Management Accounting I
Management Accounting I MGMT 20100
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This 9 page Class Notes was uploaded by Landen Harvey on Saturday September 19, 2015. The Class Notes belongs to MGMT 20100 at Purdue University taught by Lynda Thoman in Fall. Since its upload, it has received 138 views. For similar materials see /class/207960/mgmt-20100-purdue-university in Business, management at Purdue University.
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Date Created: 09/19/15
MgmL 201 Spring 2011 MgmL 201 Spring 2011 Recitation Problems R1 224 230 236 Recitation Problems R1 EXERCISE 230 15 MINUTES 224 Classifying costsiproduct vs period costs variable vs xed costs costs Number of Muf er Replacements ofinputs DM DL OH 600 700 800 230 Analyzing xed versus variable costs Tm costs 236 Marginal 00515 a 56000 56000 h 56000 c 24 000 d 32 000 N co 9 e a xed costs Variable cos s Total costs e 80 000 84 000 f 88 000 EXERCISE 224 20 MINUTES Cost per mu ler replacement 1 Advertising costs Period cost xed Ixed 0051quot 9 9333 I08 0 70 2 at ya r xed Variable cos i 4000 390 I 40 40 3 Wages of assemblyline personnel Product cost variable direct labor Total cost per mu ler replacement n 120 a 110 4 Delivery costs on customer shipments Period cost variable Rounded39 5 Newsprint consumed Product cost variable direct material Explanatory Notes 6 u 39 xed 39 L quot a Total xed costs do not vary WIth acbvlty 7 Glass costs Product cost variable direct material c Variable cost per replacement 28000I700 40 8 Tire costs Product cost variable direct material Total varIable cost for 600 replacements 40 x 600 24000 g Fixed cost per replacement 56000I600 9333 rounded 9 Sales commlsslons Penod cost varIable i Va ahle cost per replacement 24000600 40 10 Wood lue Product cost variable either direct material or manufacturing overhead ie indirect material depending on how si i cant the cost is 11 Wages of security guards Product cost variable manufacturing overhead 12 Salary of nancial vicepresident Period cost xed MgmL 201 Spring 2011 Recitation Problems R1 EXERCISE 236 15 MINUTES 1 The marginal cost of a flight would include the aircralt fuel wages of the flight crew and airport maintenance personnel and the food and beverages consumed by the passengers and crew The marginal cost would include the additional wages or commissions earned by the agency employees and the additional electricity used for light heat and computer equipment The marginal cost of the skis would i clude the direct material It is unlikely that labor and other u x t 4 v r The marginal cost would include any food and beverages consumed by the passenger and perhaps an impercepti e increase in fuel costs In most cases only the cost of the food and beverage consumed by the customer would be a marginal cost It is unlikely that the restaurant would need to employ additional service personnel dishwashers and so on Name Recitation Section Number USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 1 THROUGH 3 Seat Number Stanger Inc uses a joborder costing system The company uses normal costing and closes under applied or overapplied manufacturing overhead to Cost ofGoods Sold at the end of he year The FINAL SOLUTION 39 39 39 39 39 r m Stanger39 39 39 39 ose under Management 201 Fall 2010 applied overhead have not been made Direct Material Inventory at the beginning ofthe year 5500 1 This examination consists of40 multiplechoice questions Each question is worth 5 points Direct Material Inventory at the end of the year 000 Direct Material purchased during he ye r 45000 2 You must sit in your assigned seat to take the exam lfyou are not in he correct seat you will WorkinProcess Inventory at the beginning of the year 9000 lose 5 points 39 39 during the vear 20000 Direct Labor Costs for the year 3 Print and code your name ID number and your sec ion number on the computer answer sheet quot39 me end of he vear 14000 please enter your section number as listed below In the blank for TEST please write he version Finished Goods Inventory at he beginning ofthe year 7500 number elow Be sure to use a number 2 pencil and sign the answer sheet Finished Goods Inventory at he end ofthe year 000 C s ofG s Sold duringthe year unadjuste 4 Vou will have 2 hours to complete the exam The exam will end at 300 pm All multiple Underapplied Total Manufacturing Overhead forthe year 2000 39 I 39 39 39 Predetermined Overhead Rate for he year 200 ofdirect labor cost period at 300 pm Your score on hese questions is based only on he coded answers Please help us collect exams promptlywhen the exam is over 1 The cost ofdirect material used during the year is calculated to be 36500 5 Only simple calculators may be used during the exam Any graphing calculator or a calculator B 42500 that can store information cannot be used C 47500 D 48000 Use of unauthorized written materials rece g or giving verbal or written assistance from E 53500 or to another person 39 a 39 c ea ing 39 39 inrludinn cell phones must be turned off and stored in your bookbag If any electronic device or other C Materials used BBDM Inv purchases EBDMlnv 5500 45000 3000 unau horized materials is observed his will be considered cheating Any student discovered 47500 cheating in an examination will be given a grade ofF for the course 2 The n 6 In all problems answers are rounded to the nearest dollar or cent as appropriate Thus ifyou com ute an answer to be 1333333333333 and an answer of 133 is given he 133 is he A 24000 correct answer Similarly ifyou compute an answer to be 432897654 all answers are rounded B 22000 to the nearest dollar and the answer 433 is provided 433 is he correct answer C 20000 D 18000 Do your best and good luck E 16000 Re 39 ation Section Instructor Day and Time Room 8 Actual OH Applied OH Underapplied amount 20 000 32000 22000 Sections Krystal MIIIer KRAN 3020 MIIIer 3 Cost ofgoods manufactured during the year is calculated to be do BaIIOdaI IO A 62500 W B 67500 0009 Gerardo Baltodano I I 30 PM 7 2 20 PM KRAN 3020 c 70500 0010 Ham 0 0 FISOPM7220PM RAWLION D 72500 0011 Gerardo Baltodano F 2 30 PM 7 3 20 PM KRAN 3020 E 74 50039 0012 BrlariBobo F230PM7320PM RAWLION 39 39 n COGM EBFG 39 BBFG W Version 1 Green 72500 A year ag 39 39 39 39 its cola The cost ofthe machine was 60000 has a useful life of 5 years and a salvage value 7 ofzero at the end ofthose ve years Annual deprecia ion 0 machine is 12000 One year ofdepreciation has been recor ed The variable manufacturing cost of producing the cans is 005 er can The only xed manufacturing cost is the annual depreciation of 12000 on the stamping machine chy needs 200000 cans annually Dagmar Stamping Company recently gave Crunchy an offer to supply all of Crunchy39s can needs for the next four years at 0 07 per can lfCrunchy r u c e 000 buys from no If Crunchy buys its cans from Dagmar what will be the total dollar increase or decrease in cash ows forthe next fouryears ie forthe next fouryears added together A 16000 decrea e B 19000 increase C 29 00 decrease D 32000 increase E 51000 increase 8 B lfchange from making to buying there is an increase cost of02can but a savings of 35000 from 39 A L39 s 39 USE THE FOLLOWING INFORMATION FOR QUESTIONS 5 AND 6 Phearsum Corporation manufactures parachutes and uses an actual costing system Shown below is Phearsum39s cost structure Variable cost Total xed cost per parachute for the year Manufacturing cost 342000 Selling and administrative cost 10 171000 In its first year of operations Phearsum produced 4000 parachutes The parachutes sold for 310 each 5 lfPhearsum sold only 3800 parachutes in its rst year what total amount of cost would have been assigned to the 200 parachutes in nished goods inventory underthe variable costing 9 method7 A 20000 B 32000 C 34000 D 49100 E 50000 8 Cost per unit is 160 using variable costing thus the costs in the F6 inventory for the 200 units is 200160 32000 6 What would Phearsum39s absorption costing net income be in its first year if only 3800 parachutes were sold A 17000 B 19000 C 36100 D 47 E none ofthe above c FOHunit 3420004000 8550 NI 310 160 10 85503800 171000 6100 Rizzo Corporation had 17000 units ofbrake calipers on hand at the end of 2009 The r 39 puiicy Wu H main ain 39 39 1 015 ofthe current year39s sales During 2010 Rizzo sold 210000 units of calipers How many units did Rizzo 39 2010 purchase n 22450 B 210000 C 196150 D 194 E Some other answer A Purchases Units sold Merch lnvEB Merch lnvBB 210000 15210000 1 7000 224500 units The following informa ion relates to the breakeven point at Pezzo Corporation Sale I sdolars 120000 Total xed expenses 3 30000 lfPezzo wants to generate net income of 12000 what will its sales dollars have to be A 132000 B 136000 C 168000 D 176 0 00 E none ofthe above C At the breakeven point 0 CM ratio120000 30000 or CM ratio 25 12000 25Sales 30000 or Sales 168000 Hanover Corp 39 num its r39 Operating Income 24000 Total Product Costs incurred during the period or total production costs of he period 16000 Value ofBeginning WorkinProcess and Finished Goods Inventories 0 Value ofEnding WorkinProcess and Finished Goods Inventories 0 0 Sales The total Period CostsExpenses incurred this period equal A 0000 B 10000 C 24000 D 340 00 E Some 0 her answer Because there were no beginning or ending WIP or F6 Inventories the total product costs 000 also equals total cost of goods sold Sales 50000 minus Cost of Goods Sold 16000 minus Period Costs 10000 equals Operating Income 24000 0 9 A 01 USE THE FOLLOWING INFORMATION FOR QUESTIONS 14 THROUGH 16 An unfavorable labor ef ciency quantity variance indicates that A 39 39 was below the standard B The wage rate paid to produc ion workers was above the standard C Less la or ime was spent on production than was called for bythe standard D More labortime was spent on produc ion than was called for by the standard r r of its garlic avored yogurt The garlic 08 ounces ofc 39 lUl eaul cumainel Ul rushed garlic at a standard cost of 230 per ounce Durin the month ofJune stench urchased 75000 ounces of crushed garlic at a total cost of 3171000 stench used 64000 ofthese ounces to produce 71500 containers ofyogurt Workers were spending more time per unit to make the product than allowed by the standard 14 The following informa ion pertains to Cutter Company39s weekly activity and total costs Total Cost 1400 1500 130 units 1600 What are Cutter39s weekly fixed costs A 0 B 200 15 C 300 D 1600 E Some other answer c 1600 1400130 110 10 variable cost per unit 1600 130 X 10 300 fixed costs The following procedure performed at the United states mint is NOT a batch level activity A Inspecting the first units produced to verify proper setup B em ufactured coins to nishing stations C Set ing up I for he stamping process D stamping each individual coin 16 E All of the above activities are batch level activities 39 39139 391 39 39 39 39 39 39 itoccursforeach coin produced All of the other items are examples of batchlevel activities The variance hat is most useful in assessing he performance ofthe purchasing department manager is A the materials quantity variance B the materials price variance C the labor rate price variance D the labor ef ciency quantity variance 8 The purchasing department negotiates the price of the materials with suppliers 6 What is stench39s materials price variance forthe mon h of June A 1 00 favorable E none ofthe above A AP 1 7100075000 oz 2 2801 39 DM price variance PQSP AP 75000 oz2 3001 322801 1500 F What is stench39s materials quantity variance for the month ofJune A 1500 favorable B 15640 unfavorable C 317250 favorable D 323800 favorable E none ofthe above DM quantity variance SPSQ forAO A0 230oz08 ozcontainerx 71500 containers 64000 oz 315640 U Assume that it takes 15 minutes of labor ime to crush enough garlic to ll one container of yogurt Because the smell ofthe garlic can be unbearable workers are given and theytake it 10 minutes of break ime eve our ie 0 minutes ofwork 10 minutes of break How m ny minutes should stench use as a standard quantity of labortime per container of yogurt E 180 minutes E To get 15 minutes ofproductive time the company must allow an 2015 3 minutes so the standard is 18 minutes USE THE FOLLOWING INFORMATION FOR QUESTIONS 17 THROUGH 19 20 WriphoffCompany uses a standard cost system to collect costs related to the production of its clay bud vases Manufacturing overhead at Wriphoff is applied to production on the basis of direct labor hours The overhead standards used at Wriphoff are as follows Standard Cost per Hour Standard Cost per Vase Variable overhead 640 576 Fixed overhead 960 864 The standards above were based on an expected annual volume of40000 bud vases or 36000 direct labor hours The actual results for last yearwere as follows Number ofvases produced 35600 vases Direct labor hours incurred 34250 DLH Variable overhe d cost 212350 Fixed overhead cos 338000 21 17 What is Wriphost variable overhead spending price variance for last year A 6850 favorable B 7294 unfavorable C 14144 unfavorable D 15070 unfavorable E none ofthe above A AP 21235034250 DLH 620DLH VOH spending variance AQSP AP 34250 DLH640 620 6850 F 18 What is Wriphost xed overhead budget variance for last year A 9200 favorable B 9200 unfavorable 22 C 30416 unfavorable D 38016 unfavorable E none ofthe above E FOH budgeted 960DLH36000 DLH 345600 Can also compute the FOH budgeted as follows 8 64unit40 000 units 345600 FOH budget Valium 39 F 39 g quotquotquot 7600 F 19 mallulauulillg quot quot quot did Wriphoff apply to the 35600 vases produced during last year A 512640 B 548000 C 564800 D 569600 E none ofthe above A FOH applied 356005 76 864 512640 During a g 39 quot quot 39 g he striking assembly line workers with the office workers The assembly line workers were being paid 18 per hourwhile the office workers are only paid 10 per hour What is he most likely effect on he laborvariances in the rst month of this strike Labor Rate Price Variance Labor Efficienc Quantit Variance A Unfavorable effect B Unfavorable Favorable C Unfavorable Unfavorable D vor 1 Unfavorable E Favorable Favorable D Office labor is cheaper but much less e iclem than regular workers Forbes 39 overhead rate based on direct labor hours to apply manufacturing overhead to jobs At the beginning ofthe period the company estimated manufacturing overhead would be 18000 and direct labor hours would be 15000 The actual gures were 1 500 for manufacturing overhead and 16000 direct labor hours The cost records for the period will show A overapplied overhead of 300 B overapplied overhead of 1 500 C underapplied overhead of1500 D underapplied overhead of 300 E none ofthe above D OH rate 1800015000 DLH 1 20DLH OH applied 120DLH16000 319200 so underapplied by 19500 19200 300 Whump Ladders lnc manufactures one model of an aluminum ladder and one mode 0 wooden ladder Whump usually produces and sells 120000 aluminum ladders each year and The alumInumI quotquot 39 k 20000 ladders the wooden ladders are manufactured in small batches of 1000 ladders In past years has been 39 39 39 quotquot 39 39 quot L quot rate In Lunem year r 39 39 39 39 with a separate pool for the setup costs The cost ofa setup is the same forthe two types of ladders What is the most likely effect that this switch will have on he overhead cost assi ned 0 each model of ladder Assume that total overhead costs have not changed signi cantly over he last two Aluminum od A lncrease lncrease B Increase Decrease C Decrease Increase D No change No change E No change lncrease C Aluminum ladders are the highvolume product hence with the new base of setups one 39 39 39 4quot quot N t t of wooden ladder 39 a A g 26 Which ofthe following statements regarding sales mix is true A A Wquot 39 mix can ave 39 39 39 the r 39 B One ofthe limiting assumptions ofthe basic costvolumepro t model is that the analysis is for a single product ort e sales mix is constan Sales mix analysis is important in multipleproduct or multipleservice organiza ions D All of the above are true D All of the above statements regarding sale mix are true The following informa ion pertains to Manning lnc Selling price per unit 100 Variable costs per unit 70 Total xed costs 420000 Tax rate 40 The sales volume required to obtain a target aftertax pro t of 108000 is A 6000 units B 8 72 units C 14000 unIts D 20000 units 27 None ofthe above D Pretax profit Aftertax profit1 tax rate 31080006 3180 000 NIBT 180000 100 70X 420000 OIX 20000 units Rozella39s income statement is as follows Sales 10000 units 120000 Less variable costs 48 000 Contribution margin 72000 Less xed costs 24 000 Net income 48000 lf sales increase by 1 000 units pro ts will 28 A Increase by 12000 B Increase by 7 0 C Increase by 48 0 D Increase by 8000 E Some other answer 8 The unit contribution margin is 3 720001 0 000 units or 3 7 20 per unit If sales increase by 1000 units total contribution margin and total profits will increase by 1000 units times 3 720 or 37200 because fixed costs will remain unchanged 10 The Syracuse Milling Company manufactures an intermediate product identi ed as W1 Variable manufacturing costs per unit ofW1 are as follows Direct materials 5 Direct labor 15 Variable manufacturing overhead 10 1 If r on over ead will be eliminated Applying differential analysis to he situation Syracuse Milling should A Bun1the savIngs Is 100000 lthaca Tooling has offered to sell Syracuse Milling 10000 units ofW for 45 per unit u 3 50 000 h B 3 0 0 C Make W1 the savings iS 150000 W1 the savings iS 100000 E Some other answer D Relevant cost to manufacture 5 15 10 x 10000 50 000 3350000 The cost to purchase is 345 x 10000 3450000 The savings from making is 3450000 3350000 100 000 Elmira Corporation sells 2000 units ofproduct Y per day at 100 per unit Elmira has the 0 ion of processing the product fur her for additional costs of 500 per day 0 produce product r unit If Elmira processes product Y fur her to produce product Z the net income will 300 per day Increase by 800 per day E Some other answer C If processed further revenue will increase by 3040 x 2000 units or 3800 With additional costs of processing of 3500 profit will increase by 3300 per day When is the cost ofmanufacturing equipment recognized as an expense A When equipment depreciation is recor e B When inventory processing is completed and nished goods are recorded C When nished goods inventory is sold D None ofthe above 39 39 39 39 391de tcostthat39 39 an expense as part ofcost of w en q 39p is sold o allocated to In an effort to achieve r the product with The highest contribution margin per unit A B The highest contribution per unit ofconstraining factor C The highest selling price per unit ofconstraining factor D The lowest cost per unit of constraining factor 32 B L 4 L r Which ofthe following costs are treated as pan ofthe cost ofproduct A Wages of plant security uards B Insurance on the plant building and equipment C Depreciation on he kitchen sink in the plant cafeteria D All of the above are product costs D 33 Franklin lnc uses 39 39 k quot T 4 4 X and Y to he two products is as follows Units produced 38000 50000 Machinehours 15000 17000 Direct la orhours 16000 24000 Materials handling number ofmoves 8000 12000 etups 10000 14000 The following costs are reported 34 Materials handling 160000 Laborrelated overhead 480000 Setups 240000 Laborrelated overhead costs are allocated to the products on the basis ofdirect labor hours The laborrelated overhead costs assigned to product X are A 192000 B 232000 C 288000 D 272500 E Some other number A Laborrelated overhead rate 48000040000 DLH 12DLH Costs allocated to ProductX 16000X 12 19200 12 n market for a price USE THE FOLLOWING INFORMATION FOR QUESTIONS 32 AND 33 Claremont Division has the capacity to make 3000 units ofan intermediate good that is sold both internally and on the ope variable cost per unit and 12 of xed costs per unit What is the minimum prIce of 28 each To make the product Claremont incurs 5 of What is the minimum transfer price per unit that Claremont would accept orthe optimal transfer price for the company for an internal transfer of the 1000 units of the product if the division is ope rating at 50 capacity That Is if sales to outsiders use only 50 of Claremont39s capacity what is the minim um or optimal transfer price a 500 each A The optimal transfer price is the variable cost plus any avoidable xed costs plus the o L 24 AI cc I I W I What is the minimum transfer price per unit that Claremont would accept orthe optimal transfer is price for the com pany for an internal transfer of th 1000 units of he product if the division operating at 100 capacity That is if sales to outsiders use 100 of Claremont39s capacity w hat is the mInim um or optimal transfer prIce 5 0 each is 5 23 tmoratzaMtr L 39 39 Mary French uses gas to heat her home She has accumulated the following information 39 y e heating d egreedays value for a month is found by first subtracting he average temperature for each day from 65 degrees and then summing these daily amounts together forthe month Month Heating DegreeDays Gas Bill February 1900 195 April 78 The equation representing the relationship between the gas bill Y and heating degreedays X is 195 1900 x 3009 Therefore Y 24 0 195 aim1900 500 009 variable cost per heating degree day 24 or 78 600 X 009 24 xed costs 09 35 On December 31 2008 HarleyDavidson Inc reported on its Form 10K the following in 38 millions 2008 2007 Total investment 7829 5657 Total sales 5594 5727 Net income 655 934 2003 I t amount in computing its ROI A 84 39 B 117 C 715 D 97 E None ofthe above D Return on investment 39 quot 39 A 39 p39 t 39 39 39 39 5 829 5657 6 743 ROI 6556 743 9 7 USE THE FOLLOWING INFORMATION FOR QUESTIONS 36 AND 37 nu melast four months of 20x9 September 850000 November 810000 October 900000 December 780000 At Acmal 25 of raw materials purchases are normally paid for in the month of purchase The 40 remaining 75 is paid for in the mon h following the purchase 36 How much cash should Acmal expect to pay out for raw material purchases during he mon h of November 20x9 A 202500 B 832500 C 862500 D 877 00 E none ofthe above D In Novemberpay for 25 oflllovember s purchases plus 75 of October s purchases or 25810000 75900000 877500 37 In Acmal39s budgeted balance sheet at December 31 20x9 at what amount will accounts payable be s own Assume that accounts payable is only used for raw material purchases A 535 0 B 607500 C 780000 D 802 00 E none ofthe above A What has not been paid is the 75 of December s purchases or 753780000 000 14 maintenance B Machine set up C Propertytaxes D The production supervisor39s salary Facility level activi ies ofan organization would NOT include A Build39ng 8 Machine setup is typically a batchlevel activity since there is normally not a set up of equipment for each unit but for batches of units May eld uses a standard costing system all variances are closed out to COGS At the end of the period the following information was no e 39 25000 F Total ofthe production cost variances 513000 Unadjusted COGS Standard cost per unit Units produced The adjusted COGS for he company was 000 575 B 530000 C 525000 D 400 000 D The favorable variances are like the costs being overapplied by 25000 hence the adjusted COGS 513000 25000 488000 Knoxville lnc uses activitybased costing The company produces two products 001 and 002 Information relating to the two products is as follows 001 amp Units produced 38000 50000 Machinehours 15000 17000 Direct laborhours 16000 24000 Materials handling number ofmoves 8000 12000 Setups 10000 14000 The following actual costs are reported Materials handling 160000 Laborrelated overhead 480000 Setups 240000 lf setup costs are allocated to the two products using number of setups the setup costs assigned to product 002 are 100000 A B 112000 C 140000 D 144 1000 E none ofthe above C Setup cost rate V p s mp P Nquot tn mp 14000X 10 140000
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