ACCT 505 Managerial Accounting Entire Course

ACCT 505 Managerial Accounting Entire Course
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ACCT 505 Managerial Accounting Entire Course
ACCT 505 All Weeks Discussion , Midterm , Quizzes , Course project and Final Exam latest 2016
Devry acct505 week 1 discussion latest 2016
Ethics,
Management,
and
Applications
(graded)
Go to page 129, Case 3-29, Ethics and the Manager. Let’s discuss the questions, make value-added comments and
points, and share personal experiences of unethical situations.
Devry ACCT 505 Week 1 Quiz Latest 2016
(TCO B) Assume there was no beginning work in process inventory and the ending work in process inventory is 70%
complete with respect to conversion costs. Under the weighted average method, the number of equivalent units of
production with respect to conversion costs would be
(TCO B) Process costing would be appropriate for each of the following except
(TCO B) Lucas Company uses the weighted average method in its process costing system. The company adds
materials at the beginning of the process in the forming department, which is the first of two stages in its production
process. Materials are 100% complete with respect to beginning and ending work in process inventory. Information
concerning operations in the forming department in October follows.
What was the materials cost of work in process on October 31?
(TCO B) In a job-order costing system, the use of direct materials that have been previously purchased is recorded
as a debit to
(TCO B) During December at Ingrim Corporation, $74,000 of raw materials were requisitioned from the storeroom for
use in production. These raw materials included both direct and indirect materials. The indirect materials totaled
$6,000. The journal entry to record the requisition from the storeroom would include a
(TCO B) Wedd Corporation had $35,000 of raw materials on hand on May 1. During the month, the company
purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the
storeroom for use in production. These raw materials included both direct and indirect materials. The indirect
materials totaled $5,000. The debits to the work in process account as a consequence of the raw materials
transactions in May total
(TCO B) Some companies use process costing and some use job-order costing. Which method a company uses
depends on its industry. Several companies in different industries are listed below.

i. Frozen cranberry juice processor
ii. Custom boat builder
iii. Concrete block manufacturer
iv. Winery that produces a number of specialty wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
vi. External auditing firm
For each company, indicate whether the company is most likely to use job-order costing or process costing.
(TCO B) Job 484 was recently completed. The following data have been recorded on its job cost sheet.
Direct materials $64,850
Direct labor hours
1,500 labor hours
Direct labor wage rate
$12 per labor hour
Number of units completed
3,500 units
The company applies manufacturing overhead on the basis of direct labor hours. The predetermined overhead rate is
$22 per direct labor hour.
Compute the unit product cost that would appear on the job cost sheet for this job.
(TCO B) Miller Company manufactures a product for which materials are added at the beginning of the manufacturing
process. A review of the company’s inventory and cost records for the most recently completed year revealed the
following information.
Units Materials Conversion
Work in process. Jan. 1
(100% complete with respect
to materials costs and 80% 100,000 $100,000 $157,500
with respect to conversion
costs)
Units started into production 500,000
Costs added during the year
Materials $650,000
Conversion $997,500
Units completed during the
year
450,000
The company uses the weighted average cost method in its process costing system. The ending inventory is 100%
complete with respect to materials costs and 50% with respect to conversion costs.
Required:
i. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs.
ii. Determine the cost transferred to finished goods.
iii. Determine the amount of cost that should be assigned to the ending work in process inventory.
Devry acct505 week 2 discussion latest 2016
Ethics,
Management,
and
Applications
(graded)

Go to pages 170 and 171 and read Case 4-20, Ethics and the Manager: Understanding the Impact of Percentage
Completion on Profit. Based on the case, do you think Gary Stevens wants the estimated percentage completion to
be increased or decreased? Please explain why.
Devry ACCT 505 Week 2 Quiz latest 2016
1. (TCO B) Some companies use process costing and some use job-order costing. Which method a company
uses depends on its industry. Several companies in different industries are listed below.i. Specialty coffee roaster
(roasts small batches of specialty coffee beans)
ii. Custom aircraft builder
iii. Brick manufacturer
iv. Microbrewery that produces a number of specialty beers
v. Steel company making chain link fences from iron ore
vi. Breakfast cereal manufacturer
For each company, indicate whether the company is most likely to use job-order costing or process costing. (Points :
15)
2. (TCO B) Job 728 was recently completed. The following data have been recorded on its job cost sheet.
Direct materials $89,925
Direct labor hours
1,220 labor hours
Direct labor wage rate
$15 per labor hour
Machine hours
1,550 machine hours
Number of units completed
4,500 units
The company applies manufacturing overhead on the basis of machine hours. The predetermined overhead rate is
$18 per machine hour.
Compute the unit product cost that would appear on the job cost sheet for this job. (Points : 15)
4. (TCO A) Honeysuckle Corporation has provided the following data for the month of January.
Inventories Beginning Ending
Raw materials $40,000 $23,000
Work in process $9,000 $13,000
Finished goods $52,000 $45,000
Additional Information
Raw material purchases $68,000
Direct labor costs $81,000
Manufacturing overhead cost incurred $47,000
Indirect materials included in manufacturing overhead costs incurred $8,000
Manufacturing overhead cost applied to work in process $39,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form. (Points :
15)
Devry acct505 week 3 discussion latest 2016
Management
and

Applications
(graded)
Let’s say that a company produces a single product with a sale price of $25 per unit. The variable cost per unit is $15
and the company incurs fixed costs of $50,000 per month. What is the break-even point for this company? How much
would we expect in profit for every unit sold above break-even? What if the company has its budget set at $35,000
target profit? How many units must it sell?
Devry acct505 week 4 discussion latest 2016
Practice
and
Exam
Review
(graded)
To begin, download the practice Midterm from Doc Sharing to access questions and topics for review. For multiple
choice questions, please explain why the answer chosen is correct, and why the other choices are not correct. Please
support your response. Let’s begin with the questions on Page 1.
ACCT 505 Week 4 Midterm – New 2016
1. (TCO
A) Direct
material
cost is a
part
of (Points
: 6)
Conversion Cost NO…. Prime Cost NO.
Conversion Cost YES…. Prime Cost NO.
Conversion Cost YES…. Prime Cost YES.
Conversion Cost NO…. Prime Cost YES.
Question
2.2. (TCO
A) Total
fixed
costs (Points
: 6)
will increase with increases in activity.
will decrease with increases in activity.
are not affected by activity.
should be ignored in making decisions because they can never change.
Question
3.3. (TCO
A) Property

taxes on a
company’s
factory
building
would be
classified
as
a(n) (Points
: 6)
variable cost.
opportunity cost.
period cost.
product cost.
Question
4.4. (TCO
C) When the
activity level is
expected
to increase within
the relevant range,
what effects
would be
anticipated with
respect to each of
the
following? (Points
: 6)
Fixed costs per unit decrease and variable costs per unit do not change.
Fixed costs per unit increase and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit do not change.
Fixed costs per unit do not change and variable costs per unit increase.
Question
5.5. (TCO
B) Which of the
following
statements is
true?
I. Overhead
application may
be made slowly
as a job is worked
on.
II. Overhead
application may
be made in a
single application
at the time of
completion of the

job.
III. Overhead
application
should be made
to any job not
completed at year
end in order to
properly value
the work in
process
inventory. (Points
: 6)
Only statement I is true.
Only statement II is true.
Both statements I and II are true.
Statements I, II, and III are true.
Question 6.6. (TCO
B) Under a job-order
costing system, the
product being
manufactured (Points
: 6)
is homogeneous.
passes from one manufacturing department to the next before being completed.
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total production costs by the units produced.
Question
7.7. (TCO
F) Equivalent
units for a
process
costing
system using
the FIFO
method would
be equal
to (Points : 6)
units completed during the period, plus equivalent units in the ending work-in-process inventory.
units started and completed during the period, plus equivalent units in the ending work-in-process inventory.
units completed during the period and transferred out.
units started and completed during the period, plus equivalent units in the ending work-in-process inventory, plus
work needed to complete units in the beginning work-in-process inventory.
Question
8.8. (TCO
C) The
contribution
margin

equals (Points
: 6)
sales – expenses.
sales – variable costs.
sales – cost of goods sold.
sales – fixed costs.
Question
9.9. (TCO
C) Which of
the following
would not
affect the
break-even
point? (Points
: 6)
Variable expense per unit
Number of units sold
Total fixed expenses
Selling price per unit
Question
10.10. (TCO
D) Under
variable
costing, (Points
: 6)
inventory costs will be lower than under absorption costing.
inventory costs will be higher than under absorption costing.
net operating income will always be lower than under absorption costing.
net operating income will always be higher than under absorption costing.
1. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop
Corporation for the just-completed year.
Sales $950
Purchases of raw materials $225
Direct labor $250
Manufacturing overhead $295
Administrative expenses $150
Selling expenses $140
Raw materials inventory,
beginning
$30
Raw materials inventory,
ending
$45
Work-in-process inventory,
$20
beginning
Work-in-process inventory,
$55
ending
Finished goods inventory, $100

eginning
Finished goods inventory,
$135
ending
Prepare a Schedule of Cost of Goods Manufactured statement in the text box below. (Points : 15)
Question 2.2. (TCO B) The Nebraska Company manufactures a product that goes through three processing
departments. Information relating to activity in the first department during June is given below.
Percentage Completed
Units Materials Conversion
Work in process, June 1 140,000 65% 45%
Work in process, Jun 30 120,000 75% 65%
The department started 580,000 units into production during the month and transferred 600,000 completed units to
the next department.
Required: Compute the equivalent units of production for the first department for June, assuming that the company
uses the weighted-average method of accounting for units and costs.(Points : 20)
Question 3.3. (TCO C) A tile manufacturer has supplied the following data.
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Net operating income $180,000
Required:
Calculate the company’s unit contribution margin.
Calculate the company’s contribution margin ratio.
If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the
company’s net operating income be? (Points : 25)
Question 4.4. (TCO D) The Hampton Company produces and sells a single product. The following data refer to the
year just completed.
Selling price $450
Units in beginning inventory 0
Units produced 25,000
Units sold 22,000
Variable costs per unit:
Direct materials $150
Direct labor $75
Variable manufacturing
overhead
$25
Variable selling and admin $15
Fixed costs:
Fixed manufacturing overhead $275,000

Fixed selling and admin $200,000
Required:
Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing. (Points : 30)
( ACCT 505 Week 4 Midterm Examination Set 2 )
(TCO A) Wages paid to an assembly line worker in a factory are a
(TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n)
(TCO A) Depreciation of office buildings and office equipment is also known as
(TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated
with respect to each of the following?
(TCO F) Which of the following statements is true?
(TCO F) A job-order cost system is employed in those situations where
(TCO F) The FIFO method only provides a major advantage over the weighted-average method in that
(TCO B) The contribution margin ratio always decreases when the
(TCO B) Which of the following would not affect the break-even point?
(TCO E) In an income statement prepared using the variable costing method, variable selling and administrative
expenses would
(TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information
relating to activity in the first department during June is given below.
Percentage Completed
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%
The department started 475,000 units into production during the month and transferred 480,000 completed units to
the next department.
Required: Compute the equivalent units of production for the first department for June, assuming that the company
uses the weighted-average method of accounting for units and costs.
(TCO B) A tile manufacturer has supplied the following data:
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Net operating income $180,000
Required:
a. Calculate the company’s unit contribution margin.
b. Calculate the company’s unit contribution ratio.
c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the
company’s net operating income be?

(TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent
month of operations:
Selling price $ 125
Units in beginning inventory 600
Units oroduced 3000
Units sold 3500
Units in ending inventory 100
Variable costs per unit:
Direct materials $ 15
Direct labor $ 50
Variable manufacturing overhead $ 8
Variable selling and admin $ 12
Fixed costs:
Fixed manufacturing overhead $ 75,000
Fixed selling and admin $ 20,000
The company produces the same number of units every month, although the sales in units vary from month to month.
The company’s variable costs per unit and total fixed costs have been constant from month to month.
Required:
a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.
Devry acct505 week 5 discussion latest 2016 may
Ethics,
Management,
and
Applications
(graded)
Let’s look at Case 9-26, Ethics and the Manager, in Chapter 9, pages 423 and 424. What should Tom do in this
situation and why? Have any of you had to deal with a similar situation in the workplace?
Devry acct505 week 6 discussion latest 2016
Management
and
Applications
(graded)
What is meant by decentralization? What are the advantages and disadvantages? Do some operations lend
themselves more easily to being decentralized than others? If so, why?

Devry ACCT 505 Week 6 Quiz latest 2016
(TCO D) Return on investment (ROI) is equal to the margin multiplied by
(TCO D) For which of the following decisions are opportunity costs relevant?
(TCO D) Last year, the House of Orange had sales of $826,650, net operating income of $81,000, and operating
assets of $84,000 at the beginning of the year and $90,000 at the end of the year. What was the company’s turnover,
rounded to the nearest tenth?
(TCO D) Data for December concerning Dinnocenzo Corporation’s two major business segments-Fibers and
Feedstocks-appear below:
Sales
revenues, $870,000
Fibers
Sales
revenues, $820,000
Feedstocks
Variable
expenses, $426,000
Fibers
Variable
expenses, $344,000
Feedstocks
Traceable
fixed
$148,000
expenses,
Fibers
Traceable
fixed
S156,000
expenses,
Feedstocks
Common fixed expenses totaled $314,000 and were allocated as follows: $129,000 to the Fibers business segment
and $185,000 to the Feedstocks business segment.
Required:
Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only
dollar amounts.
(TCO D) Wryski Corporation had net operating income of $150,000 and average operating assets of $500,000. The
company requires a return on investment of 19%.
Required:
i. Calculate the company’s current return on investment and residual income.
ii. The company is investigating an investment of $400,000 in a project that will generate annual net operating income
of $78,000. What is the ROI of the project? What is the residual income of the project? Should the company invest in
this project?
(TCO D) Tjelmeland Corporation is considering dropping product S85U. Data from the company’s accounting system
appear below.
Sales $360,000
Variable
$158,000
Expenses

Fixed
Manufacturing $119,000
Expenses
Fixed Selling
and
$94,000
Administrative
Expenses
All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further
investigation has revealed that $55,000 of the fixed manufacturing expenses and $71,000 of the fixed selling and
administrative expenses are avoidable if product S85U is discontinued.
Required:
i. According to the company’s accounting system, what is the net operating income earned by product S85U? Show
your work!
ii. What would be the effect on the company’s overall net operating income of dropping product S85U? Should the
product be dropped?
(TCO D) Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit
product cost of this part is computed as follows.
Direct
$15.70
Materials
Direct Labor $17.50
Variable
Manufacturing $4.50
Overhead
Fixed
Manufacturing $14.60
Overhead
Unit Product
$52.30
Cost
An outside supplier has offered to sell the company all of these parts it needs for $51.90 a unit. If the company
accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is
in high demand. The additional contribution margin on this other product would be $219,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided.
However, $6.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part
were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company’s
remaining products.
Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the
supplier commits to supplying all 30,000 units required each year?
(TCO D) Biello Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant
has the capacity to produce 15,000 medals each month; current monthly production is 14,250 medals. The company
normally charges $115 per medal. Cost data for the current level of production are shown below.
Variable Costs
Direct Materials $969,000
Direct Labor $270,750

Selling and Administrative $270,075
Fixed Costs
Manufacturing $370,550
Selling and Administrative $89,775
The company has just received a special one-time order for 600 medals at $102 each. For this particular order, no
variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?
Devry acct505 week 7 discussion latest 2016
Capital
Budgeting
(graded)
Welcome to Week 7 Discussions! Let’s start with defining capital budgeting and decision making. What is capital
budgeting? What are the differences between screening decisions and preference decisions? Do you ever have
occasion to make capital budgeting decisions in your personal life?
ACCT 505 Course Projects
ACCT 505 Course Project 1 LBJ Company
COURSE PROJECT 1 INSTRUCTIONS
You have just been contracted as a budget consultant by LBJ Company, a distributor of bracelets to various retail
outlets across the country. The company has done very little in the way of budgeting and at certain times of the year
has experienced a shortage of cash.
You have decided to prepare a cash budget for the upcoming fourth quarter in order to show management the
benefits that can be gained from proper cash planning.You have worked with accounting and other areas to gather
the information assembled below.
The company sells many styles of bracelets, but all are sold for the same $10 price. Actual sales of bracelets for the
last three months and budgeted sales for the next six months follow:
July (actual) 20,000
August (actual) 26,000
September (actual) 40,000
October (budget) 70,000
November (budget) 110,000
December (budget) 60,000
January (budget) 30,000
February (budget) 28,000
March (budget) 25,000
The concentration of sales in the fourth quarteris due to the Christmas holiday. Sufficient inventory should be on hand
at the end of each month to supply 40% of the bracelets sold in the following month.

Suppliers are paid $4 for each bracelet. Fifty-percent of a month’s purchases is paid for in the month of purchase; the
other 50% is paid for in the following month. All sales are on credit with no discounts. The company has found,
however, that only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the
following month, and the remaining 10% is collected in the second month following sale. Bad debts have been
negligible.
Monthly operating expenses for the company are given below:
Variable expenses:
Sales commissions
4% of sales
Fixed expenses:
Advertising $220,000
Rent $20,000
Salaries $110,000
Utilities $10,000
Insurance $5,000
Depreciation $18,000
Insurance is paid on an annual basis, in January of each year.
The company plans to purchase $22,000 in new equipment during October and $50,000 in new equipment during
November; both purchases will be for cash. The company declares dividends of $20,000 each quarter, payable in the
first month of the following quarter.
Other relevant data is given below:
Cash balance as of September 30 $74,000
Inventory balance as of September 30 $112,000
Merchandise purchases for September $200,000
The company maintains a minimum cash balance of at least $50,000 at the end of each month. All borrowing is done
at the beginning of a month; any repayments are made at the end of a month.
The company has an agreement with a bank that allows the company to borrow the exact amount needed at the
beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that
interest is not compounded. At the end of the quarter, the company will pay the bank all of the accrued interest on the
loan and as much of the loan as possible while still retaining at least $50,000 in cash.
Required:
Prepare a cash budget for the three-month period ending December 31. Include the following detailed budgets:
1.
1. a. A sales budget, by month and in total.
2. b. A schedule of expected cash collections from sales, by month and in total.
3. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.
4. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.
5. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to
maintain the minimum cash balance of $50,000.
ACCT 505 Course Project 2: Hampton Company
Capital Budgeting Decision
Hampton Company: The production department has been investigating possible ways to trim total production costs.
One possibility currently being examined is to make the cans instead of purchasing them. The equipment needed
would cost $1,000,000, with a disposal value of $200,000, and would be able to produce 27,500,000 cans over the

life of the machinery. The production department estimates that approximately 5,500,000 cans would be needed for
each of the next 5 years.
The company would hire six new employees. These six individuals would be full-time employees working 2,000 hours
per year and earning $15.00 per hour. They would also receive the same benefits as other production employees,
15% of wages in addition to $2,000 of health benefits.
It is estimated that the raw materials will cost 30¢ per can and that other variable costs would be 10¢ per can.
Because there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is
accepted.
It is expected that cans would cost 50¢ each if purchased from the current supplier. The company’s minimum rate of
return (hurdle rate) has been determined to be 11% for all new projects, and the current tax rate of 35% is anticipated
to remain unchanged. The pricing for the company’s products as well as number of units sold will not be affected by
this decision. The unit-of-production depreciation method would be used if the new equipment is purchased.
Required:
1. Based on the above information and using Excel, calculate the following items for this proposed equipment
purchase.
o
Annual cash flows over the expected life of the equipment
o
Payback period
o
Simple rate of return
o
Net present value
o
Internal rate of return
The check figure for the total annual after-tax cash flows is $271,150.
2. Would you recommend the acceptance of this proposal? Why or why not? Prepare a short, double-spaced
paper in MS Word elaborating on and supporting your answer.
ACCT 505 Final Exam – latest 2016
1. (TCO E) Designing a new product is a(n) (Points : 5)
batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
Question 2.2. (TCO G) Given the following data, what would ROI be?
Sales $70,000
Net operating income $10,000
Contribution margin $20,000
Average operating assets $50,000
Stockholder’s equity $25,000
(Points : 5)
6.0%
15.0%
12.5%

20.0%
1. RspGF=”font-family:’Arial’;font-size:10pt;”(TCO C) Longiotti Corporation produces and sells a single product.
Data concerning that product appear below.
Selling price per unit $375.00
Variable expense per unit $144.00
Fixed expense per month $1,686,300
Required:
Determine the monthly breakeven in units or dollar sales. Show your work! (Points : 25)
2. TCO B) Maverick 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
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,600
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 800
Percentage complete for materials 70%
Percentage complete for conversion 30%
Required: Calculate the equivalent units for conversion for the month in the first processing department. (Points : 25)\
1. TCO D) 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 manufacturing overhead totals $18,000 for the year. The fixed
manufacturing 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)
2. TCO I) (Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 to invest and is
considering a franchise for a fast-food outlet. He would have to purchase equipment costing $500,000 to equip the
outlet and invest an additional $150,000 for inventories and other working capital needs. Other outlets in the fast-food
chain have an annual net cash inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He estimates
that the equipment could be sold at that time for about 10% of its original cost. Mr. Anders’ required rate of return is
16%.
Required:
Part A: What is the investment’s net present value when the discount rate is 16%?
Part B: Refer to your calculations. Is this an acceptable investment? Why or why not? (Points : 30)
3. TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the
Maroon Corporation for the just-completed year.
Sales 1,300
Raw materials inventory, beginning 25
Raw materials inventory, ending 30
Purchases of raw materials 250
Direct labor 350
Manufacturing overhead 500
Administrative expenses 300
Selling expenses 250
Work in process inventory, beginning 150
Work in process inventory, ending 100
Finished goods inventory, beginning 80
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)

4. TCO F) Walker Corporation is preparing its cash budget for November. The budgeted beginning cash
balance is $43,000. Budgeted cash receipts total $117,000 and budgeted cash disbursements total $122,000. The
desired ending cash balance is $55,000. The company can borrow up to $100,000 at any time from a local bank, with
interest not due until the following month.
Required:
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 ending cash balance (Points : 25)
6. (TCO H) Lindon Company uses 7,500 units of Part Y each year as a component in the assembly of one of
its products. The company is presently producing Part Y internally at a total cost of $119,000 as follows.
Direct materials
$26,000
Direct labor
28,000
Variable manufacturing overhead
20,000
Fixed manufacturing overhead
45,000
Total costs
$119,000
An outside supplier has offered to provide Part Y at a price of $12 per unit. If Lindon stops producing the part
internally, one third of the fixed manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside
supplier’s offer. Please state clearly whether the part should be made or bought and share your work.
(Points : 30)
7. TCO B) Sandler 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 75,000

Estimated variable manufacturing overhead $4.50 per machine hour
Estimated total fixed manufacturing overhead $825,000
The actual machine hours for the year turned out to be 77,000.
Required:
Compute the company’s predetermined overhead rate. (Points : 25)
( ACCT 505 Final Exam Set 2 )
1. (TCO C) Silver City, Inc., 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 Silver City 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
2. (TCO D) Globe 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 Globe 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 Globe’s technical specifications and quality requirements.
If Globe 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 (in dollars) of accepting
an outside supplier’s offer. Should the company buy the parts? If so, from which supplier?
3. (TCO E) Mesa 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.
4. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the White
Sands Corporation for the just-completed year.

Sales
1,150
Raw materials inventory, beginning
15
Raw materials inventory, ending
40
Purchases of raw materials
150
Direct labor
250
Manufacturing overhead
300
Administrative expenses
500
Selling expenses
300
Work in process inventory, beginning
100
Work in process inventory, ending
150
Finished goods inventory, beginning
80
Finished goods inventory, ending
120
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?
1. (TCO F) Farmington 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
5,000
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
1,200
Percentage complete for materials
60%
Percentage complete for conversion
30%
Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first
processing department.
2.
(TCO G) – (Ignore income taxes in this problem.) Tennessee Co. is considering the production of an exterior paint
that will require the purchase of new mixing machinery. The machinery will cost $700,000, is expected to have a
useful life of 12 years, and is expected to have a salvage value of $100,000 at the end of 12 years. The machinery
will also need a $40,000 overhaul at the end of Year 7. A $50,000 increase in working capital will be needed for this
investment project. The working capital will be released at the end of the 12 years. The new paint is expected to
generate net cash inflows of $120,000 per year for each of the 12 years. Tennessee’s discount rate is 14%.
Required:
a. What is the net present value of this investment opportunity?
b. Based on your answer to (a) above, should Tennessee go ahead with the new paint?
3. (TCO B) Winslow 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
$165,3
Required:
a) Determine the monthly break-even in unit sales. Show your work!
b) Determine the monthly break-even in dollar sales. Show your work!
1. (TCO F) Manchester, Inc. 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.

2. (TCO F) Memphis Corporation is preparing its cash budget for February. The budgeted beginning cash balance is
$27,000. Budgeted cash receipts total $136,000 and budgeted cash disbursements total $128,000. The desired
ending cash balance is $50,000. The company can borrow up to $110,000 at any time from a local bank, with interest
not due until the following month.
Required:
Prepare the company’s cash budget for February in good form. Make sure to indicate what borrowing, if any, would
be needed to attain the desired ending cash balance.