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DonDominguez

ACCT 505 Final Examination – latest 2016

DonDominguez

ACCT 505 Final Examination – latest 2016

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ACCT 505 Final Examination – latest 2016

 

  1. (TCO E) Designing a new product is a(n) (Points : 5)

batch-level activity.

product-level activity.

unit-level activity.

organization sustaining activity.

 

 

Question 2.2. (TCO G) Given the following data, what would ROI be?

Sales  $70,000

 

Net operating income  $10,000

 

Contribution margin  $20,000

 

Average operating assets  $50,000

 

Stockholder’s equity $25,000

 

(Points : 5)

6.0%

15.0%

12.5%

20.0%

 

 

  1. RspGF=”font-family:’Arial’;font-size:10pt;”(TCO C) Longiotti Corporation produces and sells a single product. Data concerning that product appear below.
<table> <tbody><tr> <td width="224">

Selling price per unit

</td> <td width="88">

$375.00

</td> </tr> <tr> <td width="224">

Variable expense per unit

</td> <td width="88">

$144.00

</td> </tr> <tr> <td width="224">

Fixed expense per month

</td> <td width="88">

$1,686,300

</td> </tr> </tbody></table>

 

 

Required:

 

Determine the monthly breakeven in units or dollar sales. Show your work! (Points : 25)

 

 

  1. TCO B) Maverick 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.
<table> <tbody><tr> <td width="697">

Work in process, beginning:

</td> <td width="152"></td> </tr> <tr> <td width="697">

  Units in beginning work in process inventory

</td> <td width="152">

400

</td> </tr> <tr> <td width="697">

  Materials costs

</td> <td width="152">

$6,900

</td> </tr> <tr> <td width="697">

  Conversion costs

</td> <td width="152">

$2,500

</td> </tr> <tr> <td width="697">

  Percent complete for materials

</td> <td width="152">

80%

</td> </tr> <tr> <td width="697">

  Percent complete for conversion

</td> <td width="152">

15%

</td> </tr> <tr> <td width="697">

  Units started into production during the month

</td> <td width="152">

6,000

</td> </tr> <tr> <td width="697">

  Units transferred to the next department during the month

</td> <td width="152">

5,600

</td> </tr> <tr> <td width="697">

  Materials costs added during the month

</td> <td width="152">

$112,500

</td> </tr> <tr> <td width="697">

  Conversion costs added during the month

</td> <td width="152">

$210,300

</td> </tr> <tr> <td width="697"></td> <td width="152"></td> </tr> <tr> <td width="697"></td> <td width="152"></td> </tr> <tr> <td width="697">

Ending work in process:

</td> <td width="152"></td> </tr> <tr> <td width="697">

  Units in ending work-in-process inventory

</td> <td width="152">

800

</td> </tr> <tr> <td width="697">

  Percentage complete for materials

</td> <td width="152">

70%

</td> </tr> <tr> <td width="697">

  Percentage complete for conversion

</td> <td width="152">

30%

</td> </tr> </tbody></table>

 

 

Required: Calculate the equivalent units for conversion for the month in the first processing department. (Points : 25)\

 

 

  1. TCO D) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below.

 

<table> <tbody><tr> <td width="231">

Units in beginning inventory

</td> <td width="211">

2,000

</td> </tr> <tr> <td width="231">

Units produced

</td> <td width="211">

9,000

</td> </tr> <tr> <td width="231">

Units sold

</td> <td width="211">

10,000

</td> </tr> <tr> <td width="231">

Sales

</td> <td width="211">

$100,000

</td> </tr> </tbody></table>

 

Less cost of goods sold:

<table> <tbody><tr> <td width="272">

Beginning inventory

</td> <td width="175">

12,000

</td> </tr> <tr> <td width="272">

Add cost of goods manufactured

</td> <td width="175">

54,000

</td> </tr> <tr> <td width="272">

Goods available for sale

</td> <td width="175">

66,000

</td> </tr> <tr> <td width="272">

Less ending inventory

</td> <td width="175">

6,000

</td> </tr> <tr> <td width="272">

Cost of goods sold

</td> <td width="175">

60,000

</td> </tr> <tr> <td width="272">

Gross margin

</td> <td width="175">

40,000

</td> </tr> <tr> <td width="272">

Less selling and admin. expenses

</td> <td width="175">

28,000

</td> </tr> <tr> <td width="272">

Net operating income

</td> <td width="175">

$12,000

</td> </tr> </tbody></table>

 

 

Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed manufacturing 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)

 

  1. TCO I) (Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 to invest and is considering a franchise for a fast-food outlet. He would have to purchase equipment costing $500,000 to equip the outlet and invest an additional $150,000 for inventories and other working capital needs. Other outlets in the fast-food chain have an annual net cash inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Anders’ required rate of return is 16%.

 

Required:

Part A: What is the investment’s net present value when the discount rate is 16%?

Part B: Refer to your calculations. Is this an acceptable investment?  Why or why not? (Points : 30)

 

 

  1. 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.

 

<table> <tbody><tr> <td width="611">

Sales

</td> <td width="408">

1,300

</td> </tr> <tr> <td width="611">

Raw materials inventory, beginning

</td> <td width="408">

25

</td> </tr> <tr> <td width="611">

Raw materials inventory, ending

</td> <td width="408">

30

</td> </tr> <tr> <td width="611">

Purchases of raw materials

</td> <td width="408">

250

</td> </tr> <tr> <td width="611">

Direct labor

</td> <td width="408">

350

</td> </tr> <tr> <td width="611">

Manufacturing overhead

</td> <td width="408">

500

</td> </tr> <tr> <td width="611">

Administrative expenses

</td> <td width="408">

300

</td> </tr> <tr> <td width="611">

Selling expenses

</td> <td width="408">

250

</td> </tr> <tr> <td width="611">

Work in process inventory, beginning

</td> <td width="408">

150

</td> </tr> <tr> <td width="611">

Work in process inventory, ending

</td> <td width="408">

100

</td> </tr> <tr> <td width="611">

Finished goods inventory, beginning

</td> <td width="408">

80

</td> </tr> <tr> <td width="611">

Finished goods inventory, ending

</td> <td width="408">

110

</td> </tr> </tbody></table>

 

 

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) Walker Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $43,000. Budgeted cash receipts total $117,000 and budgeted cash disbursements total $122,000. The desired ending cash balance is $55,000. The company can borrow up to $100,000 at any time from a local bank, with interest not due until the following month.

 

Required:

 

Prepare the company’s cash budget for November in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance (Points : 25)

 

 

  1. (TCO H) Lindon Company uses 7,500 units of Part Y each year as a component in the assembly of one of its products. The company is presently producing Part Y internally at a total cost of $119,000 as follows.

 

Direct materials

 

$26,000

 

Direct labor

 

28,000

 

Variable manufacturing overhead

 

20,000

 

Fixed manufacturing overhead

 

45,000

 

Total costs

 

$119,000

 

 

An outside supplier has offered to provide Part Y at a price of $12 per unit. If Lindon stops producing the part internally, one third of the fixed manufacturing overhead would be eliminated.

 

Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier’s offer. Please state clearly whether the part should be made or bought and share your work.

 

(Points : 30)

 

  1. TCO B) Sandler Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Data for the upcoming year appear below.

 

<table> <tbody><tr> <td width="467">

Estimated machine hours

</td> <td width="79">

75,000

</td> <td width="252"></td> </tr> <tr> <td width="467">

Estimated variable manufacturing overhead

</td> <td width="79">

$4.50

</td> <td width="252">

 per machine hour

</td> </tr> <tr> <td width="467">

Estimated total fixed manufacturing overhead

</td> <td width="79">

$825,000

</td> <td width="252"></td> </tr> </tbody></table>

 

The actual machine hours for the year turned out to be 77,000.

 

Required:

 

Compute the company’s predetermined overhead rate. (Points : 25)

 

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