Spring 08 solution

# Spring 08 solution - ACCOUNTANCY 321 Spring 2008 EXAM II -...

This preview shows pages 1–4. Sign up to view the full content.

ACCOUNTANCY 321 Spring 2008 EXAM II - Solution I. A. Possible reasons are: (1) The numerator reason: Actual manufacturing overhead differs from the estimated manufacturing overhead. (2) The denominator reason: Actual quantity of the cost driver differs from the estimated quantity. (3) Both the numerator and the denominator reasons. B. Predetermined manufacturing overhead rate = \$960,000/30,000 MH = \$32 per MH Actual manufacturing overhead \$922,400 Overapplied 76,000 Manufacturing overhead applied \$998,400 \$998,400/\$32 per MH = 31,200 ACTUAL MH C.(1) Using one overhead cost pool for allocating manufacturing overhead is appropriate because job order costing is used for Short Term Profit Measurement (external Financial and IRS reporting) purposes. With short term profit measurement, any allocation will do. (2) Using any allocation for Process Control and Performance Evaluation purposes is not appropriate. No cost allocation should be made for this purpose. OR: For Process Control and Performance Evaluation purposes only allocations which are used for motivational purposes are allowed.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
II. A. ACCRUAL BASIS Revenue (10,000 bu. @ \$2.40) \$24,000 Cost of Goods Sold: Depr. (\$3,000)(10,000/15,000) \$2,000 Other Production costs (10,000 bu.)(\$.50) 5,000 (7,000) Gross Profit \$17,000 Selling and Delivery Expense (10,000)(\$.10) \$1,000 Miscellaneous Administrative costs 4,000 Interest Expense 5,000 10,000 Before Tax Net Income \$ 7,000 (4 pts.) Accounts Receivable: (1/4)(10,000 bu.)(\$2.40) = \$6,000 (1 pt.) Inventory: (5,000 bu.)(\$.50) + (\$3,000)(5,000/15,000) = \$3,500 (1 pt.)
B. PRODUCTION BASIS Revenue (10,000 bu. @ \$2.40) \$24,000 (5,000 bu. @ \$3.00) 15,000 \$39,000 Cost of Goods Sold: Depr. (\$3,000)(15,000/15,000) \$3,000 Other Production costs (15,000 bu.)(\$.50) 7,500 (10,500) Gross Profit \$28,500 Selling and Delivery Expense (10,000)(\$.10)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 01/06/2010 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

### Page1 / 10

Spring 08 solution - ACCOUNTANCY 321 Spring 2008 EXAM II -...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online