ACCT 505 Final Exam – Latest Version
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Estimated machine hours
85,000
Estimated variable
manufacturing overhead $5.55 per machine hour
Estimated total fixed
manufacturing overhead $951,888
Required: Compute the
company's predetermined overhead rate. (Points : 25)
Answer:
Total manufacturing overhead
=
Pretermined overhead =
Estimated overhead / machine
hours
Matuseski Corporation is
preparing its cash budget for October. The budgeted beginning cash balance is
$17,000. Budgeted cash receipts total $187,000 and budgeted cash
disbursements total $177,000. The desired ending cash balance is $40,000. The
company can borrow up to $120,000 at any time from a local bank, with
interest not due until the following month.
Required: Prepare the
company's cash budget for October in good form. (Points : 25)
2.
(TCO D) McMullen Co.
manufactures automatic door openers. The company uses 15,000 electronic
hinges per year as a component in the assembly of the openers. You have been
engaged by McMullen to assist with an evaluation of whether the company
should continue producing the hinges or purchase them from an outside vendor.
The Accounting Department
provided the following detail regarding the annual cost to produce electronic
hinges.
Direct materials
Direct labor
Variable manufacturing
overhead
Fixed manufacturing overhead
Total costs
The Procurement Department provided
the following supplier pricing.
Supplier A price per hinge
Supplier B price per hinge
Supplier C price per hinge
The supplier pricing was
obtained in response to a formal request for proposal (RFP). Procurement has
determined these suppliers meet McMullen's technical specifications and
quality requirements.
If McMullen stops producing
the part internally, 10% of the fixed manufacturing overhead would be
eliminated.
Required: Prepare a
make-or-buy analysis showing the annual advantage or disadvantage of
accepting an outside supplier's offer. (Points : 30)
3.
(TCO E) Topple Company
produces a single product. Operating data for the company and its absorption
costing income statement for the last year are presented below.
Units in beginning inventory
Units produced
Units sold
Sales
Less cost of goods sold:
Beginning inventory
Add cost of goods
manufactured
Goods available for sale
Less ending inventory
Cost of goods sold
Gross margin
Less selling and admin.
expenses
Net operating income
Variable manufacturing costs
are $4 per unit. Fixed factory overhead totals $18,000 for the year. This
overhead was applied at a rate of $2 per unit. Variable selling and
administrative expenses were $1 per unit sold.
Required: Prepare a new income
statement for the year using variable costing. Comment on the differences
between the absorption costing and the variable costing income statements.
(Points : 30)
4.
TCO A) The following data
(in thousands of dollars) have been taken from the accounting records of the
Maroon Corporation for the just-completed year.
Sales
Raw materials inventory,
beginning
Raw materials inventory,
ending
Purchases of raw materials
Direct labor
Manufacturing overhead
Administrative expenses
Selling expenses
Work-in-process inventory,
beginning
Work-in-process inventory,
ending
Finished goods inventory,
beginning
Finished goods inventory,
ending
Use the above data to
prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured
and a Schedule of Cost of Goods Sold for the year. In addition, what is the
impact on the financial statements if the ending finished goods inventory is
overstated or understated? (Points : 25)
1. (TCO F) Carter
Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are
listed below.
Work in process, beginning:
Units in beginning
work-in-process inventory
Materials costs
Conversion costs
Percentage complete for
materials
Percentage complete for
conversion
Units started into
production during the month
Units transferred to the
next department during the month
Materials costs added during
the month
Conversion costs added
during the month
Ending work in process:
Units in ending
work-in-process inventory
Percentage complete for
materials
Percentage complete for
conversion
Required: Calculate the
equivalent units for materials (using the weighted-average method) for the
month in the first processing department. (Points : 25)
2. (TCO G) (Ignore income
taxes in this problem.) Axillar Beauty Products Corporation is considering
the production of a new conditioning shampoo that will require the purchase
of new mixing machinery. The machinery will cost $375,000, is expected to
have a useful life of 10 years, and is expected to have a salvage value of
$50,000 at the end of 10 years. The machinery will also need a $35,000
overhaul at the end of Year 6. A $40,000 increase in working capital will be
needed for this investment project. The working capital will be released at
the end of the 10 years. The new shampoo is expected to generate net cash
inflows of $85,000 per year for each of the 10 years. Axillar's discount rate
is 16%.
Required:
(a) What is the net present
value of this investment opportunity?
(b) Based on your answer to
(a) above, should Axillar go ahead with the new conditioning shampoo? (Points
: 35)
3. (TCO B) Aziz Corporation
produces and sells a single product. Data concerning that product appear
below.
Selling price per unit
Variable expense per unit
Fixed expense per month
Required: Determine the
monthly break-even in either unit or total dollar sales. Show your work!
(Points : 25)
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Estimated machine hours
85,000
Estimated variable
manufacturing overhead $5.55 per machine hour
Estimated total fixed
manufacturing overhead $951,888
Required: Compute the
company's predetermined overhead rate. (Points : 25)
Answer:
Total manufacturing overhead
=
Pretermined overhead =
Estimated overhead / machine
hours
Matuseski Corporation is
preparing its cash budget for October. The budgeted beginning cash balance is
$17,000. Budgeted cash receipts total $187,000 and budgeted cash
disbursements total $177,000. The desired ending cash balance is $40,000. The
company can borrow up to $120,000 at any time from a local bank, with
interest not due until the following month.
Required: Prepare the
company's cash budget for October in good form. (Points : 25)
(TCO D) McMullen Co.
manufactures automatic door openers. The company uses 15,000 electronic
hinges per year as a component in the assembly of the openers. You have been
engaged by McMullen to assist with an evaluation of whether the company
should continue producing the hinges or purchase them from an outside vendor.
The Accounting Department
provided the following detail regarding the annual cost to produce electronic
hinges.
Direct materials
Direct labor
Variable manufacturing
overhead
Fixed manufacturing overhead
Total costs
The Procurement Department provided
the following supplier pricing.
Supplier A price per hinge
Supplier B price per hinge
Supplier C price per hinge
The supplier pricing was
obtained in response to a formal request for proposal (RFP). Procurement has
determined these suppliers meet McMullen's technical specifications and
quality requirements.
If McMullen stops producing
the part internally, 10% of the fixed manufacturing overhead would be
eliminated.
Required: Prepare a
make-or-buy analysis showing the annual advantage or disadvantage of
accepting an outside supplier's offer. (Points : 30)
(TCO E) Topple Company
produces a single product. Operating data for the company and its absorption
costing income statement for the last year are presented below.
Units in beginning inventory
Units produced
Units sold
Sales
Less cost of goods sold:
Beginning inventory
Add cost of goods
manufactured
Goods available for sale
Less ending inventory
Cost of goods sold
Gross margin
Less selling and admin.
expenses
Net operating income
Variable manufacturing costs
are $4 per unit. Fixed factory overhead totals $18,000 for the year. This
overhead was applied at a rate of $2 per unit. Variable selling and
administrative expenses were $1 per unit sold.
Required: Prepare a new income
statement for the year using variable costing. Comment on the differences
between the absorption costing and the variable costing income statements.
(Points : 30)
TCO A) The following data
(in thousands of dollars) have been taken from the accounting records of the
Maroon Corporation for the just-completed year.
Sales
Raw materials inventory,
beginning
Raw materials inventory,
ending
Purchases of raw materials
Direct labor
Manufacturing overhead
Administrative expenses
Selling expenses
Work-in-process inventory,
beginning
Work-in-process inventory,
ending
Finished goods inventory,
beginning
Finished goods inventory,
ending
Use the above data to
prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured
and a Schedule of Cost of Goods Sold for the year. In addition, what is the
impact on the financial statements if the ending finished goods inventory is
overstated or understated? (Points : 25)
1. (TCO F) Carter
Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are
listed below.
Work in process, beginning:
Units in beginning
work-in-process inventory
Materials costs
Conversion costs
Percentage complete for
materials
Percentage complete for
conversion
Units started into
production during the month
Units transferred to the
next department during the month
Materials costs added during
the month
Conversion costs added
during the month
Ending work in process:
Units in ending
work-in-process inventory
Percentage complete for
materials
Percentage complete for
conversion
Required: Calculate the
equivalent units for materials (using the weighted-average method) for the
month in the first processing department. (Points : 25)
2. (TCO G) (Ignore income
taxes in this problem.) Axillar Beauty Products Corporation is considering
the production of a new conditioning shampoo that will require the purchase
of new mixing machinery. The machinery will cost $375,000, is expected to
have a useful life of 10 years, and is expected to have a salvage value of
$50,000 at the end of 10 years. The machinery will also need a $35,000
overhaul at the end of Year 6. A $40,000 increase in working capital will be
needed for this investment project. The working capital will be released at
the end of the 10 years. The new shampoo is expected to generate net cash
inflows of $85,000 per year for each of the 10 years. Axillar's discount rate
is 16%.
Required:
(a) What is the net present
value of this investment opportunity?
(b) Based on your answer to
(a) above, should Axillar go ahead with the new conditioning shampoo? (Points
: 35)
3. (TCO B) Aziz Corporation
produces and sells a single product. Data concerning that product appear
below.
Selling price per unit
Variable expense per unit
Fixed expense per month
Required: Determine the
monthly break-even in either unit or total dollar sales. Show your work!
(Points : 25)
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