Managerial Accounting (ACC 212) Uses of Accounting Information II (ACC 240) Final Exam Review 1) Beginning Raw Materials Inventory $ 1,000 Ending Raw Materials Inventory 2,500 Purchases of Raw Materials 6,000 Direct Labor 3,000 Indirect Labor 1,500 Rent, office 5,000 Rent, factory 4,000 Depreciation, office 2,000 Depreciation, factory 8,000 Beginning Work In Process Inventory 2,000 Ending Work In Process Inventory 4,500 The company's cost of goods manufactured was $ 2) Sales $80,000 Beginning Finished Goods Inventory 9,000 Ending Finished Goods Inventory Cost of Goods Manufactured 5,000 42,000 Selling Expenses General & Administrative Expenses 20,000 15,000 The company had a net (income or loss)? of $ 3) Estimated manufacturing overhead $160,000 Actual manufacturing overhead 161,500 Estimated direct labor hours 10,000 Actual direct labor hours 9,500 Overhead is based on direct labor hours. The company's predetermined overhead rate was $ hour. 4) Predetermined overhead rate is $1.80 per machine hour Actual machine hours were 80,000 Actual manufacturing overhead was $128,000 Estimated machine hours were 70,000 Estimated manufacturing overhead was $126,000 Overhead was (over or under) applied? in the amount of $
5) Expense Title September October Advertising $ 40,000 $ 40,000 Utilities 50,000 70,000 Depreciation 30,000 30,000 Shipping 2,000 3,000 Cost of Goods Sold 60,000 90,000 Sales (in units) 20,000 30,000 The relevant range for these costs is between 10,000 and 60,000 units. The company's expenses can be divided as follows (supply expense titles): Fixed expense(s) Mixed expense(s) Variable expense(s) 6) Utility Cost Machine Hours October ------------ $ 26 ------------- 6 November 40 9 December 53 ----- 15 -- Totals $ 119 30 ===== == Using the high-low method: the variable rate per machine hour is $ per machine hour the total fixed cost is $ 7) Sales ($11 per unit) $550,000 Variable Expenses 45% Fixed Expenses $199,650 This company's break-even point in UNITS is
8) Sales $360,000 Contribution Margin 198,000 Fixed Expenses 82,500 This company's current margin of safety is $ 9) Variable expense $ 35,000 Contribution margin 15,000 Fixed expense 10,000 This company's degree of operating leverage is 10) The following budget is for a merchandising company: Jun Jul Aug Sep Oct Sales (all credit) $50,000 $60,000 $50,000 $60,000 $50,000 Selling price is $10 per unit. a) Cash is collected: 10% in the month of sale 60% in the month following sale 30% in the 2nd month following sale Cash collections during September should be $ b) Any month's ending inventory is 10% of the following month's sales. The units that should be purchased during the month of August are units c) Each unit costs the company 60% of selling price. Payments are made 50% in the month of purchase and 50% in the month following purchase. During the months of June and July, 5,100 and 5,900 units were purchased, respectively. Cash payments for July should be: $
11) Cardinal Puppet Company applies overhead based on direct labor hours. Standard Cost Card Direct materials, 3 lbs @ $5 $15.00 Direct labor, 2 hrs @ $12 24.00 Overhead, 2 hrs @ $9 18.00 -------- Standard cost per unit $ 57.00 ======== 5,000 puppets were budgeted & produced using the following inputs: ACTUALS Direct material - 16,000 pounds of material were purchased at an actual unit price of $4.80, for a total actual cost of $76,800 Direct labor - 9,500 hours of direct labor time was recorded at an actual hourly rate of $12.20, for a total actual cost of $115,900 Please compute the following variances: Materials price variance $ (U or F) Materials quantity variance $ (U or F) Labor rate variance $ (U or F) Labor efficiency variance $ (U or F)
12) Sales $400,000 Less: Variable Expenses 240,000 -------- Contribution Margin $160,000 Less: Fixed Expenses 70,000 -------- Net Operating Income $90,000 Less: Income Taxes 50,000 -------- Net Income $40,000 ======== Assets Cash $ 200,000 Property, Plant & Equipment $900,000 Less: Accumulated Depreciation 100,000 800,000 Land Held for Future Use 200,000 ---------- Total Assets $1,200,000 ========== Liabilities Current Liabilities $ 100,000 Stockholders' Equity Common Stock $300,000 Retained Earnings 800,000 1,100,000 ---------- Total Liabilities and Stockholders' Equity $1,200,000 ========== What is this company's Return on Investment (ROI)? % If the Cash were used to pay off the Current Liabilities, what would the new ROI be? % 13) Cost of new machinery $ 200,000 Salvage value after 5 years 20,000 Annual net cash inflow 50,000 Useful life 5 years Cost of capital 14% Ignore income taxes Based on the above information, this company should (accept or reject) this investment proposal due to its net present value of $
14) Serena & Venus Company are purchasing a coin operated pool table for $8,000. The pool table has an estimated useful life of 5 years and no salvage value. Other relevant annual data follow: Sales $ 4,000 Variable expenses 40% Fixed expenses: Depreciation $ 1,600 Other 400 The pool table's payback period is years 15) Britney, a single woman, received and paid the following amounts. Amounts received: Amounts paid: Wages $ 20,000 Interest paid - home mortgage 5,100 Tips Game show winnings 15,000 8,000 car credit cards 1,000 600 Interest - bank 300 City of Phoenix bonds 800 Property taxes - home car 1,200 400 Gift from grandparent 10,000 Income taxes - federal 5,000 Illegal income 12,000 Income from second job 900 state Charitable contributions 1,100 2,300 Inheritance 30,000 Tuition paid to GCC (freshman) 3,000 a) From the amounts received column, what is her taxable income? $ b) From the amounts paid column, what are her itemized deductions? $
16) Current year payroll taxes are as follows: Tax Rate Applied to FICA Social Security 7.0% First $70,000 FICA Medicare 1.0% ALL Wages Federal Income Taxes 15.0% ALL Wages Federal Unemployment 0.8% First $7,000 State Unemployment 4.0% First $7,000 Nicole works for XYZ and earns a salary of $9,000 per month. What is Nicole s net pay for August? $ What is XYZ s cost to employ Nicole for the year? $
17) For each of the following, record the appropriate amounts for the month of January. a) Jeter Company provided $80,000 of services during January. Payment will be received: 70% during January, 20% in February and the balance in March. Cash Basis Accrual Basis b) Six employees have signed a contract to work for $10,000 per month. However, cash flow is currently tight. As a result, only 70% of the contractual amount will be paid in January with the remainder deferred. Cash Basis Accrual Basis c) Insurance is a necessity in any endeavor. In order to obtain the best rate possible, the company has opted to pay $36,000, in January, for the first year s coverage. Cash Basis Accrual Basis d) January 31 Balances: Cash Basis Accrual Basis Service Revenue $ $ Salaries Payable Insurance Expense