Seoul National University Business School

251.306(002) Managerial Accounting – Sample Final Exam

Fall 2024

Name
(in Korean if
applicable):
Student ID
Number:

PART 1. True/False
questions PART 2. Multiple choice questions
[2 points for each] [5 points for each]
Q Your Answer Q Your Answer Q Your Answer

1 True False 6 C 11 A

2 True False 7 C 12 D

3 True False 8 A 13 C

4 True False 9 B 14 B

5 True False 10 D 15 B

PART 3. Problems (Total 40 points)

Problem 16
(1) example of a financial measure. [1 points]
Stock return (ex. Stock-based compensation)
Accounting number (ROA, EPS, Sales)

(2) example of a non-financial measure. [1 point]

Customer satisfaction, service delivery speed

(3) two disadvantages. [4 points]

1. Ignoring the complexity and value of core business process
2. Decreasing usefulness of financial performance measures under a rapidly
changing business environment
3. Little focus on managing intangible resources (which is essential for survival)
1) Satisfaction of existing and new (potential) customers
2) Process innovation (low cost, short lead-time, high quality products & services)
3) Employee ability enhancement (continuous improvement)

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 4. Financial measures are lag indicators that summarize the results of past Actions
(≒ Limitation of financial accounting information)
cf. Non-financial measures are leading indicators of future financial performance

→ back page!!
Problem 17
materials price variance materials quantity variance
(1)
[2 points] $6,400 U $33,800 U

labor rate variance labor efficiency variance

(2)
[2 points] $8,700 F $24,000 U

variable overhead rate variance variable overhead efficiency variance

(3)
[2 points] $750 F $3,750 U

fixed overhead budget variance fixed overhead volume variance

(4)
[2 points] $1,800 U $42,000 F

Problem 18
(1)
$38
[4 points]
(2)
$60
[4 points]

Problem 19
Product A Product B Product C
(1)
[6 points] $(3,000) $ 20,000 $(8,000)

(2)
product B
[2 points]

Problem 20
(1)
$800
[5 points]
(2)
$(100)
[5 points]

- End of exam -

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 Seoul National University Business School
251.306(002) Managerial Accounting – Sample Final Exam
Fall 2024

Name
(in Korean if
applicable):
Student ID
Number:

Instructions:
• For all questions, provide your answers in separate answer sheets provided.
• Time allowed: XX minutes
• Total 100 points
• Total 20 questions

Please note:
- You are NOT permitted to use a mobile phone in any capacity during an exam.
- You must submit BOTH question paper and answer sheets at the end of the
exam.

DO NOT TURN OVER THIS COVER PAGE

UNTIL YOU ARE TOLD TO DO SO

3
 Seoul National University Business School
251.306(002) Managerial Accounting – Sample Final Exam

PART 1. True or false questions (5 × 2 points): total 10 points

[Q1-5 Determine whether the given sentence is true or false.]

1. The cash budget is developed from the budgeted income statement.

False
2. When combining activities in an activity-based costing system, activities should be
grouped together at the same level. For example, batch-level activities should not b
e combined with unit-level activities.
True
3. A problem with directly comparing a static planning budget to actual costs is that thi
s comparison fails to distinguish between differences in costs that are due to chang
es in activity and differences that are due to how well costs were controlled.
True
4. Under standard costing, the materials quantity variance is computed based on the
amount of materials purchased during the period.
False
5. All other things the same, a decrease in average operating assets will increase retu
rn on investment (ROI).
True

PART 2. Multiple choice questions (10 × 5 points): total 50 points

[Q 6-15: Pick the best answer listed for each question below. There is only one
correct answer for each question.]

6. Anola Company has two products: A and B. The company uses activity-based
costing. The estimated total cost and expected activity for each of the company's
three activity cost pools are as follows:

Activity Estimated Expected Activity

Cost Pool Cost Product A Product B Total
Activity 1 $18,000 300 200 500
Activity 2 $16,000 500 100 600
Activity 3 $27,000 600 300 900

The activity rate under the activity-based costing system for Activity 3 is closest to:

A. $90.00
B. $67.78
C. $30.00
D. $30.50

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 (a) (b) (a) ÷ (b)
Activity Cost Pool Total Cost Total Activity Activity Rate
Activity 3 $27,000 900 $30

Q7-9. Wheeling Company is in the process of preparing a budget for October and
assembled the following data:

• Beginning inventory balance in October is $32,400.

• Sales are budgeted at $240,000 for October and $250,000 for November. Of these
sales, 35% will be for cash; the remainder will be credit sales. 40% of a month’s credit
sales are collected in the month the sales are made, and the remaining 60% are
collected in the following month.
• The budgeted cost of goods sold is always 45% of sales and the ending merchandise
inventory is always 30% of the following month’s cost of goods sold. All merchandise
purchases are on account. 30% of all purchases are paid for in the month of purchase
and 70% are paid for in the following month.

7. The budgeted cash collections are

A. $144,400
B. $148,400
C. $146,400
D. $150,400

Cash sales ($240,000 × 35%) $84,000

October credit sales collected in October ($240,000 × 65% × 40%) 62,400
Total cash collections 146,400

8. The budgeted merchandise purchases are

A. 109,350
B. 283,500
C. 174,150
D. 141,750

Budgeted cost of goods sold ($240,000 × 45%) $108,000

Add: desired ending merchandise inventory ($250,000 × 45% × 30%) 33,750
Total needs 141,750
Less: beginning merchandise inventory 32,400
Required purchases $109,350

9. The budgeted cash disbursements for merchandise purchases are

A. 32,750
B. 32,805
C. 32,900

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 D. 32,500
October credit purchases paid in October ($109,350 × 30%) = $32,805

10. A favorable materials price variance coupled with an unfavorable material usage
variance would most likely result from:

A. labor efficiency problems.

B. machine efficiency problems.
C. the purchase and use of higher than standard quality material.
D. the purchase and use of lower than standard quality material.

11. Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment.
Three of the company’s most popular models appears below:

Ski Golf Fishing

Guard Guard Guard
Selling price per unit $200 $300 $255
Variable cost per unit 60 140 55
Plastic injection molding machine processing
Time required to produce one unit 2 minutes 5 minutes 4 minutes
Pounds of plastic pellets per unit 7 pounds 4 pounds 8 pounds

If the total time available on the plastic injection molding machine is the constraint,
which product offers the most profitable use of the plastic injection molding machine?

A. Ski Guard
B. Golf Guard
C. Fishing Guard
D. Ski Guard and Golf Guard

Ski Golf Fishing

Guard Guard Guard
Selling price per unit $200 $300 $255
Variable cost per unit 60 140 55
Contribution margin per unit (a) $140 $160 $200
Plastic injection molding machine processing
Time required to produce one unit (b) 2 minutes 5 minutes 4 minutes
Contribution margin per unit of the $70 per $32 per $50 per
constrained resource (a) ÷ (b) minute minute minute

12. Dunklin Medical Clinic measures its activity in terms of patient-visits. Last month, the
budgeted level of activity was 1,620 patient-visits and the actual level of activity was
1,540 patient-visits. The cost formula for administrative expenses is $3.20 per

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 patient-visit plus $14,300 per month. The actual administrative expense was
$21,050. In the clinic's flexible budget performance report for last month, the
spending variance for administrative expenses was:

A. $118 F
B. $256 F
C. $1,566 U
D. $1,822 U

Spending variance = Flexible budget − Actual results = ($14,300+1,540 × $3.20) −

$21,050 = $(1,822)
Since the actual expense is more than the flexible budget, the variance is
unfavorable (U)

13. Adier Corporation produced a total of 33,660 units this week. The company wants
to maintain an Overall Equipment Effectiveness (OEE) of 0.357. Based on the data
below, calculate the maximum allowable defective units to achieve this OEE.

Actual run time this week 6,600 minutes

Machine time available per week 11,000 minutes
Actual run rate this week 5.1 units per minute
Ideal run rate 6.0 units per minute

A. 11,027
B. 10,251
C. 10,098
D. 9,932

Utilization rate = Actual run time ÷ Machine time available = 6,600 minutes ÷ 11,000
minutes = 0.60
Efficiency rate = Actual run rate ÷ Ideal run rate = 5.1 units per minute ÷ 6 units per
minute = 0.85
Quality rate = OEE ÷ (Utilization rate × Efficiency rate) = 0.357 ÷ (0.60 × 0.85) = 0.70
Defect-Free Output=Quality × Total Output = 0.7 × 33,660 = 23,562 units
Defective Units=Total Output − Defect-Free Output = 33,660 − 23,562 = 10,098
units

14. Payment Inc. is preparing its cash budget for February. The budgeted beginning
cash balance is $27,000. Budgeted cash receipts total $136,000 and budgeted cash
disbursements total $128,000. The desired ending cash balance is $50,000. The
company can borrow up to $110,000 at any time from a local bank, with interest not
due until the following month.

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 What is the company's ending cash balance for February?

A. $45,000
B. $50,000
C. $55,000
D. $60,000

15. Largo Company recorded for the past year sales of $750,000 and average operating
assets of $375,000. What is the margin that Largo Company needed to earn in order
to achieve an ROI of 15%?

A. 2.00%
B. 7.50%
C. 9.99%
D. 15.00%

Turnover = Sales ÷ Average operating assets = $750,000 ÷ $375,000 = 2.0

ROI 15% = Margin x Turnover (=2.0)
Margin = 7.50%

PART 3. Problems total 40 points

[Q 16-20: Provide your answer in the answer sheet.]

16. Provide one example each of a financial measure and a non-financial measure, and
explain two disadvantages of emphasizing financial performance measures under
responsibility accounting.
(1) example of a financial measure [1 point]
Stock return (ex. Stock-based compensation)
Accounting number (ROA, EPS, Sales)
(2) example of a non-financial measure. [1 point]
Customer satisfaction, service delivery speed
(3) two disadvantages. [4 points]
1. Ignoring the complexity and value of core business process
2. Decreasing usefulness of financial performance measures under a rapidly

8
 changing business environment
3. Little focus on managing intangible resources (which is essential for survival)
1) Satisfaction of existing and new (potential) customers
2) Process innovation (low cost, short lead-time, high quality products&services)
3) Employee ability enhancement (continuous improvement)
4. Financial measures are lag indicators that summarize the results of past Actio
ns (≒ Limitation of financial accounting information)
cf. Non-financial measures are leading indicators of future financial performance
Provide your answer in the answer sheet.

9
17. Huron Company produces and sells a single product with a standard cost card as
follows:
Standard Standard
quantity price Standard
or hours or rate cost
Direct materials 2 feet $8.45 per foot $16.90
Direct labor 1.4 hours $16 per hour 22.40
Variable overhead 1.4 hours $2.50 per hour 3.50
Fixed overhead 1.4 hours $6 per hour 8.40
Total standard cost per unit $51.20

• The company manufactured 30,000 units during the year.

• A total of 64,000 feet of material was purchased during the year at a cost of $8.55
per foot. All of this material was used to manufacture the 30,000 units produced.
There were no beginning or ending inventories.
• The company worked 43,500 direct labor-hours at a direct labor cost of $15.80
per hour.
• Overhead is applied to products based on standard direct labor-hours. Data
relating to manufacturing overhead costs follow:
Denominator activity level (direct labor-hours) 35,000
Budgeted fixed overhead costs $210,000
Actual variable overhead costs incurred $108,000
Actual fixed overhead cost $211,800

Instructions
(1) Compute the materials price and quantity variances. Specify whether variances
are favorable (F) or unfavorable (U). [2 points]
Materials price variance = AQ (AP – SP) = 64,000 feet ($8.55 per foot – $8.45
per foot) = $6,400 U
Materials quantity variance = SP (AQ – SQ) = $8.45 per foot (64,000 feet –
60,000 feet*) = $33,800 U
*30,000 units × 2 feet per unit = 60,000 feet

(2) Compute the labor rate and efficiency variances. Specify whether variances are
favorable (F) or unfavorable (U). [2 points]

Labor rate variance = AH (AR – SR) = 43,500 DLHs ($15.80 per DLH – $16.00
per DLH) = $8,700 F
Labor efficiency variance = SR (AH – SH) = $16.00 per DLH (43,500 DLHs –
42,000 DLHs*) = $24,000 U
*30,000 units × 1.4 DLHs per unit = 42,000 DLHs

(3) Compute the variable overhead rate and efficiency variances. Specify whether
variances are favorable (F) or unfavorable (U). [2 points]

Variable overhead rate variance = (AH × AR) – (AH × SR)

= ($108,000) – (43,500 DLHs × $2.50 per DLH) = $750 F

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 Variable overhead efficiency variance = SR (AH – SH)
= $2.50 per DLH (43,500 DLHs – 42,000 DLHs) = $3,750 U

(4) Compute the fixed overhead budget and volume variances. Specify whether
variances are favorable (F) or unfavorable (U). [2 points]

Actual Fixed Budgeted Fixed Overhead Fixed Overhead Applied to Work in

Overhead Process
$211,800 $210,000* 42,000 DLHs × $6 per DLH

= $252,000

  
Budget variance, Volume variance,
$1,800 U $42,000 F
*As originally budgeted. This figure can also be expressed as: 35,000 denominator DLHs
× $6 per DLH = $210,000.

Provide your answer in the answer sheet.

11
18. Kava Inc. manufactures industrial components. One of its products, which is used in
the construction of industrial air conditioners, is known as K65. Data concerning this
product are given below:
Per Unit
Selling price $180
Direct materials $29
Direct labor $5
Variable manufacturing overhead $4
Fixed manufacturing overhead $21
Variable selling expense $2
Fixed selling and administrative expense $17

The above per unit data are based on annual production of 4,000 units of the
component. Direct labor can be considered to be a variable cost.

The company has received a special, one-time-only order for 500 units of component
K65. There would be no variable selling expense on this special order and the total
fixed manufacturing overhead and fixed selling and administrative expenses of the
company would not be affected by the order.

Instructions
(1) Assuming that Kava has excess capacity and can fulfill the order without cutting
back on the production of any product, what is the minimum price per unit on the
special order below which the company should not go? [4 points]

(2) Assume that Kava has no excess capacity and this special order would require
10 minutes of the constraining resource, which could be used instead to produce
products with a total contribution margin of $11,000. What is the minimum price
per unit on the special order below which the company should not go? [4 points]
Provide your answer in the answer sheet.

12
19. Dorsey Company manufactures three products from a common input in a joint
processing operation. Joint processing costs up to the split-off point total $350,000
per quarter. For financial reporting purposes, the company allocates these costs to
the joint products based on their relative sales value at the split-off point. Unit selling
prices and total output at the split-off point are:
Product Selling price Quarterly output
A $16 per pound 15,000 pounds
B $ 8 per pound 20,000 pounds
C $25 per gallon 4,000 gallons

Each product can be processed further after the split-off point. Additional processing
requires no special facilities. The additional processing costs (per quarter) and unit
selling prices after further processing are:
Product Additional processing Selling price
costs
A $63,000 $20 per pound
B $80,000 $13 per pound
C $36,000 $32 per gallon

Instructions
(1) What is the financial advantage (disadvantage) of further processing each of the
three products beyond the split-off point? [6 points]
(2) Based on the analysis, which product or products should be sold at the split-off
point, and which should be processed further? [2 points]

Provide your answer in the answer sheet.

Answer:
(1) The financial advantage (disadvantage) of further processing each product is
calculated as follows:

A B C
Selling price after further processing $20 $13 $32
Selling price at the split-off point 16 8 25
Incremental revenue per pound or gallon $4 $5 $7
Total quarterly output in pounds or gallons × 15,000 × 20,000 × 4,000
Total incremental revenue $60,000 $100,000 $28,000
Total incremental processing costs 63,000 80,000 36,000
Financial advantage (disadvantage) of further
processing $(3,000) $ 20,000 $(8,000)

(2) Products A and C should be sold at the split-off point. Only product B should
be processed further.

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20. Advanced Products Corporation supplied the following data from its activity-based
costing system:

Overhead Costs
Wages and salaries $300,000
Other overhead costs 100,000
Total overhead costs $400,000

Additional cost information:

Total activity
Activity cost pool Activity measure for the year
Supporting direct labor Number of direct labor-hours 20,000 DLHs
Order processing Number of customer orders 400 orders
Customer support Number of customers 200 customers
Other This is an organization-sustaining Not applicable
activity

Distribution of resource consumption across activities

Supporting Order Customer
Direct Labor Processing support Other Total
Wages and salaries 40% 30% 20% 10% 100%
Other overhead costs 30% 10% 20% 40% 100%

During the year, advanced products completed one order for a new customer,
Shenzhen Enterprises. This customer did not order any other products during the
year. Data concerning that order follow:
Shenzhen Enterprises order
Units ordered 10 units
Direct labor-hours 2 DLH per unit
Selling price $300 per unit
Direct materials $180 per unit
Direct labor $50 per unit

Instructions
(1) Calculate the total overhead costs for the order from Shenzhen Enterprises
including customer support costs. [5 points]
(2) Calculate the customer margin for Shenzhen Enterprises. [5 points]

Provide your answer in the answer sheet.

Answer:
(1) The overhead costs for the Shenzhen Enterprises order
Supporting Order Customer
Direct Labor Processing support Other Total
Wages and salaries 120,000 90,000 60,000 30,000 300,000
Other overhead costs 30,000 10,000 20,000 40,000 100,000
150,000 100,000 80,000 70,000 400,000

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 Activity Cost Pools (a) Total Cost (b) Total Activity (a)÷(b) Activity rate
Supporting direct labor $150,000 20,000 DLHs $7.50 per DLH
Order processing $100,000 400 orders $250 per order
Customer support $80,000 200 customers $400 per customer

Activity Cost Pools (a) Activity rate (b) Activity (a)×(b) ABC cost
Supporting direct labor $7.50 per DLH 20 DLH $150
Order processing $250 per order 1 order 250
Customer support $400 per customer 1 customer 400
Total overhead cost $800

(2) Calculate the customer margin for Shenzhen Enterprises.

Sales (10 units × $300 per unit) $3,000

Costs:
Direct materials ($180 per unit × 10 units) $1,800
Direct labor ($50 per unit × 10 units) 500
Support direct labor overhead 150
Order processing overhead 250
Customer support overhead 400 3,100
Customer margin $ (100)

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