ACCT 505 Final Exam 100% Correct Answers
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ACCT 505 Final Exam 100% Correct Answers
ACCT 505 Final Exam – 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.
|
Selling price
per unit
|
$375.00
|
|
Variable expense
per unit
|
$144.00
|
|
Fixed expense
per month
|
$1,686,300
|
Required:
Determine the monthly breakeven in units or dollar sales. Show
your work! (Points : 25)
2. 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.
|
Work in process,
beginning:
|
|
|
Units in
beginning work in process inventory
|
400
|
|
Materials
costs
|
$6,900
|
|
Conversion costs
|
$2,500
|
|
Percent
complete for materials
|
80%
|
|
Percent
complete for conversion
|
15%
|
|
Units
started into production during the month
|
6,000
|
|
Units
transferred to the next department during the month
|
5,600
|
|
Materials
costs added during the month
|
$112,500
|
|
Conversion costs added during the month
|
$210,300
|
|
Ending work in
process:
|
|
|
Units in
ending work-in-process inventory
|
800
|
|
Percentage complete for materials
|
70%
|
|
Percentage complete for conversion
|
30%
|
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.
|
Units in
beginning inventory
|
2,000
|
|
Units produced
|
9,000
|
|
Units sold
|
10,000
|
|
Sales
|
$100,000
|
Less cost of goods sold:
|
Beginning inventory
|
12,000
|
|
Add cost of
goods manufactured
|
54,000
|
|
Goods available
for sale
|
66,000
|
|
Less ending
inventory
|
6,000
|
|
Cost of goods
sold
|
60,000
|
|
Gross margin
|
40,000
|
|
Less selling and
admin. expenses
|
28,000
|
|
Net operating
income
|
$12,000
|
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)
2. 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)
3. 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
|
1,300
|
|
Raw materials
inventory, beginning
|
25
|
|
Raw materials
inventory, ending
|
30
|
|
Purchases of raw
materials
|
250
|
|
Direct labor
|
350
|
|
Manufacturing
overhead
|
500
|
|
Administrative
expenses
|
300
|
|
Selling expenses
|
250
|
|
Work in process
inventory, beginning
|
150
|
|
Work in process
inventory, ending
|
100
|
|
Finished goods
inventory, beginning
|
80
|
|
Finished goods
inventory, ending
|
110
|
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)
4. 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)
6. (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)
7. 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.
|
Estimated
machine hours
|
75,000
|
|
|
Estimated
variable manufacturing overhead
|
$4.50
|
per
machine hour
|
|
Estimated total
fixed manufacturing overhead
|
$825,000
|
The actual machine hours for the year turned out to be 77,000.
Required:
Compute the company’s predetermined overhead rate. (Points : 25)
( ACCT 505 Final Exam Set 2 )
1. (TCO
C) Silver City, Inc., has collected the following operating
information below for its current month’s activity. Using this
information, prepare a flexible budget analysis to determine how well Silver
City performed in terms of cost control.
Actual Costs Incurred
Static Budget
Activity level (in units)
5,250
5,178
Variable Costs:
Indirect materials
$24,182
$23,476
Utilities
$22,356
$22,674
Fixed Costs:
Administration
$63,450
$65,500
Rent
$65,317
$63,904
2. (TCO
D) Globe 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 Globe 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
$54,000
Direct labor
60,000
Variable manufacturing overhead
36,000
Fixed manufacturing overhead
90,000
Total costs
$240,000
The Procurement Department provided the following supplier
pricing:
Supplier A price per hinge
$11.00
Supplier B price per hinge
$10.75
Supplier C price per hinge
$10.50
The supplier pricing was obtained in response to a formal
request for proposal (RFP). Procurement has determined these suppliers
meet Globe’s technical specifications and quality requirements.
If Globe 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 (in dollars) of accepting an outside supplier’s
offer. Should the company buy the parts? If so, from which
supplier?
3. (TCO
E) Mesa 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
2,000
Units produced
9,000
Units sold
10,000
Sales
$100,000
Less cost of goods sold:
Beginning inventory
12,000
Add cost of goods manufactured
54,000
Goods available for sale
66,000
Less ending inventory
6,000
Cost of goods sold
60,000
Gross margin
40,000
Less selling and admin. expenses
28,000
Net operating income
$12,000
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.
4. (TCO
A) The following data (in thousands of dollars) have been
taken from the accounting records of the White Sands Corporation for the
just-completed year.
Sales
1,150
Raw materials inventory, beginning
15
Raw materials inventory, ending
40
Purchases of raw materials
150
Direct labor
250
Manufacturing overhead
300
Administrative expenses
500
Selling expenses
300
Work in process inventory, beginning
100
Work in process inventory, ending
150
Finished goods inventory, beginning
80
Finished goods inventory, ending
120
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?
1. (TCO
F) Farmington 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
400
Materials costs
$6,900
Conversion costs
$2,500
Percentage complete for materials
80%
Percentage complete for conversion
15%
Units started into production during the month
6,000
Units transferred to the next department during the month
5,000
Materials costs added during the month
$112,500
Conversion costs added during the month
$210,300
Ending work in process:
Units in ending work-in-process inventory
1,200
Percentage complete for materials
60%
Percentage complete for conversion
30%
Required: Calculate the equivalent units for materials (using
the weighted-average method) for the month in the first processing department.
2.
(TCO G) – (Ignore income taxes in this
problem.) Tennessee Co. is considering the production of an exterior
paint that will require the purchase of new mixing machinery. The machinery
will cost $700,000, is expected to have a useful life of 12 years, and is
expected to have a salvage value of $100,000 at the end of 12 years. The
machinery will also need a $40,000 overhaul at the end of Year 7. A $50,000 increase
in working capital will be needed for this investment project. The working
capital will be released at the end of the 12 years. The new paint is
expected to generate net cash inflows of $120,000 per year for each of
the 12 years. Tennessee’s discount rate is 14%.
Required:
a. What is the net present value of this investment
opportunity?
b. Based on your answer to (a) above,
should Tennessee go ahead with the new paint?
3. (TCO
B) Winslow Corporation produces and sells a single product.
Data concerning that product appear below.
Selling price per unit
$130.00
Variable expense per unit
$27.30
Fixed expense per month
$165,3
Required:
a) Determine the monthly break-even in unit sales. Show your
work!
b) Determine the monthly break-even in dollar sales. Show
your work!
1. (TCO
F) Manchester, Inc. bases its predetermined overhead rate on
the estimated machine hours for the upcoming year. Data for the upcoming year
appear below.
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.
2. (TCO
F) Memphis Corporation is preparing its cash budget for
February. The budgeted beginning cash balance is $27,000. Budgeted cash
receipts total $136,000 and budgeted cash disbursements total $128,000. The
desired ending cash balance is $50,000. The company can borrow up to $110,000
at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget for February in good form.
Make sure to indicate what borrowing, if any, would be needed to attain the
desired ending cash balance.
1. (TCO
C) Silver City, Inc., has collected the following operating
information below for its current month’s activity. Using this
information, prepare a flexible budget analysis to determine how well Silver
City performed in terms of cost control.
Actual Costs Incurred
Static Budget
Activity level (in units)
5,250
5,178
Variable Costs:
Indirect materials
$24,182
$23,476
Utilities
$22,356
$22,674
Fixed Costs:
Administration
$63,450
$65,500
Rent
$65,317
$63,904
2. (TCO
D) Globe 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 Globe 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
$54,000
Direct labor
60,000
Variable manufacturing overhead
36,000
Fixed manufacturing overhead
90,000
Total costs
$240,000
The Procurement Department provided the following supplier
pricing:
Supplier A price per hinge
$11.00
Supplier B price per hinge
$10.75
Supplier C price per hinge
$10.50
The supplier pricing was obtained in response to a formal
request for proposal (RFP). Procurement has determined these suppliers
meet Globe’s technical specifications and quality requirements.
If Globe 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 (in dollars) of accepting an outside supplier’s
offer. Should the company buy the parts? If so, from which
supplier?
3. (TCO
E) Mesa 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
2,000
Units produced
9,000
Units sold
10,000
Sales
$100,000
Less cost of goods sold:
Beginning inventory
12,000
Add cost of goods manufactured
54,000
Goods available for sale
66,000
Less ending inventory
6,000
Cost of goods sold
60,000
Gross margin
40,000
Less selling and admin. expenses
28,000
Net operating income
$12,000
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.
4. (TCO
A) The following data (in thousands of dollars) have been
taken from the accounting records of the White Sands Corporation for the
just-completed year.
Sales
1,150
Raw materials inventory, beginning
15
Raw materials inventory, ending
40
Purchases of raw materials
150
Direct labor
250
Manufacturing overhead
300
Administrative expenses
500
Selling expenses
300
Work in process inventory, beginning
100
Work in process inventory, ending
150
Finished goods inventory, beginning
80
Finished goods inventory, ending
120
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?
1. (TCO
F) Farmington 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
400
Materials costs
$6,900
Conversion costs
$2,500
Percentage complete for materials
80%
Percentage complete for conversion
15%
Units started into production during the month
6,000
Units transferred to the next department during the month
5,000
Materials costs added during the month
$112,500
Conversion costs added during the month
$210,300
Ending work in process:
Units in ending work-in-process inventory
1,200
Percentage complete for materials
60%
Percentage complete for conversion
30%
Required: Calculate the equivalent units for materials (using
the weighted-average method) for the month in the first processing department.
2.
(TCO G) – (Ignore income taxes in this
problem.) Tennessee Co. is considering the production of an exterior
paint that will require the purchase of new mixing machinery. The machinery
will cost $700,000, is expected to have a useful life of 12 years, and is
expected to have a salvage value of $100,000 at the end of 12 years. The
machinery will also need a $40,000 overhaul at the end of Year 7. A $50,000
increase in working capital will be needed for this investment project. The
working capital will be released at the end of the 12 years. The
new paint is expected to generate net cash inflows of $120,000 per year
for each of the 12 years. Tennessee’s discount rate is 14%.
Required:
a. What is the net present value of this investment
opportunity?
b. Based on your answer to (a) above,
should Tennessee go ahead with the new paint?
3. (TCO
B) Winslow Corporation produces and sells a single product.
Data concerning that product appear below.
Selling price per unit
$130.00
Variable expense per unit
$27.30
Fixed expense per month
$165,3
Required:
a) Determine the monthly break-even in unit sales. Show your
work!
b) Determine the monthly break-even in dollar sales. Show
your work!
1. (TCO
F) Manchester, Inc. bases its predetermined overhead rate on
the estimated machine hours for the upcoming year. Data for the upcoming year
appear below.
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.
2. (TCO
F) Memphis Corporation is preparing its cash budget for
February. The budgeted beginning cash balance is $27,000. Budgeted cash
receipts total $136,000 and budgeted cash disbursements total $128,000. The
desired ending cash balance is $50,000. The company can borrow up to $110,000
at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget for February in good form.
Make sure to indicate what borrowing, if any, would be needed to attain the
desired ending cash balance.
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