ACC 561 FINAL EXAM 2 ACC 561 FINAL EXAM 2

ACC 561 FINAL EXAM 2

1. At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month,

Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for

$15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September

30, 2017

$441,000 credit

2. The investigation of materials price variance usually begins in the

Purchasing department

3. Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard.

However, the plastic actually cost $80 per yard. The company actually made 3,900 units,

although it had planned to make only 3,300 units. Total yards used for production were 3,960.

How much is the total materials variance

$900 U

4. La More Company had the following transactions during 2016: Sales of $9,000 on account

Collected $4,000 for services to be performed in 2017 Paid $3,750 cash in salaries for 2016

Purchased airline tickets for $500 in December for a trip to take place in 2017 What is La More’s

2016 net income using accrual accounting

$5,250

5. Based on the following data, what is the amount of working capital Account Payable $64,000

Accounts receivable 114,000 Cash 70,000 Intangible Assets 100,000 Inventory 138,000 Longterm investments 160,000 Long-term liabilities 200,000 Short-term investments 80,000 Notes

payable (short-term) 56,000 Property, plant, and equipment 1,340,000Prepaid insurance 2,000

$284,000

6. It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale

which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each.

Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has

sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will

be the effect on net income

$6,000 increase

7. Which one of the following is an example of a period cost

A manager's salary for work that is done in the corporate head office

8. An activity-based overhead rate is computed as follows

estimated overhead divided by estimated use of cost drivers

9. Which is the last step in developing the master budget

Preparing the budgeted balance sheet

10. Are advanced receipts from customers treated as revenue at the time of receipt? Why or why

not?

No, revenue cannot be recognized until the work is performed

11. Miller Manufacturing’s degree of operating leverage is 1.5. Warren Corporation’s degree of

operating leverage is 3. Warren’s earnings would go up (or down) by ________ as much as

Miller’s with an equal increase (or decrease) in sales

2 times

12. Which of the following is not an underlying assumption of CVP analysis

Beginning inventory is larger than ending inventory

13. Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2016,

2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent

of the base

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Version 2021
Category Exam (elaborations)
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Language English
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