Which of the following is not a duty of a management accountant under the IMA Statement of Ethical Professional Practice’s integrity standard?

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If activity level
increases, what happens to the unit fixed cost?

2) Select one:

a. It decreases.

b. It increases.

c. It remains the
same.

d. It depends on how
much the activity level increases.

3)

Which of the
following is not a duty of a
management accountant under the IMA Statement of Ethical Professional
Practice’s integrity standard?

Select one:

a. Mitigate
actual conflict of interest.

b. Refrain from
engaging in any conduct that would prejudice carrying out duties ethically.

c. Properly exercise authority.

d. Abstain from
engaging in or supporting any activity that might discredit the profession.

4)

A traditional GAAP
income statement does not help
managers predict the financial results of their decisions because the format of
the statement is based on cost function rather than cost behavior. Which of the
following is not classified as a cost function?

Select one:

a. Product

b. Sales

c. Administration

d. Variable

5)

Janitorial supplies
used in the factory restrooms is an example of:

Select one:

a.

Direct Material	Product Cost
Yes	No

b.

Direct Material	Product Cost
Yes	Yes

c.

Direct Material	Product Cost
No	Yes

d.

Direct Material	Product Cost
No	No

6)

Which of the
following is not a type of unethical behavior employees might observe?

Select one:

a. Abusive or
intimidating behavior

b. Lying to
employees

c. Misreporting
of hours worked

d. Having employees sign an acknowledgement that
they understand and will adhere to the corporate code of conduct.

7)

There
is an important relation between contribution margin and profit. Which of the
following statements is not true?

Select one:

a. As the number
of units sold rises, profit increases by the variable cost per unit.

b. As the number of
units sold increases, total contribution margin increases, but fixed costs
remain the same.

c. As the number
of units sold rises, profit increases by the additional contribution margin per
unit.

d. As the number of units sold decreases, total
contribution margin decreases, but fixed costs remain the same.

8)

Which
of the following is not a
characteristic of managerial accounting reports?

Select one:

a. Managerial
accounting reports are designed to provide the ultimate decision maker with the
appropriate information.

b. Managerial
accounting reports come in a variety of formats.

c. Managerial
accounting reports are not distributed to the general public.

d. All of these answer choices are correct.

9)

Which of the
following does not affect the price a company charges under cost-plus pricing?

Select one:

a. Desired gross
margin percentage

b. The cost of the
product

c. The historical price of the product or
service

d. All of these
answer choices affect the price a company charges under cost-plus pricing.

10)

The
cost of storing finished goods inventory is an example of

Select one:

a.

Period Cost	Overhead
Yes	No

b.

Period Cost	Overhead
Yes	Yes

c.

Period Cost	Overhead
No	Yes

d.

Period Cost	Overhead
No	No

11)

Which
of the following statements relating to just-in-time inventory is not correct?

Select one:

a. As soon as
goods are completed, they are shipped directly to the customer.

b. Products are
generally completed in small batches in response to customer requests.

c. Just-in-time is beneficial to all companies that will implement it.

d. No safety stock
is kept in the event that some units are found to be defective.

Instructions:

Problems – various points – Total (140 points)

1.
(5 points)

Grassi Company produces high
definition television sets. The following information is available for this
product:

Fixed cost per unit $250

Variable cost per unit 750

Markup per unit 300

Grassi Company’s markup percentage would be

a. 30%.

b. 40%.

c. 60%.

d. 120%.

2.
(5
points)

In each of the
following situations, identify whether the setting is primarily financial
accounting or managerial accounting.

a.
Abba
Company purchased a new telephone system costing $132,000 for its sales
division. The new phone system will be depreciated using the straight-line
method over a period of five years and has an estimated salvage value of
$5,000.

b. Bandex Company has had
several customers who are experiencing the negative effects of the downturn in
the economy. As a result, the company believes its allowance for doubtful
accounts should be increased from 1% of credit sales to 1.5% of credit sales.

c.
Cortez,
Inc. has experienced a decline in net income over the past three years. The
engineering department is considering redesigning a product to eliminate waste
and inefficiency in the production process.

d. The sales manager of Decca
Corporation believes one salesman is creating fictitious sales to inflate his
commission. The sales manager has asked the controller for a detailed report of
sales by salesman.

e.
Essex, Inc. executives are meeting to analyze
the company’s actual results compared to budgeted amounts.

3.
(10
points)

Georgiana operates a nail salon. She is trying to plan her costs for the next
month and is uncertain as to how to estimate those costs. Help her estimate next month’s costs given
the following information she collected, based on number of customers per
month.

	Number of Customers
	1,300	1,800	1,500	1,200
Nail supplies	$4,030	$5,580	4,650	3,720
Equipment Rental	2,200	2,200	2,200	2,200
Electricity	274	364	310	256
Total	$6,504	$8,144	$7,160	$6,176

Georgiana wants
to know what her total costs would be if she estimates 1,450 customers next
month.

a.
$2,240

b. $6,832

c.
$6,996

d. $4,756

4. (20 points)

Mega Bright Window Cleaners’
monthly income statement at several levels of activity is as follows:

Windows washed	2,000	4,000	6,000
Sales revenue	$3,000	$6,000	$9,000
Cost of goods sold	1,200	2,400	3,600
Gross profit	1,800	3,600	5,400
Operating expenses
?Advertising expense	500	500	500
?Salaries and wages expense	700	900	1,100
?Insurance expense	200	200	200
?Postage expense	500	1,000	1,500
Total operating expenses	1,900	2,600	3,300
Operating income	$ (100)	$1,000	$2,100

Required:

a.
Identify
each expense as fixed, variable, or mixed.

b.
Prepare
a contribution margin income statement based on a volume of 5,000 windows.

5. (30 points)

Mirada Manufacturing produces
pumps for residential swimming pools. For the year, management estimated that
total manufacturing overhead would be $1,488,000. Management decided to use
direct labor hours to apply manufacturing overhead and budgeted 62,000 direct
labor hours. The following information was compiled before an adjustment had
been made to close Manufacturing Overhead Control:

Raw Materials Inventory $304,291 Work in Process Inventory $337,997 Finished Goods Inventory $756,362 Actual direct labor hours used 68,970 Actual overhead incurred $1,434,576

How much overhead did Mirada
apply to jobs during the year (if necessary, round your answer to the nearest
dollar)?

a.
$1,434,576

b. $1,655,280

c.
$1,487,683

d. $1,434,680

For the year,
manufacturing overhead was

a. $220,704 underapplied

b. $220,704 overapplied

c. $144,976 overapplied

d. $144,976 underapplied

6. (30
points)

Herzig
Industries sells two electrical components with the following characteristics.
Fixed costs for the company are $200,000 per year.

	XL-709	CD-918
Sales price	$10.00	$25.00
Variable cost	6.00	17.00
Sales volume	40,000 units	60,000 units

Required:

a.
How many units of each product
must Herzig Industries sell in order to break even?

b. Herzig’s
vice president of sales has determined that due to market changes, the sales
price of component XL-709 can be increased to $14.00 with no impact on sales volume. What will be Herzig’s new breakeven
point in units?

c.
Returning to the original
information, Herzig’s vice president of marketing believes that spending
$80,000 on a new advertising campaign will increase sales of component CD-918
to 80,000 units, without affecting the sales of product XL-709. How many units
of each product must Herzig sell to break even under this new scenario?

7.
(40 points)

Windows
of the World (WOW) produces decorative windows in several styles and finishes.
The company uses a job order costing system to accumulate product costs.
Because much of the production process is automated, WOW has selected machine
hours as its overhead application base.

In May, WOW worked on three jobs. Job 69 was started in
April and completed and delivered to customers in May. Job 70 was started and finished in May, and
at the end of May, the windows from the job were in the warehouse. Job 71 was
started but not completed at the end of May.

	69	70	71
Costs Added in April
Direct materials	$10,000
Direct labor	$ 1,000
Overhead	$ 450
Machine hours	10 MH
Costs Added in May
Direct materials	$ 5,000	$ 8,000	$ 4,000
Direct labor	$24,000	$12,000	$ 500
Machine hours	600 MH	500 MH	15 MH

Required

a.
Calculate
the total manufacturing cost for May.

b.
Calculate
the total cost of each of the three jobs as of the end of May.

c.
Calculate
the balance in the Work in Process Inventory account at the end of May.

d.
Calculate
the cost of goods manufactured for May.

e.
Calculate
the Cost of Goods Sold for May.

f.
Calculate
the Finished Goods Inventory balance at the end of May.