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ACCT 505 Week
1 -7 Discussion Questions Solution ACCT 505 Week 4 Midterm ,
ACCT 505
Week 1,2 and 6 Quizzes ,
ACCT 505
Course project
ACCT 505
Course Project 1 LBJ Company
ACCT 505
Course Project 2 Hampton Company
ACCT 505 Final Exam latest
ACCT 505 Final Exam latest
ACCT 505 Week 1 Discussion 1
|
Ethics,
Management, and Applications (graded)
|
Go
to page 129, Case 3-29, Ethics and the Manager. Let’s discuss the questions,
make value-added comments and points, and share personal experiences of
unethical situations.
|
ACCT
505 Week 1 Discussion 2Ethics, Management, and Applications (graded)
|
ACCT 505 Week 1 Discussion
2
Go
to page 129, Case 3-29, Ethics and the Manager. Let’s discuss the questions,
make value-added comments and points, and share personal experiences of
unethical situations.
ACCT 505 Week 2 Discussion
1
Welcome
to our Week 2 Discussions! Let's begin by discussing when job order costing
systems would be more effective than a process costing system. Please give
examples of types of businesses in which each would be appropriate. Do these
costing systems apply only to manufacturing?
ACCT 505 Week 2 Discussion
2
|
Ethics,
Management, and Applications (graded)
|
Go
to pages 170 and 171 and read Case 4-20, Ethics and the Manager: Understanding
the Impact of Percentage Completion on Profit. Based on the case, do you think
Gary Stevens wants the estimated percentage completion to be increased or
decreased? Please explain why.
ACCT 505 Week 3 Discussion
1
Why
is CVP analysis useful? Why is it an important concept in managerial accounting?
ACCT 505 Week 3
Discussion 2
|
Management
and Applications (graded)
|
Let’s
say that a company produces a single product with a sale price of $25 per unit.
The variable cost per unit is $15 and the company incurs fixed costs of $50,000
per month. What is the break-even point for this company? How much would we
expect in profit for every unit sold above break-even? What if the company has
its budget set at $35,000 target profit? How many units must it sell?
ACCT 505 Week 4
Discussion 1
Let's start the week by discussing Case 8-30 on pages 389
and 390. First, let's discuss how the budgeting process as employed by Ferguson
& Son Manufacturing Company contributes to the failure to achieve the
budgeted costs. What could they do differently that might lead to better budget
outcomes?
ACCT 505 Week 4
Discussion 2
|
Practice
and Exam Review (graded)
|
To
begin, download the practice Midterm from Doc Sharing to access questions and
topics for review. For multiple choice questions, please explain why the answer
chosen is correct, and why the other choices are not correct. Please support
your response. Let’s begin with the questions on Page 1.
ACCT 505 Week 5
Discussion 1
What are standard costs? Is a standard different from a
budget? What happens if they are set too high or too low?
|
Ethics,
Management, and Applications (graded)
|
Let’s
look at Case 9-26, Ethics and the Manager, in Chapter 9, pages 423 and 424.
What should Tom do in this situation and why? Have any of you had to deal with
a similar situation in the workplace?
ACCT 505 Week 6 Discussion 1
Welcome to Week 6 Discussions! Let's begin with some
definitions: What are sunk costs? Opportunity costs? Incremental costs? What is
meant by relevant costs?
ACCT 505 Week 6 Discussion 2
|
Management
and Applications (graded)
|
What
is meant by decentralization? What are the advantages and disadvantages? Do
some operations lend themselves more easily to being decentralized than others?
If so, why?
ACCT 505 Week 7 Discussion 1
|
Capital
Budgeting (graded)
|
Welcome
to Week 7 Discussions! Let’s start with defining capital budgeting and decision
making. What is capital budgeting? What are the differences between screening
decisions and preference decisions? Do you ever have occasion to make capital
budgeting decisions in your personal life?
ACCT 505 Week 7 Discussion 2
Practice and Exam Review
(graded)
To begin, download the Practice Final Exam from Doc Sharing
to access questions and topics for review. For multiple choice questions,
please explain why the answer chosen is correct and why the other choices are
not correct. Please support your response. Let's begin with the questions on
page 1.
ACCT 505 Week 5
Discussion 2
Professor Slook Email this Author 5/12/2016 8:53:50 AM
How
does the break-even point fit into this discussion? What is the break-even point? Why is it an important
concept in managerial accounting? What are its uses?
ACCT
505 Course Projects
ACCT 505
Course Project 1 LBJ Company
COURSE
PROJECT 1 INSTRUCTIONS
You have just been contracted as a
budget consultant by LBJ Company, a distributor of bracelets to various retail
outlets across the country. The company has done very little in the way of
budgeting and at certain times of the year has experienced a shortage of cash.
You have decided to prepare a cash
budget for the upcoming fourth quarter in order to show management the benefits
that can be gained from proper cash planning.You have worked with accounting
and other areas to gather the information assembled below.
The company sells many styles of
bracelets, but all are sold for the same $10 price. Actual sales of bracelets
for the last three months and budgeted sales for the next six months follow:
|
July (actual)
|
20,000
|
|
August (actual)
|
26,000
|
|
September (actual)
|
40,000
|
|
October (budget)
|
70,000
|
|
November (budget)
|
110,000
|
|
December (budget)
|
60,000
|
|
January (budget)
|
30,000
|
|
February (budget)
|
28,000
|
|
March (budget)
|
25,000
|
The concentration of sales in the
fourth quarteris due to the Christmas holiday. Sufficient inventory should be
on hand at the end of each month to supply 40% of the bracelets sold in the
following month.
Suppliers are paid $4 for each
bracelet. Fifty-percent of a month’s purchases is paid for in the month of
purchase; the other 50% is paid for in the following month. All sales are on
credit with no discounts. The company has found, however, that only 20% of a
month’s sales are collected in the month of sale. An additional 70% is
collected in the following month, and the remaining 10% is collected in the
second month following sale. Bad debts have been negligible.
Monthly operating expenses for the
company are given below:
Variable expenses:
Sales
commissions
4% of sales
Fixed expenses:
Advertising
$220,000
Rent
$20,000
Salaries
$110,000
Utilities
$10,000
Insurance
$5,000
Depreciation
$18,000
Insurance is paid on an annual
basis, in January of each year.
The company plans to purchase
$22,000 in new equipment during October and $50,000 in new equipment during
November; both purchases will be for cash. The company declares dividends of
$20,000 each quarter, payable in the first month of the following quarter.
Other relevant data is given below:
Cash balance as of September 30
$74,000
Inventory balance as of September
30
$112,000
Merchandise purchases for
September
$200,000
The company maintains a minimum cash
balance of at least $50,000 at the end of each month. All borrowing is done at
the beginning of a month; any repayments are made at the end of a month.
The company has an agreement with a
bank that allows the company to borrow the exact amount needed at the beginning
of each month. The interest rate on these loans is 1% per month and for simplicity
we will assume that interest is not compounded. At the end of the quarter, the
company will pay the bank all of the accrued interest on the loan and as much
of the loan as possible while still retaining at least $50,000 in cash.
Required:
Prepare a cash budget for the
three-month period ending December 31. Include the following detailed budgets:
1.
1.
a. A sales budget, by month and in total.
2.
b. A schedule of expected cash collections from sales,
by month and in total.
3.
c. A merchandise purchases budget in units and in
dollars. Show the budget by month and in total.
4.
d. A schedule of expected cash disbursements for
merchandise purchases, by month and in total.
5.
A cash budget. Show the budget by
month and in total. Determine any borrowing that would be needed to maintain
the minimum cash balance of $50,000.
ACCT 505 Course Project 2: Hampton
Company
Capital Budgeting Decision
Hampton Company: The production
department has been investigating possible ways to trim total production costs.
One possibility currently being examined is to make the cans instead of
purchasing them. The equipment needed would cost $1,000,000, with a disposal
value of $200,000, and would be able to produce 27,500,000 cans over the life
of the machinery. The production department estimates that approximately
5,500,000 cans would be needed for each of the next 5 years.
The company would hire six new
employees. These six individuals would be full-time employees working 2,000
hours per year and earning $15.00 per hour. They would also receive the same
benefits as other production employees, 15% of wages in addition to $2,000 of
health benefits.
It is estimated that the raw
materials will cost 30¢ per can and that other variable costs would be 10¢ per
can. Because there is currently unused space in the factory, no additional
fixed costs would be incurred if this proposal is accepted.
It is expected that cans would cost
50¢ each if purchased from the current supplier. The company’s minimum rate of
return (hurdle rate) has been determined to be 11% for all new projects, and
the current tax rate of 35% is anticipated to remain unchanged. The pricing for
the company’s products as well as number of units sold will not be affected by
this decision. The unit-of-production depreciation method would be used if the
new equipment is purchased.
Required:
1.
Based on the above information and
using Excel, calculate the following items for this proposed equipment
purchase.
o
Annual cash flows over the expected
life of the equipment
o
Payback period
o
Simple rate of return
o
Net present value
o
Internal rate of return
The check figure for the total
annual after-tax cash flows is $271,150.
2.
Would you recommend the acceptance
of this proposal? Why or why not? Prepare a short, double-spaced paper in MS
Word elaborating on and supporting your answer.
ACCT 505 Week 1 Quiz Latest 2016
(TCO B) Assume there was no beginning work in process
inventory and the ending work in process inventory is 70% complete with respect
to conversion costs. Under the weighted average method, the number of
equivalent units of production with respect to conversion costs would be
(TCO B) Process costing would be appropriate for each of the
following except
(TCO B) Lucas Company uses the weighted average method in its
process costing system. The company adds materials at the beginning of the
process in the forming department, which is the first of two stages in its
production process. Materials are 100% complete with respect to beginning and
ending work in process inventory. Information concerning operations in the
forming department in October follows.
What was the materials cost of work
in process on October 31?
(TCO B) In a job-order costing system, the use of direct
materials that have been previously purchased is recorded as a debit to
(TCO B) During December at Ingrim Corporation, $74,000 of raw
materials were requisitioned from the storeroom for use in production. These
raw materials included both direct and indirect materials. The indirect
materials totaled $6,000. The journal entry to record the requisition from the
storeroom would include a
(TCO B) Wedd Corporation had $35,000 of raw materials on hand
on May 1. During the month, the company purchased an additional $68,000 of raw
materials. During May, $92,000 of raw materials were requisitioned from the
storeroom for use in production. These raw materials included both direct and
indirect materials. The indirect materials totaled $5,000. The debits to the
work in process account as a consequence of the raw materials transactions in
May total
(TCO B) Some companies use process costing and some use
job-order costing. Which method a company uses depends on its industry. Several
companies in different industries are listed below.
i. Frozen cranberry juice processor
ii. Custom boat builder
iii. Concrete block manufacturer
iv. Winery that produces a number of specialty wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
vi. External auditing firm
ii. Custom boat builder
iii. Concrete block manufacturer
iv. Winery that produces a number of specialty wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
vi. External auditing firm
For each company, indicate whether
the company is most likely to use job-order costing or process costing.
(TCO B) Job 484 was recently completed. The following data
have been recorded on its job cost sheet.
|
Direct materials
|
$64,850
|
|
Direct labor hours
|
1,500 labor hours
|
|
Direct labor wage rate
|
$12 per labor hour
|
|
Number of units completed
|
3,500 units
|
The company applies manufacturing
overhead on the basis of direct labor hours. The predetermined overhead rate is
$22 per direct labor hour.
Compute the unit product cost that
would appear on the job cost sheet for this job.
(TCO B) Miller Company manufactures a product for which
materials are added at the beginning of the manufacturing process. A review of
the company’s inventory and cost records for the most recently completed year
revealed the following information.
|
Units
|
Materials
|
Conversion
|
|
|
Work in process. Jan. 1 (100%
complete with respect to materials costs and 80% with respect to conversion
costs)
|
100,000
|
$100,000
|
$157,500
|
|
Units started into production
|
500,000
|
||
|
Costs added during the year
|
|||
|
Materials
|
$650,000
|
||
|
Conversion
|
$997,500
|
||
|
Units completed during the year
|
450,000
|
The company uses the weighted
average cost method in its process costing system. The ending inventory is 100%
complete with respect to materials costs and 50% with respect to conversion
costs.
Required:
i. Compute the equivalent units of
production and the cost per equivalent units for materials and for conversion
costs.
ii. Determine the cost transferred to finished goods.
iii. Determine the amount of cost that should be assigned to the ending work in process inventory.
ii. Determine the cost transferred to finished goods.
iii. Determine the amount of cost that should be assigned to the ending work in process inventory.
Devry ACCT 505 Week 2 Quiz latest
2016
1.
(TCO B) Some companies use process costing and some use
job-order costing. Which method a company uses depends on its industry. Several
companies in different industries are listed below.i. Specialty coffee roaster
(roasts small batches of specialty coffee beans)
ii. Custom aircraft builder
iii. Brick manufacturer
iv. Microbrewery that produces a number of specialty beers
v. Steel company making chain link fences from iron ore
vi. Breakfast cereal manufacturer
ii. Custom aircraft builder
iii. Brick manufacturer
iv. Microbrewery that produces a number of specialty beers
v. Steel company making chain link fences from iron ore
vi. Breakfast cereal manufacturer
For each company, indicate whether
the company is most likely to use job-order costing or process
costing. (Points : 15)
2.
(TCO B) Job 728 was recently completed. The following
data have been recorded on its job cost sheet.
|
Direct materials
|
$89,925
|
|
Direct labor hours
|
1,220 labor hours
|
|
Direct labor wage rate
|
$15 per labor hour
|
|
Machine hours
|
1,550 machine hours
|
|
Number of units completed
|
4,500 units
|
The company applies manufacturing
overhead on the basis of machine hours. The predetermined overhead rate is $18
per machine hour.
Compute the unit product cost that
would appear on the job cost sheet for this job. (Points : 15)
4.
(TCO A) Honeysuckle Corporation has provided the following
data for the month of January.
|
Inventories
|
Beginning
|
Ending
|
|
Raw materials
|
$40,000
|
$23,000
|
|
Work in process
|
$9,000
|
$13,000
|
|
Finished goods
|
$52,000
|
$45,000
|
|
Additional Information
|
|
|
Raw material purchases
|
$68,000
|
|
Direct labor costs
|
$81,000
|
|
Manufacturing overhead cost
incurred
|
$47,000
|
|
Indirect materials included
in manufacturing overhead costs incurred
|
$8,000
|
|
Manufacturing overhead cost
applied to work in process
|
$39,000
|
Prepare a Schedule of Cost of Goods
Manufactured and a Schedule of Cost of Goods Sold in good form. (Points :
15)
ACCT 505 Week 4 Midterm – New 2016
Conversion Cost NO…. Prime Cost
NO.
Conversion Cost YES…. Prime Cost NO. Conversion Cost YES…. Prime Cost YES. Conversion Cost NO…. Prime Cost YES. |
will increase with increases in
activity.
will decrease with increases in activity. are not affected by activity. should be ignored in making decisions because they can never change. |
variable cost.
opportunity cost. period cost. product cost. |
Fixed costs per unit decrease and
variable costs per unit do not change.
Fixed costs per unit increase and variable costs per unit do not change. Fixed costs per unit do not change and variable costs per unit do not change. Fixed costs per unit do not change and variable costs per unit increase. |
Only statement I is true.
Only statement II is true. Both statements I and II are true. Statements I, II, and III are true. |
is homogeneous.
passes from one manufacturing department to the next before being completed. can be custom manufactured. has a unit cost that is easy to calculate by dividing total production costs by the units produced. |
units completed during the period,
plus equivalent units in the ending work-in-process inventory.
units started and completed during the period, plus equivalent units in the ending work-in-process inventory. units completed during the period and transferred out. units started and completed during the period, plus equivalent units in the ending work-in-process inventory, plus work needed to complete units in the beginning work-in-process inventory. |
sales – expenses.
sales – variable costs. sales – cost of goods sold. sales – fixed costs. |
Variable expense per unit
Number of units sold Total fixed expenses Selling price per unit |
inventory costs will be lower than
under absorption costing.
inventory costs will be higher than under absorption costing. net operating income will always be lower than under absorption costing. net operating income will always be higher than under absorption costing. |
1.
(TCO A) The following data (in thousands of dollars) have been
taken from the accounting records of Larop Corporation for the just-completed
year.
|
Sales
|
$950
|
|
Purchases of raw materials
|
$225
|
|
Direct labor
|
$250
|
|
Manufacturing overhead
|
$295
|
|
Administrative expenses
|
$150
|
|
Selling expenses
|
$140
|
|
Raw materials inventory, beginning
|
$30
|
|
Raw materials inventory, ending
|
$45
|
|
Work-in-process inventory,
beginning
|
$20
|
|
Work-in-process inventory, ending
|
$55
|
|
Finished goods inventory,
beginning
|
$100
|
|
Finished goods inventory, ending
|
$135
|
Prepare a Schedule of Cost of Goods
Manufactured statement in the text box below. (Points : 15)
Question 2.2. (TCO B) The Nebraska Company manufactures a product that goes
through three processing departments. Information relating to activity in the
first department during June is given below.
|
Percentage Completed
|
||||
|
Units
|
Materials
|
Conversion
|
||
|
Work in process, June 1
|
140,000
|
65%
|
45%
|
|
|
Work in process, Jun 30
|
120,000
|
75%
|
65%
|
|
The department started 580,000 units
into production during the month and transferred 600,000 completed units to the
next department.
Required: Compute the equivalent units of production for the first
department for June, assuming that the company uses the weighted-average method
of accounting for units and costs.(Points : 20)
Question 3.3. (TCO C) A tile manufacturer has supplied the following data.
|
Boxes of tile produced and sold
|
625,000
|
|
Sales revenue
|
$2,975,000
|
|
Variable manufacturing expense
|
$1,720,000
|
|
Fixed manufacturing expense
|
$790,000
|
|
Variable selling and admin expense
|
$152,000
|
|
Fixed selling and admin expense
|
$133,000
|
|
Net operating income
|
$180,000
|
Required:
Calculate the company’s unit contribution margin.
Calculate the company’s contribution margin ratio.
If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company’s net operating income be? (Points : 25)
Question 4.4. (TCO D) The Hampton Company produces and sells a single
product. The following data refer to the year just completed.
|
Selling price
|
$450
|
|
Units in beginning inventory
|
0
|
|
Units produced
|
25,000
|
|
Units sold
|
22,000
|
|
Variable costs per unit:
|
|
|
Direct materials
|
$150
|
|
Direct labor
|
$75
|
|
Variable manufacturing overhead
|
$25
|
|
Variable selling and admin
|
$15
|
|
Fixed costs:
|
|
|
Fixed manufacturing overhead
|
$275,000
|
|
Fixed selling and admin
|
$200,000
|
Required:
Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing. (Points : 30)
( ACCT 505 Week 4 Midterm
Examination Set 2 )
(TCO A) Wages paid to an assembly line worker in a factory are
a
(TCO A) A cost incurred in the past that is not relevant to
any current decision is classified as a(n)
(TCO A) Depreciation of office buildings and office equipment
is also known as
(TCO A) When the activity level is expected to increase within
the relevant range, what effects would be anticipated with respect to each of
the following?
(TCO F) Which of the following statements is true?
(TCO F) A job-order cost system is employed in those
situations where
(TCO F) The FIFO method only provides a major advantage over
the weighted-average method in that
(TCO B) The contribution margin ratio always decreases when
the
(TCO B) Which of the following would not affect the break-even
point?
(TCO E) In an income statement prepared using the variable
costing method, variable selling and administrative expenses would
(TCO F) The Illinois Company manufactures a product that goes
through three processing departments. Information relating to activity in the
first department during June is given below.
Percentage Completed
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
The department started 475,000 units
into production during the month and transferred 480,000 completed units to the
next department.
Required: Compute the equivalent
units of production for the first department for June, assuming that the
company uses the weighted-average method of accounting for units and costs.
(TCO B) A tile manufacturer has supplied the following data:
Boxes of tile produced and sold
625,000
Sales revenue $2,975,000
Variable manufacturing expense
$1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense
$152,000
Fixed selling and admin expense
$133,000
Net operating income $180,000
Required:
a. Calculate the company’s unit
contribution margin.
b. Calculate the company’s unit
contribution ratio.
c. If the company increases its unit
sales volume by 5% without increasing its fixed expenses, what would the
company’s net operating income be?
(TCO E) Lehne Company, which has only one product, has
provided the following data concerning its most recent month of operations:
|
Selling price
|
$ 125
|
|
|
Units in beginning inventory
|
600
|
|
|
Units oroduced
|
3000
|
|
|
Units sold
|
3500
|
|
|
Units in ending inventory
|
100
|
|
|
Variable costs per unit:
|
||
|
Direct materials
|
$ 15
|
|
|
Direct labor
|
$ 50
|
|
|
Variable manufacturing overhead
|
$ 8
|
|
|
Variable selling and admin
|
$ 12
|
|
|
Fixed costs:
|
||
|
Fixed manufacturing overhead
|
$ 75,000
|
|
|
Fixed selling and admin
|
$ 20,000
|
The company produces the same number
of units every month, although the sales in units vary from month to month. The
company’s variable costs per unit and total fixed costs have been constant from
month to month.
Required:
a. What is the unit product cost for
the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.
Devry acct505 week 5 discussion
latest 2016 may
|
Ethics, Management, and
Applications (graded)
|
Let’s look at Case 9-26, Ethics and
the Manager, in Chapter 9, pages 423 and 424. What should Tom do in this
situation and why? Have any of you had to deal with a similar situation in the
workplace?
Devry ACCT 505 Week 6 Quiz latest
2016
(TCO D) Return on investment (ROI) is equal to the margin multiplied
by
(TCO D) For which of the following decisions are opportunity
costs relevant?
(TCO D) Last year, the House of Orange had sales of $826,650,
net operating income of $81,000, and operating assets of $84,000 at the
beginning of the year and $90,000 at the end of the year. What was the
company’s turnover, rounded to the nearest tenth?
(TCO D) Data for December concerning Dinnocenzo Corporation’s
two major business segments-Fibers and Feedstocks-appear below:
|
Sales revenues, Fibers
|
$870,000
|
|
Sales revenues, Feedstocks
|
$820,000
|
|
Variable expenses, Fibers
|
$426,000
|
|
Variable expenses, Feedstocks
|
$344,000
|
|
Traceable fixed expenses, Fibers
|
$148,000
|
|
Traceable fixed expenses,
Feedstocks
|
S156,000
|
Common fixed expenses totaled
$314,000 and were allocated as follows: $129,000 to the Fibers business segment
and $185,000 to the Feedstocks business segment.
Required:
Prepare a segmented income statement
in the contribution format for the company. Omit percentages; show only dollar
amounts.
(TCO D) Wryski Corporation had net operating income of
$150,000 and average operating assets of $500,000. The company requires a
return on investment of 19%.
Required:
i. Calculate the company’s current
return on investment and residual income.
ii. The company is investigating an
investment of $400,000 in a project that will generate annual net operating
income of $78,000. What is the ROI of the project? What is the residual income
of the project? Should the company invest in this project?
(TCO D) Tjelmeland Corporation is considering dropping product
S85U. Data from the company’s accounting system appear below.
|
Sales
|
$360,000
|
|
Variable Expenses
|
$158,000
|
|
Fixed Manufacturing Expenses
|
$119,000
|
|
Fixed Selling and Administrative
Expenses
|
$94,000
|
All fixed expenses of the company
are fully allocated to products in the company’s accounting system. Further
investigation has revealed that $55,000 of the fixed manufacturing expenses and
$71,000 of the fixed selling and administrative expenses are avoidable if
product S85U is discontinued.
Required:
i. According to the company’s
accounting system, what is the net operating income earned by product S85U?
Show your work!
ii. What would be the effect on the
company’s overall net operating income of dropping product S85U? Should the
product be dropped?
(TCO D) Fouch Company makes 30,000 units per year of a part it
uses in the products it manufactures. The unit product cost of this part is
computed as follows.
|
Direct Materials
|
$15.70
|
|
Direct Labor
|
$17.50
|
|
Variable Manufacturing Overhead
|
$4.50
|
|
Fixed Manufacturing Overhead
|
$14.60
|
|
Unit Product Cost
|
$52.30
|
An outside supplier has offered to
sell the company all of these parts it needs for $51.90 a unit. If the company
accepts this offer, the facilities now being used to make the part could be
used to make more units of a product that is in high demand. The additional
contribution margin on this other product would be $219,000 per year.
If the part were purchased from the
outside supplier, all of the direct labor cost of the part would be avoided.
However, $6.20 of the fixed manufacturing overhead cost being applied to the
part would continue even if the part were purchased from the outside supplier.
This fixed manufacturing overhead cost would be applied to the company’s
remaining products.
Required:
i. How much of the unit product cost
of $52.30 is relevant in the decision of whether to make or buy the part?
ii. What is the net total dollar
advantage (disadvantage) of purchasing the part rather than making it?
iii. What is the maximum amount the
company should be willing to pay an outside supplier per unit for the part if
the supplier commits to supplying all 30,000 units required each year?
(TCO D) Biello Co. manufactures and sells medals for winners
of athletic and other events. Its manufacturing plant has the capacity to
produce 15,000 medals each month; current monthly production is 14,250 medals.
The company normally charges $115 per medal. Cost data for the current level of
production are shown below.
|
Variable Costs
|
||
|
Direct Materials
|
$969,000
|
|
|
Direct Labor
|
$270,750
|
|
|
Selling and Administrative
|
$270,075
|
|
|
Fixed Costs
|
||
|
Manufacturing
|
$370,550
|
|
|
Selling and Administrative
|
$89,775
|
|
The company has just received a
special one-time order for 600 medals at $102 each. For this particular order,
no variable selling and administrative costs would be incurred. This order
would also have no effect on fixed costs.
Required:
Should the company accept this
special order? Why?
ACCT
505 Final Exam – latest 2016
1.
(TCO E) Designing a new product is a(n) (Points : 5)
batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
Question 2.2. (TCO G) Given the following data, what would ROI be?
Sales $70,000
Net operating income $10,000
Contribution margin $20,000
Average operating assets
$50,000
Stockholder’s equity $25,000
(Points : 5)
6.0%
15.0%
12.5%
20.0%
1.
RspGF=”font-family:’Arial’;font-size:10pt;”(TCO
C) Longiotti Corporation produces and sells a single product. Data concerning
that product appear below.
|
Selling price per unit
|
$375.00
|
|
Variable expense per unit
|
$144.00
|
|
Fixed expense per month
|
$1,686,300
|
Required:
Determine the monthly breakeven in
units or dollar sales. Show your work! (Points : 25)
2.
TCO B) Maverick Corporation uses the weighted-average method
in its process costing system. Data concerning the first processing department
for the most recent month are listed below.
|
Work in process, beginning:
|
|
|
Units in beginning work in
process inventory
|
400
|
|
Materials costs
|
$6,900
|
|
Conversion costs
|
$2,500
|
|
Percent complete for
materials
|
80%
|
|
Percent complete for
conversion
|
15%
|
|
Units started into
production during the month
|
6,000
|
|
Units transferred to the
next department during the month
|
5,600
|
|
Materials costs added
during the month
|
$112,500
|
|
Conversion costs added
during the month
|
$210,300
|
|
Ending work in process:
|
|
|
Units in ending
work-in-process inventory
|
800
|
|
Percentage complete for
materials
|
70%
|
|
Percentage complete for
conversion
|
30%
|
Required: Calculate the equivalent
units for conversion for the month in the first processing department. (Points
: 25)\
1.
TCO D) Topple Company produces a single product. Operating
data for the company and its absorption costing income statement for the last
year are presented below.
|
Units in beginning inventory
|
2,000
|
|
Units produced
|
9,000
|
|
Units sold
|
10,000
|
|
Sales
|
$100,000
|
Less cost of goods sold:
|
Beginning inventory
|
12,000
|
|
Add cost of goods manufactured
|
54,000
|
|
Goods available for sale
|
66,000
|
|
Less ending inventory
|
6,000
|
|
Cost of goods sold
|
60,000
|
|
Gross margin
|
40,000
|
|
Less selling and admin. expenses
|
28,000
|
|
Net operating income
|
$12,000
|
Variable manufacturing costs are $4
per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed
manufacturing overhead was applied at a rate of $2 per unit. Variable selling
and administrative expenses were $1 per unit sold.
Required: Prepare a new income
statement for the year using variable costing. Comment on the differences
between the absorption costing and the variable costing income statements.
(Points : 30)
2.
TCO I) (Ignore income taxes in this problem.) Bill Anders
retires in 8 years. He has $650,000 to invest and is considering a franchise
for a fast-food outlet. He would have to purchase equipment costing $500,000 to
equip the outlet and invest an additional $150,000 for inventories and other
working capital needs. Other outlets in the fast-food chain have an annual net
cash inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He
estimates that the equipment could be sold at that time for about 10% of its
original cost. Mr. Anders’ required rate of return is 16%.
Required:
Part A: What is the investment’s net
present value when the discount rate is 16%?
Part B: Refer to your calculations.
Is this an acceptable investment? Why or why not? (Points : 30)
3.
TCO A) The following data (in thousands of dollars) have been
taken from the accounting records of the Maroon Corporation for the
just-completed year.
|
Sales
|
1,300
|
|
Raw materials inventory, beginning
|
25
|
|
Raw materials inventory, ending
|
30
|
|
Purchases of raw materials
|
250
|
|
Direct labor
|
350
|
|
Manufacturing overhead
|
500
|
|
Administrative expenses
|
300
|
|
Selling expenses
|
250
|
|
Work in process inventory,
beginning
|
150
|
|
Work in process inventory, ending
|
100
|
|
Finished goods inventory,
beginning
|
80
|
|
Finished goods inventory, ending
|
110
|
Use the above data to prepare (in
thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule
of Cost of Goods Sold for the year. In addition, what is the impact on the
financial statements if the ending finished goods inventory is overstated or
understated? (Points : 25)
4.
TCO F) Walker Corporation is preparing its cash budget for
November. The budgeted beginning cash balance is $43,000. Budgeted cash receipts
total $117,000 and budgeted cash disbursements total $122,000. The desired
ending cash balance is $55,000. The company can borrow up to $100,000 at any
time from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget
for November in good form. Make sure to indicate what borrowing, if any, would
be needed to attain the desired ending cash balance (Points : 25)
6.
(TCO H) Lindon Company uses 7,500 units of Part Y each year as
a component in the assembly of one of its products. The company is presently
producing Part Y internally at a total cost of $119,000 as follows.
Direct materials
$26,000
Direct labor
28,000
Variable manufacturing overhead
20,000
Fixed manufacturing overhead
45,000
Total costs
$119,000
An outside supplier has offered to
provide Part Y at a price of $12 per unit. If Lindon stops producing the part
internally, one third of the fixed manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy
analysis showing the annual advantage or disadvantage of accepting the outside
supplier’s offer. Please state clearly whether the part should be made or
bought and share your work.
(Points : 30)
7.
TCO B) Sandler Corporation bases its predetermined overhead
rate on the estimated machine hours for the upcoming year. Data for the
upcoming year appear below.
|
Estimated machine hours
|
75,000
|
|
|
Estimated variable manufacturing
overhead
|
$4.50
|
per machine hour
|
|
Estimated total fixed
manufacturing overhead
|
$825,000
|
The actual machine hours for the
year turned out to be 77,000.
Required:
Compute the company’s predetermined
overhead rate. (Points : 25)
( ACCT 505 Final Exam Set 2 )
1. (TCO C) Silver City, Inc., has collected the following operating
information below for its current month’s activity. Using this
information, prepare a flexible budget analysis to determine how well Silver
City performed in terms of cost control.
Actual Costs Incurred
Static Budget
Activity level (in units)
5,250
5,178
Variable Costs:
Indirect materials
$24,182
$23,476
Utilities
$22,356
$22,674
Fixed Costs:
Administration
$63,450
$65,500
Rent
$65,317
$63,904
2. (TCO D) Globe Co. manufactures automatic door openers. The
company uses 15,000 electronic hinges per year as a component in the assembly
of the openers. You have been engaged by Globe to assist with an
evaluation of whether the company should continue producing the hinges or
purchase them from an outside vendor.
The Accounting Department
provided the following detail regarding the annual cost to produce electronic
hinges:
Direct materials
$54,000
Direct labor
60,000
Variable manufacturing overhead
36,000
Fixed manufacturing overhead
90,000
Total costs
$240,000
The Procurement Department provided
the following supplier pricing:
Supplier A price per hinge
$11.00
Supplier B price per hinge
$10.75
Supplier C price per hinge
$10.50
The supplier pricing was obtained in
response to a formal request for proposal (RFP). Procurement has
determined these suppliers meet Globe’s technical specifications and quality
requirements.
If Globe stops producing the part
internally, 10% of the fixed manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy
analysis showing the annual advantage or disadvantage (in dollars) of accepting
an outside supplier’s offer. Should the company buy the parts? If
so, from which supplier?
3. (TCO E) Mesa Company produces a single product. Operating data
for the company and its absorption costing income statement for the last year
are presented below:
Units in beginning inventory
2,000
Units produced
9,000
Units sold
10,000
Sales
$100,000
Less cost of goods sold:
Beginning inventory
12,000
Add cost of goods manufactured
54,000
Goods available for sale
66,000
Less ending inventory
6,000
Cost of goods sold
60,000
Gross margin
40,000
Less selling and admin. expenses
28,000
Net operating income
$12,000
Variable manufacturing costs are $4
per unit. Fixed factory overhead totals $18,000 for the year. This overhead was
applied at a rate of $2 per unit. Variable selling and administrative expenses
were $1 per unit sold.
Required: Prepare a new income
statement for the year using variable costing. Comment on the differences
between the absorption costing and the variable costing income statements.
4. (TCO A) The following data (in thousands of dollars) have been
taken from the accounting records of the White Sands Corporation for the
just-completed year.
Sales
1,150
Raw materials inventory, beginning
15
Raw materials inventory, ending
40
Purchases of raw materials
150
Direct labor
250
Manufacturing overhead
300
Administrative expenses
500
Selling expenses
300
Work in process inventory, beginning
100
Work in process inventory, ending
150
Finished goods inventory, beginning
80
Finished goods inventory, ending
120
Use the above data to prepare (in
thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule
of Cost of Goods Sold for the year. In addition, what is the impact on the
financial statements if the ending finished goods inventory is overstated or
understated?
1. (TCO F) Farmington Corporation uses the weighted-average
method in its process costing system. Data concerning the first processing
department for the most recent month are listed below.
Work in process, beginning:
Units in beginning work-in-process
inventory
400
Materials costs
$6,900
Conversion costs
$2,500
Percentage complete for materials
80%
Percentage complete for conversion
15%
Units started into production during
the month
6,000
Units transferred to the next
department during the month
5,000
Materials costs added during the
month
$112,500
Conversion costs added during the
month
$210,300
Ending work in process:
Units in ending work-in-process
inventory
1,200
Percentage complete for materials
60%
Percentage complete for conversion
30%
Required: Calculate the equivalent
units for materials (using the weighted-average method) for the month in the
first processing department.
2.
(TCO G) – (Ignore income taxes in this
problem.) Tennessee Co. is considering the production of an exterior
paint that will require the purchase of new mixing machinery. The machinery
will cost $700,000, is expected to have a useful life of 12 years, and is
expected to have a salvage value of $100,000 at the end of 12 years. The
machinery will also need a $40,000 overhaul at the end of Year 7. A $50,000
increase in working capital will be needed for this investment project. The
working capital will be released at the end of the 12 years. The
new paint is expected to generate net cash inflows of $120,000 per year
for each of the 12 years. Tennessee’s discount rate is 14%.
Required:
a. What is the net present
value of this investment opportunity?
b. Based on your answer to (a)
above, should Tennessee go ahead with the new paint?
3. (TCO B) Winslow Corporation produces and sells a single
product. Data concerning that product appear below.
Selling price per unit
$130.00
Variable expense per unit
$27.30
Fixed expense per month
$165,3
Required:
a) Determine the monthly break-even
in unit sales. Show your work!
b) Determine the monthly break-even
in dollar sales. Show your work!
1. (TCO F) Manchester, Inc. bases its predetermined overhead rate
on the estimated machine hours for the upcoming year. Data for the upcoming year
appear below.
Estimated machine hours
85,000
Estimated variable manufacturing
overhead
$5.55 per machine hour
Estimated total fixed manufacturing
overhead
$951,888
Required:
Compute the company’s predetermined
overhead rate.
2. (TCO F) Memphis Corporation 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.
Required:
Prepare the company’s cash budget
for February in good form. Make sure to indicate what borrowing, if any, would
be needed to attain the desired ending cash balance.
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