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(08)_APADMS_2510_Winter_2009_Final_Examination

(08)_APADMS_2510_Winter_2009_Final_Examination - Last...

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Last name (surname): ____________________ First name: ____________________ Student ID#: ___________________________ YORK UNIVERSITY Atkinson School of Administrative Studies ADMS 2510 3.0 Final Exam, Winter 2009 Topic A – Part 1 Instructions This is a closed book examination and no collaboration is allowed. Put your name and student number at the top of the page. Place your answer to each question on space provided after each question. To work out your answer you can use the examination paper. You may write with a pencil or pen. You are allowed the use of a simple (non-programmable) calculator. Three hours are allowed to complete the 5 questions (total of 100 marks) of part 1 and part 2 of the exam. Once you have completed Part 1, raise your hand to return it and to receive Part 2 of the exam. If you leave early, please respect your fellow students by leaving quietly. Place photo identification on your desk during the examination to facilitate verification. Question 1 / 25 marks (40 minutes) Question 2 / 20 marks (30 minutes) Total marks Part 1 / 45 marks (70 minutes)
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Question 1 (25 marks – estimated time required: 40 minutes) Doggone Groomers is in the dog-grooming business. Its costs of operation in 2008 have been gathered below: a) Using the high-low method, express the above relationship between the number of dogs groomed and operating costs in the form of y = a + bx. [4] b = ($4 400 $2 650) ÷ (325 150 ) = $1 750 ÷ 175 = $10 a + $10 × 325 = $4 400 a = $1 150 y = $1 150 + $10 x b) Puli, the owner, had expected to groom 175 dogs in April of 2009. What were the operating costs Puli would have expected for the month? [2] y = $1 150 + $10 × 175 = $2 900 c) Puli charges an average of $60 per dog groomed. Prepare, in good form, a flexible budget for monthly activity levels of 165 and 175 dogs groomed. [4] Doggone Groomers Flexible Budget for 2009 Dogs groomed per month 165 175 Grooming revenue $9 900 $10 500 Variable operating costs 1 650 1 750 Contribution margin 8 250 8 750 Fixed operating costs 1 150 1 150 Operating income $7 100 $7 600 Month Number of Dogs Groomed Operating Costs Jan 175 $3 000 Feb 225 3 600 Mar 275 4 180 Apr 175 3 800 May 200 2 700 Jun 225 3 200 Jul 300 4 250 Aug 325 4 400 Sep 275 4 100 Oct 200 3 150 Nov 150 2 650 Dec 175 2 750
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c) Puli uses your answer to a) to forecast expenses for 2009. As it turned out, April of 2009 was a slower month than expected. A total of only 150 dogs were groomed and operating costs for the month were $2 800. Calculate the Flexible Budget and the Sales Volume variances. [4] Actual operating income: $60 × 150 $2 800 = $6 200 Budgeted operating income at level of 150 dogs groomed: ($60 $10) × 150 $1 150 = $6 350 Budgeted operating income at level of 175 dogs groomed: $7 600 Flexible budget variance: $6 200 $6 350 = $150 U Sales volume variance: $6 3500 $7 600 = $1 250 U Static budget variance: $150 + $1 250 = $1 400 U d) Puli is wondering what to make of the variances you have calculated. Can you explain? [3] Operating income dropped by $150 as a result of lax cost control.
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