Year 1 to Year 2, but decreased as a percentage of sales
   Decreased from Year 1 to Year 2
   Increased from Year 1 to Year 2 both in total amount and as a percentage of sales
8. Which of the following statements is (are) true?
   
   A. Companies that produce many different products or services would use job-order costing systems.
   
   B. Job-order costing systems cannot be used by service firms.
   
   C. Costs are traced to departments and then allocated to units of product when job-order costing is used.
   incorrect
   
   D. All of the above.
9. In a job-order costing system, the basic document for accumulating costs for a specific job is:
   the labor time ticket
   the Work in Process inventory account
   the job cost sheet
   the materials requisition form
10. Harrington Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours in the Machining Department and on direct labor cost in the Assembly Department. At the beginning of the year, the company made the following estimates:
    
    Machining Assembly
    Direct labor hours 19,000 12,000
    Direct labor cost $ 22,000 $15,000
    Machine hours 3,000 1,000
    Manufacturing overhead $30,000 $33,000
    
    What predetermined overhead rates would be used in the Machining and the Assembly Department, respectively?
    $10.00 and 45.45%
    $15.00 and 45.45%
    $15.00 and 115.15%
    $10.00 and 220.00%