Name: …………………………………………………… Id.:………………………………..

Question 1: choose the best answer . (20 marks)

1 .The master budget

is :

A (

Cost accounting 2 Final exam 2008/2009Islamic university – Gaza Sunday 21/06/2009College of commerce

50 marksAccounting department

a flexible budget B (

a static budget C (

developed at the end of the period D (

bas

ed on the actual level of output

2 .A flexible budget :A (

is another name for management by exception B (

is developed at the end of the period C (

is based on the budgeted level of output D (

provides favorable operating results

3 .Management by exception is the practice of concentrating on :A (

the master budget B (

areas not operating as anticipated C (

favorable variances D (

unf

avorable variances

4 .A variance is :A (

the gap between an actual result and a benchmark amount B (

the required number of inputs for one standard output C (

the difference between an actual result and a budgeted amount D (

the dif

ference between a budgeted amount and a standard

amount

5 .An unfavorable variance indicates that :A (

actual costs are less than budgeted costs B (

actual revenues exceed budgeted revenues C (

the actual amount decreased operating income relative to the budgeted amount D (

All

of these answers are

correct .

6 .A favorable variance indicates that :A (

budgeted costs are less than actual costs B (

actual revenues exceed budgeted revenues C (

the actual amount decreased operating income relative to the budgeted amount D (

All of these answers are correct . 7 .Overhead costs have been increasing due to all of the following EXCEPT :

A (

increased automation B (

more complexity in distribution processes C (

tracing more costs as direct costs with the help of technology D (

product proliferation

8.

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value for:

A (

the current shareholders B (

the customer using the products or services C (

plant employees D (

majo

r suppliers of component parts

9 .

Variable overhead costs include :A (

plant-leasing costs B (

the plant manager's salary C (

depreciation on plant equipment D (

mac

hine maintenance

10 .Fixed overhead costs include :A (

the cost of sales commissions B (

property taxes paid on plant facilities C (

energy costs D (

in

direct materials

11.

Effective planning of fixed overhead costs includes all of the following EXCEPT :A (

planning day-to-day operational decisions B (

eliminating nonvalue-added costs C (

planning to be efficient D (

choo

sing the appropriate level of capacity

12.

Effective planning of variable overhead includes all of the following EXCEPT :A (

choosing the appropriate level of capacity B (

eliminating nonvalue-adding costs C (

redesigning products to use fewer resources D (

redes

igning the plant layout for more efficient processing

13 .

All costs incurred beyond the splitoff point that are assignable to one or more individual products are called :

A (

byproduct costs B (

joint costs C (

main costs D (

se

parable costs

14 .

In joint costing :A (

costs are assigned to individual products as assembly of the product occurs B (

costs are assigned to individual products as disassembly of the product occurs C (

a single production process yields two or more products D (

Bot

h B and C are correct .

15 .

The ________ point is the juncture in a joint production process when two or more products become separately identifiable .

A (

splitoff B (

joint product C (

process D (

end

16 .

The focus of joint costing is on allocating costs to individual products :A (

before the splitoff point B (

after the splitoff point C (

at the splitoff point D (

at the end of production 17 .

When a single manufacturing process yields two products, one of which has a relatively high sales value compared to the other, the two products are respectively known as :

A (

joint products and byproducts B (

joint products and scrap C (

main products and byproducts D (

mai

n products and joint products

18 .

When a joint production process yields two or more products with high total sales values, these products are called :

A (

main products B (

joint products C (

byproducts D (

sc

rap

19 .

Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are :

A (

reworked units B (

spoilage C (

scrap D (

de

fective units

20 .

Costs of poor quality production include the :A (

opportunity cost of the plant and workers B (

effect on current customers C (

effect on potential customers D (

All of these answers are correct.

Q. 1 2 3

A.

Question 2: Answer the following questions using the information below: (12 marks)Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials

defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 20X5 are as follows:

WIP, beginning inventory 12/1/20X5 10,000 unitsDirect materials (100% complete)Conversion costs (75% complete)

Started during December 40,000 unitsCompleted and transferred out 12/31/20X5 38,400 unitsWIP, ending inventory 12/31/20X5 8,000 units

Direct materials (100% complete)Conversion costs (65% complete)

Costs for December:WIP, beginning Inventory:

Direct materials $ 50,000Conversion costs 30,000

Direct materials added 100,000Conversion costs added 140,000

1 .

What

is the number of total spoiled

units ?

2 .

Normal spoilage totals(units :(

3 .

Abnorma

l spoilage totals(units :(

4 .What is the total cost per equivalent unit using the weighted-average method of process costing?

5. What cost is allocated to abn

ormal spoilage using the weighted-average process-costing

method?

6 .What are the amounts of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing

method ?

Name: …………………………………………………… Id.:……………………………….. Question 3: Answer the following questions using the information below: (12 marks)Peters' Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:

Actual Results

Flexible Budget Variances

Flexible Budget

Sales-Volume Variances

Static Budget

Units sold 225,000 225,000 206,250Revenues $84,160 $2,000 F (A) $2,800 U (B)Variable costs (C) $400 U $31,720 $4,680 F $36,400Fixed costs $16,560 $1,720 F $18,280 0 $18,280Operating income $35,480 (D) $32,160 (E) $30,280

1 .What amounts are reported for revenues in the flexible-budget (A?(

2 .What amounts are reported for revenues in the static-budget (B ?(

3. What

are the actual variable costs (C(

4. What

is the total flexible-budget

variance (D ?(

5. What

is the total sales-volume

variance (E?(

6. What is the total static-budget variance?

Question 4: Answer the following questions using the information below: (10 marks)

Russo Corporation manufactured 16,000 space heaters during November. The overhead cost-allocation base is $15.75 per machine-hour. The following variable overhead data pertain to November:

Actual BudgetedProduction 16,000 units 18,000 unitsMachine-hours 7,875 hours 9,000 hoursVariable overhead cost per machine-hour: $15.50 $15.75

1 .

What is th

e actual variable overhead cost?

2 .

What is

the flexible-budget amount?

3 .

What is the variable overhead spending variance?

4.

What is t

he variable overhead efficiency

variance?

5 .

What is the total variable overhead variance?

4 bonus marks for all students With best wishes

Mohammad Marwan Al ashi