Exam%4:%%Chapters%18%and%22
1. For%each%of%the%characteristics%below,%identify%whether%it%is%a%focus%of%financial%
accounting%or%managerial%accounting.%Use%the%letter%F%to%identify%financial%
accounting%and%M%to%identify%managerial%accounting.
1.
%%%%%Users%are%generally%managers,%employees%and%decision%makers%
internal%to%the%organization. %%____
2.
%%%%%Used%to%assist%managers%in%making%planning%and%control%
decisions. %%____
3. %%%%%Information%is%structured%and%controlled%by%GAAP. %%____
4.
%%%%%Information%is%available%quickly%without%the%need%to%wait%for%an%
audit. %%____
5. %%%%%Information%is%mainly%historical%with%some%predictions. %%____
6. %%%%%Emphasis%of%the%information%is%on%the%whole%organization. %%____
7.
%%%%%Information%is%mostly%monetary,%but%includes%nonmonetary%
information. %%____
2. Explain%what%is%meant%by%the%”lean%business%model”%and%why%many%businesses%
have%adopted%it.
3.%%The%following%cost%items%relate%to%the%Brock%Company.%Classify%each%cost%as%a%
variable%cost,%a%fixed%cost,%or%a%mixed%cost%by%placing%an%X%in%the%appropriate%column.%
Each%cost%should%be%evaluated%in%terms%of%the%volume%of%units%of%finished%products%
produced.%Also%indicate%with%an%X%for%each%item%if%it%is%a%product%cost%or%a%period%cost.
%%
4. For%each%item%shown%below,%classify%it%as%a%product%cost%or%a%period%cost,%by%
placing%an%X%in%the%appropriate%column.%For%each%item%that%is%a%product%cost,%also%
indicate%whether%it%is%a%direct%cost%or%an%indirect%cost%with%respect%to%a%unit%of%
finished%product.
%%
5. The%following%information%describes%a%product%expected%to%be%produced%and%sold%
by%Pepin%Corporation:%
Required:
(a)%Calculate%the%contribution%margin%per%unit.
(b)%Calculate%the%breakWeven%point%in%units.
Multiple%Choice:
6. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%Compute%the%contribution%margin%per%unit%
if%the%machine%is%purchased.
A. $22.50.
B. $26.00.
C. $29.50.
D. $28.50.
E. $27.50.
7. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%Compute%breakWeven%point%in%units%if%the%
new%machine%is%purchased.
A. 10,438%units.
B. 8,814%units.
C. 10,000%units.
D. 9,200%units.
E. 9,869%units.
8. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%What%effect%would%the%purchase%of%the%
new%machine%have%on%Winthrop’s%breakWeven%point%in%units?
A. 800%unit%increase.
B. 800%unit%decrease.
C. 5,714%unit%increase.
D. 4,444%unit%decrease.
E. No%effect%on%the%breakWeven%point%in%units.

Exam%4:%%Chapters%18%and%22
1. For%each%of%the%characteristics%below,%identify%whether%it%is%a%focus%of%financial%
accounting%or%managerial%accounting.%Use%the%letter%F%to%identify%financial%
accounting%and%M%to%identify%managerial%accounting.
1.
%%%%%Users%are%generally%managers,%employees%and%decision%makers%
internal%to%the%organization. %%____
2.
%%%%%Used%to%assist%managers%in%making%planning%and%control%
decisions. %%____
3. %%%%%Information%is%structured%and%controlled%by%GAAP. %%____
4.
%%%%%Information%is%available%quickly%without%the%need%to%wait%for%an%
audit. %%____
5. %%%%%Information%is%mainly%historical%with%some%predictions. %%____
6. %%%%%Emphasis%of%the%information%is%on%the%whole%organization. %%____
7.
%%%%%Information%is%mostly%monetary,%but%includes%nonmonetary%
information. %%____
2. Explain%what%is%meant%by%the%”lean%business%model”%and%why%many%businesses%
have%adopted%it.
3.%%The%following%cost%items%relate%to%the%Brock%Company.%Classify%each%cost%as%a%
variable%cost,%a%fixed%cost,%or%a%mixed%cost%by%placing%an%X%in%the%appropriate%column.%
Each%cost%should%be%evaluated%in%terms%of%the%volume%of%units%of%finished%products%
produced.%Also%indicate%with%an%X%for%each%item%if%it%is%a%product%cost%or%a%period%cost.
%%
4. For%each%item%shown%below,%classify%it%as%a%product%cost%or%a%period%cost,%by%
placing%an%X%in%the%appropriate%column.%For%each%item%that%is%a%product%cost,%also%
indicate%whether%it%is%a%direct%cost%or%an%indirect%cost%with%respect%to%a%unit%of%
finished%product.
%%
5. The%following%information%describes%a%product%expected%to%be%produced%and%sold%
by%Pepin%Corporation:%
Required:
(a)%Calculate%the%contribution%margin%per%unit.
(b)%Calculate%the%breakWeven%point%in%units.
Multiple%Choice:
6. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%Compute%the%contribution%margin%per%unit%
if%the%machine%is%purchased.
A. $22.50.
B. $26.00.
C. $29.50.
D. $28.50.
E. $27.50.
7. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%Compute%breakWeven%point%in%units%if%the%
new%machine%is%purchased.
A. 10,438%units.
B. 8,814%units.
C. 10,000%units.
D. 9,200%units.
E. 9,869%units.
8. Winthrop%Manufacturing%produces%a%product%that%sells%for%$50.00.%Fixed%costs%are%
$260,000%and%variable%costs%are%$24.00%per%unit.%Winthrop%can%buy%a%new%
production%machine%that%will%increase%fixed%costs%by%$11,400%per%year,%but%will%
decrease%variable%costs%by%$3.50%per%unit.%What%effect%would%the%purchase%of%the%
new%machine%have%on%Winthrop’s%breakWeven%point%in%units?
A. 800%unit%increase.
B. 800%unit%decrease.
C. 5,714%unit%increase.
D. 4,444%unit%decrease.
E. No%effect%on%the%breakWeven%point%in%units.