ACCT 434 Midterm Exam http://homeworkmonster.com/downloads/acct-434-midterm-exam/ ACCT 434 Midterm Exam
(TCO 1) For each of the following drivers identify an appropriate activity.
a. # of machines
b. # of setups
c. # of inspections
d. # of orders
e. # of runs
f. # of bins or aisles
g. # of engineers
(TCO 2) Favata Company has the following information:
Month Budgeted Sales
June $60,000
July 51,000
August 40,000
September 70,000
October 72,000
In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month’s cost of sales.
Prepare a purchases budget for July through September.
(TCO 1) Merriamn Company provides the following ABC costing information:
(TCO 2) A master budget
(TCO 2)
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(TCO 4) In evaluating different alternatives, it is useful to concentrate on
(TCO 5) The theory of constraints is used for cost analysis when
(TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
Direct materials $45,000
Direct labor 65,000
Variable factory overhead 30,000
Fixed factory overhead 70,000
Total costs $210,000
Of the fixed factory overhead costs, $30,000 is avoidable.
Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should
(TCO 3) Patrick Ross, the president of Ross’s Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:
Month Machine-hours Overhead Costs
February 1,700 $20,500
March 2,800 22,250
April 1,000 19,950
May 2,500 21,500
June 3,500 23,950
Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.
(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit
Overhead costs need to be accounted for this way we can understand just how much cost goes into producing each unit. There are other cost factors that contribute to the product aside from labor and material. Since the projected and the actual sales volumes do not align Kelly should be concerned with the other
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
B. 1. The impact of costs on the decision to move forward with the new Maui Sandal line is as follows: As the production continues, the hours needed for each batch, or individual pair, will begin to decrease. By continuing to produce this line the total labor costs will continue to decrease, but most likely, at a slower rate as more sandals are produced. This data can help the company decide employment levels, capacity, costs, and their pricing of this particular merchandise in the open market. The company predicts that it will take 1,000 labor hours for production to complete for the first batch, with 50 total batches between month 1 and month 4.
(TCO 5) You’ve just joined the staff of the XYZ Manufacturing Company (XYZ, for short). XYZ manufactures only one product, the gizmo. It comes in two sizes, the mini-gizmo and the magna-gizmo. Both are difficult to manufacture, and consequently, the company closely monitors rejected units. The company has three locations, each of which produces both the mini and the magna-gizmos. You are automating the weekly production reports so that you can easily calculate total production for the entire company each week.
The manufacturing manager now feels that the competitors’ valves are of equal quality as that of Wilkerson. Currently, the competitors have not changed their prices and GM has been maintained at 35%.
Consolidated Company makes cardboard boxes. During the most recent accounting period Consolidated paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes. Consolidated started and completed 400,000 boxes. Based on this information, what is the average manufacturing cost per box?
Peter’s Peripherals assembles multimedia upgrade kits --- sets of components for adding sound and video to desktop computers. The demand for their kits for the next four quarters is estimated in the table below. Unit manufacturing cost for each kit is $160. Holding costs on each kit is $80 per quarter. Any kit that must be delivered late is assessed a backorder cost of $120. Each worker is capable of finishing 10 kits per quarter. If the company chooses to vary work force levels, it will incur costs of $400 for each additional worker; $600 for each termination. The company currently has 28 employees.
÷ 10,000 = $15.13. 5. The Armstrong Helmet Company likely uses a process cost system. Process costing is used when large volumes of a homogenous product are produced on a continuous basis.
Going into 2004, Bob Moyer planned to produce 10,000 bicycles at Mile High Cycles. Construction of his bicycles includes the utilization of three departments, frames, wheel assembly, and final assembly. During this year, Mile High Cycles ended up actually producing 10,800 bicycles to meet higher than expected demand. Bob is curious as to whether or not he was successful in maintaining costs to meet these higher levels of demand.
However, this system was found to be “ineffective for costing and bidding individual parts.” Id. While some machines produced low cost parts at high volume, other machines were producing high cost parts at low volume, which created cost discrepancies between various machines and thus misallocation of
1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing
7. Though numbers given in the cost data can not be contested, I would definitely contest the way total cost has been computed. The item 345 department operates within a large manufacturing facility that churns out number of other products too. Hence judging the profitability of item 345 on the basis of total cost is not practical.
The determination of these values requires you to add columns to the Inventory Analysis worksheet. Mr. Milligan asks you to use the worksheet provided. As Mr. Milligan will use the Inventory Analysis worksheet during a presentation, he wants the worksheet to have a professional appearance. To enhance the worksheet’s appearance, you include an appropriate header and format to the worksheet, column, and row labels. The header should display the name of the business, the name of the worksheet, and the current date. As you construct the worksheet, you use the currency format for all columns containing dollar values. Also, for any column that contains a percentage, you
The current method of apportioning production overheads based on direct labour hours can be described as a traditional approach to product costing. In a manufacturing company’s financial statements, each item produced must be allocated some of the production overheads to make the statements compliant. Sometimes the individual costs of these items can be calculated incorrectly based on overall production overhead and the system of allocating in place, however the overall financial statement can still be accurate. This traditional method of allocating the production
cost-of-goods-sold section might be in relation to the sales total. In the case of a merchandising firm,