# AQW

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```					Question #1
The XYZ Company has budgeted sales of 900,000 units in 2012. Its target ending inventory is
80,000 units and its beginning inventory is 100,000 units.

Each unit of XYZ’s product requires 4 pounds of material to produce. Its target ending inventory
for material is 60,000 pounds and its beginning inventory for materials is 50,000 pounds.

a) Compute the number of units to be produced.

b) Compute the budgeted number of pounds of materials to be purchased.

Question #2
The Thomas Company makes all its sales on credit. It expects to collect cash from receivables
according to the following schedule:
 70% collected in the month of sale.
 15% in the month after sale.
 10% in the second month after sale.
 4% in the third month after sale

Budgeted sales are as follows:
 January \$70,000
 February \$90,000
 March \$100,000
 April \$120,000
 May \$100,000
 June \$90,000
.
What are the budgeted cash collections for April?
Question #3
Expected production (units)                 8,000
Standard pounds of DM usage per unit         3.00
Standard DM price per pound                    \$5
Standard DML hours per unit                  5.00
Standard DML rate per hour                 \$15.00
Standard VMOH rate                          \$6.00   per DLH
Standard FMOH rate                          \$8.00   per DLH

Actual
Units produced                           7,800
Pounds of DM purchased                   25,000
Total cost of DM purchased              \$130,000
Pounds of DM used                        23,100
DML hours worked                         40,100
Total cost of DML                       \$585,460
VMOH                                    \$250,000
FMOH                                    \$350,000

a) Calculate the following variances:
o Direct materials price variance
o Direct materials efficiency variance
o Direct manufacturing labor rate variance
o Direct manufacturing labor efficiency variance
o VMOH spending variance
o VMOH efficiency variance
o FMOH spending variance
o FMOH production-volume variance

b) Explain what each of the calculated variances imply about the firm’s operations:
o Direct materials price variance
o Direct materials efficiency variance
o Direct manufacturing labor rate variance
o Direct manufacturing labor efficiency variance
o VMOH spending variance
o VMOH efficiency variance
o FMOH spending variance
o FMOH production-volume variance

c) Prepare the following journal entries:
o Purchase of direct materials
o Usage of direct materials
o Paying of wages for direct manufacturing labor
o Incurrence of VMOH & FMOH
o Application of VMOH & FMOH to production
o Closing out VMOH and FMOH accounts
Question #4
a) When allocating overhead costs, is it better to use budgeted rates or actual rates? Be sure to

b) When allocating overhead costs, is it better to use budgeted usage of the allocation base or
actual usage of the allocation base? Be sure to support your answer with specifics.

Question #5
Consider the following information:
Bud CM       Bud Market        Bud Market    Act CM     Act Market        Act Market
Product    per Unit     Size (units)        Share       per Unit   Size (Units)        Share
1        \$3.00       4,800,000            10%         \$2.70      3,960,000           15%
2        \$2.20       3,600,000            20%         \$2.00      4,840,000           15%

a) Calculate the following variances for each product:
o Sales-volume variance
o Sales-mix variance
o Sales-quantity variance
o Market size variance
o Market share variance

b) What insights can you draw from the above variances?

Question #6
The ABC Company has two operating divisions and two support divisions. The following table
presents the amount of hours of service provided by the two support divisions:

OP 1          OP 2        SUP 1   SUP 2
SUP 1        1,000         2,000         0     1,000
SUP2         3,000         1,500        500      0

The costs for the four departments appear below:

Department       Costs
OP 1             \$250,000
OP 2             \$300,000
SUP 1            \$150,000
SUP 2            \$60,000

a) Allocate the support department costs to the operating departments using the direct method.

b) Allocate the support department costs to the operating departments using the step-down
method, starting with Support Department 1.

c) State the equations one would use to allocate the support department costs to the operating
departments using the reciprocal method. You do not need to solve the equations!
Question #7
A company purchases and processes 15,000 gallons of raw material at a cost of \$30,000. From
this process, it produces 600 pounds of JP1 and 900 pounds of JP2. JP1 can be sold for \$21 per
pound or processed further into 6,000 units of FP1 at a total cost of \$12,750. FP1 has a selling
price of \$4 per unit. JP2 can be sold for \$26 per pound or processed further into 10,200 units of
FP2 at a total cost of \$26,250. FP2 has a selling price of \$5 per unit. Assume that the company
sells only FP1 and FP2. In other words, it further processes both joint products. Also, assume
there is no beginning or ending inventory.

a) Allocate the joint costs to JP1 and JP2 using the physical measure method (based on pounds),
sales value at split off method, the NRV method, and the constant gross margin percentage NRV
method.

b) Is it a good idea for the firm to further process the joint products? Be sure to justify your
conclusions with specific calculations.

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About I am teacher of Accounting and want to build the concepts the students in accounting.