vers! f Caldwell, Andrew TS1_ | Name:! ee velsion Exam #1 Spring 2012 INSTRUCTIONS ~ Please read before you take the exam. Failure to'follow instructions will result in the loss of points. 1. This isa closed book and closed notes exam. You must do your own work without assistance from anyone. Giving or receiving assistance from anyone during the exam will result ina grade of zero and reporting to the Office of Student Integrity. To attest to your compliance with this instruction and the Georgia Tech honor system, please sign the honor pledge below before turning in your exam 2. Totreat all students equally, | do not answer questions during an exam. Answer each question based on the information given. If you think there is a typo error, please let me know. 3. You may use only a calculator supplied by me. You may not use your cell phone or personal computer during the exam. All cell phones must be fumed off and placed on the top of your desk in plain view at all times during the exam. Use of your cell phone during the exam is considered cheating and a violation of the Honor System. 4, Each multiple-choice question has only one best answer. If you choose more than one answer, it will be considered an incorrect answer. Enter your answer to the multiple choice questions on the Scantron sheet provided. What you enter on the Scantron sheet is your answer for grading purposes. Please totally erase changes on the Scantron or get a clean Scantron form and re-enter your answers. Insert your Scantron form inside of this exam when you turn it in. 5. Youare required to show your work on the problems: If you do not show your work, you will not receive full credit even if you have a correct answer: 6. There are 11 pages in this exam. Points available are as follow: Terminology matching ~ 15 @ 2 points each 3028 Problems (2) 2422 * Multiple choice - 25 @ 3 points each B66 ge dy o> 44% Total Inoue Grades will be expressed as a percentage of total available points. Honor Pledge: ‘On my honor, | pledge that | have peither given nor received any unauthorized help on this exam. (Signed) If you do not want your graded exam returned to the grading bins for this class, please sign below. If you do not sign below, your exam will be placed in the bins for this class if you signed a FERPA waiver. Do not return my graded exam to the bin:Version A ‘Matching (2 points each) ~ Select the term and match:it with the phrase that most closely describes it. Each term (“A” through “2") may be used only once. a tetoeatata mtn Activity-based costing L Incremental costs T. Predetermined Break-even point Indirect costs overhead rate Contribution margi L. Indirect materials U. Product costs Ri controliable costs ‘Manufacturing V. Relevant range XR cost of goods available ‘overhead W. — Scattergraph for sale \ Margin of safety Sunk costs F. Cost of goods O. Mixed costs Y. Underapplied manufactured P. Noncontrollable costs overhead G. Direct costs & Opportunity costs & Variable costs H. Direct materials Overapplied overhead Fixed costs \ Period costs 21 Costs that increase or decrease in total in response to increases or decreases in the level of business activity Q)> Costs that manager ean influence 3 The difference in costs between decision alternatives 4 Costs incurred in the past that are not relevant to present decisions QS Value of the benefits foregone when one decision alternative is selected over another 16 Costs that do not change in total with changes in the level of business act S71 Materials costs that are not traced directly to products produced —S 8 Costs that are identified with accounting periods rather than with goods produced ANS Method of assigning overhead costs that uses multiple allocation bases E10 Beginning balance in the Finished Goods Inventory plus cost of goods manufactured R11 overhead applied to products is greater than the actual overhead costs incured LN 12 cost ofa manufacturing activities other than direct material and direct labor C13 Difference between selling price and variable cost per unit _ N14 Difference between the expected level of sales and the break-even sales B 15 Number of units that must be sold fora company to have a net income of $0 ap vVersion A. 1. The fundamental difference between managerial and financial accounting is that A. all financial accounting information is audited by Certified Public Accountants whereas ‘managerial accounting information is not audited by anyone. B, managerial accounting is concerned principally with determining the cost of inventory (ending inventory and cost of goods sold), whereas financial accounting is concerned with a wider range of the organization's activities. © teraz counting provides formation for decison makers within the orarizatin, whereas financial accounting provides information for individuals and institutions external to the organization. D. financial accounting information follows U.S. Generally Accepted Accounting Principles, whereas managerial accounting information generally follows rules set forth by the Institute of Management Accountants. 2. Aretaller purchased some trendy clothes that have gone out of style and must be marked down to 40% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation? A. the current selling price the original selling price the original purchase price D. the anticipated profit 3. Marco Diner produced and sold 2,000 bagels last month and had fixed costs of $6,000. if production and sales are expected to increase by 10% next month, which of the following statements is true? A. Total fixed costs will increase. B. Total fixed costs will decrease. C. Fixed cost per unit will increase © Fixed cost per unit will decrease. 4. Which of the following costs is not part of manufacturing overhead? A. Electricity for the factory g Depreciation of factory equipment Salaries for the production supervisors Health insurance for sales staff 5. Which of the following is a period cost? ‘A. Rent on an factory building B. Depreciation on production equipment C. Raw materials cost © commissions paid on each unit soldVersion A 6. Border Designs manufactures custom tiles and applies job-order costing. The following information relates to the fiscal year ending December 31, 2011. Beginning balance in Raw Materials inventory $ 12,500 Purchases of raw material 189,000 — Ending balance in Raw Materials Inventory 14,300- Beginning balance in Work in Process 24,500 Ending balance in Work in Process 23,100 Boas smo (1.504171) Manufacturing overhead applied 65,300 ‘Actual manufacturing overhead 64,100 — 1,300 Beginning balance in Finished Goods 28,900 Ending balance in Finished Goods 24,300 199, 2106 sales 432,000 > Selling expenses 120,000 General and administrative expenses 86,000 How much is the cost of raw materials transferred into production? $187,200 $189,000 $190,800 D. $201,500 Carbon Factors manufactures emission detectors‘and employs a job-order costing system. During June, the company's transactions and accounts included the following Raw materials purchased... sne$265,000 Direct materials used in production... 262,000 3 7/06 Raw materials inventory, beginning 4,200 Corporate administrative costs Selling expenses... Sales .. Total manufacturing overhead applied z m2 IN ED Total manufacturing overhead incurred ......38,100 — 2 62/000 Finished goods, beginning. 17,200 +5 HOD Work in process inventory, Beginning...unnn13,700 1a} Work in process inventory, ending ... Direct labor cost incurred. Finished goods, ending How much is cost of goods manufactured for June using normal costing? . $349,200 6 fam < $346,200 ©) $348,100under (065 over Version A 8) During the month of August, Grinding Gears applied overhead to jobs using an overhead rate of $0.75 per dollar of direct labor. Direct labor in August was $156,000. Estimated overhead in ‘August was $115,600. Actual overhead was composed of the following items: Indirect materials $16,400 ‘i Indirect labor 22,000 15 X Wl poo= NN), 20 Utilities 24,500 Depreciation 38,700 Repair expense 13,500 Total $115,109 How much overhead cost will be applied to Work in Process for overhead during August for Grinding Gears using normal costing? ® $115,100 B $115,600 {C) $117,000 More information is needed to answer. 9. Wiley Publishing utilizes job-order costing for textbook production. it allocates overhead at a rate of 120% of direct labor costs. The following is data regarding three jobs worked on in February: WIP balance Costs added to WIP in February AtEeb a Direct labor Direct Materials Job #28 $400 $500 $200 Job #29 $500 $300 $300 Job #30 $300 $100 $250 Jobs #28 and #29 were completed and sold in February. Using normal costing, how much is . 6 balance in the WIP account at the end of February? $770 : aro 300 * (00+ (11100) + 25 7 C. $650 D. $350 vc vend 10. During 2011, Magus Company applied overhead using a job-order costing system at a rate of $12 per direct labor hours. Estimated direct labor hours for the year were 150,000, estimated overhead for the year was $1,800,000. Actual direct labor hours for 2011 were 140,000 and actual overhead was $1,700,000. What is the amount of under- or over-applied overhead for the year? A, $100,000 Underapplied @) $20,000 Underapplied 155,600. _ 093 5, $120,000 Underspted {)@23jo® |) Tomeno—(.1, x eam) = Yoo - LsVersion A ___11. 8CS Company applies manufacturing overhead based on direct labor cost. Information concerning manufacturing overhead and labor for August follows: Estimated Actual Overhead cost $174,000 $171,100 Direct labor hours 5,800 5,900 P10 im Direct labor cost $87,000 $89,975 = |.) 9180 How much is the predetermined overhead rate? 8 $2.00 €. i000 L740 => D. $1.93 $7,000 12. Why is overhead applied using a predetermined overhead rate? 8 The actual amount of overhead is not known until yearend and the company desires timely cost information. 8. The company desires to know the actual job costs during the year. C. Acompany is unable to estimate its expected costs for the year. (© Overhead amounts cannot be accurately determined since they include both fixed and variable components. 13. The impact of prorating overapplied overhead between the appropriate inventory accounts and cost of goods sold (as opposed to closiig it all to cost of goods sold) is to: ‘A. Increase cost of goods sold, decrease income, and reduce inventory ‘BC Reduce cost of goods sold, increase income, and increase inventory © Reduce cost of goods sold, increase income, and reduce inventory D. Increase cost of goods sold, decrease income and increase inventory 14, When the level of activity increases, total fixed costs A. Decrease. Remain the same. Increase. D. Change, but the direction depends on the specific situation. 15. When the level of activity increases, the fixed cost per unit, decreases. B. Remains the same. C. Increases. D. Fluctuates, depending on the amount of the increase in activityVersion A 16. The high-low method calculates the variable cost per unit as the A. Difference between fixed costs and total costs. Product of the number of units and the contribution margin per unit. Change in cost divided by the change in activity level for two points. D. Change in activity level divided by the change in cost for two points. 17. ByteTown Computers has collected the following production data for the past four months: Units produced Total cost | 7,000 $16,500 2,520 =1C, 70, 10,000 22,500 8,500 17,750 (10.0% ~ "]jpas) 3,000 9,000 21,000 2,500 + ($2.00 x units produced) Total cost = $3,750 + ($2.75 x units produced) 1,500 + ($ 2.17 x units produced) 500 + ($2.25 x units produced) ot high-low method is used,.whats the month total cost equation? | Poy, (2% 7) 18. The three elements of the profit margin are: ‘A. Selling price per unit, variable cost per unit, and fixed cost per‘unit. Total revenues, total variable costs, and total fixed cost. © Selling price per unit, variable cost per unit, and total fixed costs. D. Selling price per unit, total variable costs, and fixed cost per unit. 19. Which of the following will have no effect on the break-even point in units? ‘A. The selling price increases B. The variable cost per unit increases ‘The sales volume increases D. Total fixed costs increase 20. The incremental profit generated by the sale of one additional unit is equal to the 8 Contribution margin per unit. B._ Selling price C. Margin of safety. D. Incremental cost.Version A 21. Werth Company produces tie racks. The estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 units ata price of $20 per unit. How much is the break-even point in units? 48,000 72.000 271d _ 3.600 Gam) D 8a7 22. Werth Company produces tie racks. The estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 units at a price of $20 per unit. By how much can sales revenue drop before Werth incurs a loss? J A. $12,000 260 ( 000K ) $240,000 ‘89,200 | jeer e $72,000 ae: ¢ 4,00 D. $360,000 ( cS) 23. The president of Jackson Corporation will not receive'a bonus next year unless the company’s profits are at least $435,000, Jackson sells a single product at a price of $27 per unit. if variable costs are $12 per unit and fixed costs total $150,000, what amount of sales in units must Jackson generate in order for the president to'receive a bonus? 6) oan nts 436,000 + (50,900 §96,oa0 ; 29,000 ut 2- dD = | r D. 21,167 units = 3x2 24. Verret, Inc. produces tacos and burritos with a stable sales mix. Its financial information follows for the month of June: Tacos Burritos Sales revenue $50,000 $150,000 Fred costs 6,000 38,000 Yu, 006 friable costs 12,000 78,000 171000 Income 32,000 24,000 How much is the breakeven point in total sales dollars for Verret? A, $115,385 B. $200,000 7 c. $135,333, LY, LO 8 $80,000 . (Aoojor 90/000) 2,00 ,000Version A = 25. Which of the following is not an assumption underlying CVP analysis? ‘A. Costs can be accurately separated into their fixed and variable components. B._ Fixed costs remain constant over the relevant range. © Variable costs per unit change over the relevant range. D.. The sales mix remains constant. Bonus Question (2 points): The Super Bowl is Sunday February 5. Name one of the two teams playing for the championship of the NFL in the 2012 Super Bowl. New aieVersion A Problem 1 (17 points) ~ produce an ational) O/units during tH remaining 11 months of the year. In other words, total produce ofan Bifated toe Samu. Det atrial ad dstaor ets re 4a Sarper un, respectively. lames Comfy einects to incr the flowing manufctring overhead ost during the 2011 accounting period: e ox tly = Production supplies $ 4,800 yboorld= Cl, yao Supervisor salary 192,000 6% SLE Depreciation on equipment 144,000 44,200 Utiities 36,000 Rent on manufacturing faclties _96,000 TOTAL S800 Cxpecied overhead Required: 1. (2points) Assuming that the number of units isthe cost allocation base, determine the predetermined overhead allocation rate. Yn $20 « (Lt Allocation rate =_fU4-25 pec_unie 4,600 2. (6 points) Determine the total full cost of the 1,200 units of product made in January using normal costing, ron tatcon = 4149, 304 ‘a 's(hwe) 4. Eglo) + 5).(1120) 54140 + ten + G,400= [ag 200 3. (3 points) Assume that actual Neen for 2011 was 8,800 units and that actual overhead cos a 2011 totaled $474,000. Determine the amount, if any, of under-applied or over-applied overhead. Clearly indicate the amount and whether it is under-applied or over-applied. Usdec applied by 1!Ojpo0 “1 Myowo — (40x 448) M000 - 134 4O= “40, 600 4. (6 points) Prepare the journal entry to close the manufacturing overhead account at year end using the amounts you determined in #3 above. You may assume that the net under- or over-applied overhead amount is immaterial to James Manufacturing Company's operating results. on ose ak _boods Sold $4,006 X _7 a Manu factocien Over h 4124, 000 10Version A Problem 2 (7 points) Mendez Company manufactures a product that has a variable cost of $30 per unit. The company's fixed costs total$750,000. Mendez had income before tax of $80,000 in the previous year. Its product sells for $50 per unit. In an effort to increase the company’s market share, management is considering lowering the product's selling price to $46 per unit. Required: Hf Mendez desires to maintain net income of $90,000, how many additional units must it sellin order to justify the price decline? Hint - to answer the question, you should determine the following amounts: (3 points) Number of units sold at $50 to generate income of $90,0002__“1AjO02.,. < (3 points) Number of units that must be sold at $46 to generate income of $90,0007_ 23 HOBualtS (2 point) Number of additional units? 104500, UnltS 4) $0(x) ~ 30(x) -7§0,000 = 40,000 20x-750,000 = 40,200 Qox = 840,000 X% > 1,000 Units b) ‘olc) ~ 30x) ~ 7ye000 = 70,000 [bx= $40,000 x = $9,500 [) §1520- Nave =< (0,500 pane a. Caldwell, Andrew TS1 { = Nami ACCT 2102 ~ Prof.J.M. Turner Exam #2 Spring 2012 INSTRUCTIONS — Please read before you take the exam. Failure to follow instructions will result in the loss of points. 1. Thisis @ closed book and closed notes exam. You must do your own work without assistance from anyone. Giving or receiving assistance from anyone during the exam will result in a grade of zero ‘and reporting to the Office of Student Integrity. To attest to your compliance with this instruction ‘and the Georgia Tech honor system, please sign the honor pledge below before turning in your exam. 2. To treat all students equally, | do not answer questions during an exam. Answer each question based on the information given. If you think there is a typo error, please let me know. 3. You may use only a calculator supplied by me. You may not use your cell phone or personal computer during the exam. All cell phones must be turned off and placed on the top of your desk in plain view at all times during the exam. Use of your cell phone during the exam is considered cheating and a violation of the Honor System. 4, Each multiple-choice question has only one best answer. If you choose more than one answer, it will be considered an incorrect answer. Enter your answer to the multiple choice questions on the Scantron sheet provided. What you enter on the Scantron sheet is your answer for grading purposes. Please totally erase changes on the Scantron or get a clean Scantron form and re-einter yout answers. Insert your Scantron form inside of this exam when you turn it in. 5, You are required to show your work on the problems. if you do not show your work, you will not receive full credit even if you have a correct anSwer. 6. There are 9 pages in this exam. Points available are as follows: 2 Terminology matching - 17 @ 2 points each 3434 = 994 Problems (1) 1010 87. feed 59 % Multiple choice - 17 @ 3 points each 5134 ’ Total 8B Grades will be expressed as a percentage of total available points. Honor Pledge: ‘On my honor, t pledge that | have neither given nor received any unauthorized help on this exam. (signed) Hf you do not want your graded exam returned to the grading bins for this class, please sign below. If you do not sign below, your exam will be placed in'the bins for this class if you signed a FERPA waiver. Do not retum my graded exam to the bin: - Page 10f9Matching (2 points each - 34 total points) Match each of the following terms with the phrase that most closely describes it. Each answer may be used only once. Enter the letter in the space provided; use capital letters. Cost pool Cost-plus contract Cost structure Equity approach to allocation Lump-sum allocation Relative benefits approach to allocat Cost allocation Responsibility accounting system Cost driver :Unitized costs Cost objective Variable costing Ability to bear approach to allocation Full absorption costing Actvity-based costing Activity-based management x x ® x Cause-and-effect relationship & NS N Controllable costs FES LEOE A costing approach in which only variable manufacturing costs are product costs, and fixed manufacturing costs are period expenses. A costing approach in which all manufacturing costs are added to the product. Costs that a manager can influence ‘Amethod of allocation that assigns more costs to more profitable cost objects. ‘The relative proportion of fixed versus variable costs that @ company incurs. Ameasure of the activity that is used to allocate costs Allocations of fixed costs in which predetermined amounts are allocated regardless of changes in the level of activity ‘The object or recipient of the cost allocation ‘A system of accounting that traces revenues and costs to organizational units and individuals with related responsibility for generating revenue and controlling costs. Assigning indirect costs to cost objectives . An allocation of cost to the cost objective that caused it to be incurred. Has the goal of improving efficiency and effectiveness by analyzing and costing activities A grouping of individual costs whose total is allocated using one allocation base . Fixed costs stated on a per unit basis . Arecently developed method of cost allocation that uses cost drivers to allocate costs to products Price for this includes actual costs plus a fixed amount or percentage An attempt to allocate costs in a way that is fair to interested parties. ah A Page 2 of 91. Which of the following costs are not considered product costs under variable costing? @ Fixed manufacturing overhead. B. Variable selling and administrative costs. Fixed selling and administrative costs. ,) None of the above. 2. Which of the following is not a reason for a company to use variable costing? In other or all of the following are reasons to use variable costing except Variable costing is required by generally accepted accounting principles. Variable costing eliminates the temptation to overproduce in order to reduice cost per unit. C. Variable costing highlights the fact that all of fixed overhead costs will be incurred regardless of the level of production. D. Variable costing is useful for decision making. 3. The following are amounts determined by Image, Inc, for the production of 800 clocks during August: Sales price $40 per unit ae Ie Variable manufacturing costs $6 per unit— 3 Fixed manufacturing costs Saperunt = “$e . Vatiable adi $3 per unit— Xo. Fixed administrative costs $5 per unit joo If 800 clocks are sold during August, how much is total contribution margin? A. $27,200 8. $17,600 ¢. $24,000 © $24,800 __4. Inusing variable costing, how are fixed manufacturing costs classified? A. As inventory costs 8. As part of cost of goods sold C. As product costs © As period costs A Page 3 0f 9Use the following data for problems 5 and 6. ‘Ajax Manufacturing has the following cost structures: Direct material $10 Direct labor 20 Variable manufacturing overhead 5 i 08 Total variable manufacturing costs per unit 3s ( we) 2 h uy fixed manufacturing overhead per year $100,000 Fixed selling and administrative expense per year $200,000 ht 5. Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the full cost of ending inventory is: $90,000 = $70,000 x L000 = Iy0ay Cc. $140,000 _D. $130,000 . Assume that Ajax produces 10,000 items and sells 8,000 items. The selling price of Ajax's product is $90 per unit. In this case, the contribution margin on the income statement prepared using variable costing is: ®. sss0000 (tex fooo) = The vte0 ¢. $700,000 ~ (35x Byeae) ® $440,000 40,000 7. Last month, Garland Industries produced 100,000 units and sold 75,000 of them at a price of $10 per unit. Manufacturing costs consisted of direct materials of $200,000, direct labor of $120,000, variable manufacturing overhead of $60,000'and fixed manufacturing overhead of $150,000. Fixed general and administrative costs totaled $90,000. ~ What would Garland's net income be for the month using variable costing? A. $262,500 12.00,000 2 © $225,000 150100. Toga C. $380,¢ 7 A ae ~ (3.9x%5j000) Rowe 1) . Sate george eee Yes De ite Le Bo bose - ~ eee pagelfAQ? —_——— G25; 606 3.9___8. Last month, Garland Industries produced 100,000 units and sold 75,000 of them at a price of $10 per unit. Manufacturing costs consisted of direct materials of $200,000, direct labor of $120,000, variable manufacturing overhead of $60,000 and fixed manufacturing overhead of $150,000. Fixed general and administrative costs totaled $90,000. ‘What would Garland's net income be'for the month using full costing? 7 ‘A. $370,000 38 B. $225,000 73060 +fina20 $380,000 ~ 484, wr) $262,500 £ — 3524500 y §3 = 40928 15,020 Saeaeaete Wi 41 S00 ____9. Mortenson Machines announced that production was being réduced because the company had excess inventory. Its first quarter would report a loss because of the use of full costing for financial reporting purposes. Which of the following is correct? With the reduction in production, fixed manufacturing overhead is spread out over more units and unit cost decreases. With,a lower unit cost, cost of goods sold will be high and profit low. B, With the reduction in production, fixed manufacturing overhead is spread out over fewer units and unit cost increases. With a higher unit cost, cost of goods sold will be lower and profit higher. With the reduction in production, fixed nianufacturing overhead is spread out over fewer units and unit cost increases. With a higher unit cost, cost of goods sold will be high and profit low. Q, With the reduction in production, fixed manufacturing overhead is spread out over ‘more units and unit cost decreases. With.a higher unit cost, cost of goods sold will h and profit low. ___10. An important concern in formifig a cost pool is to: ‘A, Avoid placing similar costs in the same pool. B.. Limit the number of costs that make up the pool. {© Ensure that the costs in the pool are homogenous, or similar. ‘BA Give back to the Tech community. Page 5 of 9411. One way to avoid the unfavorable behavioral problems associated with unitized fixed costs is to: A, Not allocate fixed costs. ® Use a lump-sum method of allocating fixed costs. S&, Combine fixed and variable costs in a single cost pool: JR, Use only volume-based measures as the cost allocation base. ___12, Which one of the following costs would most likely be allocated to products by @ toy truck manufacturer in order to determine full cost per unit? A. Costs to advertise toy trucks on television ®_ Wages of workers that assemble the trucks. Production supervisor's salary. ). Cost of the wheels. __13. Which one of the following is a benefit of ABC for managers? It oftén leads to cost control improvements. 7 Its use in determining full costs helps with internal deci C. It more expensive that traditional costing systems. D. Allof the above are benefits of ABC for managers. n making. ___14, It is generally a good idea to allocate rather than service department costs A. budgeted, direct Bev variable, actual budgeted, actual uncontrollable, actual Page 6 of 9Use the following data for questions 15 and 16. Olsen Company estimated the following costs and activities for March: ; Estimated] Costdriver& | Allocation rate fa Total cost | Estimated total units | Per unit Machine setups | $33,600_| 400 Setups $84 per setup Utilities $60,000 | 200,000 usage hours | $0.30 per hour Materials handling |_$84,000_| 12,500 crates $6.72 per crate Direct labor $35,520, $20 per labor hour Direct material | $60,000 $1 per pound The following information pertains to the actual production of brackets and hinges during March: Brackets | Hinges | Units produced 60,000 |" 40,000 Direct material cost incurred $30,000 | $31,200 Direct labor cost incurred ($20/hour) | $24,000 | $12,000 ‘Setups implemented 120 290 | Crates handled 7 6,800 | _5,200 | Utility hours used ‘80,000 | 125,000 Q 15. How much is the overhead cost per \ge if Olsen uses a traditional cost system and applies overhead based on direct labor cost using only one cost pool? A. $2.31 B. $5.00 D. $91.02 2 1.900 424,200 = 36,00 ~ te Diyoeo = 333 72 4173 ity-based costing? (2120) LY, io. “ooo 7s (CXS;2e0) ~ many 3 7500 EE Poo Uee4 NyoooxQo 2003 Page 7 of 9 e019 39 gol (3% ps,260)___17. Martinez, Inc. has 2 departments—sorting and molding. The payroll and IT departments provide services for the production departments and all other service departments. Payroll is allocated based on number of employees and IT is allocated based on number of computer stations. Martinez provided the following inform: concerning its departments for June: Cost #of ‘Computer | # of labor Department | incurred | employees | SUS" Fet | “Setions | hours. | 7? Sorting $58,000 30 3,000 6 20,000 Molding $84,000 10 4,500 4 10,000 IT $40,000 15 1,000, 12, 3,000 Payroll ‘$34,000 25 1,500 | __7,000| How much service cost will be allocated to the sorting department using the direct method? A, $45,250 ssa) es a $49,500 $88,300 © $20,750 (9: - ce 33, » 2. Be, Bonus Question (2 points) DO NOT ENTER THE ANSWER TO THE BONUS QUESTION ON THE “Wf00 SCANTRON. INDICATE YOUR ANSWER IN THE SAPCE BELOW. 6 tu _© ityousee your professor, Dr. Turner, on campus or in the COM building, the appropriate reaction is to: ‘A. Actas though you don’t see him or don’t know him B. Turn around and walk the other way being careful to avoid eye contact © smile and say hello D. Offer him an incentive to grade your exam favorably Note - There is only one correct answer to the bonus question A Page 80f9Problem 1 (10 points) Raeon, Inc. produces car radios. The selling price per radio.is $1,000. Costs involved in production are: Direct material $100 - Direct labor 100 74250, Variable manufacturing overhead 50 Fixed manufacturing overhead per year 250,000 In addition, the company has fixed selling and administrative costs: Fixed selling costs per year $175,000 Fixed administrative costs per year 75,000 During the year, Raeon produces 1,000 car radios and sells 800 radios. There was no beginning inventory. Required: 1, How much is profit using variable costing? 2, What is the cost of ending inventory using variable costing? $00 X| 00 = { $00,ce0 a (964,000) 260 x $00 qf 600,020 i ~ (Soe Mpa For) "PO Y Toojo0s Prof'+ I5d1a »cosrok endl \_invenjor Yi. . A Page 9 of 9 Ieee eee