Part II - Multiple Choice (30 marks)

WITH ANSWERS Please provide your answers on the Multiple Choice Answer Sheet provided. 1. A professional managerial accountant has an ethical responsibility to take some action when he/she becomes aware that the company he/she is working for is illegally dumping toxic wastes. Which of the following specific code of ethics applies best in this scenario? A) Integrity second best answer, but we also marked this correct. B) Confidentiality. C) Competence best answer. D) Reliability. Use the following information to answer question 2-3: ToyGo Company uses predetermined manufacturing overhead rate to apply overhead based on machine hours. On December 31, 2008, ToyGos manufacturing overhead account showed a debit balance of $30,000. ToyGo estimated at the beginning of the year that it would incur 230,000 machine hours for 2008. The actual machine hours totaled 200,000 hours. Completed job cost sheets show that $300,000 in manufacturing overhead was transferred to the finished goods account. There were no partially completed jobs at the end of 2007. Among all the jobs started in 2008, job X was the only partially completed job at the end of 2008, with $80,000 in applied overhead. Applied=300+80=380K, 2. What is the total manufacturing overhead applied for year 2008? A. $330,000 B. $300,000 C. $380,000 D. $220,000 3. At the beginning of the year, what was the companys estimated manufacturing overhead amount? Applied MOH/ actual MH = PDOH rate PDOH x estimated MH beg of year = Estimated MOH 380/200*230=437K A. $379,500 B. $402,500 C. $345,000 D. $437,000

4. DSK Company applies its manufacturing overhead base on direct labor hours. For the month of September, the company incurred 20,000 labour hours, out of which 80% were direct labour hours. The budgeted direct labour hours for September was 14,000 hours. During September $100,000 manufacturing overhead is applied to work in progress. Job 007 used 10,000 direct labour hours and 1,800 indect labour hours during the month. On the job cost sheet for Job 007, what should be the added manufacturing overhead cost during September? $100,000/(20,000hrsx80%)*10,000 actual DLH A) $100,000 B) $62,500 C) $87,500 D) $59,000

5. Which of the following is the stakeholder group whose interests are to be directly and formally protected by effective corporate governance? A) Customers B) Creditors C) Shareholders D) Employees

6. Which of the following facets of the lean thinking model is often called just-in-time production? A) Continuously pursue perfection in the business process. B) Identify the business process that delivers value C) Organize work arrangements around the flow of the business process D) Create a pull system that responds to customer orders

7. Which of the following would NOT be classified as a Batch-level activity? A) Setting up equipment B) Clerical activity associated with processing purchase orders to produce an order for a standard product C) Arranging for a shipment of a number of different products to a customer D) Vendor negotiation costs

8. Suppose a firm reports the following results using the least-squares regression method: Y = $750 - $2.56X Y is the daily repair and maintenance cost and X is the daily units of production in hundreds. The daily observations were over a one-month period. The results do not make sense to the manager of the repair and maintenance department. What of the following statements is the most plausible explanation for the apparently meaningless results? A) Repair and maintenance is most likely scheduled when the production facilities are idle. B) Most repair and maintenance is conducted when the production facilities are in use C) Total daily repair and maintenance costs increase as the daily units of production increase. D) A least-squares regression using, for example, monthly or bi-weekly repairs and maintenance and production data will definitely not produce more meaningful results.

9. The following inventory valuation errors were discovered by TopHat Corporation's new controller just after the annual financial statements were published at the end of Year 2. The Year 2 ending inventory was understated by $45,000. The Year 1 ending inventory was overstated by $31,000. The net income for Knox in each of these years was: Net income Year 2 $198,000 Year 1 $174,000

Assuming there were no income taxes, what was the adjusted net income in each year? Yr 1 :174000-31000= 143,000 Yr 2: 198000+31000+45000= 274,000 Year 2 Year 1 A) $184,000 $205,000 B) $122,000 $205,000 C) $274,000 $143,000 D) $212,000 $143,000

Use the following information to answer questions 10-11: Fall Company has provided the following data for the third quarter of the most recent year: Sales Fixed Manufacturing Overhead Direct Labour Variable Fixed Selling Expenses Variable Manufacturing Overhead Variable Variable Administrative Expenses Variable Direct Materials Variable Fixed Administrative Expenses Variable Selling Expenses Variable $300,000 $ 29,000 $ 51,000 $ 30,000 $ 20,000 $ 32,000 $ 38,000 $ 29,000 $ 33,000

Assume that direct labour is a variable cost and that there were no beginning or ending inventories. 10. At the level of sales for the third quarter, how much in additional fixed selling expenses could Sorter Company have afforded to spend and still would have reported $22,000 operating income?
300000-29000-51000-30000-20000-32000-38000-29000-33000-22000 = 16,000

A) $16,000.

B) $38,000.

C) $46,000.

D) $49,000.

11. Suppose the sales for the third quarter was the equivalent of 1,000 units and that the fixed manufacturing and non-manufacturing costs were valid between the relevant range of 800 and 1,200 units. If Sorter Company had sold 100 additional units, it would have reported what amount of additional operating income?
(300000-51000-20000-32000-38000-33000)*100/1000

A) $30,000.

B) $21,100.

C) $30,000.

D) $12,600.

12. (NOT COVERED SPRING 2010) From the beginning of the year Sunny Corporation bases its predetermined overhead rate on machine-hours at capacity and used predetermined overhead rate of $3 per machine hours. Actual data for the year revealed that Actual manufacturing overhead (assume entirely fixed costs) was $225,000, variable production costs were $18 per machine hour, and actual activity level was 60,000 machine-hours. The level of activity at capacity is 75,000 machinehours and the budgeted level of activity was 66,000 machine-hours. What is the cost of unused capacity to be reported on the income statement? (75000-6000) x 3 A) $18,000 B) $45,000 C) $ 225,000 D) $1,260,000

Use the following to answer questions 13-15: Harrison Company is a merchandising firm. Next month, the company expects to sell 1,200 units. The following data describe the company's revenue and cost structure: Selling Price per Unit Variable selling expense Cost of goods purchased per Unit Advertising Expense Administrative Expense $50 8% of sales $23 $4,860 per month $5,200 per month plus 12% of sales

Assume that all activity mentioned in this problem is within the relevant range. 13. What is the expected gross margin next month? A) $32,400. B) $27,600. C) $22,340. D) $20,400.
(50-23)*1200

14. What is the expected contribution margin next month? A) $32,400. B) $27,600. C) $22,340. D) $20,400.
((50- 0.08x50 - 0.12 x 50)-23)*1200

15. What is the expected operating income next month? A) $ 22,340. B) $ 10,340 C) $ 15,860. D) $17,540.
(((50*0.8)-23)*1200)-5200 FC -4860 FC