Homework answers / question archive / ACT 215, Spring 2021 ID: Exam 4 – Final (Total 100 Points) Name: (first name, middle name, last name) 01:00PM - 03:00PM, May 05, 2021 Signature: (Questions 1 through 11 worth 1 point each – 11 Points) 1

ACT 215, Spring 2021 ID: Exam 4 – Final (Total 100 Points) Name: (first name, middle name, last name) 01:00PM - 03:00PM, May 05, 2021 Signature: (Questions 1 through 11 worth 1 point each – 11 Points) 1

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ACT 215, Spring 2021 ID: Exam 4 – Final (Total 100 Points) Name: (first name, middle name, last name) 01:00PM - 03:00PM, May 05, 2021 Signature: (Questions 1 through 11 worth 1 point each – 11 Points) 1. Over the range of the number of units produced, costs can be classified as variable costs and fixed costs by its behavior. a) True b) False 2. Direct materials and direct labor are variable costs for a manufacturing company. a) True b) False 3. Sales commission, a certain percentage of sales contract, is an example of variable cost. a) True b) False 4. Property taxes a company pays on their manufacturing plant and on their office building are fixed costs. a) True b) False 5. Insurance expense a company pays on their factory is a fixed cost, but insurance expense a company pays on their office building is a variable cost. a) True b) False 6. Variable costs have the same unit costs (costs per unit) regardless of the number of units produced. a) True b) False Page 1 of 11 7. Fixed costs have the same total costs regardless of the number of units produced. a) True b) False 8. Standard costs are reasonable costs in manufacturing products including normal materials spoilage, labor idle time and machine idle time. a) True b) False 9. The concept of standard costs can be applied to service providers, too. a) True b) False 10. Actual costs are estimated costs rather than real costs incurred in manufacturing products. a) True b) False 11. Rate of return on investment and residual income are performance measures. a) True b) False Page 2 of 11 12. The following information is available for Western Rider Inc. for April, 2017: Standard Components of Standard Quantity Cost per Pair Product Costs per Pair of Jeans Standard Price Direct materials $5.00 per sq. yd. 1.5 sq. yds. per pair $ 7.50 Direct labor $9.00 per hr. 0.80 hr. per pair 7.20 Factory overhead Variable $3.60 per hr. 0.80 hr. per pair 2.88 ($6.00 per hr.) Fixed $2.40 per hr. 0.80 hr. per pair 1.92 Total standard cost per pair $ 19.50 During the period, Western Rider produced 5,000 pairs of jeans and incurred the following costs. Component of Actual Quantity Product Costs Actual Price (Rate) (Time) Actual Cost Direct materials $5.50 per sq. yd. 7,300 sq. yds. $ 40,150 Direct labor $10.00 per hr. 3,850 hrs. 38,500 Factory overhead Variable=$10,400 Fixed=$12,000 22,400 Total actual cost of product for the period $ 101,050 (1) Using the following diagram, analyze direct materials variance and interpret the cause of variance. (15 points) Actual Quantity × Actual Price Actual Quantity × Standard Price Price Variance Standard Quantity × Standard Price Quantity Variance Page 3 of 11 • Interpretation of cause of variance: (2) Using the following diagram, analyze direct labor variance and interpret the cause of variance. (15 points) Actual Hours × Actual Rate Actual Hours × Standard Rate Rate Variance • Standard Hours × Standard Rate Time Variance Interpretation of cause of variance: Page 4 of 11 (3) Using the following diagram, analyze variable factory overhead variance and fixed factory overhead variance. (11 points) Actual Variable Factory Overhead = $ Standard Variable Factory Overhead = $ Actual Fixed Factory Overhead = $ Standard Fixed Factory Overhead = $ Variable Variance = Fixed Variance = Total FOH Variance Use the following information for Question 13. • • • • • • Cost of a new piece of equipment is $250,000. Useful life of the equipment is estimated to be 10 years. Estimated revenues from the equipment per year are $80,000. All the expenses of the equipment per year are $50,000. Depreciation expense of the equipment per year is $20,000. All transactions are in cash, except depreciation. 13. Compute the cash back period using the formula provided. (5 points) Cash Back Period = Initial cost Annual net cash inflow Page 5 of 11 Use the following information for Questions 14 through 15. North America • • • Europe Total assets $87,500 $175,000 Income from operations $17,500 $21,000 Minimum required income from operations 10% of total assets 10% of total assets 14. Compute rate of return on investment (ROI). (6 points) ROI - North America: ROI - Europe: 15. Compute residual income. (6 points) North America: Europe: 16. Considering ROI and residual income, make your recommendations and explain why you make the recommendations. (10 points) Page 6 of 11 17. Regarding balanced scorecard, sort each of the following measurement items under one of the five categories by its letter. (10 points) Example: Financial a, b, c a. Amount of waste b. Income from operations c. Number of defects d. Number of new products e. Number of patents f. Number of repeat customers g. Number of trained employees h. Number of training hours i. Rate of return on investment j. Response time to customer Financial Innovation Learning Customer Service Page 7 of 11 Manufacturing Processes Page 8 of 11 ACT 215 ID: Spring 2021 Name: Ethics Questions Score: __________ out of 10 Answer the following questions based on IMA Statement of Ethical Professional Practice. 1. Taking on a responsibility you know can be better completed by someone else would violate the ethical conduct standard of: a) Competence b) Confidentiality c) Credibility d) Integrity 2. Failure to mitigate conflicts of interest would violate the ethical conduct standard of: a) Competence b) Confidentiality c) Credibility d) Integrity 3. Not disclosing all relevant information would violate the ethical conduct standard of: a) Competence b) Confidentiality c) Credibility d) Integrity Page 9 of 11 4. An example of the IMA's competence standard is to: a) Provide decision support information that is accurate, clear, concise and timely b) Communicate information fairly and objectively c) Keep information confidential, except when disclosure is legally required d) Abstain from engaging in or supporting any activity that might discredit the profession 5. An example of the IMA's integrity standard is to: a) Provide decision support information that is accurate, clear, concise and timely b) Abstain from engaging in or supporting any activity that might discredit the profession c) Keep information confidential except when disclosure is legally required d) Communicate information fairly and objectively 6. An example of the IMA's confidentiality standard is to: a) Provide decision support that is accurate, clear, concise and timely b) Keep information confidential except when disclosure is authorized or legally required c) Communicate information fairly and objectively d) Abstain from engaging in or supporting any activity that might discredit the profession 7. Preparing financial statements in accordance with GAAP is an example of: a) Credibility b) Competence c) Integrity d) Objectivity Page 10 of 11 8. Attending class to maintain professional knowledge is an example of which ethical standard? a) Competence b) Confidentiality c) Credibility d) Integrity 9. Refusing gifts or favors that would influence actions is an example of which ethical standard? a) Competence b) Confidentiality c) Credibility d) Integrity 10. You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which IMA guideline has been violated? a) Objectivity b) Competence c) Confidentiality d) Integrity