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ACT 5060 Mid Term 2014




Question;Question 11. In analyzing a firm?s profitability ratios over a four-year period, you observe that the firm?s gross margin percentage has steadily decreased. Over the same period, its operating margin percentage has steadily increased. How would you interpret this? Be specific in your response.Question 2 1. How can a financial analyst use a firm?s days sales in inventory ratio, days sales in receivables ratio, and asset turnover ratio to assess a firm. As part of your answer, you should give the formula for each ratio and say what it tells us about the firm. Be specific in your response.Question 31. The following information pertains to the Sophia Corporation:Expected production (units)35,000Standard DML hours per unit9Standard DML rate per hour$18Standard pounds of DM usage perunit4Standard DM price per pound$6Actual units produced37,000Actual DML hours worked345,000Actual cost of DMLPounds of DM purchasedTotal cost of DM purchasedPounds of DM used$5,865,000150,000$1,050,000136,000a) Calculate the following variances: Direct manufacturing labor rate variance Direct manufacturing labor usage varianceDirect materials price variance (like we did in the chat session) Direct materials usage varianceb) Explain what each of the calculated variances imply about Sophia?s operations. Make sure you give a specific possible reason for the calculated variance. Direct manufacturing labor rate variance Direct manufacturing labor usage variance Direct materials price variance Direct materials usage varianceQuestion 41.List and describe 3 ways in which management accounting differs from financial accounting. Be specific in your response.Question 51. List and describe 4 potential problems with budgeting. As part of your description, provide an example of each potential problem.


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