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 Septembe...
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 Long-
term 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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