294 MIDTERM PRACTICE 2 - Commerce Mentor Program COMM 294...

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Commerce Mentor Program: COMM 294 Midterm Review Session Question #1 (7 marks, suggested time 7 minutes) Job Order Costing Largeo Company produces unique coffee tables. On January 1, Largeo’s raw materials inventory balance was $4,215 and its finished goods balance was $2,465. Also, on January 1, there were three jobs in process with the following costs: Job 65 Job 66 Job 67 Direct Materials $ 200 $680 $1,560 Direct labor 700 1,400 2,100 Applied overhead 840 1,680 2,520 Total $1,740 $3,760 $6,180 During January, two more jobs were started; Job 68 and Job 69. Material purchases were $4,780. Materials and direct labor costs incurred by each job in process in January follow: Materials Direct labor Job 65 $800 $600 Job 66 300 400 Job 67 520 300 Job 68 1,600 1,300 Job 69 1,520 1,400 Job 67 and 68 were completed and sold by January 31. Required: 1. If overhead is applied on the basis of direct labor hours, what is the overhead rate? (2 marks) 2. Calculate costs of goods sold for January. (5 marks)
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Question #2 (32 marks, suggested time 32 minutes) Cost Volume profit Analysis and Activity Based Management The Pink Salmon Restaurant (PSR) wants to offer an “all you can eat” salmon and prawn buffet. (Shrimp is definitely off the menu). The restaurant will be very careful to monitor the amount of salmon and prawns that are being eaten during the dinner. This is so they do not cook more salmon and prawns than will be eaten by the patrons. Even so, PSR believes that 5% of all prawns and shrimp purchased will be thrown out. The remaining other food on the buffet will be cooked in advance and stored in refrigerated containers until the buffet starts. Up to 20% of the other food that is displayed on the buffet is usually thrown out at the end of the evening. The cooking staff is comprised of two sous-chefs who do the actual preparing of the food
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294 MIDTERM PRACTICE 2 - Commerce Mentor Program COMM 294...

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