Accounting Controllership

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					Name
ID #




                                             EMBA PMS 01
                                        ACCT321 Managerial Control
                                              First Quiz
                                              Fall, 2000


- Please make sure that you have them all, and make sure that your name is on the exam.

- For all parts of the exam, please show your work. Prepare logical, well thought out solutions and it may
well help your grade. I cannot give you any partial credit on problems if I cannot follow your thought
processes.

    -   Regarding academic honesty: I expect that your work on this quiz is your work alone. A reputation
        for integrity is a trait to be protected and cherished. Please don’t provide inappropriate assistance or
        ask for assistance since this is intended to be an assessment of your individual work.



                                                        Points earned:

Problem 1 (15 points)
Problem 2 (15 points)
Problem 3 (15 points)
Problem 4 (15 points)
Problem 5 (20 points)
Problem 6 (20 points)
Total possible 100 points




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Problem 1.       Premium Pickups is an up-scale, higher-priced, specialty pickup truck maker based in Irvine
California. The management accountant for Premium Pickups compiled information for various levels of
pickup truck output:

        Pickup Truck Output

                                   3,000 trucks     6,000 trucks      9,000 trucks

Variable production costs          $ 29,640,000     $_________        $_________

Fixed production costs              __________       39,200,000        _________

Variable selling costs               4,500,000       __________        _________

Fixed selling costs                 13,660,000       13,660,000        _________

Total costs                        $ __________ $__________           $_________

Selling price per truck                  46,000           40,100             35,900

Total unit cost                          29,000      __________            _________

Gross profit per truck             __________         __________          _________


Required:
Rounding all per unit calculations to the nearest dollar, fill in the blanks with the correct figures.




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Problem 2.       Fashionaire Company produces children's clothing. During 1999, the company incurred the
following costs:

Factory rent                                 $ 156,000
Direct labor used                              406,000
Factory utilities                               40,000
Direct materials purchases                     624,000
Indirect materials used                        109,000
Indirect labor                                  86,000

Inventory balances were:

                                    January 1        December 31
Direct materials                    $110,000             $ 78,000
Work in process                       140,000            157,000
Finished goods                        180,000            149,000


Required:
Calculate of cost of goods manufactured and cost of goods sold (show your work)




Problem 3:

Staley Co. manufactures computer monitors. Following is a summary of its basic cost and revenue data:
                           Per unit               Percent of price
Sales price                        $480           100
Variable costs                      312           65
Contribution margin                 168           35


        A)         If fixed costs are $100,000, the breakeven point is calculated to be:




         B)     If Staley Co.'s wanted to earn an after-tax (use a 30% tax rate) profit of $40,000 the number
of units which must be sold, is calculated to be:




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Problem 4. Shaver Co. manufactures a variety of electric razors used by both men and women for hair
removal. The company's plant is partially automated; however, some manual labor is employed. The
company is evaluating the benefits of an activity-based cost system. Listed below is annual cost driver
information used in the product-costing system:
Overhead Cost Pool                  Budgeted          Expected frequency of cost        Rate
                                    Cost              driver
Machinery                                 $168,640 27,200 Machine hrs                   $6.20 / mh
depreciation/Maintenance
Factory depreciation/                     $129,250 55,000 direct labor hrs              $2.35/ dlh
Utilities/insurance
Product design                            $554,400 38,500 hrs in design                 $14.40/ hrs in
                                                                                        design
Material purchasing/                    $1,078,000 134,750 lbs Raw mat'ls               $8.00/ lb
storing
TOTAL                                   $1,930,290


In the past month two recent product orders had the following requirements:
                                          Order 101                Order 102
                                          Men's Razors             Women's Razors
Units produced and sold                             20,000                    26,000
Direct labor hours                                      30                        40
Pounds of raw materials                                860                       750
Hours in design                                         20                        23
Machine hours                                           65                        50

Instructions:
Utilizing Conventional Costing (single driver) using only machine hours, how much overhead is assigned to
each recent order, 101 men's razors and 102 women's razors? Don't round off too early. Show your work.




Utilizing ABC and each of the activity pools and their related cost driver, how much overhead is assigned to
each recent order, 101 men's razors and 102 women's razors? Show your work.




Describe the potential benefit(s) of using ABC for this company.




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Problem 5 : I. Nellibell's Café bakes croissants that are sold to local restaurants and grocery stores in the
Columbia, South Carolina area. When 600 croissants are baked, the average cost is $0.70. When 720
croissants are baked, the average cost is $0.65.

1.      If the cost function for croissants is linear, the average cost when 670 are baked is calculated to be:




2.      If the cost function for croissants is linear, the average cost when 800 are baked is calculated to be:




II. RexTab manufactures two products, HV540 and HV720 that have the following sales and cost
information.
                          HV540           HV720         Total
Sales                           $30,000       $82,500       $112,500
Variable costs                  (22,500)      (49,500)        (72,000)
Contribution margin              $ 7,500      $33,000           40,500
Fixed costs                                                   (23,000)
Operating income                                                17,500




1.The total contribution margin for HV540 at breakeven, if sales mix remains constant, is calculated to be:




2.The sales for HV720 at breakeven, if sales mix remains constant, is calculated to be:




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Problem 6:Kumar Co. is attempting to predict its maintenance costs more
accurately. Maintenance costs and machine hours for the first seven months of
the year are as follows:
Month        Hours         Cost
       2        3325      22510
       3        3383      22706
       6        3410      22935
       5        3423      22920
       1        3451      22843
       7        3500      23175
       4        3614      24089

1.a) Using the high-low method, calculate unit variable cost, total monthly
fixed cost and the cost formula. Show your work.




1.b) Using least-squares regression analysis from excel(please attach a copy of
your results), calculate unit variable cost, total monthly fixed cost and the
cost formula.




     2.     Which method is 'better" at predicting costs? Explain




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