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Mid-Term A Solution

# Mid-Term A Solution - SOLUTIONS COMM 3305 and ACCO 240 FALL...

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SOLUTIONS- COMM 3305 and ACCO 240 – FALL EXAM 2006 √√ means 1 mark √ means ½ mark QUESTION 1 1. D 2. D 3. B 4. D 5. A 6. C 7. A 8. B 9. A 10.C 11.C 12.A 13. E 14.B 15. D 1

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SOLUTIONS- COMM 3305 and ACCO 240 – FALL EXAM 2006 QUESTION 2 Instruction 1: 3.5 marks Est OH 500000 Est Mach hrs 10000 OH rate \$50.00per Mach hrs √ Basic Deluxe Basic 5000x\$50 250000/40000 units √ OH √\$6.25 √\$12.50 Deluxe 5000X50 250000/20000 units√ Prime costs \$80.00 \$160.00 √\$86.25 √\$172.50 Instruction 2 (10 marks) 1 mark for table or Equation set up Activity Driver Basic Model Deluxe model Total costs Total activity Cost per activity Basic Deluxe Maintaining equipment hours used 1000 3000 \$114,000 4000 √\$28.50 \$28,500.00 \$85,500.00 Engineering support hours 1500 4500 \$120,000 6000 √\$20.00 \$30,000.00 \$90,000.00 Material Handling number of moves 2000 4000 \$20,000 6000 √\$3.33 \$6,660.00 \$13,320.00 Setting up equipment number of set up s 20 60 \$96,000 80 √\$1,200.00 \$24,000.00 \$72,000.00 Purchasing material Number of requisitions 100 200 \$60,000 300 √\$200.00 \$20,000.00 \$40,000.00 Receiving goods Orders processed 250 500 \$40,000 750 √\$53.33 \$13,325.00 \$26,650.00 Inspection Number of inspections 250 500 \$30,000 750 √\$40.00 \$10,000.00 \$20,000.00 Providing space Machine hours 5000 5000 \$20,000 10000 √\$2.00 \$10,000.00 \$10,000.00 √\$142,485.00 √\$357,470.00 40,000 20,000 OH cost per product √\$3.56 √\$17.87 Prime costs \$80.00 \$160.00 √\$83.56 √\$177.87 1 mark for table or equation format in calculations Instruction 3: (4 marks) Compare 86 vs 83 and 172 vs 178 – not much difference but : Any two points : 1 mark each Activity costing provides the most precise allocation The ABC costs are more accurate (better tracing-closer representation of actual resource consumption). This shows that the basic model was over costed and the deluxe model under costed when the plant wide overhead rate was used. Activity costing Leads to better cost pools and Leads to better control over overhead costs and to better management decisions When the manufacturing process changes, activity offers a better allocation 1
SOLUTIONS- COMM 3305 and ACCO 240 – FALL EXAM 2006 QUESTION 3

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