PriorMT - Accounting 311 Winter 2004 Midterm Name_

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Accounting 311 Winter 2004 Midterm Name_______________________________________ When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one I was astonished at how much the old man had learned in seven years.-- Mark Twain 1. Ms. B. BARTRAM, an auditor for the IRS, is trying to reconstruct some partially destroyed records of a taxpayer. For the data below, find the unknown amounts A through D. Revenues $62,000 Finished Goods, 12/31/01 5,000 A/R, 12/31/01 6,000 Finished Goods, 12/31/02 3,000 A/R, 12/31/02 2,000 W.I.P., 12/31/01 1,000 Cost of Goods Sold A W.I.P., 12/31/02 C Direct Material, 12/31/01 3,000 Direct Material used 9,000 Direct Material, 12/31/02 1,800 Direct Mfg. Labor used 25,000 Gross Margin 16,000 MOH 15,100 Cost of Goods Mfg. B Direct Material purchases D What is the Cost of Goods sold (A) for 2002? [4 pts.] What was Cost of Goods Manufactured (B) for 2002? [4 pts.] What was the ending WIP (C) for 2002? [4 pts.] How much direct materials were purchased (D) in 2002? [4 pts.] -1-
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Accounting 311 Winter 2004 Midterm Name_______________________________________ 2. CAGLE Food Company has three restaurants situated around Tacoma. Fixed costs for the three restaurants together total $500,000 per year. The average sales check per customer is $8.00. The average variable cost (food and other) per customer is $3.20. The income tax rate is 30%. CAGLE has a target net income of $175,000 [after tax] What revenues are needed to obtain the target net income? [4 pts.] How many customers are needed to breakeven? [4 pts.] What would net income (after tax) be if the number of customers is 150,000? [4 pts.] 3. What is the general formula for calculating the degree of operating leverage ? [4 pts.] 4. What is the correct journal entry if direct materials of $152,000 and indirect materials of $14,000 are sent to the factory plant floor? [4 pts.] -2-
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Accounting 311 Winter 2004 Midterm Name_______________________________________ 5. JEN Corp. uses a normal costing system and applies overhead based on direct labor hours used. Budgeted factory overhead was $240,600 and budgeted direct labor hours were 20,050. Actual MOH was $260,000 and actual direct labor hours were 20,200. Before disposition of under/overapplied overhead, the cost of goods sold was $1,040,000 and ending inventory balances were: Materials--control $ 40,000 WIP 195,000 Finished goods 65,000 Total $300,000 What was the MOH rate (per direct labor hour)? [2 pts.] What amount of MOH was over or underapplied? [4 pts.] What journal entry would you make to dispose of the OH variance using the proration approach based on account ending dollar balances? [8 pts.] -3-
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Accounting 311 Winter 2004 Midterm Name_______________________________________ 6. For what types of companies would a “peanut-butter” approach to costing not be appropriate? [4 pts.] 7. Assuming that you are using a traditional cost system, what are three ways that you might refine
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PriorMT - Accounting 311 Winter 2004 Midterm Name_

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