ADMS_Fall_2009_Final_Exam_Part_Two_Q_and_S

ADMS_Fall_2009_Final_Exam_Part_Two_Q_and_S -...

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Unformatted text preview: Name:____________________ Student Number:____________ Fall 2009 School of Administrative Studies, York University ADMS 2510-Introduction to Management Accounting Final Exam: Part Two December 20, 2009 8:20-10:10PM Instructions 1. This is a closed book examination and no collaboration is allowed. 2. Only NON-PROGRAMMABLE calculators are allowed 3. Write your name and student number in the designated area at the top of each page, and indicate your section letter on the cover page. 4. Place photo identification on your desk at the beginning of the exam to facilitate verification. 5. You must sign in. 6. Formula sheets and dictionaries are not allowed. 7. Cell phones must be turned off. Indicate Section:____________ A: Tuesday 4-7pm S. Ding VH D B: Wednesday 7-10pm J. Nemi CLH K C: Thursday 7-10pm S. Ding CLH B D: Monday 7-10pm S. Ding VH D E: Wednesday 4-7pm J. Nemi CLH H F: Internet P. Gelinas G: Friday 11:30-2:30pm B. Bryant HNE 038 Deferred Sign-in Number: ______________ Question 3 (20 marks): ________ Question 4 (20 marks): ________ Question 5 (20 marks): ________ Total: /60 1 Name:____________________ Student Number:____________ QUESTION 3 (20 marks) Laidlaw Industries produces tool and die machinery for manufacturers. The company expanded vertically in 2008 by acquiring Kelly Steel Company, one of its suppliers of alloy steel plates. In order to manage the two separate businesses, the operations of Kelly are reported separately as an investment centre. Laidlaw monitors its divisions both on the basis of contribution margin and return on average investment, with investment defined as average operating assets employed. Management bonuses have been based on ROI. All investments are expected to earn a minimum return of 11% before income taxes. Kelly Steels cost of goods sold is considered to be entirely variable, while the divisions administrative expense is not to be considered dependent on volume. Selling expenses are a mixed cost with 40% attributed to sales volume. Kellys ROI has been 11.8% since 2008. During the fiscal year ended November 30, 2009, Kelly contemplated a capital acquisition of $2,000,000 with an estimated ROI of 11.5%. However, the division manager of Kelly Steel rejected the investment because it would reduce Kellys overall ROI. The 2009 operating statement for Kelly Steel Company follows. The divisions operating assets employed were $15,750,000 at November 30, 2009, a 5% increase over the 2008 year-end balance. Kelly Steel Company Operating Statement For the Year Ended November 30, 2009 Sales revenue $25,000,000 Less expenses: Cost of goods sold $16,500,000 Administrative expenses 3,955,000 Selling expenses 2,700,000 23,155,000 Operating income before taxes $ 1,845,000 2 Name:____________________ Student Number:____________ REQUIRED: a) Calculate the contribution margin per unit for Kelly Steel Company if 1,484,000 units were produced and sold for the year ended November 30, 2009. (5 marks) b) Calculate the ROI for Kelly Steel Company for the year ended November 30,...
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ADMS_Fall_2009_Final_Exam_Part_Two_Q_and_S -...

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