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Accounting Final exam




Question;Joleen Harmon, CPA, has two clients. Client A requires 20 hours;of partner time and 100 hours of staff time. Client B will use 12 hours of;partner time and 80 hours of staff time. Partners are paid $85 an hour and;bill support time at 60% of their hourly rate. Staff are paid $25 an hour;and bill support time at $20 per billable hour. On a separate sheet of;paper, calculate the total charge to each of these clients if profit is added;at 20% over cost.;2. The Tijama Manufacturing Company has;determined the cost of manufacturing a unit of product to be as follows, based;on annual production of 50,000 units per year;Direct materials $20.00;Direct labor 15.00;Variable factory overhead 10.00;Fixed factory overhead 12.00;Operating statistics for the month of August and September are as follows;August September;Units produced 4,200 3,500;Units sold 3,500 4,200;Selling and administrative expenses $25,000 $35,000;The selling price is $75 a unit. There were no inventories on August 1, and;there is no work in process at September 30. Prepare comparative income;statements for each month under both absorption costing;and direct costing.;3. The Donal;Company has sales of $800,000, variable costs of $300,000, and fixed costs of;$250,000. On a separate sheet of paper, compute the following.;a. Contribution margin ratio;b. Break-even sales volume;c. Margin of safety ratio;d. Net income as a percentage of sales;4.;Devine and O?Clock, architects, have been using a simplified costing system in;which all professional labor costs are included in a single direct cost;category (professional labor) and all overhead costs are included in a single;indirect cost pool (professional support) and allocated to jobs using;professional labor hours as the allocation base. Consider two clients: Shank;Products, which required 50 hours of design work for a new addition, and Sayers;Markets, which required plans for a new store that took 20 hours to draw. The;firm has two partners who each earn a salary of $150,000 a year and four;associates who each earn $60,000 per year. Each professional has 1,500 billable;hours per year. The professional support is $590,000, which consists of;$350,000 of design support and $240,000 of staff support. Shank?s job required;30 hours of partner time and 20 hours of associate time. Sayers job required 5;hours of partner time and 15 hours of associate time.;Required:-;1. Prepare job costs sheets for Shank Products and Sayers Markets, using a;simplified costing system with one direct and one indirect cost pool.;2. Prepare job costs sheets for the two clients, using an activity-based;costing system with two direct cost categories (partner labor and associate;labor) and two indirect cost categories (design support and staff support). Use;professional labor dollars as the cost allocation base for design support and;use professional labor dollars for staff support.;5.;Differential analysis.;Made Easy, Inc., manufactures household products such as windows, light;fixtures, ladders, and work tables. During the year it produced 10,000 Model;10X windows but only sold 5,000 units at $40 each. The remaining units cannot;be sold through normal channels. Cost for inventory purposes on December 31;included the following data on the unsold units;Materials??????????????????????? $10.00;Labor???????????????????.. 5.00;Variable;overhead????????????????????. 3.00;Fixed;overhead??????????????????????. 2.00;Total cost per;window $20.00;Made Easy can sell the 5,000 windows at a liquidation price of $20.00 per;window, but it will incur a packaging and shipping charge of $6.00 per window.;Required:-;1. Identify the relevant costs and revenue for the liquidation sale alternative.;Is Made Easy better off accepting the liquidation price rather than doing;nothing?;2. Assume the Model 10X can be reprocessed to another size window, Model 20X;which will require the same amount of labor and overhead as was initially;required to produce Model 10X but sells only for $30. Determine the most;profitable course of action: liquidate or reprocess


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