ACCT 505 Final Exam Guide (New) Set 1
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<strong>ACCT</strong> <strong>505</strong> <strong>Final</strong> <strong>Exam</strong> <strong>Guide</strong> (<strong>New</strong>) <strong>Set</strong> 1<br />
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Score 248250<br />
Multiple Choice 2<br />
Short 2<br />
Essay 7<br />
Question 1 : (TCO E) Designing a new product is a(n)<br />
2. Question : (TCO G) Given the following data, what would ROI be?<br />
Sales $70,000<br />
Net operating income $10,000<br />
Contribution margin $20,000<br />
Average operating assets $50,000<br />
Stockholder's equity $25,000<br />
1. Question : (TCO C) Longiotti Corporation produces and sells a single product. Data<br />
concerning that product appear below.<br />
Selling price per unit $375.00
Variable expense per unit $144.00<br />
Fixed expense per month $1,686,300<br />
Required:<br />
Determine the monthly breakeven in units or dollar sales. Show your work!<br />
2. Question : (TCO B) Maverick Corporation uses the weighted-average method in its<br />
process costing system. Data concerning the first processing department for<br />
the most recent month are listed below.<br />
Work in process, beginning:<br />
Units in beginning work in process inventory 400<br />
Materials costs $6,900<br />
Conversion costs $2,500<br />
Percent complete for materials 80%<br />
Percent complete for conversion 15%<br />
Units started into production during the month 6,000<br />
Units transferred to the next department during the month 5,600<br />
Materials costs added during the month $112,500<br />
Conversion costs added during the month $210,300<br />
1. Question : (TCO D) Topple Company produces a single product. Operating data for the<br />
company and its absorption costing income statement for the last year are<br />
presented below.<br />
Units in beginning inventory 2,000<br />
Units produced 9,000<br />
Units sold 10,000<br />
Sales $100,000
Less cost of goods sold:<br />
Beginning inventory 12,000<br />
Add cost of goods manufactured 54,000<br />
Goods available for sale 66,000<br />
Less ending inventory 6,000<br />
Cost of goods sold 60,000<br />
Gross margin 40,000<br />
Less selling and admin. expenses 28,000<br />
Net operating income $12,000<br />
2. Question : (TCO I) (Ignore income taxes in this problem.) Bill Anders retires in 8 years.<br />
He has $650,000 to invest and is considering a franchise for a fast-food<br />
outlet. He would have to purchase equipment costing $500,000 to equip the<br />
outlet and invest an additional $150,000 for inventories and other working<br />
capital needs. Other outlets in the fast-food chain have an annual net cash<br />
inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He<br />
estimates that the equipment could be sold at that time for about 10% of its<br />
original cost. Mr. Anders' required rate of return is 16%.<br />
Required:<br />
Part A: What is the investment's net present value when the discount rate is<br />
16%?<br />
Part B: Refer to your calculations. Is this an acceptable investment? Why or<br />
why not?<br />
3. Question : (TCO A) The following data (in thousands of dollars) have been taken from the<br />
accounting records of the Maroon Corporation for the just-completed
year.<br />
Sales 1,300<br />
Raw materials inventory, beginning 25<br />
Raw materials inventory, ending 30<br />
Purchases of raw materials 250<br />
Direct labor 350<br />
Manufacturing overhead 500<br />
Administrative expenses 300<br />
Selling expenses 250<br />
Work in process inventory, beginning 150<br />
Work in process inventory, ending 100<br />
Finished goods inventory, beginning 80<br />
Finished goods inventory, ending 110<br />
Use the above data to prepare (in thousands of dollars) a schedule of Cost<br />
of Goods Manufactured and a Schedule of Cost of Goods Sold for the year.<br />
In addition, what is the impact on the financial statements if the ending<br />
finished goods inventory is overstated or understated?<br />
4. Question : (TCO F) Walker Corporation is preparing its cash budget for November. The<br />
budgeted beginning cash balance is $43,000. Budgeted cash receipts total $117,000 and<br />
budgeted cash disbursements total $122,000. The desired<br />
ending cash balance is $55,000. The company can borrow up to $100,000 at<br />
any time from a local bank, with interest not due until the following month.<br />
Required:<br />
Prepare the company's cash budget for November in good form. Make sure
to indicate what borrowing, if any, would be needed to attain the desired<br />
ending cash balance<br />
5. Question : (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the following<br />
operating information for its current month's activity. Using this information,<br />
prepare a flexible budget analysis to determine how well BLH performed in<br />
terms of cost control.<br />
Static Budget<br />
Activity level (in units) 5,250 5,178<br />
Variable costs:<br />
Indirect materials $24,182 $23,476<br />
Utilities $22,356 $22,674<br />
Fixed costs:<br />
Administration $63,450 $65,500<br />
Rent $65,317 $63,904<br />
6. Question : (TCO H) Lindon Company uses 7,500 units of Part Y each year as a<br />
component in the assembly of one of its products. The company is presently<br />
producing Part Y internally at a total cost of $119,000 as follows.<br />
Direct<br />
materials<br />
$26,000<br />
Direct labor 28,000<br />
Variable<br />
manufacturing<br />
overhead
20,000<br />
Fixed<br />
manufacturing<br />
overhead<br />
45,000<br />
Total costs $119,000<br />
An outside supplier has offered to provide Part Y at a price of $12 per unit. If<br />
Lindon stops producing the part internally, one third of the fixed<br />
manufacturing overhead would be eliminated.<br />
Required: Prepare a make-or-buy analysis showing the annual advantage or<br />
disadvantage of accepting the outside supplier's offer. Please state clearly<br />
whether the part should be made or bought and share your work.<br />
7. Question : (TCO B) Sandler Corporation bases its predetermined overhead rate on the<br />
estimated machine hours for the upcoming year. Data for the upcoming year<br />
appear below.<br />
Estimated machine hours 75,000<br />
Estimated variable manufacturing<br />
overhead $4.50 per machine hour<br />
Estimated total fixed manufacturing<br />
overhead $825,000<br />
The actual machine hours for the year turned out to be 77,000.<br />
Required:<br />
Compute the company's predetermined overhead rate.