Managerial Accounting Exam - ASAP

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1

 

Buckhorn Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Data for the upcoming year appear below.

 

Estimated machine hours

85,000

Estimated variable manufacturing overhead

$5.55 per machine hour

Estimated total fixed manufacturing overhead

$951,888

 

Required: Compute the company's predetermined overhead rate. (Points : 25)

 

 

 

2

 

Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month. 

Required: Prepare the company's cash budget for October in good form.
 (Points : 25)

 

 

 

3.

 

Bella Lugosi Holdings, Inc. (BLH), has collected the following operating information below for its current month's activity. Using this information, prepare a flexible budget analysis to determine how well BLH performed in terms of cost control.

 

 

Actual Costs Incurred

Static Budget

Activity level (in units)

5,250

5,178

 

  

Variable costs:

  

     Indirect materials

$24,182

$23,476

     Utilities

$22,356

$22,674

Fixed costs: 

  

     Administration

$63,450

$65,500

     Rent

$65,317

$63,904

 

(Points : 30)

 

 

 

4.

 

McMullen Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by McMullen to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor.  

The Accounting Department provided the following detail regarding the annual cost to produce electronic hinges. 

 

Direct materials

$54,000

Direct labor

60,000

Variable manufacturing overhead

36,000

Fixed manufacturing overhead

90,000

Total costs

$240,000

 



The Procurement Department provided the following supplier pricing.

 

Supplier A price per hinge

$11.00

Supplier B price per hinge

$10.75

Supplier C price per hinge

$10.50

 


The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet McMullen's technical specifications and quality requirements.

If McMullen stops producing the part internally, 10% of the fixed manufacturing overhead would be eliminated.

Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting an outside supplier's offer.
 (Points : 30)

 

 

 

5.

 

(TCO E) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below. 

 

Units in beginning inventory

2,000

Units produced

9,000

Units sold

10,000

Sales

$100,000

 

Less cost of goods sold:

 

Beginning inventory

12,000

Add cost of goods manufactured

54,000

Goods available for sale

66,000

Less ending inventory

6,000

Cost of goods sold

60,000

Gross margin

40,000

Less selling and admin. expenses

28,000

Net operating income

$12,000

 


Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold. 

Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
 (Points : 30)

 

 

 

6.

 

The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year.

 

Sales

1,200

Raw materials inventory, beginning

25

Raw materials inventory, ending

50

Purchases of raw materials

180

Direct labor

230

Manufacturing overhead

250

Administrative expenses

400

Selling expenses

200

Work-in-process inventory, beginning

150

Work-in-process inventory, ending

120

Finished goods inventory, beginning

100

Finished goods inventory, ending

110

 


Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?
 (Points : 25)

 

 

 

7.

 

Carter Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.

Work in process, beginning:

 

Units in beginning work-in-process inventory

400

Materials costs

$6,900

Conversion costs

$2,500

Percentage complete for materials

80%

Percentage complete for conversion

15%

Units started into production during the month

6,000

Units transferred to the next department during the month

5,800

Materials costs added during the month

$112,500

Conversion costs added during the month

$210,300

 

Ending work in process:

 

Units in ending work-in-process inventory

1,400

Percentage complete for materials

70%

Percentage complete for conversion

40%

 


Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department.
 (Points : 25)

 

 

 

8.

 

(Ignore income taxes in this problem.) Five years ago, the city of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable.

 

 

Old System

New System

Cost of radar system

$30,000

$50,000

Current salvage value

$10,000

-

Salvage value in 10 years

$5,000

$8,000

Annual operating costs

$34,000

$29,000

Upgrade required in 5 years

$4,000

-

Discount rate

14%

14%

 


Required:
(a) What is the city of Paranoya's net present value for the decision described above? Use the total cost approach.
(b) Should the city of Paranoya purchase the new system or keep the old system?
 (Points : 35)

 

      

 

9.

 

(TCO B) Aziz Corporation produces and sells a single product. Data concerning that product appear below.

 

 

Selling price per unit

$130.00

Variable expense per unit

$27.30

Fixed expense per month

$165,347

 



Required: Determine the monthly break-even in either unit or total dollar sales. Show your work! 
(Points : 25)

 

 

 

 

 

 

 

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