MBA Take Home Exam

Hobbit Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: The company applies overhead to jobs using a predetermined overhead rate based on machinehours. At the beginning of the year, the company estimated that it would work 33,000 machinehours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: • Raw materials were purchased, $315,000. • Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect). • The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000. • Selling costs, $147,000. • Factory utility costs, $10,000. • Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. • Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours. • Sales for the year totaled $1,253,000.
Required: Please complete the following in good form. a. Prepare a Schedule of Cost of Goods Manufactured. b. Was the overhead underapplied or overapplied? By how much? c. Prepare a Schedule of Cost of Goods Sold. The company closes any underapplied or overapplied overhead to Cost of Goods Sold. d. Prepare an income statement for the year.
Essay 1 (6 points) Business professionals including accountants are faced with a number of ethical challenges. Statement of Management Accounting 1C gives an ethical framework for practicing accountants and others involved in managerial accounting.
Part A: Define and describe this ethical framework.
Part B: Given this ethical framework, what should business professionals practicing managerial accounting do when faced with an ethical situation?