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final exam-Exam-w-solution

final exam-Exam-w-solution - CONCORDIA UNIVERSITY Course No...

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+ CONCORDIA UNIVERSITY Course: Managerial Accounting, No.: COMM 305 ALL SECTIONS & ACCO 240 Examination: Final Date: DECEMBER 8, 2010 No. of Pages: 11 Pages including the cover page Material Allowed: This is a closed book examination; no reference to notes, etc. is allowed. However, a silent hand-held four-function calculator and one standard (not electronic) dictionary are permitted. Special Instructions: Answer all multiple choice questions in the Answer Sheet IBM Form no. 4521 Return the exam questions with your answers. The Answer Sheet IBM Form no. 4521 & answer booklet Student Name: Student ID No.: Section: Instructor: COMM 305 ALL SECTIONS & ACCO 240 Final Exam December 2010 page 1
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Please read the questions carefully and budget your time carefully. Show details of all your work in the lined examination answer booklet Write all your final answers in IBM Sheet with pencil. QUESTION I-A. 7.5 POINTS Use the following information to calculate and answer the next 3 questions. (SHOW YOUR WORK) Taylor Enterprises sells its product for $40 per unit. Taylor recently received a special order from a customer for 20,000 units. Production costs per unit for regular sales are: Direct materials $ 6 Direct labour 14 Manufacturing overhead (2/3 variable) 12 1. Suppose the special order price is $600,000 for all 20,000 units, and assume that Taylor has sufficient capacity to fill the special order. Should it be accepted? a. Yes, because profits will increase by $120,000 b. No, because profits will decrease by $200,000 c. No, because profits will decrease by $40,000 d. Yes, because profits will increase by $40,000 e. None of the above Total Variable cost per unit = $ 6 + 14 + 8 = $28 X 20,000 units = $560,000 – special order price is $600,000 = profit $40,000 2. Suppose that Taylor would like to earn $50,000 on this order and assume that there is sufficient capacity to fill the special order. What price per unit should Taylor charge for the special order? Total Variable costs for 20,000 units = $560,000 + to earn $50,000 on this order / 20,000 = $30.50 3. Suppose that the special order price is $600,000 for all 20,000 units, but there is not sufficient capacity to fill the order; 8,000 units of regular business will be replaced by the special order if it is accepted. Should Taylor accept the special order? And why? COMM 305 ALL SECTIONS & ACCO 240 Final Exam December 2010 page 2
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Total Variable cost per unit = $ 6 + 14 + 8 = $28 – SELLING PRICE $40 = $12 OPPORTUNITY COST FOR 8,000 UNITS = $ 96,000 + TVC $560,000 = $656,000 – SP $600,000 = LOSS $56,000 QUESTION I-B. 5 POINTS Use the following information to calculate and answer the next 2 questions. (SHOW YOUR WORK) Loso Co. made and sold 100,000 of its only product in 2009 for $15 each. Loso’s costs per unit for 2009 follow: Direct materials $ 5.00 Direct labour 2.00 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 1.50 Variable selling & administrative costs 0.80 Fixed selling & administrative costs 0.50 Total $10.80 In 2010, Loso expects to produce and sell 80,000 units. The selling price and variable costs per unit will remain unchanged, as will total fixed costs.
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