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Accounting 611 Midterm Exam - Spring 2014 Solution




Question;Problem 1Using the following information find the unknown amounts. Assume each set of information is an independent case.a. Merchandise Inventory Purchases $210,000Cost of goods sold 223,000Beginning balance 41,000Ending balance?b. Direct Materials Beginning balance $ 7,000Ending balance 14,000Purchases 48,000Direct materials used?c. Work-in-process Inventory Ending balance $ 22,000Cost of goods manufactured 21,000Beginning balance 8,000Current manufacturing costs?d. Finished Goods Inventory Cost of goods manufactured $62,000Ending balance 20,000Cost of goods sold 61,000Beginning balance?Problem 2Sprint Manufacturing Company produces two products, X and Y. The following information is presented for both products:X YSelling price per unit $30 $20Variable cost per unit 20 5Total fixed costs are $292,500.Required:a. Calculate the contribution margin for each product.b. Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.c. Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.Problem 3Rachel's Pet Supply Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:Number of Number of Number ofProduct Setups Components Direct Labor HoursStandard 3 30 650Deluxe 7 50 150Overhead costs $40,000 $120,000Assume a traditional costing system applies the $160,000 of overhead costs based on direct labor hours.a. What is the total amount of overhead costs assigned to the standard model?b. What is the total amount of overhead costs assigned to the deluxe model?Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.c. What is the total amount of overhead costs assigned to the standard model?d. What is the total amount of overhead costs assigned to the deluxe model?Problem 4Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units. The cost of placing an order is $80 and the cost of carrying one unit in inventory for one year is $25.Required:a. Use the economic-order-quantity model to determine the optimal order size.b. Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.c. Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.Problem 5The following data are available for Ruggles Company for the year ended September 30, 2011.Sales: 24,000 units at $50 eachExpected and actual production: 30,000 unitsManufacturing costs incurred:Variable: $525,000Fixed: $372,000Nonmanufacturing costs incurred:Variable: $144,800Fixed: $77,400Beginning inventories: noneRequired:a. Determine operating income using the variable-costing approach.b. Determine operating income using the absorption-costing approach.Problem 6Jerry's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2011 operations.Sales (1,000 televisions) $ 900,000Cost of goods sold 400,000Store manager's salary per year 70,000Operating costs per year 157,000Advertising and promotion per year 15,000Commissions (4% of sales) 36,000Part 1. What was the variable cost per unit sold for 2011?A) $36B) $436C) $678D) $400Part 2What were total fixed costs for 2011?A) $678,000B) $436,000C) $242,000D) $227,000Part 3 What are the estimated total costs if Penny's expects to sell 3,000 units next year?A) $1,550,000B) $1,332,000C) $1,671,000D) $1,453,000Part 4Which cost estimation method is being used by Jerry's TV and Appliance Store?A) the industrial engineering methodB) the conference methodC) the account analysis methodD) the quantitative analysis method


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