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devry acct346 full course [ all discun full course project midterm and final 2 version




Question;Managerial and Financial Accounting (graded)Flexibility, timeliness, and forward looking are said to be the prominent traits of modern management accounting, whereas standardization and consistency describe financial accounting. Explain why the focus on these two accounting systems differs.Product Versus Period Costs (graded)Comment on what makes up a product cost and what constitutes a period cost. Use examples and explain why this distinction is necessary.week 2Job-Order Costing (graded)What is Job Order Costing? What type of businesses would use this cost accounting method? Give examples. What are the advantages and disadvantageous of this technique? Discuss.Process Costing (graded)Describe how the process costing system accumulates and assigns costs by comparing and contrasting to the job-order costing system.Cost-Volume-Profit Analysis (graded)Based on your ebook readings and review of both the lecture and Becker content, discuss the basic assumptions of CVP analysis and how we can use CVP analysis as managers in making decisions.Absorption Costing (graded)Absorption costing, also known as full costing refers to a system in which all the fixed manufacturing overheads are allocated to products. The alternative system which assigns only variable manufacturing costs to products then fixed costs added separately is termed variable costing. Discuss the pros and cons of each method. Give examples.week 4Activity-Based Costing (graded)How does activity-based costing differ from the traditional costing approach? When would it give more accurate costs than traditional costing systems?Incremental Cost Analysis (graded)"Only those costs that change need be included in the decision-making process." Evaluate this statement and discuss its merits or shortcomings based on your readings.Capital Budgeting Techniques (graded)What is NPV? What is IRR? Suppose a company has 2 different capital budgeting projects from which to choose, but has constrained funds and cannot implement all of the projects. Explain how and whay you would choose one project over the other. TIME VALUE OF MONEYWE OFTEN SAY THAT MONEY HAS A TIME VALUE. WHAT DO WE MEAN BY THAT? WHY IS THIS IMPORTANT IN ACCOUNTING? GIVE EXAMPLES. week 6Standard Costs and Variance Analysis (graded)WHAT IS THE PURPOSE BEHIND A STANDARD COSTING SYSTEM? HOW IS THIS METHOD DIFFERENT FROM ABC OR VARIABLE COSTING OR JOB COSTING OR PROCESS COSTING SYSTEMS THAT WE HAVE LEARNED (HOPEFULLY) IN THIS COURSE? WHAT ARE SOME OF ITS ADVANTAGES AND DISADVANTAGES? GIVE EXAMPLES.Variance Analysis (graded)What are the 4 key variances discussed in this chapter? Select and define one and provide an example. week 7Ratio Analysis (graded)What are the limitations of ratios and how do we over-come those limitations? Financial Statement Analysis (graded)Why do managers analyze financial statements? What are they looking for? List three types of decisions that managers can make by analyzing financial statements.Acct 346devry ACCT 346 Project - Bravo Baking CompanyCourse: ACC346ACCT 346 Student Name Bravo Baking Company began operations in May of 2010 with the production and sales of speciality breads. The company has experienced a good market demand for its high protein, low carbohydrate product called "Hi-Lo" Hi-Lo's success has required that Bravo continue to make only this one product, however, Bravo's customers, the local retailers, have been asking for more specialty...Page 1Question 1. 1. (TCO 1) How does managerial and financial accounting differ in terms of the amount of detail presented and nonmonetary and monetary information? (Points: 15)Question 2. 2. (TCO 2) What is an indirect labor cost? What is an example of an indirect labor cost? (Points: 15)Question 3. 3. (TCO 3) What is the difference between job order and process costing? (Points: 15)Question 4. 4. (TCO 4) What is a variable cost? What is an example of a variable cost? (Points: 15)Page 2Question 1. 1. (TCO 5) What is variable costing? How does it differ from full costing? (Points: 15)Question 2. 2. (TCO 6) What is the third step in the cost allocation process? Give an example of this step. (Points: 15)Question 3. 3. (TCO 7) What is a differential cost? What is an example of one? (Points: 15)Question 4. 4. (TCO 8) What is activity-based pricing? How is the price determined? (Points: 15)age 3Question 1. 1. (TCO 6) Describe the pros and cons of ABC. Do you think that ABC is beneficial for a company to use? Why or why not? (Points: 30)Question 2. 2. (TCO 7) Products Alpha and Beta are joint products. The joint production cost of the products is $800. Alpha has a market value of $400 at the split-off point. If Alpha is further processed at an additional cost of $600, its market value is $1,400. Product Beta has a market value of $1,200 at the split-off point. If Product Beta is further processed at an additional cost of $300, its market value is $1,400. Using the relative sales value method, calculate the joint product cost that would be allocated to Alpha and Beta. How do you know if one of the products should be further processed? (Points: 30)Question 3. 3. (TCO 8) A company must incur annual fixed costs of $1,000,000 and variable costs of $200 per unit and estimates that it can sell 10,000 pumps annually and marks up cost by 30 percent. Using cost-plus pricing, what is the cost per unit and the price? What are advantages and disadvantages of cost-plus pricing? (Points: 30)age 4Question 1. 1. (TCO 9) A project will require an initial investment of $400,000 and will return $100,000 each year for six years. If taxes are ignored and the required rate of return is 9%, what is the project's net present value? Based on this analysis, should the company proceed with the project? (Points: 30)Question 2. 2. (TCO 10) Why does a company perform ratio analysis? What are the profitabili(TCO 1) The goal of managerial accounting is to provide information that managers need for: planning.control.decision making.All of the aboveQuestion 2. Question:(TCO 1) Which of the following statements regarding fixed costs is true?: When production increases, fixed cost per unit increases.When production decreases, total fixed costs decrease.When production increases, fixed cost per unit decreases.When production decreases, total fixed costs increase.Question 3. Question:(TCO 1) You own a car and are trying to decide whether or not to trade it in and buy a new car. Which of the following costs is an opportunity cost in this situation?: The trip to Cancun that you will not be able to take if you buy the carThe cost of the car you are trading inThe cost of your books for this termThe cost of your car insurance last yearQuestion 4. Question:(TCO 1) Shula?s 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: materials, $4,080, hourly labor (variable), $5,200, rent (fixed), $1,700, depreciation, $800, and other fixed costs, $600. Each steak dinner sells for $14.00 each. Which is the budgeted fixed cost per unit?: $1.06$1.44$4.49$1.94Question 5. Question:(TCO 1) Which of the following is an example of a manufacturing overhead cost?: Security at the manufacturing plantFabric used to produce shirtsCost of shipping product to customersThe salary of the president of the company4 of 4Comments:Question 6. Question:(TCO 1) Which of the following is a period cost?: Rent on a factory buildingDepreciation on production equipmentRaw materials costCommissions paid on each unit soldComments:Question 7. Question:(TCO 1) At December 31, 2010, WDT Inc. has a balance in the Work in Process Inventory account of $62,000. At January 1, 2010, the balance was $55,000. Current manufacturing costs for the year are $292,000, and cost of goods sold is $284,000. How much is cost of goods manufactured?: $292,000$299,000$277,000$285,000Question 8. Question:(TCO 2) BCS Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for August follows.Estimated ActualOverhead cost $174,000 $171,000Direct labor hours 5,800 5,900Direct labor cost $87,000 $89,975How much overhead should be applied in total during August?: 177,000179,950171,100Comments:Question 9. Question:(TCO 2) Citrus Company incurred manufacturing overhead costs of $300,000. Total overhead applied to jobs was $306,000. What was the amount of overapplied or underapplied overhead?: $7,000 overapplied$6,000 overapplied$6,000 underapplied$13,000 underappliedQuestion 10. Question:(TCO 3) Companies in which of the following industries would not be likely to use process costing?: CerealsPaintsCosmeticsAuto body repairsInstructor Explanation: See Chapter 5.0 of 4Comments:Question 11. Question:(TCO 3) The blending department began the period with 20,000 units. During the period, the department received another 80,000 units from the prior department, and at the end of the period, 30,000 units remained, which were 40% complete. How much are equivalent units in the blending department?s Work In Process Inventory at the end of the period?: 12,00028,00040,00052,000Question 12. Question:(TCO 3) Ranger Glass Company manufactures glass for French doors. At the start of May, 2,000 units were in process. During May, 11,000 units were completed and 3,000 units were in process at the end of May. These in-process units were 90% complete with respect to material and 50% complete with respect to conversion costs. Other information is as follows.Work in process, May 1:Direct material $36,000Conversion costs $45,000Costs incurred during May:Direct material $186,000Conversion costs $255,000Calculate the cost per equivalent unit for conversion costs.: $24.00$4.09$21.43$20.40Question 13. Question:(TCO 4) Total costs were $75,800 when 30,000 units were produced and $95,800 when 40,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.: $80,115$76,000$79,800$91,8004 of 4Comments:Question 14. Question:(TCO 4) The margin of safety is the difference between: total revenue and total fixed costs.expected level of sales and the break-even point.budgeted fixed costs and actual fixed costs.selling price and variable cost per unit.Instructor Explanation: See Chapter 6.4 of 4Comments:Question 15. Question:(TCO 4) Allen Company sells homework machines for $100 each. Variable costs per unit are $75 and total fixed costs are $62,000. Allen is considering the purchase of new equipment that would increase fixed costs to $84,000 but decrease the variable costs per unit to $60. At that level, Allen Company expects to sell 3,000 units next year. Which is Allen?s break-even point in units if it purchases the new equipment?: 2,480 units36,000 units2,100 units3,650 unitsQuestion 16. Question:(TCO 4) Paula Corporation sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, which is Paula?s margin of safety?: $468,140$124,025$700,975$405,000Question 17. Question:(TCO 5) Which of the following is treated differently in full costing than in variable costing?: Direct materialsFixed manufacturing overheadDirect laborVariable manufacturing overheadInstructor Explanation: See Chapter 7.4 of 4Comments:Question 18. Question:(TCO 5) Variable costing income is a function of: units sold only.units produced only.both units sold and units produced.neither units sold nor units produced.Instructor Explanation: See Chapter 7.4 of 4Comments:Question 19. Question:(TCO 5) Peak Manufacturing produces snow blowers. The selling price per snow blower is $100. Costs involved in production are as follows.Direct material per unit: $20Direct labor per unit: 12Variable manufacturing overhead per unit: 10Fixed manufacturing overhead per year: $148,500In addition, the company has fixed selling and administrative costs of $150,000 per year.During the year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much fixed manufacturing overhead is in ending inventory under full costing?: $0$49,500Question 20. Question:(TCO 6) Which of the following is not a reason why companies allocate costs?: To calculate the full cost of products for financial reporting purposesTo discourage managers from using external suppliersTo reduce the frivolous use of company resourcesTo provide information needed by managers to make appropriate decisionsInstructor Explanation: See Chapter 4.4 of 4Comments:Question 21. Question:(TCO 5) An allocation base: is the minimum amount to be allocated to a cost object.coordinates the manufacturing overhead costs as they are incurred.will always be less than the variable costs for a product.relates the cost pool to the cost objectives.Instructor Explanation: See Chapter 4.4 of 4Comments:Question 22. Question:(TCO 6) The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases.Production Dept. 1 Production Dept. 2Square footage 15,000 45,000Direct labor hours 25,000 50,000If Jones assigns costs to departments based on square footage, how much total costs will be allocated to Production Department 1?: $1,400,000$1,050,000$1,575,000$2,100,000Question 23. Question:(TCO 7) A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the manager will be fired. The manager's salary, in relation to the decision to keep or drop the sporting goods department, is: avoidable and therefore relevant.not avoidable and therefore relevant.sunk and therefore not relevant.the same for all alternatives and therefore not relevant.Instructor Explanation: See Chapter 8.4 of 4Comments:Question 24. Question:(TCO 7) BigByte Company has 20 obsolete computers that are carried in inventory at a cost of $15,000. If these computers are upgraded at a cost of $8,000, they could be sold for $17,700. Alternatively, the computers could be sold as is for $8,500. Which is the net advantage or disadvantage of reworking the computers?: $1,200 advantage$1,200 disadvantage$9,200 disadvantage$9,700 advantageQuestion 25. Question:(TCO 7) YXZ Company?s market for the Model 55 has changed significantly, and YXZ has had to drop the price per unit from $275 to $135. There are some units in the Work In Process Inventory that have costs of $160 per unit associated with them. YXZ could sell these units in their current state for $100 each. It will cost YXZ $10 per unit to complete these units so that they can be sold for $135 each.When the incremental revenues and expenses are analyzed, which is the financial impact?: $25 per-unit profit if the units are completed$125 per-unit profit if the units are completed$65 per-unit loss if the units are completed$150 per-unit loss if the units are completedQuestion 26. Question:(TCO 3) Describe a process costing system, including the types of companies that commonly use this system. How can process costing information be used in incremental analysis?:Question 27. Question:(TCO 7) Each year, ACE Engines surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, who have offered to conduct the survey and summarize results for $50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a higher quality job than his company has been doing but is unwilling to spend more than $12,000 above current costs. The head of bookkeeping for ACE has prepared the following summary of costs related to the survey in the prior year.Mailing$27,000Printing (done by Lester Print Shop)$9,000Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130 ? $16)$2,080Share of depreciation of computer and software used to track survey responses and summarize results$1,200Share of electricity, phone, and so forth based on square feet of space occupied by Pat Fisher versus entire company$600Total$39,880Prepare an incremental analysis in good form to determine the impact on profit of going outside versus conducting the survey as in the past. Will ACE accept the RBG offer? Why or why not?:Comments:Question 28. Question:(TCO 4) The following monthly data are available for RedEx, which produces only one product that it sells for $84 each. Its unit variable costs are $28, and its total fixed expenses are $64,960. Sales during April totaled 1,600 units.(a) How much is the break-even point in sales dollars for RedEx?(b) How many units must RedEx sell in order to earn a profit of $24,640?(c) A new employee suggests that RedEx sponsor a company softball team as a form of advertising. The cost to sponsor the team is $1,792. How many more units must be sold to cover this cost?(TCO 7) Elliot?s Escargots sells commercial and home snail extraction tools and serving pieces. Currently, the Serving Pieces Section takes up approximately 50% of the company?s retail floor space. The CEO of Elliot?s wants to decide if the company should continue offering Serving Pieces or focus only on Snail Extraction Tools. If the Serving Pieces are dropped, salaries and other direct fixed costs can be avoided and Snail Extraction sales would increase by 13%. Allocated fixed costs are assigned based on relative sales.Snail Extraction ServingTools Pieces TotalSales $1,200,000 $800,000 $2,000,000Less cost of goods sold 500,000 700,000 1,200,000Contribution margin 700,000 100,000 800,000Less Avoidable direct fixed costs:Salaries 175,000 175,000 350,000Other 60,000 60,000 120,000Less Unavoidable allocated fixed costs:Rent 14,118 9,882 24,000Insurance 3,529 2,471 6,000Cleaning 4,117 2,883 7,000Executive salary 76,470 53,530 130,000Other 7,058 4,942 12,000Total costs 340,292 308,708 649,000Net income ($359,708) ($208,708) $151,000Prepare an incremental analysis in good form to determine the incremental effect on profit of discontinuing the snail extraction tool line.Question 2. Question:(TCO 4) Paschal?s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.35 (6 points).What is the break-even point per month in sales?What level of sales is needed for a monthly profit of $70,000?For the month of August, Paschal?s anticipates sales of $600,000. What is the expected level of profit?Question 3. Question:(TCO 6) Princess Cruise Lines has the following service departments, concierge, valet, and maintenance. Expenses for these departments are allocated to Mediterranean and transatlantic cruises. Expenses for the departments are totaled (both variable andcomponents are combined) and as follows.Concierge $1,500,000Valet $2,750,000Maintenance $2,250,000The sea miles logged are 5,000,000 for the Mediterranean and 20,000,000 for the transatlantic voyages.Based upon the sea miles logged, allocate the service department costs (6 points).Question 4. Question:(TCO 9) Thurman Munster, the owner of Adams Family RVs, is considering the addition of a service center his lot. The building and equipment are estimated to cost $1,200,000, and both the building and equipment will be depreciated over 10 years using the straight-line method. The building and equipment have zero estimated residual value at the end of 10 years. Munster?s required rate of return for this project is 12%. Net income related to each year of the investment is as follows.Revenue $450,000Less:Material Cost $60,000Labor 100,000Depreciation 120,000Other 10,000 290,000Income before taxes 160,000Taxes at 40% 64,000Net Income $96,000(A) Determine the net present value of the investment in the service center. Should Munster invest in the service center?(B) Calculate the internal rate of return of the investment to the nearest 0.5%.(C) Calculate the payback period of the investment.(D) Calculate the accounting rate of return.Question 5. Question:(TCO 5) The following information relates to Vice Versa Ventures for calendar year 20XX, the company?s first year of operations.Units produced 20,000Units sold 15,000Selling price per unit $30Direct material per unit $5Direct labor per unit $5Variable manufacturing overhead per unit $2Variable selling cost per unit $3Annual fixed manufacturing overhead $160,000Annual fixed selling and administrative expense $80,000(a) Prepare an income statement using full costing.(b) Prepare an income statement using variable costing.Question 6. Question:(TCO 8) Leekee Shipyards has a new barnacle-removing product for ocean-going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product.Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information.Per Unit TotalDirect Materials $2.00Direct Labor $1.50Variable Manufacturing Overhead$1.00Fixed Manufacturing Overhead $100,000Variable Selling and Administrative Expense $0.10Fixed Selling and Administrative Expense $100,000Page 1;1. (TCO 1) A difference between actual costs and planned;costs (Points: 4);should be;investigated if the amount is exceptional.;indicates that;the planned cost was poorly estimated.;indicates that;the manager is doing a poor job.;should be;ignored unless it involves the cost of ingredients.;2. (TCO 1) Which of the following is not likely to be a;fixed cost? (Points: 4);Direct;materials;Rent;Depreciation;Salary of the;human resources director;3. (TCO 2) Which of the following is not a manufacturing;cost? (Points: 4);Manufacturing;overhead;Direct;materials;Direct labor;Administrative;expenses;4. (TCO 2) A job-order costing system is likely used by a;(Points: 4);soft drink;bottler;breakfast;cereal manufacturer;paint;manufacturer;custom home;builder;5. (TCO 3) Equivalent units are calculated by (Points: 4);taking the units;needed to complete the beginning inventory, adding units started and taking the;equivalent units in ending inventory;taking the;units completed plus the equivalent units in ending inventory.;taking the;total units to account for and subtracting equivalent units in ending inventory;taking units;started plus units transferred out.;6. (TCO 3) The Freedom Corporation?s painting department had;a beginning inventory of 580 units, which had direct material costs of $22,715.;During June, 9,290 units were started and costs of $1,268,085 were incurred for;direct material. Ending inventory consists of 1,000 units, which are 35%;complete with respect to direct material. What is the cost per equivalent unit;for direct material? (Points: 4);$40.00;$137.00;$140.00;$159.00;7. (TCO 4) Which of the following is not an assumption of;C-V-P analysis? (Points: 4);Costs can be;accurately separated into fixed and variable components.;Fixed costs;remain constant within the relevant range.;Total variable;costs are proportioned to the level of activity.;Selling price;per unit declines after the break-even point is reached.;8. (TCO 4) The contribution margin per unit is the;difference between (Points: 4);total revenue;and total fixed costs;selling price;and variable costs per unit;anticipated;level of sales and break-even sales;budgeted fixed;costs and actual fixed costs;9. (TCO 5) Full costing (Points: 4);is the same as;absorption costing.;considers fixed;manufacturing overhead as part of the cost of inventory.;often does not;provide the information needed for C-V-P analysis.;All of the;above choices are correct.;10. (TCO 5) Which of the following is not true when units;sold exceed units produced? (Points: 4);Full costing;and variable costing will yield the same net income.;Full costing;will assign some fixed manufacturing costs to the units in ending inventory.;Net income will;be higher under variable costing than under full costing.;Inventory;levels will decrease.;11. (TCO 6) Cost-plus contracts are common in which of the;following industries? (Points: 4);Manufactured;home builders;Soft drink;bottlers;Defense;contractors;Newspaper;publishers;12. (TCO 6) Which of the following is not generally true;when a company compares ABC and traditional costing? (Points: 4);ABC uses more;cost drivers;ABC allocates;cost based solely on production volume;ABC is more;expensive;ABC is less;likely to undercost complex, low volume products;13. (TCO 7) Fixed costs that will be eliminated if a;particular course of action is undertaken are called (Points: 4);optional costs;opportunity;costs;direct costs;avoidable costs;Page 2;1. (TCO 7) Two or more products that result from common;inputs are called (Points: 4);split products;joint products;combination;products;common products;2. (TCO 8) Activity based pricing seeks to (Points: 4);charge;customers with the costs they are creating.;make greater;profits by charging all customers more.;maintain all;customers in the customer base.;all of the;above.;3. (TCO 8) When deciding to accept or reject a special;order, which of the following costs would most likely not be relevant? (Points;4);The wages of;direct labor to make the order.;Depreciation on;the machinery used to make the order.;The raw;material used to make the order.;The electricity;used to run the machine to make the order.;4. (TCO 9) Present value techniques (Points: 4);ignore cash;flows that will occur more than ten years in the future.;are a way of;converting future dollars into equivalent current dollars.;provide more;conservative results than similar time value of money computations.;treat dollars;received today the same as dollars received in the future.;5. (TCO 9) The internal rate of return (Points: 4);takes into;account the time value of money.;is the rate of;return that equates the present value of future cash flows to the initial;investment.;both A and B;neither A nor B;6. (TCO 10) A method of budget preparation that requires all;budgeted amounts to be justified by the department, even if the amounts were;supported in prior periods, is called (Points: 4);variance;budgeting.;flexible;budgeting.;current period;budgeting.;zero base;budgeting.;7. (TCO 10) Which budget is prepared first? (Points: 4);Cash;disbursement budget;Production;budget;Capital budget;Sales budget;8. (TCO 10) The difference between standard costs and;budgeted costs is that standard costs (Points: 4);refer to a;single unit while budgeted costs refer to the cost, at standard, for the total;number of budgeted units.;are calculated;under ideal conditions, while budgeted costs are calculated for attainable;conditions.;are calculated;for material while budgeted costs are calculated for labor.;are part of the;management accounting system, while budgets are part of the financial;accounting system.;9. (TCO 10) The overhead volume variance indicates that;(Points: 4);raw materials;have been wasted.;management has;done a poor job of controlling costs.;the quantity of;production differed from what was anticipated.;labor rates;were higher than expected.;10. (TCO 10) A subunit that has responsibility for;controlling cost but not revenues is a(n) (Points: 4);profit center.;cost center.;investment;center.;business;center.;11. (TCO 10) Which of the following is not an advantage of;decentralization for a company? (Points: 4);Subunit;managers have better information.;Subunit;managers will act to benefit the organization as a whole.;Subunit;managers can respond quicker to changing circumstances.;Subunit;managers can receive training to move into top level management positions.;12. (TCO 10) The ratio that measures the return earned;independently of how the firm is financed is the (Points: 4);return on stockholders' equity.;price earnings;ratio.;earnings per;share.;return on;assets.;Page 3;1. (TCO 1) Distinguish between product costs and period;costs. Define both types of costs and provide examples. (Points: 20);2. (TCO 6) Pacific Airlines has three service departments;ticketing, baggage handling, and aircraft maintenance. Costs of these;departments are allocated to two revenue producing departments, domestic and;international flights. Costs for the service departments are not separated into;fixed and variable and the totals are as follows;Ticketing $4,000,000;Baggage handling $2,000,000;Aircraft maintenance $6,000,000;Air miles are as follows;Domestic 5,000,000;International 20,000,000;(a) Allocate the service department costs based on air;miles.;(b) Evaluate World Airlines use of air miles as a basis for;allocation. Do you think the;cause-and-effect relationship is strong?;(c) Suggest alternative methods to allocate the service;department costs. (Points: 25);3. (TCO 10) Gina's Boutique makes custom jewelry. One item;the guru necklace, is a best seller and sales in units for the first quarter;are as follows;January 100,000 units;February 150,000 units;March 180,000 units;Desired ending inventory is budgeted at 20% of next month;sales.;Compute production for February. (Points: 25);4. (TCO 2) Singleton Company is trying to determine a;predetermined manufacturing overhead. Estimated overhead for the upcoming year;is $600,000. Budgeted machine hours are 120,000 hours, and budgeted labor hours;are 15,000 hours at a rate of $20.00 per hour. Compute the predetermined;overhead rate based on;(a) Machine hours;(b) Direct labor hours;(c) Direct labor dollars (Points: 25);Page 4;1. (TCO 9) A project will require an initial investment of;$600,000 and is expected to generate the following cash flows;Year 1 $100,000;Year 2 $250,000;Year 3 $250,000;Year 4 $200,000;Year 5 $100,000;(a) What is the project's payback period?;(b) If the required rate of return is 20% and taxes are;ignored, what is the project's net present value? (Points: 25);2. (TCO 4) Legal Docs Inc is a legal services firm that;files incorporation papers for small businesses. They charge $1,000 per;application. This year's income;statement shows the following;Sales $1,295,000;Variable Expenses $1,023,000;Contribution margin $272,000;Fixed costs $250,000;Profit $22,000;Required;(a) Compute the break-even point in units.;(b) Compute the contribution margin ratio.;(c) Compute the current margin of safety.;(d) How many applications must the company sell to make a;profit of $350,000? (Points: 25);3. (TCO 5) The following data has been taken from Air-Tite;company in its first year of business.;Units produced 100,000;Units sold 80,000;Units in ending inventory 20,000;Fixed manufacturing overhead $400,000;(a) Compute the amount of fixed manufacturing overhead that;would be expensed in the current year if full absorption costing is used.;(b) Compute the amount of fixed manufacturing overhead that;would be expensed in the current year if variable costing is used.;(c) Compute the amount of fixed manufacturing overhead that;would be included in ending inventory under full absorption costing. (Points;25)


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