ACCT 505 Week 4 Midterm Exam

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1. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year:

 

Sales.................................................................................

$910

 

Purchases of raw materials................................................

$225

 

Direct labor.......................................................................

$245

 

Manufacturing overhead....................................................

$265

 

Administrative expenses....................................................

$150

 

Selling expenses................................................................

$140

 

Raw materials inventory, beginning.....................................

$15

 

Raw materials inventory, ending.........................................

$45

 

Work-in-process inventory, beginning.................................

$20

 

Work-in-process inventory, ending.....................................

$55

 

Finished goods inventory, beginning...................................

$100

 

Finished goods inventory, ending.......................................

$135

Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

(Points : 15)

      
      

 

2. (TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

                                                                        Percentage Completed
                                                   Units            Materials     Conversion
Work in process, June 1              150,000             75%          55%
Work in process, Jun 30              145,000             85%          75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

(Points : 20)

      
      

 

3. (TCO B) A tile manufacturer has supplied the following data:

Boxes of tile produced and sold                                      625,000

Sales revenue                                                               $2,975,000

Variable manufacturing expense                                    $1,720,000

Fixed manufacturing expense                                         $790,000

Variable selling and admin expense                                $152,000

Fixed selling and admin expense                                    $133,000

Net operating income                                                    $180,000

Required:

a. Calculate the company's unit contribution margin.

b. Calculate the company's unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

(Points : 25)

      
      

 

4.

 

(TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

 

 $         125

   

Units in beginning inventory

 

600

Units oroduced

 

3000

Units sold

 

3500

Units in ending inventory

 

100

   

Variable costs per unit:

  

Direct materials

 

 $           15

Direct labor

 

 $           50

Variable manufacturing overhead

 

 $             8

Variable selling and admin

 

 $           12

   

Fixed costs:

  

Fixed manufacturing overhead

 

 $      75,000

Fixed selling and admin

 

 $      20,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:


a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.

(Points : 30)

      
      

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