ACCT 336 DeVry Week 6 Quiz

ACCT 336 DeVry Week 6 Quiz
Downloading is very simple, you can download this Course here:
http://wiseamerican.us/product/acct-336-devry-week-6-quiz/
Or
Contact us at:
SUPPORT@WISEAMERICAN.US
ACCT 336 DeVry Week 6 Quiz
Question 1.1.(TCO 7) Elliot’s Escargots sells commercial and home snail extraction tools and serving pieces.
Currently, the Serving Pieces Section takes up approximately 50% of the company’s retail floor space. The CEO of
Elliot’s wants to decide if the company should continue offering Serving Pieces or focus only on Snail Extraction Tools.
If the Serving Pieces are dropped, salaries and other direct fixed costs can be avoided and Snail Extraction sales would
increase by 13%. Allocated fixed costs are assigned based on relative sales.
Snail Extraction
Serving
Tools Pieces Total
Sales $1,200,000 $800,000 $2,000,000
Less cost of goods sold 500,000 700,000 1,200,000
Contribution margin 700,000 100,000 800,000
Less Avoidable direct fixed costs:
Salaries 175,000 175,000 350,000
Other 60,000 60,000 120,000
Less Unavoidable allocated fixed costs:
Rent 14,118 9,882 24,000
Insurance 3,529 2,471 6,000
Cleaning 4,117 2,883 7,000
Executive salary 76,470 53,530 130,000
Other 7,058 4,942 12,000
Total costs 340,292 308,708 649,000
Net income ($359,708) ($208,708) $151,000
Prepare an incremental analysis in good form to determine the incremental effect on profit of discontinuing the snail
extraction tool line. (Points : 6)

Question 2.2.(TCO 4) Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600
and variable cost per dollar of sales is $0.35 (6 points).
What is the break-even point per month in sales?
What level of sales is needed for a monthly profit of $70,000?
For the month of August, Paschal’s anticipates sales of $600,000. What is the expected level of profit?(Points : 6)
Question 3.3.(TCO 6) Princess Cruise Lines has the following service departments; concierge, valet, and
maintenance. Expenses for these departments are allocated to Mediterranean and transatlantic cruises. Expenses for
the departments are totaled (both variable and components are combined) and as follows.
Concierge $1,500,000
Valet $2,750,000
Maintenance $2,250,000
The sea miles logged are 5,000,000 for the Mediterranean and 20,000,000 for the transatlantic voyages.
Based upon the sea miles logged, allocate the service department costs (6 points).
Question 4.4.(TCO 9) Thurman Munster, the owner of Adams Family RVs, is considering the addition of a service
center his lot. The building and equipment are estimated to cost $1,200,000, and both the building and equipment will
be depreciated over 10 years using the straight-line method. The building and equipment have zero estimated residual
value at the end of 10 years. Munster’s required rate of return for this project is 12%. Net income related to each year
of the investment is as follows.
Revenue $450,000
Less:
Material Cost $60,000
Labor 100,000
Depreciation 120,000
Other 10,000 290,000
Income before taxes 160,000
Taxes at 40% 64,000
Net Income $96,000
(A) Determine the net present value of the investment in the service center. Should Munster invest in the service center?
(B) Calculate the internal rate of return of the investment to the nearest 0.5%.
(C) Calculate the payback period of the investment.
(D) Calculate the accounting rate of return. (Points : 8)
Question 5.5.(TCO 5) The following information relates to Vice Versa Ventures for calendar year 20XX, the
company’s first year of operations.
Units produced 20,000

Units sold 15,000
Selling price per unit $30
Direct material per unit $5
Direct labor per unit $5
Variable manufacturing overhead per unit $2
Variable selling cost per unit $3
Annual fixed manufacturing overhead $160,000
Annual fixed selling and administrative expense $80,000
(a) Prepare an income statement using full costing.
(b) Prepare an income statement using variable costing. (Points : 8)
Question 6.6.(TCO 8) Leekee Shipyards has a new barnacle-removing product for ocean-going vessels. The
company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants
to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product.
Use the absorption costing approach to determine the markup necessary to make the desired return on investment
based on the following information.
Per Unit
Total
Direct Materials $2.00
Direct Labor $1.50
Variable Manufacturing Overhead $1.00
Fixed Manufacturing Overhead $100,000
Variable Selling and Administrative Expense $0.10
Fixed Selling and Administrative Expense $100,000
(Points : 6)