DEVRY ACCT 505 FINAL EXAM 71313

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Nic Saybin Enterprises Accounting Department collects all pertinent monthly operating data. Selected data are presented below for the current month. From the data provided, please provide Saybin Enterprises Management with a flexible budget analysis to see how costs were controlled. 

Actual Costs Incurred Static Budget 

Activity level (in units) 754,009 746,500 

Variable Costs: 

Indirect materials $328,897 $325,640 

Utilities $174,332 $171,890 

Fixed Costs: 

General and administrative $237,985 $244,908 

Rent $135,500 $135,000



(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 $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 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. 

(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 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. 

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 1,200 

Raw materials inventory, beginning 25 

Raw materials inventory, ending 50 

Purchases of raw materials 180 

Direct labor 230 

Manufacturing overhead 250 

Administrative expenses 400 

Selling expenses 200 

Work-in-process inventory, beginning 150 

Work-in-process inventory, ending 120 

Finished goods inventory, beginning 100 

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? 

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 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 5,800 

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 1,400 

Percentage complete for materials 70% 

Percentage complete for conversion 40% 



Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department.



(TCO G) (Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:





Old System New System 

Cost of radar system $30,000 $50,000 

Current salvage value $10,000 - 

Salvage value in 10 years $5,000 $8,000 

Annual operating costs $34,000 $29,000 

Upgrade required in 5 years $4,000 - 

Discount rate 14% 14% 



Required:

(a) What is the City of Paranoya's net present value for the decision described above? Use the total cost approach.

(b) Should the City of Paranoya purchase the new system or keep the old system? 

TCO B) Madlem, Inc., produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $86.40 per unit. The company's fixed expense is $720,384 per month.



Required:



Determine the monthly break-even in either unit or total dollar sales. Show your work! 

 

Willow Creek Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor hours for the upcoming year at 38,500 labor hours. The estimated variable manufacturing overhead was $7.37 per labor hour and the estimated total fixed manufacturing overhead was $601,328. The actual labor hours for the year turned out to be 41,721 labor hours.



Required:



Compute the company's predetermined overhead rate for the recently completed year.

 

 

1. (TCO F) Buckhorn 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 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. 

(TCO F) 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)

    • 8 years ago