ACCT505 Final Exam New

BUY ACCT505 Final Exam New

1. (TCO F) Buckhorn 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 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. (Points : 25)
Answer:
Total manufacturing overhead =
Pretermined overhead =	Estimated overhead / machine hours
Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month.
Required: Prepare the company's cash budget for October in good form. (Points : 25)

2.

(TCO D) McMullen 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 McMullen 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

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead

Total costs

The Procurement Department provided the following supplier pricing.

Supplier A price per hinge

Supplier B price per hinge

Supplier C price per hinge

The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet McMullen's technical specifications and quality requirements.

If McMullen 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 of accepting an outside supplier's offer. (Points : 30)

3.

(TCO E) 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

Units produced

Units sold

Sales

Less cost of goods sold:

Beginning inventory

Add cost of goods manufactured

Goods available for sale

Less ending inventory

Cost of goods sold

Gross margin

Less selling and admin. expenses

Net operating income

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. (Points : 30)

4.

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

Raw materials inventory, beginning

Raw materials inventory, ending

Purchases of raw materials

Direct labor

Manufacturing overhead

Administrative expenses

Selling expenses

Work-in-process inventory, beginning

Work-in-process inventory, ending

Finished goods inventory, beginning

Finished goods inventory, ending

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)

1. (TCO F) Carter 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

Materials costs

Conversion costs

Percentage complete for materials

Percentage complete for conversion

Units started into production during the month

Units transferred to the next department during the month

Materials costs added during the month

Conversion costs added during the month

Ending work in process:

Units in ending work-in-process inventory

Percentage complete for materials

Percentage complete for conversion

Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department. (Points : 25)

2. (TCO G) (Ignore income taxes in this problem.) Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $375,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of Year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $85,000 per year for each of the 10 years. Axillar's discount rate is 16%.

Required:

(a) What is the net present value of this investment opportunity?

(b) Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo? (Points : 35)

3. (TCO B) Aziz Corporation produces and sells a single product. Data concerning that product appear below.

Selling price per unit

Variable expense per unit

Fixed expense per month

Required: Determine the monthly break-even in either unit or total dollar sales. Show your work! (Points : 25)