ACC122 Final Exam – Problems (10 points each)
1. Cellular Solutions Inc. had a very successful year in 2013. Based on a $125 average unit selling price, monthly sales during 2013 were as follows:
Mr. James, vice president of sales, is preparing the sales budget for 2014. Increased manufacturing costs will make it necessary to increase the selling price by 12 percent. Even with this price increase, the unit volume of sales is expected to increase by 25 percent. The seasonal sales pattern shown for 2013 is expected to continue in 2014.
a. Prepare the monthly sales unit and dollar budgets for the first quarter of 2014.
b. Mr. Serene is considering the possibility of raising the average selling price by 20 percent in 2014. If this action is taken, he projects that the sales volume for the year will increase by only 10 percent. What would forecasted sales in units and dollars be in 2014 if his projection is correct?
2. A company expects to begin the coming year with 6,000 ceramic pots in finished goods inventory. It expects to sell 85,000 ceramic pots and end the year with 8,000 pots in the finished goods inventory. Four pounds of clay go into each ceramic pot. The company expects to have 4,000 pounds of clay on hand at the beginning of the coming year and wishes to end the year with 6,000 pounds in inventory.
a. Prepare a production budget showing the number ceramic pots that the company must manufacture to carry out these plans.
b. Prepare a direct materials purchases budget showing the number of pounds of clay that the company must purchase during the year.
3. The CEO of Star Coffee is interested in reviewing the May 2014 performance report for Cost Center 7-11. Prepare a brief performance report for the CEO utilizing the following information for Cost Center 7-11. Line items should be broken out between direct materials, direct labor, variable overhead, and fixed overhead.
Espresso machine repair
4. Using the following information, prepare a traditional income statement and a variable costing income statement:
Variable cost of goods sold
Variable selling expenses
Fixed selling expenses
Fixed manufacturing costs
5. As the staff accountant for Investment Center 916, calculate the October 2014 ROI, using the following information:
October 2014 profit margin
October 2014 sales
Assets at September 30, 2014
Assets at October 31, 2014
Round your answers to two decimal places.
6. Nexus Star Inc. produces various kinds of oils. One of its product, Product X, is made from castor oil, beeswax, aloe vera, and a base compound.
For the next 12 months, the company’s purchasing agent believes that the cost of ingredients will be as follows:
The direct labor time standard is 3.50 hours per unit at a standard direct labor rate of $12.00 per hour. The standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hour for the standard fixed overhead rate.
a. Using these production standards, compute the standard unit cost of direct materials per unit if it takes 0.50 gallon of castor oil, 1 pound of beeswax, 0.25 gallon of aloe vera, and 1 gallon of base compound to produce one unit of product X. Round values to two decimal places.
b. Using the standard unit cost of direct materials per case determined in (a) and the production standards given for direct labor and overhead, compute the standard unit cost of one unit of product X.
7. Rose Corporation provides you the following budgeted cost information for July, 2014.
Budgeted variable costs
Budgeted fixed overhead
The company has a normal capacity of producing 9,000 units. However, in July, the company produced 9,500 units by incurring the following costs.
Actual variable costs
Actual fixed overhead
Prepare a performance report for July, 2014, to compare the data from Rose’s flexible budget with the actual costs incurred. Also find if costs are under or over budgeted.
8. Golf Pro Inc. makes wood drivers for the professional golfer. Because of the clientele of users, only the finest materials can be used, and the quality of craftsmanship must be high. The following cost, quantity, and time standards have been set for 2014:
Direct materials: 2 board-feet of wood @ $20 per board-foot and 2 feet of leather strip @ $5 per foot
Direct labor: Cutting Department, 0.6 hour per driver at $10 per hour; Shaping/Finishing Department, 1.4 hours per driver at $15 per hour
Overhead: variable, $5 per direct labor hour; fixed, $8 per direct labor hour
The wood is added at the beginning of the cutting process and the leather strip at the beginning of the shaping/finishing process.
Compute the standard cost per driver.
9. Regis Company has a tax rate of 25 percent and is considering a capital project that will make the following annual contribution to operating income:
Operating income before income taxes
Determine the net cash inflows for this project using the:
a. receipts and disbursements method (show calculations).
b. income adjustment procedure (show calculations).
10. The following data have been gathered for a capital investment decision.
The minimum rate of return for this investment is 14 percent. The present value factors for a 14 percent discount rate are as follows:
End of Period
Present Value of $1
Present Value of an Annuity of $1
a. Compute the present value of each of the cash inflows of the investment.
b. What would have been the present value of the cash flows if they were received in equal installments over the five-year period at the same discount rate? (Assume the total cash inflows remain same.)
c. If the answers to parts (a) and (b) differ, explain the reason(s) why.
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ACC122 Final Exam – Problems (10 points each)
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Preview: $172 xxxxxx Corporation xxxxxxxx you the xxxxxxxxx budgeted cost xxxxxxxxxxx for xxxxx xxxx Budgeted xxxxxxxx costs Per xxxx Direct materials xx Direct xxxxx xx Overhead xx Budgeted fixed xxxxxxxx $90,000 The xxxxxxx has x xxxxxx capacity xx producing 9,000 xxxxx However, in xxxxx the xxxxxxx xxxxxxxx 9,500 xxxxx by incurring xxx following costs xxxxxx variable xxxxx xxx unit xxxxxx materials $57,000 xxxxxx labor $47,500 xxxxxxxx $57,000 xxxxxx xxxxx overhead xxxxxxx Prepare a xxxxxxxxxxx report for xxxxx 2014, xx xxxxxxx the xxxx from Rose’s xxxxxxxx budget with xxx actual xxxxx xxxxxxxx Also xxxx if costs xxx under or xxxx budgeted xxxxxxxxxxxxx xxxxxxxxxxx Performance xxxxxx for July, xxxxxx Actual Results xxxxxxxxxxxxxxxx cost xxx xxxx Flexible xxxxxx @ 9,500 xxxxx Direct Materials xxxxxx -9,500 xx xxxxxx Direct xxxxx 47,500 -9,500 xx 38,000 Variable xxxxxxxxx 57,000 xxxxxx xx 76,000 xxxxx overheads 85,000 xxxxx F 90,000 xxxxxxxxxxxxxxxxx cost xxxxxxx xxxxx F xxxxxxx Answer: Actual xxxxxx material and xxxxxx labor xxxx xx expended xxxx than the xxxxxxxx leading to xxxxxxxxxxx variance xx xxxxxx each xxxxx overheads costs xxx incurred less xxxx budgeted, xx xxxx favorable xxxxxxxx of $19,000 xxx $5,000 respectively xxxxx total xxxxxx xxxxx are xxxx than budgeted, xxxxxxx a net xxxxxxxxx variance xx xxxxxxxxxx Pro xxx makes wood xxxxxxx for the xxxxxxxxxxxx golfer xxxxxxx xx the xxxxxxxxx of users, xxxx the finest xxxxxxxxx can xx xxxxx and xxx quality of xxxxxxxxxxxxx must be xxxx The xxxxxxxxx xxxxx quantity, xxx time standards xxxx been set xxx 2014:Direct xxxxxxxxxx x board-feet xx wood @ xxx per board-foot xxx 2 xxxx xx leather xxxxx @ $5 xxx footDirect labor: xxxxxxx Department, x x hour xxx driver at xxx per hour; xxxxxxxxxxxxxxxxx Department, x x hours xxx driver at xxx per hourOverhead: xxxxxxxxx $5 xxx xxxxxx labor xxxxx fixed, $8 xxx direct labor xxxxxxx wood xx xxxxx at xxx beginning of xxx cutting process xxx the xxxxxxx xxxxx at xxx beginning of xxx shaping/finishing process xxxxxxx the xxxxxxxx xxxx per xxxxxx Solution:Standard cost xxx unit:Direct material:Wood x x xxx xxxxxxxxxx strip2 x 5 =$10Direct xxxxxxxxxxxxx Department0 6 x 10= xxxxxxxxxxxxxxxxxxx xxxxxxxxxxx 4 x 15=$21Overheads:Variable(0 6 x 1 4) x 5=$10Fixed(0 x x 1 xx x 8=$16Total xxxxxxxx unit cost=$103Answer: xxxxxxxx cost xxx xxxx driver xx $103Regis Company xxx a tax xxxx of xx xxxxxxx and xx considering a xxxxxxx project that xxxx make xxx xxxxxxxxx annual xxxxxxxxxxxx to operating xxxxxxxxxxx revenues$130,000Noncash revenues10,000Cash xxxxxxxxxxxxxxxxxxxxxxxxxxxx (35,000)Operating xxxxxx xxxxxx income xxxxxxxxxxxxxxxxxx taxes (18,750)Operating xxxxxxxxxxxxxxxxxxxxxx the net xxxx inflows xxx xxxx project xxxxx the:a receipts xxx disbursements method xxxxx calculations) x xxxxxx adjustment…..
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