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ACC 561 Week 3 Assignment Study Guide and Practice Quiz

ACC 561 WEEK 3 ASSIGNMENT STUDY GUIDE AND PRACTICE QUIZ


 

STUDY GUIDE QUESTIONS 1-7

Question 1
Using these data from the comparative balance sheet of Rosalez Company, perform horizontal analysis.
Increase or (Decrease)
Dec. 31, 2012 Dec. 31, 2011 Amount Percentage
Accounts receivable $ 564,600 $ 397,700 $

%
Inventory $ 790,300 $ 586,000 $

%
Total assets $3,135,100 $2,796,600 $

%

Question 2
Using these data from the comparative balance sheet of Rosalez Company, perform vertical analysis.
Dec. 31, 2012 Dec. 31, 2011
Amount Percentage Amount Percentage
Accounts receivable $ 564,800
% $ 353,400
%
Inventory $ 798,200
% $ 583,400
%
Total assets $3,165,600
% $2,776,200
%

Question 3
Vertical analysis (common-size) percentages for Vallejo Company’s sales, cost of goods sold, and expenses are listed here.

Vertical Analysis 2012 2011 2010
Sales 100 % 100 % 100 %
Cost of goods sold 60.8 64.5 65.8
Expenses 25.7 27.9 28.7

Did Vallejo’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Provide numerical support for your answer.

Question 4
Horizontal analysis (trend analysis) percentages for Spartan Company’s sales, cost of goods sold, and expenses are listed here.

Horizontal Analysis 2012 2011 2010
Sales 96.2 % 104.8 % 100.0 %
Cost of goods sold 101.0 98.0 100.0
Expenses 105.6 95.4 100.0

Explain whether Spartan’s net income increased, decreased, or remained unchanged over the 3-year period.

Question 5
These selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).

2009 2008
Cash $ 13,606 $ 7,669
Accounts receivable 23,045 19,951
Inventories 31,087 31,345
Other current assets 12,522 11,909
Total current assets $ 80,260 $ 70,874
Total current liabilities $245,805 $326,203
Question 6
Staples, Inc. is one of the largest suppliers of office products in the United States. It had net income of $738.7 million and sales of $24,275.5 million in 2009. Its total assets were $13,073.1 million at the beginning of the year and $13,717.3 million at the end of the year. What is Staples, Inc.’s asset turnover ratio and profit margin ratio?

Question 7
Selected data taken from a recent year’s financial statements of trading card company Topps Company, Inc. are as follows (in millions).

Net sales $326.7
Current liabilities, beginning of year 41.1
Current liabilities, end of year 62.4
Net cash provided by operating activities 10.4
Total liabilities, beginning of year 65.2
Total liabilities, end of year 73.2
Capital expenditures 3.7
Cash dividends 6.2

Compute these ratios: current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. Provide a brief interpretation of your results.

STUDY GUIDE PRACTICE QUIZ

Question 1
A major purpose of cost accounting is to

  • provide information to stockholders for investment decisions.
  • measure, record, and report product costs.
  • measure, record, and report period costs.
  • classify all costs as operating or nonoperating.

Question 2
The two basic types of cost accounting systems are

  • job order and job accumulation systems.
  • job order and process cost systems.
  • process cost and batch systems.
  • job order and batch systems.

Question 3
A process cost system would most likely be used by a company that makes

  • college graduation announcements.
  • motion pictures.
  • repairs to automobiles.
  • breakfast cereal.

Question 4
Which of the following would be accounted for using a job order cost system?

  • The production of automobiles.
  • The production of personal computers.
  • The refining of petroleum.
  • The construction of a new campus building.

Question 5
The flow of costs in a job order cost system

  • cannot be measured until all jobs are complete.
  • measures product costs for a set time period.
  • generally follows a LIFO cost flow assumption.
  • involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done.

Question 6
The entry to record the acquisition of raw materials on account is

  • Work in Process Inventory Accounts Payable
  • Accounts Payable Raw Materials Inventory
  • Manufacturing OverheadRaw Materials Inventory Accounts Payable
  • Raw Materials Inventory Accounts Payable

Question 7
Time tickets should be approved by

  • the audit committee.
  • the employee’s supervisor.
  • co-workers.
  • the payroll department.

Question 8
The labor costs that have been identified as indirect labor should be charged to

  • salary expense.
  • manufacturing overhead.
  • the individual jobs worked on.
  • direct labor.

Question 9
Manufacturing overhead is applied to each job

  • by means of a predetermined overhead rate.
  • at the end of the year when actual costs are known.
  • only if the overhead costs can be directly traced to that job.
  • at the time when the overhead cost is incurred.

Question 10
A process cost accounting system is most appropriate when

  • similar products are mass-produced.
  • individual products are custom made to the specification of customers.
  • a variety of different products are produced, each one requiring different types of materials, labor, and overhead.
  • the focus of attention is on a particular job or order.

Question 11
Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?

  • The detail at which costs are calculated.
  • The number of work in process accounts.
  • The time period each covers.
  • The manufacturing cost elements included.

Question 12
In process cost accounting, manufacturing costs are summarized on a

  • process order cost sheet.
  • job order cost sheet.
  • production cost report.
  • manufacturing cost sheet.

Question 13
In a process cost system, product costs are summarized:

  • when the products are sold.
  • on job cost sheets.
  • after each unit is produced.
  • on production cost reports.

Question 14
Which of the following is considered a difference between a job order cost and a process cost system?

  • The manufacturing cost elements.
  • Documents used to track costs.
  • The accumulation of the costs of materials, labor, and overhead.
  • The flow of costs.

Question 15
The costs that are easiest to trace directly to products are

  • direct materials and direct labor.
  • direct labor and overhead.
  • direct materials and overhead.
  • None of the above; all three costs are equally easy to trace to the product.

Question 16
Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job.

  • direct materials and direct labor
  • direct materials
  • direct labor
  • overhead

Question 17
The last step in activity-based costing is to

  • assign manufacturing overhead costs for each activity cost pool to products.
  • compute the activity-based overhead rate per cost driver.
  • identify and classify the major activities involved in the manufacture of specific products.
  • identify the cost driver that has a strong correlation to the activity cost pool.

Question 18
The first step in activity-based costing is to

  • identify and classify the major activities involved in the manufacture of specific products.
  • identify the cost driver that has a strong correlation to the activity cost pool.
  • assign manufacturing overhead costs for each activity cost pool to products.
  • compute the activity-based overhead rate per cost driver.

Question 19
A well-designed activity-based costing system starts with

  • assigning manufacturing overhead costs for each activity cost pool to products.
  • analyzing the activities performed to manufacture a product.
  • identifying the activity-cost pools.
  • computing the activity-based overhead rate.

Question 20
An example of an activity cost pool is

  • number of inspections
  • setting up machines
  • number of setups
  • machine hours.