# answers_to_the_final - Answers to the mid-term Part I...

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Answers to the mid-term Part I. Multiple Choices 1. D 2. C 3. D 4. A 5. B 6. D 7. B 8. A 9. C 10. B 11. C 12. E 13. D 14. C 15. B Part II. Problems 1. 1) Beginning inv. + production – ending inv. = sale 300 + x –200 = 5,000 x = 4,900 2) poles needed: 1000 + x –600 = 4,900 x = 4,500 cost: \$4,500 sheeting needed: 5,000 + x – 3000 = 4,900 × 3 x = 12,700 (sq. meter) 6,350 \$10,850 2. 1) Long-run normal volume: 3 × 2400 × 60 = 432,000 min. Budgeted volume: 475,313 min. Actual volume: 490,799 min. Standard volume at the actual production level: 484,227 min. Each can be used. 2) Note that this is the rate determined at the beginning of accounting period (predetermined rate). Actual volume and standard volume numbers are not available at that point. Normal volume Budgeted volume V.C. (47.52/60) \$0.792 \$0.792 F.C. 1,111,330/total min. 2.5725 2.3381 Predetermined rate \$3.3645/min \$3.1301/min × 36 min . × 36 min standard cost of #A7474 \$121.12/unit \$112.68/unit 3) The long-run normal volume of 432,000 is preferred because it avoids the potential “death-spiral” effect: when you are having a bad year with low budgeted volume, using budgeted volume leads to higher per unit allocated cost, making it even more costly to sell your product in the bad year. (The difference between normal volume and budgeted volume also captures the expected volume variance, reflecting the efficiency of capacity utilization. Recall Polysar case.) However, many companies do use budgeted volume (thus eliminated expected volume variance).

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answers_to_the_final - Answers to the mid-term Part I...

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