Solved by verified expert :Managerial Accounting
EXAMINATION
NUMBER:
06168501
Note:You should complete alllesson exams before you
take the final exam.
Complete the following exam by
answering the questionsand compiling your answers intoa word-processing
document. Whenyou’re ready to submit your answers, refer to the
instructions atthe end of your exam booklet. Be certain to indicate the
properquestion number before each of your answers. Remember to show
your work if an answer requires a mathematical solution.
Answer each of the following 20
questions. Each answer isworth 5 points.
1.
The
work-in-process inventory account of a manufacturing company shows a balance of
$3,000 at the end of an accounting period. The job-cost sheets of the two incomplete
jobs show charges of $500 and $300 for direct materials, and charges of $400
and $600 for direct labor. From this information, it appears that the company
is using a predetermined overhead rate as a percentage of direct labor costs.
What percentage is the rate?
2.
The
break-even point in dollar sales for Rice Company is $480,000 and the company’s
contribution margin ratio is 40 percent. If Rice Company desires a profit of
$84,000, how much would sales have to total?
3.
Williams
Company’s direct labor cost is 25 percent of its conversion cost. If the
manufacturing overhead for the last period was $45,000 and the direct material
cost was $25,000, how much is the direct labor cost?
4.
Grading
Company’s cash and cash equivalents consist of cash and marketable securities.
Last year the company’s cash account decreased by $16,000 and its marketable
securities account increased by $22,000. Cash provided bv operating activities
was $24,000. Net cash used for financing activities was $20,000. Based on this
information, was the net cash flow from investing activities on the statement
of cash flows a net increase or decrease? By how much?
5.
Gladstone
Footwear Corporation’s flexible budget cost formula for supplies, a variable
cost, is $2.82 per unit of output. The company’s flexible budget performance
report for last month showed an $8,140 unfavorable spending variance for
supplies. During that month, 21,250 units were produced. Budgeted activity for
the month had been 20,900 units. What is the actual cost per unit for indirect
materials?
6.
Lyons
Company consists of two divisions, A and B. Lyons Company reported a
contribution margin of $60,000 for Division A, and had a contribution margin
ratio of 30 percent in Division B, when sales in Division B were $240,000. Net
operating income for the company was $22,000 and traceable fixed expenses were
$45,000. How much were Lyons Company’s common fixed expenses?
7.
Atlantic
Company produces a single product. For the most recent year, the company’s net
operating income computed by the absorption costing method was $7,800, and its
net operating income computed by the variable costing method was $10,500. The
company’s unit product cost was $15 under variable costing and $24 under absorption
costing. If the ending inventory consisted of 1,460 units, how many units must
have been in the beginning inventory?
8.
Black
Company uses the weighted-average method in its process costing system. The
company’s ending work-in-process inventory consists of 6.000 units, 75 percent
complete with respect to materials and 50 percent complete with respect to
labor and overhead. If the total dollar value of the inventory is $80,000 and
the cost per equivalent unit for labor and overhead is $6.00, what is the cost
per equivalent unit for materials?
9.
At
Overland Company, maintenance cost is exclusively a variable cost that varies
directly with machine-hours. The performance report for July showed that actual
maintenance costs totaled $11,315 and that the associated rate variance was
$146 unfavorable. If 7,300 machine-hours were actually worked during July, what
is the budgeted maintenance cost per machine-hour?
10.
The
cost of goods sold in a retail store totaled $650,000. Fixed selling and
administrative expenses totaled $115,000 and variable selling and
administrative expenses were $420,000. If the store’s contribution margin
totaled $590,000, how much were the sales?
11.
Denny
Corporation is considering replacing a technologically obsolete machine with a
new state-of-the-art numerically controlled machine. The new machine would cost
$600,000 and would have a 10-year useful life. Unfortunately, the new machine
would have no salvage value. The new machine would cost $20,000 per year to
operate and maintain, but would save $125,000 per year in labor and other
costs. The old machine can be sold now for scrap for $50,000. What percentage
is the simple rate of return on the new machine rounded to the nearest tenth of
a percent? (Ignore income taxes in this problem.)
12.
Lounsberry
Inc. regularly uses material O55P and currently has in stock 375 liters of the
material, for which it paid $2,700 several weeks ago. If this were to be sold
as is on the open market as surplus material, it would fetch $6.35 per liter.
New stocks of the material can be purchased on the open market for S7.20 per
liter, but it must be purchased in lots of 1,000 liters. You’ve been asked to
determine the relevant cost of 900 liters of the material to be used in a job
for a customer. What is the relevant cost of the 900 liters of material O55P?
13.
Harwichport
Company has a current ratio of 3.0 and an acid-test ratio of 2.8. Current
assets equal $210,000, of which $5,000 consists of prepaid expenses. The
remainder of current assets consists of cash, accounts receivable, marketable
securities, and inventory. What is the amount of Harwichport Company’s
inventory?
14.
Tolla
Company is estimating the following sales for the first six months of next
year:
January
$350,000
February
$300,000
March
$320,000
April
$410,000
May
$450,000
June
$470,000
Sales at Tolla are normally collected as
70 percent in the month of sale, 25 percent in the month following the sale,
and the remaining 5 percent being uncollectible. Also, customers paying in the
month of sale are given a 2 percent discount. Based on this information, how
much cash should Tolla expect to collect during the month of April?
15.
Trauscht
Corporation has provided the following data from its activity-based costing
system:
Activity Cost Pool
Total Cost
Total Activity
Assembly
$704,880
44,000 machine-hours
Processing orders
$91,428
1,900 orders
Inspection
$117,546
1,950 inspection-hours
The company makes 360 units of product
P23F a year, requiring a total of 725 machine-hours, 85 orders, and 45 inspection-hours
per year. The product’s direct materials cost is $42.30 per unit and its direct
labor cost is $14.55 per unit. The product sells for $132.10 per unit.
According to the activity-based costing system, what is the product
margin for product P23F?
16. Williams Company’s direct labor cost is 30
percent of its conversion cost. If the manufacturing overhead for the last
period was $59,500 and the direct materials cost was $37,000, what is the
direct labor cost?
17.
In a
recent period, 13,000 units were produced, and there was a favorable labor
efficiency variance of $23,000. If 40,000 labor-hours were worked and the
standard wage rate was $13 per labor-hour, what would be the standard hours
allowed per unit of output?
18.
The
balance in White Company’s work-in-process inventory account was $15,000 on
August 1 and $18,000 on August 31. The company incurred $30,000 in direct labor
cost during August and requisitioned $25,000 in raw materials (all direct
material). If the sum of the debits to the manufacturing overhead account total
$28,000 for the month, and if the sum of the credits totaled $30,000, then was
Finished Goods debited or credited? By how much?
19.
A
company has provided the following data:
Sales 4,000 units
Sales price $80 per unit
Variable cost $50 per unit
Fixed cost $30,000
If the dollar contribution margin per unit is
increased by 10 percent, total fixed cost is decreased by 15 percent, and all
other factors remain the same, will net operating income increase or decrease?
By how much?
20.
For the current year, Paxman Company incurred
$175,000 in actual manufacturing overhead cost. The manufacturing overhead
account showed that overhead was overapplied in the amount of $9,000 for the
year. If the predetermined overhead rate was $8.00 per direct labor-hour, how
many hours were worked during the year?
