Managerial Accounting;Note: You should complete all lesson exams before you take the;final exam.;Complete the following exam by answering the questions and;compiling your answers into a word-processing document. When;you?re ready to submit your answers, refer to the instructions at;the end of your exam booklet. Be certain to indicate the proper;question number before each of your answers. Remember to;show your work if an answer requires a mathematical solution.;Answer each of the following 20 questions. Each answer is;worth 5 points.;1. The work-in-process inventory account of a manufacturing;company shows a balance of $3,000 at the end of an;accounting period. The job-cost sheets of the two incomplete jobs show charges of $500 and $300 for direct;materials, and charges of $400 and $600 for direct labor.;From this information, it appears that the company is;using a predetermined overhead rate as a percentage of;direct labor costs. What percentage is the rate?;2. The break-even point in dollar sales for Rice Company is;$480,000 and the company?s contribution margin ratio;is 40 percent. If Rice Company desires a profit of;$84,000, how much would sales have to total?;3. Williams Company?s direct labor cost is 25 percent of its;conversion cost. If the manufacturing overhead for the;last period was $45,000 and the direct material cost was;$25,000, how much is the direct labor cost?;EXAMINATION NUMBER;061685012 Final Examination;4. Grading Company?s cash and cash equivalents consist of;cash and marketable securities. Last year the company?s;cash account decreased by $16,000 and its marketable;securities account increased by $22,000. Cash provided;by operating activities was $24,000. Net cash used for;financing activities was $20,000. Based on this information, was the net cash flow from investing activities on;the statement of cash flows a net increase or decrease?;By how much?;5. Gladstone Footwear Corporation?s flexible budget cost;formula for supplies, a variable cost, is $2.82 per unit of;output. The company?s flexible budget performance report;for last month showed an $8,140 unfavorable spending;variance for supplies. During that month, 21,250 units;were produced. Budgeted activity for the month had;been 20,900 units. What is the actual cost per unit for;indirect materials?;6. Lyons Company consists of two divisions, A and B. Lyons;Company reported a contribution margin of $60,000 for;Division A, and had a contribution margin ratio of 30;percent in Division B, when sales in Division B were;$240,000. Net operating income for the company was;$22,000 and traceable fixed expenses were $45,000. How;much were Lyons Company?s common fixed expenses?;7. Atlantic Company produces a single product. For the most;recent year, the company?s net operating income computed;by the absorption costing method was $7,800, and its net;operating income computed by the variable costing method;was $10,500. The company?s unit product cost was $15;under variable costing and $24 under absorption costing.;If the ending inventory consisted of 1,460 units, how;many units must have been in the beginning inventory? Final Examination 3;8. Black Company uses the weighted-average method in its;process costing system. The company?s ending work-inprocess inventory consists of 6,000 units, 75 percent;complete with respect to materials and 50 percent complete with respect to labor and overhead. If the total;dollar value of the inventory is $80,000 and the cost per;equivalent unit for labor and overhead is $6.00, what is;the cost per equivalent unit for materials?;9. At Overland Company, maintenance cost is exclusively a;variable cost that varies directly with machine-hours. The;performance report for July showed that actual maintenance costs totaled $11,315 and that the associated rate;variance was $146 unfavorable. If 7,300 machine-hours;were actually worked during July, what is the budgeted;maintenance cost per machine-hour?;10. The cost of goods sold in a retail store totaled $650,000.;Fixed selling and administrative expenses totaled $115,000;and variable selling and administrative expenses were;$420,000. If the store?s contribution margin totaled;$590,000, how much were the sales?;11. Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art;numerically controlled machine. The new machine would;cost $600,000 and would have a 10-year useful life.;Unfortunately, the new machine would have no salvage;value. The new machine would cost $20,000 per year to;operate and maintain, but would save $125,000 per year;in labor and other costs. The old machine can be sold;now for scrap for $50,000. What percentage is the simple;rate of return on the new machine rounded to the nearest;tenth of a percent? (Ignore income taxes in this problem.) 4 Final Examination;12. Lounsberry Inc. regularly uses material O55P and currently;has in stock 375 liters of the material, for which it paid;$2,700 several weeks ago. If this were to be sold as is on;the open market as surplus material, it would fetch $6.35;per liter. New stocks of the material can be purchased;on the open market for $7.20 per liter, but it must be;purchased in lots of 1,000 liters. You?ve been asked to;determine the relevant cost of 900 liters of the material;to be used in a job for a customer. What is the relevant;cost of the 900 liters of material O55P?;13. Harwichport Company has a current ratio of 3.0 and;an acid-test ratio of 2.8. Current assets equal $210,000;of which $5,000 consists of prepaid expenses. The;remainder of current assets consists of cash, accounts;receivable, marketable securities, and inventory. What;is the amount of Harwichport Company?s inventory?;14. Tolla Company is estimating the following sales for the;first six months of next year;January $350,000;February $300,000;March $320,000;April $410,000;May $450,000;June $470,000;Sales at Tolla are normally collected as 70 percent in the;month of sale, 25 percent in the month following the sale;and the remaining 5 percent being uncollectible. Also, customers paying in the month of sale are given a 2 percent;discount. Based on this information, how much cash;should Tolla expect to collect during the month of April?Final Examination 5;15. Trauscht Corporation has provided the following data;from its activity-based costing system;The company makes 360 units of product P23F a year;requiring a total of 725 machine-hours, 85 orders, and 45;inspection-hours per year. The product?s direct materials;cost is $42.30 per unit and its direct labor cost is $14.55;per unit. The product sells for $132.10 per unit. According;to the activity-based costing system, what is the product;margin for product P23F?;16. Williams Company?s direct labor cost is 30 percent of its;conversion cost. If the manufacturing overhead for the;last period was $59,500 and the direct materials cost;was $37,000, what is the direct labor cost?;17. In a recent period, 13,000 units were produced, and there;was a favorable labor efficiency variance of $23,000.;If 40,000 labor-hours were worked and the standard;wage rate was $13 per labor-hour, what would be the;standard hours allowed per unit of output?;18. The balance in White Company?s work-in-process inventory account was $15,000 on August 1 and $18,000 on;August 31. The company incurred $30,000 in direct labor;cost during August and requisitioned $25,000 in raw;materials (all direct material). If the sum of the debits to;the manufacturing overhead account total $28,000 for the;month, and if the sum of the credits totaled $30,000, then;was Finished Goods debited or credited? By how much?;Activity Cost Pool Total Cost Total Activity;Assembly $704,880 44,000 machine-hours;Processing orders $91,428 1,900 orders;Inspection $117,546 1,950 inspection-hours6 Final Examination;19. A company has provided the following data;Sales 4,000 units;Sales price $80 per unit;Variable cost $50 per unit;Fixed cost $30,000;If the dollar contribution margin per unit is increased;by 10 percent, total fixed cost is decreased by 15 percent;and all other factors remain the same, will net operating;income increase or decrease? By how much?;20. For the current year, Paxman Company incurred;$175,000 in actual manufacturing overhead cost. The;manufacturing overhead account showed that overhead;was overapplied in the amount of $9,000 for the year.;If the predetermined overhead rate was $8.00 per;direct labor-hour, how many hours were worked;during the year?
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