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Devry ACCT434 final essay questions




Question;1.(TCO 2) Rossi Company has the following projected account;balances for June 30, 20X9;Accounts;payable;$;60,000;Sales;$;800,000;Accounts;receivable;$;120,000;Capital;stock;$;420,000;Depreciation;factory;$;24,000;Retained;earnings;?;Inventories;(5/31 & 6/30);$;180,000;Cash;$;56,000;Direct;materials used;$;210,000;Equipment;net;$;260,000;Office;salaries;$;92,000;Buildings;net;$;400,000;Insurance;factory;$;4,000;Utilities;factory;$;16,000;Plant wages;$;140,000;Selling;expenses;$;50,000;Bonds;payable;$;160,000;Maintenance;factory;$;28,000;Prepare a;budgeted income statement AND a budgeted balance sheet as of June 30, 20X9.;(Points: 25);2.;(TCO 5);Paul's Medical Equipment Company manufactures hospital beds. Its most;popular model, Deluxe, sells for $5,000. It has variable costs totaling;$2,800 and fixed costs of $1,000 per unit, based on an average production run;of 5,000 units. It normally has four production runs a year, with;$500,000 in setup costs each time. Plant capacity can handle up to six;runs a year for a total of 30,000 beds.;A;competitor is introducing a new hospital bed similar to Deluxe that will sell;for $4,000. Management believes it must lower the price to;compete. Marketing believes that the new price will increase sales by;25% a year. The plant manager thinks that production can increase by;25% with the same level of fixed costs. The company sells all the;Deluxe beds it can produce.;Question;1: What is the annual operating income from Deluxe at the price of;$5,000?;Question;2: What is the annual operating income from Deluxe if the price is;reduced to $4,000 and sales in units increase by 25%?;(Points: 25);3.;(TCO 7) Grace;Greeting Cards Incorporated is starting a new business venture and is in the;process of evaluating its product lines. Information for one new;product, traditional parchment grade cards, is as follows;? For;16 times each year, a new card design will be put into production. Each;new design will require $200 in setup costs.;?;The parchment grade card product line incurred $75,000 in development costs;and is expected to be produced over the next four years.;?;Direct costs of producing the designs average $0.50 each.;?;Indirect manufacturing costs are estimated at $50,000 per year.;?;Customer service expenses average $0.10 per card.;?;Sales are expected to be 2,500 units of each card design. Each card;sells for $3.50.;?;Sales units equal production units each year.;What is the;total estimated life-cycle operating income?;(Points: 25);4.;(TCO 8);Autocar Company manufactures automobiles. The red car division sells;its red cars for $25,000 each to the general public. The red cars have;manufacturing costs of $12,500 each for variable and $5,000 each for fixed;costs. The division's total fixed manufacturing costs are $25,000,000;at the normal volume of 5,000 units.;The blue car;division has been unable to meet the demand for its cars this year. It;has offered to buy 1,000 cars from the red car division at the full cost;of $18,000. The red car division has excess capacity and the 1,000;units can be produced without interfering with the outside sales of;5,000. The 6,000 volume is within the division's relevant operating;range.;Explain;whether the red car division should accept the offer. Support your decision;showing all calculations.;(Points: 25);5.;(TCO 11) For;supply item MT, Bluesky Company has been ordering 150 units based on the;recommendation of the salesperson who calls on the company monthly. The;company has hired a new purchasing agent, who wants to start using the;economic-order-quantity method and its supporting decision elements.;She has gathered the following information;Annual;demand in units;300;Days;used per year;300;Lead;time, in days;20;Ordering;costs;$125;Annual;unit carrying costs;$25;Determine the;EOQ, average inventory, orders per year, average daily demand, reorder point;annual ordering costs, and annual carrying costs.


Paper#38453 | Written in 18-Jul-2015

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