Question;ACC 312 Fundamentals of Managerial Accounting;Midterm Exam ITest FormA;Name UTEID;Instructor ClassDay_____________Time;Instructions;Confirmthatyou have 25;multiple-choice questions;and6 workout problems;(16 pages).;1. Answers toMultiple-Choicequestions should be recordedontheScantron.;A.;Onyour Scantronanswersheet, writeand bubbleinyour;name, UTEID, and the ?Test Form? letternoted;above.;B. Usea#2;pencil onlytomark your responses onyour;Scantronanswer sheet.Markclearlyanderase;completelyas needed.Onlymultiple;choice answersmarkedon;your Scantronanswer;sheetwill be graded.;C.;The time allotted;for;an examincludesthetime required;to ?bubble-in? yourScantron answersheets.;It;is cheatingtotake extratime;to bubble inthe answersheetaftertime is;up forthe exam.;2. Answers to;Problems;should be recordedontheexam where;indicated.Show your workinthespaceprovidedor;attach scratch paper.;3. Cellphones;books,notes,PDAsand;programmable calculatorsare;NOT;allowed at yourdeskduring;the exam.Calculatorscapable;of storing text are NOT;allowed.;4. Inthe interestofminimizingdisruptions;and;makingsureallstudents;have exactlythe same informationonthe exam, wewillanswer onlythe followingkinds of questions duringthe exam;a. Vocabularyquestions relatingto;non-managerial-specificwords;b. Questions abouta possible mistakeinthe exam.;Inthe latter case,ifamistakeisconfirmed, we willanswer;bymakinganannouncement;to the whole class.If no;announcementismadeina;short period of time, you mayassume thatthe problemiscorrectaswritten.;5.;Bringyour entire exam,scratch paper, Scantronanswer sheet, and studentID to;the front of the roomwhenyou;have finished.;6.;You are remindedof the University?shonor policywhich;requires youdo your own;work and not giveorreceive assistanceon this exam.;SECTIONI-MULTIPLE;CHOICE (50points?25questions,2pointseach)-PleasechoosetheONE;BEST;answerforeachquestionand;recordyouranswer;ontheScantronanswersheet.;1.;FancyTechnologycurrentlysells;100 units, incurs fixed costs, generates;aprofit;and has aunitcontribution;margin of$4. FancyTechnologycan automateits production process, whichwill;increaseitsfixed costs an additional;$100 and decreaseits variable costs;by;$1 perunit. Also, if;FancyTechnologydecreases;its priceby$1,it will;sell 20% moreunits. Byhow;much will FancyTechnology?s;profit change(compared to current profit)ifit automates theproduction process;AND decreases theprice;by$1?;A. Increaseby$180;B. Increaseby$480;C. Decreaseby$100;D. Decreaseby$20;E. Noneoftheabove;2.;Dent Manufacturinghas31,000 labor;hours available forproducingMandN. Considerthe followinginformation;ProductM;ProductN;Requiredlabortimeperunit(hours);2;3;Totaldemand(units);6,500;8,000;SalesPrice;$7.50;$9.00;Contributionmarginperunit;$5.00;$5.70;IfDentmakestheoptimalproduction;scheduletomaximize;profit,howmuchcontributionmarginwouldthecompanyexpecttogenerate?;A.;$102,750;B.;$32,500;C.;$66,700;D.;$78,100;E.;Noneoftheabove.;Skip- this topicnot coveredinSpr2014.;3.;The;Gilligan Companyincurs;total fixed costs of$1,400,000 forthe;production of50,000 units or less, and;$1,500,000 iftheyproduce;more than 50,000 units (additional;$100,000). Theyhavea contributionmarginratio;of 40%. Theproduct will sell for;$80 perunit. What is the smallest numberofunits that must besoldto earn a;pre-taxprofit of$420,000?;A.;56,875;B.;100,000;C.;58,000;D.;44,375;E.;60,000;4.;Taylor;Companyhad;thefollowingdata(in;millions of$) fora;recent period.There werenobeginningorendinginventories.;Sales;$990;DirectMaterialsused;$360;Directlabor(variable);$190;Factoryoverhead;Variable;$125;Fixed;$75;Sellingand;administrativeexpenses Variable $60;Fixed $40;Whichofthefollowingiscorrect(inmillionsof$)?;CostofGood Sold;ContributionMargin;OperatingIncome;A.;$360;$240;$140;B.;$750;$240;Cannot;be determined;C.;$550;$255;$140;D.;$550;$240;$140;E.;$750;$255;$140;5.;RockyProduction;Specialists (RPS)is considering whetherto makeorbuya component that is usedin theproduction of faxmachines.;Theannual cost of;producingthe100,000 units ofthe component needed;by;thecompanyis as;follows;Fax;machinecomponentvariablemanufacturingcosts $300,000Fixedmanufacturingcostsofthecomponent-makingfactory $100,000AllocatedRPScorporateoverhead $;50,000;IfRPSweretodiscontinueproductionofthecomponent,fixedmanufacturingcostswouldbereducedby80%.Corporate;overheadisallocated;basedonfactory;squarefootageandwouldnotdecrease.;RPSshouldbuythe100,000componentsiftheper-unit;costofthepurchasedcomponentislessthanwhat;amount?;A.;$3.20;B.;$3.50;C.;$3.80;D.;$4.30;E.;$4.50;6.;MedTech is studyingtheprofitabilityofachange;in operation and hasgathered;thefollowinginformation;CurrentOperation;AnticipatedOperation;Fixed;costs;$38,000;$48,000;Sellingprice;$16;$22;Variablecost;$10;$12;Sales;(units);9,000;6,000;Should MedTech makethe;change?;A. Yes, becausethecompanywill be;better offby$6,000.;B. Yes, becausethecompanywill be;better offby$4,000.;C. No, becausethecompanywill be;worse offby$22,000.;D. Yes, becausethecompanywill be;better offby$12,000.;E. Noneoftheabovecorrectlylists the changein;profit.;7.;Western ShirtsInc.;makes t-shirts for teenagers.In2011, the;companyhadafter-tax;profits of$6,027,462and sold t-shirts for;$26.50 each. Acorporate;taxrateof25%was;levied on Western ShirtsInc. duringtheyear.Ifthe variable costper t-shirt is $16 and 1,320,768 t-shirts weresold,what;is the total amount offixed costs for;thecompanyduring;2011? Roundto the;nearest dollar.;A.;$5,831,448;B.;$5,247,870;C.;$4,680,535;D.;$4,904,560;E.;$4,510,680;8.;As production increases,what happens to VariableCosts per unit?;A. Decreases;B. Increases;C. Stays the same;D. Either increases ordecreases, dependingon the;fixed costs;E. Noneoftheabove;9. An examination of Aquafloat Corporation's;inventoryaccounts revealed thefollowinginformation:Raw;materials, June1: 46,000;units;Raw materials;June30: 51,000 units;Purchases ofrawmaterials;duringJune: 185,000 unitsThereis no beginningorending;work-in-process inventory.;Aquafloat Corporation?s finished product requires;fourunits of rawmaterials and it sells for$10. On;thebasis ofthis information, howmanyfinished products were manufacturedduring;June?;A.;45,000.;B.;47,500.;C.;57,750.;D.;70,500.;E.;180,000.;10.;Chelsea;Corporation, which uses;least-squares regression analysis, has derived the following regressionequation for;estimates ofmanufacturingoverhead: Y=495,000 + 5.65X.Which ofthe;followingstatements is trueiftheprimary;cost driveris machine hours?;A. Total manufacturingoverhead is represented;by;the variable?X?.;B.;The;companyanticipates$495,000 offixed manufacturingoverhead.;C.;?X?;is commonlyknownas;the dependent variable.;D.;?X?;represents the;numberofmachine hours.;E.;Both ?B? and?D?aretrue;11. WhitfieldInc. has;thefollowinginformation regarding;activityforthis;year:Finishedgoods;inventorydecreased by$100,000;Work-in-process inventoryincreased;by;$350,000Total manufacturing;costs were$525,000;What are cost ofgoodsmanufactured;and;cost ofgoods;sold, respectively?A.;$175,000 &$275,000;B.;$100,000&$350,000C. $525,000;$350,000 D. $875,000 &$775,000;E. We need;more information about actual;inventorybalances to determine answer;12. CarpoolInc. hasfixed costs;perunit of$10 when thecompany;produces 50,000 units. At the;same level ofproduction, total variablecosts;are$400,000. What is the total cost;whenCarpool produces 100,000 units?(Assume that 100,000 units is in the relevant range.);A.;$1,800,000;B.;$800,000;C.;$900,000;D.;$1,300,000;E.;$1,000,000;13.;Acompanyproducesandsellstwoproductsatunitcontributionmarginsof$4forJand$6forK.Fixedcostsare$140,000.;IftheplannedsalesmixistwounitsofJforeachunitofK,thebreakeven;pointwouldbe(selectthebestanswers);A. 17,500unitsofJand8,750unitsofK;B. 7,500unitsofJ and15,000unitsofK;C. 10,000unitsofJand20,000unitsofK;D. 20,000unitsofJand10,000unitsofK;14.;RenaissanceInc. uses the;high-low method to analyze cost behavior.Thecompany?s;relevant rangeofactivityvaries;from 500 to 1,200 machine-hourswith the;followinginformation forthe first six-months oftheyear;Month Machine-hours Utilities costs;January;720;$8,000;February;900;8,810;March;790;8,315;April;680;7,820;May;970;9,125;June;830;8,495;Thefixed utilities cost permonth is estimated to be;A.;$4,760;B.;$4,400;C.;$5,300;D.;$3,520;E.;An;amount other than those listed;above;15.;Assume;the following;forthe MNS Company;Sales;(20,000 units);$800,000;Fixed;Expenses;$210,000;Break-even;point (revenue);$700,000;Ifthe sales;price weretoincreaseby10% and variable expenses increased$2.00 per;unit, which ofthefollowing;would be true?;A. The new break-even point is $700,000;B. Theold break-even pointis 7,500 units;C. The new variableexpenses are$44 perunit;D. The new break-even point is 15,000 units;E. The newsellingprice;is $30 perunit;16. Companycan sell all;theunits it can produceofeither;latteorcappuccino but not both.Latte;hasaunitcontribution margin of$45 and takes;threemachine hours to make andcappuccino;has aunit contributionmargin of$32 and;takes two machine hours to make. Thereare;1,200 machine hours availabletomanufactureaproduct. What should the company;do?;Skip- this topicnot coveredinSpr2014.;A. Make latte whichcreates$13 more;profit perunit than cappuccino does;B. Make latte becausecappuccino is overrated asabeverage;C. Make cappuccino whichcreates;$1 moreprofit per machinehourthan lattedoes;D. Make cappuccino because moreunits can be madeand sold than;latte;E. The same total;profits exists regardless ofwhich product is made;(Usethefollowinginformation forthe;next two questions)A partial listingofcosts incurred;duringDecemberat Gagnier;Corporation appears below;Factorysupplies(Indirect Materials)????????????..;$8,000;Administrative wages and salaries?????????????.;$105,000;Direct;materials????????????????????...;$153,000;Sales;staffsalaries???????????????????...;$68,000;Factorydepreciation??????????????????...;$49,000;Corporate headquarters buildingrent???????.....................;$34,000;Indirect;labor?????????????????????...;$32,000;Marketing??????????????????????....;$103,000;Direct;labor?????????????????????.....;$83,000;17.;The;total ofthe manufacturingoverhead costs listed above;forDecemberis;A.;$325,000;B.;$635,000;C.;$89,000;D.;$40,000;E.;Noneofthe;above;18.;The;total ofthe periodcosts;listed above for Decemberis;A.;$89,000;B.;$310,000;C.;$325,000;D.;$399,000;E.;Noneofthe;above;19.;Iadanza;Corporation is a;wholesaler that sells a singleproduct. Management has provided;thefollowingcost data for two levels ofmonthlysales;volume.Thecompanysells;theproduct for$195.70 perunit.;Sales volume;(units)?????????;6,000;7,000;Cost;of sales????????????;$457,800;$534,100;Sellingand;administrative costs????..;$621,000;$639,100;The best estimateofthetotal contribution marginwhen 6,300 units aresold is;A.;$752,220;B.;$638,190;C.;$100,170;D.;$177,030;E.;Noneofthe;above;20.;BuckeyeCompanyhas;provided thefollowingdata;for maintenancecost;Prior;Year;Current;Year;Machinehours.?????...;12,500;15,000;Maintenancecosts????..;$27,000;$31,000;What is our best estimateof total costs?;A. $21,625 peryearplus $0.625 per machinehour;B. $7,000 peryearplus $0.625 per machinehour;C. $7,000 peryearplus $1.60 per machinehour;D. $27,000 peryearplus $1.60 per machinehour;E. Noneoftheabove;21. The followingmonthlydataare available fortheEagerCompanyand;its onlyproduct;Unit;sales price??????????????????.;$75;Unit;variableexpenses???????????..????;$30;Total;fixed expenses???????????.?????;$180,000;Budgeted;sales forthemonth of March???..?????..;7,000 units;Thesafetymargin;forthecompanyfor March was;A.;$315,000;B.;$225,000;C.;$135,000;D.;$495,000;E.;Noneofthe;above;22.;North;South;Sales???????????????...;$900,000;$800,000;Variableexpenses??????????..;450,000;300,000;Traceablefixed expenses???????...;260,000;210,000;Allocated common corporate expenses??.;240,000;190,000;Operatingincome(loss)??????..;$(50,000);$100,000;The Kelsh;Companyhastwo divisions--North;and;South. Thedivisions havethe;following revenuesandexpenses;Management at Kelsh is ponderingthe;elimination of North Division.;IfNorth Division were eliminated,its traceablefixed expenses;could be avoided.Thetotal common;corporateexpenses would be;unaffected.Given these;data, theelimination of North Division;would result in an overall companyoperatingincome;of;A.;$100,000;B.;$150,000;C.;$(140,000);D.;$50,000;E.;Noneofthe;above;23.;Wright Corporation's;contribution format income statement for last month appears;below.;Sales?????????????;$45,000;Variableexpenses???...................;$27,000;Contribution;margin??????...;18,000;Fixed;expenses????????...;12,000;Operatingincome??????.;$6,000;There wereno;beginning orendinginventories.;Thecompanyproduced and sold;3,000 units duringthemonth.Ifsales decrease by500;units next month,calculatethereduction in fixed expenses that;would berequired to maintain thecurrent operatingincome.;A.;$7,500;B.;$6,000;C.;$2,000;D.;E.;$3,000;Noneofthe;above;24.;Ellis Television makes and;sells portable televisions. Each;television regularlysells for$210. Thefollowing;cost data pertelevision is based on a full;capacityof10,000 televisions produced;each period.;Direct materials????????????????????????..;$80;Direct;labor???.............................................................................................;$60;Manufacturingoverhead(70%;variable and 30%unavoidablefixed)????;$40;A special order has been;received byEllis for;asaleof2,000 televisions to an overseas customer. Theonlyselling;costs that would be;incurred on this orderwould;be$6 pertelevision for shipping.;Ellis is nowselling6,000 televisions;throughregular channels each period. What should betheminimum;sellingpriceper;television in negotiatingapriceforthis;specialorder?;A.;$174;B.;$168;C.;$210;D.;$180;E.;Noneofthe;above;25.;Wright Companyproduces products;I, J, and Kfrom a;singleraw materialinput. Budgeted;dataforthenext;month follows;ProductI;Product;J;Product;K;Units;produced?????????????.;1,500;2,000;3,000;Perunit;sales value at split-off???????.;$10;$12;$15;Added;processing costs perunit??????..;$2;$4;$4;Perunit;sales valueif processes further???..;$15;$15;$20;Ifthejoint cost;oftheraw material input;is $78,000, which oftheproducts;should be processed beyond thesplit-off;point?;ProductI;Product J;Product K;A);Yes;Yes;No;B);Yes;No;Yes;C);No;Yes;No;D);No;Yes;Yes;Skip- this topicnot coveredinSpr2014.;SECTIONII(50points);YouMUST;showyourworkto;receiveanypartialcredit/Pleasetrytobeasneatandorganizedaspossible.;Unlessstatedroundtotwodecimal;places.;QUESTIONONE(8 points);Determine;the missing amounts;for eachofthe following companiesbyfilling;in theopenblanksbelow.;Sales;Revenue;XYZ;Company;ABC;Company;$245,000;Beginning;inventory,raw material;$8,500;Ending;inventory,raw material;$180,000;$20,000;Purchasesofraw material;$190,000;Direct;raw materialused;$140,000;Directlabor;$62,500;Manufacturing;overhead;$490,000;$80,000;Total;manufacturingcosts;$1,040,000;$170,000;Beginning inventory,work-in-process;$60,000;Ending;inventory, work-in-process;$2,500;Costof goods;manufactured;$1,050,000;$175,000;Beginning inventory,finishedgoods;$100,000;Costof goods;available forsale;$185,000;Ending;inventory, finished goods;$12,500;Costof goods;sold;$1,090,000;Gross;Margin;$510,000;Selling;and administration expenses;Income;before;taxes;$298,000;$50,000;Income;tax expense;$76,000;Net;income;$32,500;QUESTIONTWO(6 points);Managers in theStampingDepartment havebeenstudying;overhead cost and the relationship with machine;hours. Datafrom themost recent 12;months follow.;The managerofthedepartment;has requested a regression;analysis of thesetwo variables;(labeled no. 1 below).;However, the staffperson performingtheanalysis decided to run;another regression that excluded;February(labeled no. 2). She observed that thevolumeofactivitywas very;lowforthat;month becauseoftwo factors;asevereflu;outbreakand an electrical fire that disrupted operations;for;about10 workingdays.;Required;A. ExcludingFebruaryas an;outlier and usingthehigh-low method determinethe;following (ignoretheregression results).;Total Fixed Costs $;VariableCost perUnit;$;B. Prepare anestimateofoverhead;cost foravolume;of3,000 machinehours byusingthe;regression No. 1output. IgnoreA;andregression output No.;2.;QUESTIONTHREE(8 points);MackenzieInc manufactures and sells threeracquets: Squash, Tennis, and;Racquetball.Annual fixed costs are;$3,440,000;and dataabout the threeproducts;follow.The corporate taxrateis;20%.Round to two decimal;points even forunits.;Squash;Racquetball;Tennis;Sales;mix in units;50%;20%;30%;Sellingprice;$300;$700;$500;Variablecost;150;420;220;Required;A. Determinethe weighted-averageunit contribution margin.;B. Determinethebreak-even volumein units for each product.;C. Determinethe total numberof weighted units that must besold to obtain an;after-taxprofit forthe;companyof$860,000.;D. Assume that;the sales mixfor Squash, Racquetball, and Tennis is changed to;40%, 30%, and 30%,respectively. Will the;numberof weighted units required to break-even increaseor;decrease? Circle;thecorrect response;Increase Decrease;QUESTIONFOUR(10 points);Masse Corporation usespart G18;in oneofits products. The company's;AccountingDepartment reports thefollowing;costs ofproducingthe16,000 units ofthe;part that are needed every year.;An outside supplier has offered to makethepart and sell it to thecompanyfor$28.00;each.Ifthis offer;isaccepted, the supervisor's;salaryandall of;the variable costs, including;direct labor, can be avoided.;Thespecial equipment used to makethe;part was purchased many years agoand has;no salvagevalueorotheruse. The;allocatedgeneral overheadrepresents;fixed costs oftheentire company.;Iftheoutside supplier'sofferwere;accepted, only$22,000 of these allocated general;overheadcosts would be;avoided.Inaddition,the;spaceused to produce part G18 could be usedto make moreofoneofthe;company's otherproducts,generatinganadditional;margin of$22,000 peryear for that product.;Required;a. Preparea detailed report that shows the;relevant costs of making and;buyingthe G18 part. Include;atotal cost for each option in addition to cost detail.;Also computethe effecton the;company's totaloperatingincome;ofbuyingthepart;G18 from the supplier ratherthan continuingto make;it insidethecompany.;b. Which alternativeshould;thecompanychoose?;QUESTIONFIVE(9 points);Skipall of Question Five-;this topic not;coveredinSpr2014.;Glunn;Companymakes threeproducts;in a singlefacility. Theseproducts havethefollowingunit productcosts;Additional dataconcerningtheseproducts;are listed below.;Themixingmachines;arepotentiallythe;constraint in the production facility. A total of24,200 minutes areavailable;permonth on these machines. Direct laboris a variable;cost in this company.;Required;a. Howmanyminutes;ofmixingmachinetimewould be;required to satisfydemand forall;three products?;b. How much of each product should be produced;to maximize operatingincome?;(Round up to thenearestwhole;unit);PRODUCTA;PRODUCTB;PRODUCTC;c. Up to how much should thecompanybewilling to payforoneadditional;hourofmixingmachine;timeifthecompanyhas;madethe best useoftheexistingmixing;machinecapacity?(Round;offto the nearestwhole cent.);QUESTIONSIX(9points);Marshall Corporation hasreceived a request fora;special orderof9,000 units of productZ74 for;$46.50 each.The;normal sellingpriceofthis product;is $51.60 each, but theunits wouldneed;to be modified slightlyforthecustomer.;Thenormal unit product cost;of productZ74 is computed;as follows;Direct laboris avariablecost. The;special orderwould haveno effect;on the company's total fixedmanufacturingoverhead;costs. The customerwould likesome;modifications madeto productZ74 that wouldincrease;the variablecosts by$6.20;perunit and that would requireaone-time investment of$46,000 in specialmolds that;would haveno salvage value.This;special orderwould have;noeffect on the company's;other sales.Thecompanyhasamplesparecapacityforproducingthe;special order.;Required;Determinetheeffect;on the company's total operatingincomeofaccepting;the special order. Includeamountand;indicateifit increases or decreases operatingincome. Show;yourwork!
Paper#41495 | Written in 18-Jul-2015Price : $52