2017 Final Exam Practice Problems - Acct 4210 Practice...

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Acct 4210 Practice Problems – Final ExamNote: This document includes practice problems for the material after the second exam. To study the material from thefirst and second exam, you should use the study guide for the first and second exam. These are on the website.1.Cecil’s Manufacturing has always made its own components.Recently, Waylo Products offered to supply one ofCecil’s components, the CZ-43, at a price of $5 each.Cecil uses 2,000 units of CZ-43 each year.The productioncost per unit is as follows:Direct Materials$1.30Direct labor0.50Variable Overhead2.50Fixed Overhead3.00Total$7.30The fixed overhead is an allocated expense; none of it would be eliminated if Cecil’s stopped producing CZ-43.Required:Should Cecil’s make or buy CZ-43?2.Mallard Company has been approached by a new customer offering to purchase 1,500 units of Mallard’s productat a price of $3 each.The new customer is geographically separated from Mallard’s other customers and therewould be no effect on existing sales.Mallard has the capacity to produce 10,000 units but only plans to produceand sell 8,000 units in the coming year.The produce normally sells for $5.The cost per unit is as follows:Direct Materials$0.50Direct Labor1.00Variable Overhead0.40Fixed Overhead2.00Total$3.90Required:1. Should Mallard accept the special order?Consider both quantitative and qualitative factors inyour decision.2. Suppose the order were for 2,500 units instead of 1,500.What would be the total dollarimpact on Mallard’s profits if they accepted the order?3.Mason Company currently manufactures 8,000 units of part 34R eachyear to be used in the production ofseveral of Mason’s products.The cost per unit for 34R is as follows:Direct Material$6.00Direct Labor3.00Variable Overhead2.00Fixed Overhead2.50Total$ 13.50Of the total fixed overhead assigned to 34R, $4,800 is directly traceable to the part while the rest is commonfixed overhead.An outside supplier has offered to sell the part to Mason for $12.There is no alternative usefor the facilities currently used to produce the part.Required:1. Should Mason Company make or buy part 34R?2. What is the most Mason would be willing to pay an outside supplier for the part?4.The manager of Specialty Paper Products is agonizing over a customer’s offer to purchase 5,000 boxes ofcalendars.The company is operating at 70% capacity and could use the extra business, but the offered price of$4.20 per box is significantly below the cost to produce the calendars.

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Term
Fall
Professor
Guymon
Tags
variable overhead, Rimbaud, Ernest Golding

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