ACCT 6381 Ch 18 _ 25 Final Examination
ACCT 6381 Ch 18 _ 25 Final Examination
ACCT 6381 Ch 18 _ 25 Final Examination
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<strong>ACCT</strong> <strong>6381</strong> <strong>Ch</strong> <strong>18</strong> – <strong>25</strong> <strong>Final</strong> <strong>Examination</strong><br />
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Q1<br />
The costs for Clark Equipment to make a part in house are displayed below:<br />
Per Unit<br />
Direct Materials$ 3.00<br />
Direct Labor 7.00<br />
Allocated Overhead 10.00<br />
Total Cost$20.00<br />
Moving to an outside vendor will allow Clark Equipment to reduce their overhead costs by 70%.<br />
What is the maximum purchase price the company should consider to move to an outside vendor<br />
without respect to any other issue?<br />
(present calculations for partial credit). Label your answer.<br />
Q2<br />
When considering a move to outsourcing a process, eliminating a department and all its<br />
employees, what issues should be considered? These issues should be financial as well as<br />
strategic. Your answer should be presented as a bulleted list.<br />
Q3
What issues should be considered when deciding whether to eliminate a department in a retail<br />
store? Your answer should discuss the issues of profitability and include the concept of the<br />
contribution format income statement as well as the effect on sales for the store.<br />
Q4<br />
How might the use of a predetermined overhead rate compare to the actual results of the<br />
activities affected by the predetermined overhead rate? Your answer should begin by explaining<br />
how a predetermined overhead rate is calculated and conclude with why there would be<br />
variances from the original estimated values in the calculation (do not discuss any variables<br />
except those directly related to the predetermined overhead rate calculation).<br />
Q5<br />
What is the first budget and why is that important? How does it affect all remaining budgets?<br />
Q6<br />
Describe the specific items you would use to calculate how much of a product to produce or<br />
acquire for the period? Your answer should be based on the budget chapter as well as on the<br />
basic formula related to inventory, discussed at various points throughout our class.<br />
Q7<br />
Your company is building the budget for next year and asks your assistance. How might you use<br />
the high low method, including its calculation and the cost formula for total cost. Your answer,<br />
focusing on the high low method, should include how costs can be calculated, what purpose the<br />
method serves, and what issues may arise regarding the accuracy of the resulting conclusion<br />
regarding costs based on the high low method.