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Acct 285 - Exam 1 - 7 ‘ I x [email protected]“[3‘ Problem...

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Unformatted text preview: 7 ; ,. ‘ I x Name @930“ [3‘ Problem One (15 points) Assume that Builder Products has 10,000 units in beginning inventory (100% complete as to materials and 80% complete as to conversion costs). During May, 110,000 units were started and 99,000 units were completed. The ending inventory was 100% complete with respect to materials and 40% complete with respect to conversion costs. Costs in the beginning inventory were: $18,500 for materials and $15,040 for conversion costs. Costs incurred during May were $178,300 for materials and $189,020 for conversion costs. Prepare a cost of production report for May using the above information. Do not complete the shaded spaces. I .1), ‘, Vt.” ’ 1» Exam I — Accounting 285 - Summer 2005 Cost of Production Rep ort l Units Mat % Com-late CC % Cam F_Beginning WIP Plus : Units Started Total to Account for Less: Ending WIP Units Complete—d MaterIals UnitsCflpleted Endingfl Total Units W \ 01,50 0 Calculation of Total Costs r_ TE aterials Beginning WIP S S, 500 a Current Cost \ I K I 3 00 Conversion costs Materials Total Cost . l 6 (a 3 89 b Total Units Cost Per Unit 5 I ,_(p_Ll Cost Reconcilia ' Cost to Transfer: r—— Cost to Transfer Endino WIP: __ mm:— Conversion cost Total Endino Inventor Total Cost __l_ Aflfioo go 0&0 ZLQ Q‘ @0 I—‘ Calculation of Co_stper Units J Total cost i ,4, ' / i ‘4 J‘ “A Exam I — Accounting 285 - Summer 2005 Problem One (15 points) Assume that Builder Products has inventory (100% complete as to materials and 80% complet During May, 110,000 units were started and 99,000 units w inventory was 100% complete with respect to materials and to conversion costs. Costs in the beginning inventory were: $10,920 for conversion costs. Costs incurred during May we and $180,252 for conversion costs. Prepare a cost of product above information. Do not co mplete the shaded spices. Name / (L‘- \ J A 1.04100 units in beginning 6 as to conversion costs). ere completed. The ending 40% complete with respect $18,500 for materials and re $178,300 for materials ion report for May using the 1’— Cost of Production Re ortg Beginning WIP l_Plus : Units Started _‘_ Total to Account for Less: Ending WIP l Units Comgleted 1 Calculation of Units [ Materials Conversion costs l Units Completed flea) Ending WIP 2 (4100 Total Units ()0 Calculation of Tota _F Materials Current Cost Total Cost Beginning WIP a cu a Ion 0 Cost er Units Materials Total Cost Total Units “(0 COO JQJLODU Cost Per Unit _L 14H l__ Cost Reconciliation Cost to Transfer: Cost to Transfer Endin- WIP: Material Conversion cost Total cost Total Endm inventor Select the BEST answer to each question and circle the letter of the answer. 1. If management informs employees that bonuses will depend solely on improving the ,9 gross profit ratio (gross profit/sales), which of the following behaviors would be a? likely to be observed? (‘3 Sales people would quit trying to sell high volume, low margin core products 09) b. Overall sales would fall , . Overall gross profit would fall \\ All of the above 2. Marie’s Muffins projects labor costs of $25,000 in a period when 50,000 units are produced. If labor is a variable cost, and if production is expected to drop to 45,000 units in the next period, what is the expected labor cost in the next period? a. $25,000 Var) fable COS} i3 CdeUflQPQV’ (XIV/t 7 €902,500 $133ch )60000 = 060/1101 c. $20,000 d. $27,500 [45.000 X . 50 >flw Use the following information for the next two questions. Hess Manufacturing, which uses a normal overhead application system, has done an analysis of its overhead costs and has determined that machine hours are the best cost driver for overhead costs. The cost formula for overhead as a function of machine hours is estimated to be Overhead = $100,000 + $7.00 per machine hour Hess estimates that 20,000 machine hours will be worked in 2005. 3. What is the overhead application rate for 2005? c a. $5.00 per machine hour /D0 0629 f @> (<90; WE b. $10.00 per direct labor hour -: /; \ Q $12.00 per machine hour Q0) w ' d. $7.00 per machine hour 4. Assume that Hess actually works 22,000 hours in 2005 and incurs $246,000 gig 0 overhead costs. Which of the following conclusions can be reache 3‘! (E W Qagl‘i ’00 a Hess incurred less overhead than was expected in the original budget for overhead ®Hess incurred less overhead than would be expected given the number of machine hours worked. 9/ c. Hess incurred more overhead than should have been incurred for the year. d. Hess did a poor job of controlling overhead co ts for the year. (,ij ‘ s a) a [00000 . ’Budytijor 29.070 Ms is 354)w= “90,009 t‘hfiw mined \S 4946\000 Use the following information for the next 2 questions: During 2005, Wilson Company applies overhead using a normal costing system at a rate of $12 per direct labor hours. Estimated direct labor hours for the year were 150,000, 0 estimated overhead for the year was $1,800,000. Actual direct labor hours for 2005 6}; five W0 140,000 and actual overhead was $1,700,000. €00 ($0000 0 6995\00“&5. What is the amount of under or over applied overhead for the year? 9'19 905‘“. . $100,000 underapplied 6 $20,000 underapplied M 0‘ c. $0 d. $120,000 underapplied 6. Job AKL was produced during 2002. The job used $20,000 worth of materials, $30,000 worth of direct labor (making $15 per hour). What is the normal cost of the job? H .000 a. $50,000 SDDL ago .113 0 I 16 ‘— 9000 h“ H 393325332 09. 3551629 mm} d. $94,000 .7 1+ ‘ (I) D 7. Miller Manufacturing makes three products with the following information: mm.— $12.00 $9.00 $5.00 Variable cost $8.00 M $3.00 , CO $2.00 .00 \O The products are sold in a 5:3:2 mix, for Marbles, slingshots, and cap pistols respectively. What is the weighted average contribution margin per unit for Miller? 3 a. $4.33 g g b. $8.50 )5 L. 3;? '9“ $3323 39 4— 1% + c :44th 8. Which of the following would most clearly be an indirect cost when considering the cost of having a concert at Hilton Coliseum? I The cost of the security officers hired from the City of Ames for the concert ® The salary of the event’s manager at the Iowa State Center. c. The cost of advertising the event in the Des Moines Register d. The fee paid to the Boy Scouts for picking up the trash in the parking lot afier the concert. Use the following information for the next 4 questions: Swanson Company makes hockey sticks. The costs and prices for the sticks follow. Selling Price $23.00 per stick Variable Costs $13.00 per stick Fixed Costs $1,440,000 per year 9. What would income be if 200,000 sticks sold (assume that 200,000 were also produced)? [5 a. $4,600,000 CM 900. OOOX \O :- 0? ,OOOKIJO b. $2,000,000 \ g) $560,000 m \\ H40. 00 0 none of the above fl WOW/6 w 10. In what range does the break even pomt in units fall? 0 — 124,999 sticks [ '4 H 0 ) 000 125,000 - 149,999 sticks 150,000 - 174,999 sticks ~ more than 174,999 sticks 9‘3 ‘3 \2’ .2 1441009 How many sticks must be sold to earn a profit of $500,000 (ignore taxes)? (3) S: 11. 0—249,999sticks I: “40.01) T600,C0() A '44 m M ‘2: 2:2;222::22;22::22:: W ~52: d. more than 749,999 sticks ' ‘01.}019 00 12. Assume that Swanson could buy a new piece of machinery that wo e variable cost per stick to $11.00, but would increase fixed costs tm year. Above what volume would Swanson be more profitable with the new \ 6 production process than the current one? a. 126,154sticks UCV Wg FC’P 200,000 b. 144,000 sticks @ 100,000 sticks 9‘00)Oa) /; >‘OO)(.1/ 175,000 sticks 13. You are trying to decide whether to go to a concert you have tickets for, or stay home and study for an exam tonight. Which of the following would be a sunk cost that is not relevant to this decision? Q The cost of the tickets \ b. c. What the tickets could be sold for in front of the concert hall before the performance The cost of going out to dinner since you always go out to dinner when you go to a concert. d. The cost of the hotel room you were going to stay in after the concert. It is 2:00 pm and you can cancel until 4:00 pm. 0509 14. Just Rain Company produces two models, Wind and Hail, a new manufacturing process. Information regarding Wind and Hail is summarized in the following table: Wind Hail Price per unit $80 $60 Variable cost per unit $50 $30 Processing time required per unit 6 hours 2 hours There are only 120 hours per week of processing time available. Demand for both products is not constrained. Should Just Rain produce Wind or Hail? \% a. The company is indifferent between the two products, since the contribution margin per unit is the same. b. The company should produce Wind because the total contribution margin will be $600. The company should produce Hail because the total contribution margin will be $1,800. d. The problem does not provide enough information to make a decision. 15. Jones Company bought $200,000 of direct material during June, incurred $90,000 in direct labor cost, and had $130,000 in manufacturing overhead. Inventories for June were as follows: Beginning Ending Raw material $14,000 $18,000 ‘0 F67 Work in Process $19,000 $17,000 11.) 13 , [Q 325 1‘5 Finished Goods $1 8,000 $15,000 What is the cost of goods sold for June? R8. @031 [a (I C 0W” 4 l? a 1385 00 53133333 @umsesanq. 81; 130 61/195 4% c. $418,000 Mix 51H 435 $07" [3 (13 $421, 000 . W .91. W 04% L” 16. A company has a cost that 18 $4. 00 pélAérfit at a vo e of 9 .00 per -——-—- unit at a volume of 12, 000 units. The cost is: ‘6 Q 5:12... ”132...; 0.4+ Ln] 3:13:13... gm, 4 00 36W 0 3 00 30100 191000 \1/ A @400 H J— %lq4 17. Melvin Company makes 2 products, A and B. “Product—‘fis 5'Cor‘lh1bution argin :7 9'5 per unit of $6.00 and product B has a contribution margin per unit of $11 ..00 Melvin Company has annual fixed costs of $290, 000 units. Assume that products A and B 3—5 are sold in a 3:1 mix (3 units of A are sold for eac unit of B) How man {:0ka Ufl‘ each must be sold to break even? 2W9§0 .30000 A; 10,000 B 9,5 % 3: 3333:3333. 4 M33 36,000 \Q d. 40,000A;0B 400(1) 860 [0,(190 18. A cost is $80,000 in total at a volume of 20,000 units and $4.00 per unit at a volume of 25,000 units. The cost is: O Tbilu‘ “W U” |x t 0 5:33... swat) 60.000 ”'00 c. mixed 9’0 d. strange 96100 O ‘OO‘Ow M WWIQ’ me» ya 19. Assume a company using a normal costing system has both fixedan variable manufacturing overhead costs. Which of the following would cause overhead to be overapplied? a. Working more hours that was planned when determining the overhead rate. b. Spending more than should have been spent given how many hours were worked. . Spending less than should have been spent given how many hours were worked. Both a and c 20. Which of the following is not a product cost in a factory making tennis balls? The salary of the night security person walking around the factory. §The cost of advertising the tennis balls. ‘ \ gThe cost of the material used in the tennis balls. d. The depreciation on the machine that puts the balls into the can they are sold in. ...
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