ACC T1

ACC 320

TEST 1

2021 SPRING

RULES FOR TEST 1

1. Submit on time [as indicated on your system]

2. Do not copy because when identified your marks will be very low.

3. Read the questions with care before answering

4. All questions must be hand written [ typed answer gets very low marks]

5. The graph question should be done on graph paper and it should be constructed not sketched

6. Cleanliness or neatness will be rewarded.

7. in theory questions you should provide your own examples not just copy from PPT. 

IMPORTANT

ATTENDANCE FOR TEST 1 WILL HAPPEN AT 2.00 PM. IF YOU ARE ABSENT YOUR TEST WILL BE MARKED ON 80% NOT 100%

Question 1

The following information pertains to the Satyam Company for the year ending December 31, 2019.

	$	Hours
Revenue	140,000
Interest expense	2300
Purchases of direct materials	10,000
Indirect Labour	8,000
Beginning direct material	1850
Indirect Materials	5,000
Supplies expense [factory]	3,500
Supplies [factory]	9540
Depreciation of factory machines	2,000
Depreciation of factory Plant	2300
Depreciation of shop	4,000
Unearned revenue	5620
Selling commission	1200
Marketing costs	4200
Wages [Store]	6,000
Insurance expense [shop]	2300
Prepaid insurance Expense [store]	1450
Supplies expense [store]	5,000
Utilities [store]	2,500
Direct Labor Hours		2500
Hourly Rate for direct labour	11
Direct materials inventory Dec 31 2019	7,000
Work in process Jan 1 2019	3,000
Sales Return/ allowances	2100
Rent revenue	8,000
Work in process Dec 31 2019	5,000
Sales Discounts	3,000
Finished Goods Inventory Jan 1 2019	6,000
Finished Goods Inventory Dec 31 2019	2500

REQUIRED

1. Prepare a COGM statement for year end

2. Calculate cost of goods sold

3. Prepare an income statement [ assume income tax rate to be 15%] for year end

Question 2

Lotus company incurred the following maintenance costs during the past 9 months :

Table 1

Months	Room occupancy	Cost $
1	120	4560
2	210	9780
3	50	2920
4	160	8280
5	430	20320
6	80	3920
7	325	17140
8	143	5500
9	570	22400

REQUIRED

Part 1

A. Use the data on Table 1 , estimate the variable and fixed cost of the company using the high and low method

B. Develop a cost function for the company.

C. Estimate the maintenance cost if 630 rooms are occupied in October

Part 2

1. Use a scatter graph and the two points that seem to best represent the relationship between cost and activity levels of 80 and 325 machine hours. Use these two points , estimate the variable cost and the fixed cost [ components of maintenance costs]

2. Develop a cost function that the company can use to estimate maintenance cost at different volume levels of occupancy

3. Estimate maintenance costs for December if the company expects 600 rooms to be occupied

SHOULD CONSTRUCT THE GRAPH USING GRAPH PAPER [available free on internet]. Very little mark will be given if you make a sketch,

Part 3

1. Using the least square formula find Fixed cost and Unit variable cost

2. State the cost function

3. If X = 800 what is Y

Question 3

XYZ company provides the following information processed by its analyst department :

Statistics
Covariance	72640
Correlation	0.82
Standard Deviation x	79.1
Standard Deviation y	21.35
Variance x	6254
Variance y	456
Mean ( x)	842
Mean (y)	17250

Using the information given on the table above

4. Find the variable cost per unit

5. Calculate the fixed cost

6. State the cost function

7. If X= 180 find Y

Question 4

Answer these questions briefly

1. Using examples differentiate between prime cost and conversion cost

2. How does committed cost differ from variable cost? Illustrate your answer by sketch graph.

4. What are the main features of information provided to the management accounting department?

5. Compare and contrast variable cost and fixed cost.

6. State a cost function and why do we have to use it in management accounting?