CMA Canada Assignment: MA 1, 2, 3docshare01.docshare.tips/files/5714/57146398.pdf · Assignment: MA...

CMA Canada

Saskatchewan Partner

AMAP: Accelerated Management Accounting Program

2010 - 2011

Assignment: MA 1, 2, 3

Due: Sunday, February 20, 2011: 11 p.m.

Please use the excel spread sheet to record your answers and send them to:

[email protected]

1) The following information pertains to Tom's Country Wood Shop:

Beginning finished goods, 1/1/x1 $ 15,000 Ending finished goods, 12/31/x1 9,500 Cost of goods sold 56,000 Sales 112,500 Operating expenses 25,000

What is the cost of goods manufactured for 20x1?

a. $ 31,500

b. $ 50,500

c. $ 56,500

d. $ 61,500

e. $ 66,500

Frazer, Inc. had the following activities in the year:

Direct materials: Beginning inventory $ 100,000 Purchases 308,000 Ending inventory 52,000 Direct manufacturing labour 80,000 Manufacturing overhead 60,000 Ending work in process inventory 20,000 Beginning work in process inventory 4,000 Ending finished goods inventory 80,000 Beginning finished goods inventory 120,000

2) What is Frazer's cost of goods sold?

a. $ 400,000

b. $ 440,000

c. $ 464,000

d. $ 516,000

e. $ 520,000

3) What is Frazer's cost of goods manufactured?

a. $ 536,000

b. $ 512,000

c. $ 496,000

d. $ 480,000

e. $ 476,000

Use the information below to answer the following questions 4 through 9. Consider the following data of the Vancouver Company for the year: $ $ Sandpaper 10,000 Leasing costs - plant 120,000 Materials handling 100,000 Amortization - equip. 70,000 Coolants & lubricants 7,000 Property taxes - equip 10,000 Indirect mfg. labour 86,000 Fire insurance - equip. 5,000 Direct mfg. labour 680,000 Direct mat. purchased 980,000 Direct mat., Jan 1 120,000 Direct mat. Dec 31 86,000 Finished goods, Jan 1 210,000 Sales 4,000,000 Finished goods, Dec 31 400,000 Sales commissions 200,000 WIP, Jan 1 30,000 Sales salaries 180,000 WIP, Dec 31 20,000 Advertising costs 150,000 Administration costs 250,000

4) What is the unit cost for the direct materials for the year assuming 2,000,000 units are produced (direct materials costs are $ 1.00 per unit when 1,014,000 units are produced)?

a. $ 1.10

b. $ 0.95

c. $ 0.80

d. $ 1.00

e. $ 1.08

5) What is the unit cost for the plant leasing cost for the year assuming 2,000,000 units are produced (plant leasing costs are $ 0.118 per unit when 1,014,000 units are produced)?

a. $ 0.35

b. $ 0.12

c. $ 0.18

d. $ 0.04

e. $ 0.06

6) What is the cost of goods sold for Vancouver Company?

a. $ 1,502,000

b. $ 1,922,000

c. $ 2,322,000

d. $ 2,302,000

e. $ 1,712,000

7) What is the cost of goods manufactured for the year?

a. $ 2,097,000

b. $ 2,132,000

c. $ 2,112,000

d. $ 2,082,000

e. $ 2,102,000

8) What is the Manufacturing cost incurred for the year?

a. $ 2,132,000

b. $ 2,352,000

c. $ 1,088,000

d. $ 2,102,000

e. $ 2,097,000

9) What is the amount of direct materials used for the year?

a. $ 1,014,000

b. $ 946,000

c. $ 1,031,000

d. $ 894,000

e. $ 860,000

10) Big Sports University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:

1. Foothills Country Club

a. Fixed rental cost of $ 600, b. plus $ 15.00 per person for food.

2. Downhill Country Club a. Fixed rental cost of $ 1,080. b. plus $ 12.00 per person for food.

Big Sports has budgeted $ 900 for administrative and marketing expenses. It plans

to hire a band, which will cost another $ 400. Tickets are expected to be $ 40 per person. Any other items required for the event will be donated by its local business supporters.

How many people must purchase tickets assuming option two is chosen, and Big Sports expects to raise $ 4,820 for the athletic fund? Assume no one pays more than the cost of his/her ticket.

a. 258 people

b. 514 people

c. 600 people

d. 720 people

e. 610 people

11) Joan Perry has three booth rental options at the bridal fair where she plans to sell her new product. The booth rental options are:

Option 1: $ 4,000 fixed fee Option 2: $ 3,000 fixed fee + 5% of all revenues generated at the fair Option 3: 20% of all revenues generated at the fair. The product sells for $ 150 per unit. She is able to purchase the units for $ 50.00 each.

Which option should Joan choose in order to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold?

a. Option three with expected income of $ 3,640

b. Option two with expected income of $ 1,810

c. Option one with expected income of $ 1,200

d. Option three with expected income of $ 4,060

e. Option two with expected income of $ 4,060

Use the information below to answer the following question(s). The following information is for Winnie Company:

Product A: Revenue $ 4.00 Variable Cost $ 1.00 Product B: Revenue $ 6.00 Variable Cost $ 2.00 Total fixed costs are $ 40,000

12) What is the operating income assuming actual sales are 300,000 units, and the sales mix is one unit of Product A and two units of Product B?

a. $ 1,060,000

b. $ 1,040,000

c. $ 1,100,100

d. $ 100,000

e. $ 1,100,000

13) What is the breakeven point assuming the sales mix consists of two units of Product A and one unit of Product B?

a. 4,000 units of A and 2,000 units of B

b. 8,050 units of A and 4,025 units of B

c. 8,000 units of A and 4,000 units of B

d. 4,000 units of A and 4,000 units of B

e. 4,050 units of A and 2,025 units of B

14) Comics Plus has a current production level of 200,000 comics per month. Unit costs at this level are:

Direct materials $ 0.125 Direct labour 0.200 Variable overhead 0.075 Fixed overhead 0.100 Marketing - Fixed 0.100 Marketing/distribution - Variable 0.200

Current monthly sales are 180,000 units. Printers, LTD has contacted Comics Plus about purchasing 15,000 units at $1.00 each. Current sales would not be affected by the special order, and variable marketing/ distributing costs would not be incurred on the special order. What is Comics Plus' change in profits using the contribution margin format if the order is accepted?

a) $ 9,000 increase

b) $ 2,000 decrease

c) $ 11,000 increase

d) $ 9,000 decrease

e) $ 2,000 increase

15) Crest Information Technologies manufactures three sizes of copiers: light usage, medium usage, and heavy usage. Potential sales include 200 units of light, 240 units of medium, and 200 units of heavy per month. The maximum machine-hours available is 12,000 per week. Product information is provided below.

Light Medium Heavy Marketing Costs ($): Variable 120 240 400 Fixed 300 500 1,000 Manufacturing costs ($): Variable 120 240 400 Fixed 80 100 240 Machine-hours per unit 20 40 100

What is the full product cost for heavy usage copiers?

a) $ 800

b) $ 1,400

c) $ 1,240

d) $ 640

e) $ 2,040

16) Action Mopeds manufactures mopeds. The following information pertains to the company's normal operations per month:

Output units 15,000 mopeds Machine-hours 4,000 hours Direct manufacturing labour hours 5,000 hours Direct manufacturing labour per hour $ 24 Direct materials per unit $ 200 Variable manufacturing overhead costs $ 322,500 Fixed manufacturing overhead costs $ 1,200,000 Marketing and distribution costs $ 1,125,000 Research and development costs $ 900,000

What is the unit cost for establishing a minimum bid on a one-time-only special order of 1,000 units from an overseas city if all cost relationships remain the same except for a one-time setup charge of $ 40,000?

a) $ 260.50

b) $ 269.50

c) $ 309.50

d) $ 209.50

e) $ 444.50

17) Central Medical Supply, Inc., a manufacturer of medical testing equipment, has $ 240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $ 64,000; the market value would then be $ 136,000. However, Tripac offered to purchase the obsolete equipment as is for $ 88,000.

What are the relevant figures above for management in their decision?

a) (136,000 - 64,000); (88,000 - 0) b) (240,000 + 64,000); (88,000 - 240,000) c) (240,000 + 64,000); (88,000 - 0) d) (240,000 + 64,000); (88,000 + 240,000) e) (136,000 - 64,000); (88,000 - 240,000)

18) Central Medical Supply, Inc., a manufacturer of medical testing equipment, has $ 240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $ 64,000; the market value would then be $ 136,000. However, Tripac offered to purchase the obsolete equipment as is for $ 88,000.

What is the opportunity cost associated with the adaptation of the equipment to another line of testing equipment assuming Central accepts Tripac's offer?

a) $ 72,000

b) $ 136,000

c) $ 240,000

d) $ 88,000

e) none of the above

19) A company is preparing its budgets for the upcoming year. Current direct materials cost is $ 150,000, and current direct manufacturing labour is $ 1,000,000, both of which are expected to increase by 4% next year. Overhead costs currently are (for the year just ending) variable $ 18,000 and fixed $ 30,000. The firm expects to achieve a 2% cost reduction in overhead costs by continuous improvement.

What is the company's expected cost for the upcoming year if production is the same number of units as the current year?

a) $ 1,175,000

b) $ 1,176,920

c) $ 1,243,040

d) $ 1,196,920

e) $ 1,263,040

Use the following information to answer Question 20 and 21. In order to increase its profit, CQE Inc. is considering the possibility of adding a new product, a calculator, to its product line. Three different types of calculator can be manufactured, each requiring a $ 100,000 investment. The information concerning each calculator is shown below:

Model Sales (Units)

Price Cost of Materials

Labour Hours

Overhead Costs

1 50,000 $ 55 $ 15 1.0 $ 9 2 300,000 $ 27 $ 12 0.2 $ 10

3 100,000 $ 35 $ 13 0.5 $ 7

The labour cost is $16 per hour, and 60% of overhead costs are variable. There are 3,000 hours available each month for the production of these calculators. In order to ship the calculators, the company has 27,000 boxes available. CQE can pack four calculators of type 2 or four calculators of type 3 in one box, whereas only one type 1 calculator fits in a box. Where:

X1 = quantity of calculator 1 X2 = quantity of calculator 2 X3 = quantity of calculator 3

20) What is the objective function that will maximize the profit (Max Z) of the company?

a) Max Z = 55X1 + 27X2 + 35X3 b) Max Z = 20.4X1 + 7.8X2 + 11.2X3 c) Max Z = 18.6X1 + 5.8X2 + 9.8X3 d) Max Z = 15X1 + 1.8X2 + 7X3 – (100,000 × 3) e) None of the above

21) What is the constraint for packaging?

a) 4X1 + X2 + X3 <= 27,000 b) X1 + X2 + X3 <= 27,000 c) X1 + 4X2 + 4X3 <= 27,000 d) 0.25X1 + X2 + X3 <= 27,000 e) None of the above

Grinnell Manufacturing Company has the following information: Month Budgeted Sales January $ 76,000 February 85,000 March 92,000 April 79,000 Budgeted Expenses per Month Wages $ 15,000 Advertising 12,000 Depreciation 3,000 Other 4 percent of sales Note: All cash expenses are paid as incurred.

22) What are the expected total cash disbursements for expenses in January?

a) $ 30,000

b) $ 29,000

c) $ 33,040

d) $ 30,040

e) $28,200

23) What are the expected total cash disbursements for expenses in March?

a) $ 27,000

b) $ 30,040

c) $ 32,000

d) $ 30,680

e) $ 30,400

24) What is the expected total cash disbursements for expenses in February?

a) $ 32,000

b) $ 30,400

c) $ 30,200

d) $ 30,000

e) $ 34,400

25) Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 20x1. The company had enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each flowerpot total $ 2.00 while direct labour is $ 1.00. Factory overhead is $ 0.40 per flowerpot.

What will be the amount of cost of goods sold?

a) $ 122,400

b) $ 139,400

c) $ 101,500

d) $ 136,000

e) $ 149,600

Use the information below to answer the following question(s).

Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 20x1 is as follows: Month Sales January 10,000 February 14,000 March 13,000 Finished goods inventory at the end of December is 3,000 units. Ending finished goods are equal to 30 percent of next month's sales. April 20x1 sales are expected to total 16,000 units.

26) How many chests will be produced in the first quarter of 20x1?

a) 44,800 chests

b) 48,400 chests

c) 41,800 chests

d) 37,000 chests

e) 38,800 chests

27) Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 20x1. The company had enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units totaled 4,000 with a target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00. Factory overhead is $0.40 per flowerpot.

What will be the total costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 20x1?

a) $ 0; $ 41,000; $16,000

b) $ 80,000; $ 40,000; $ 16,000

c) $ 0; $ 40,000; $ 16,000

d) $ 84,000; $ 40,000; $ 16,400

e) $ 82,000; $ 41,000; $ 16,400

28) Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 20x1. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $ 800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $ 200 while direct labour is $ 80. Manufacturing overhead is $ 60 per scoreboard.

What will be the total costs of direct materials used in 20x1?

a) $ 3,400,000

b) $ 3,200,000

c) $ 3,600,000

d) $ 3,800,000

e) $ 3,155,000

Contempo Futon manufactures futons. The estimated number of sales for the last quarter of 20x1 is as follows: Month Sales October 20,000 November 25,000 December 30,000 Beginning finished goods should be equal to 30 percent of each month's sales during these months and 10 percent of each month's sales in other months. January 20x2 sales are anticipated to be 15,000 chairs. The cost to produce a chair is $ 125. 29) How many futons will be produced in the three months?

a) 90,000 futons

b) 82,500 futons

c) 70,500 futons

d) 75,000 futons

e) 98,650 futons

30) What will be the cost of goods manufactured for December?

a) $ 3,937,500

b) $ 3,750,000

c) $ 3,125,000

d) $ 2,625,000

e) $ 2,812,500

31) Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 20x1. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $ 800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $ 200 while direct labour is $ 80. Manufacturing overhead is $ 60 per scoreboard.

What will be the amount of cost of goods sold?

a) $ 6,120,000

b) $ 6,460,000

c) $ 6,800,000

d) $ 8,160,000

e) $ 5,975,000

Use the information below to answer the following question(s). A company makes table lamps, for which the following standards have been developed:

Standard Inputs Standard Price Expected for Each Expected per Unit of Output Unit of Output Direct materials 20 kilograms $ 2 per kilogram Direct labour 6 hours $ 8 per hour

During January, production of 100 lamps was expected, but 110 lamps were actually completed. Direct materials purchased and used were 2,100 kilograms at an actual price of $ 2.20 per kilogram. Direct labour cost for the month was $ 5,310, and the actual pay per hour was $ 9.00.

32) The direct-labour efficiency variance for the month of January is

a) $ 70 favourable

b) $ 560 favourable. c) $ 560 unfavourable

d) $ 630 favourable

e) $ 630 unfavourable

33) The direct-material price variance for January is

a) $ 20 favourable

b) $ 420 unfavourable. c) $ 420 favourable. d) $ 400 unfavourable. e) $ 400 favourable

The following data for a pottery company pertain to the production of 2,000 clay pots during July.

Direct Materials (All materials purchased were used.): Standard cost: $ 6.00 per kilogram of clay. Total actual cost: $ 11,200. Standard cost allowed for units produced: $ 12,000. Materials efficiency variance: $ 240 unfavourable. Direct Manufacturing Labour: Standard cost: 2 pots per hour at $ 24.00 per hour. Actual cost per hour: $ 24.50. Labour efficiency variance: $ 672 favourable.

34) What is the labour price variance for direct manufacturing labour?

a) $ 486 favourable

b) $ 486 unfavourable

c) $ 672 favourable

d) $ 186 favourable

e) $ 672 unfavourable

35) What is the total actual costs of direct manufacturing labour?

a) $ 23,200

b) $ 23,814

c) $ 24,000

d) $ 24,672

e) $ 672

Use the information below to answer the following question(s). 36) Ames Golf Company used the following data to evaluate their current operating

system. The company sells 1 pack of golf balls for $10 per pack. The $10 selling price is also the budgeted selling price.

Budgeted Actual Units Sold 1,000,000 990,000 Variable Costs $ 3,000,000 $ 2,500,000 Fixed Costs $ 1,800,000 $ 1,850,000

What is the total static budget variance for Ames Golf Company?

a) $ 350,000 favourable

b) $ 650,000 favourable

c) $ 400,000 favourable

d) $ 390,000 unfavourable

e) $ 450,000 unfavourable

37) Assume that variable manufacturing overhead is allocated according to machine-hours. Aladdin Company expects to produce 400 cases of Product A using 400 machine-hours. Each machine hour is expected to take 10 KWH of electricity, which costs $6 per KWH. What is the maximum amount the company would be willing to pay for the new machine based solely on spending and efficiency variances if a new energy-efficient machine only used 8 KWH per machine-hour?

a) $ 120

b) $ 4,800

c) $ 4,920

d) $ 4,680

e) $ 4,120

Use the information below to answer the following question(s). Moeller Electric manufactures light fixtures. The following information pertains to the company's manufacturing overhead data. Budgeted output units 30,000 fixtures Budgeted machine-hours 10,000 hours Budgeted variable manufacturing overhead costs for 30,000 fixtures $ 80,625 Actual output units produced 44,000 fixtures Actual machine-hours used 10,000 hours Actual variable manufacturing overhead costs $ 121,000

38) What is Moeller Electric's variable manufacturing overhead static budget variance?

a) $ 40,375 unfavourable





39) What is the variable manufacturing overhead flexible-budget variance?



c) $ 387 favourable

d) $ 2,750 favourable


40) What is Moeller Electric's variable manufacturing overhead sales-volume variance?





e) $ 2,750 favourable

Use the information below to answer the following question(s). Munoz, Inc. produces a special line of plastic toy racing cars. Munoz, Inc. produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc. must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2004. Actual Static-budget Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup-hours per batch 5 5.25 Variable overhead cost per setup-hour $40 $38 Total fixed setup overhead costs $ 14,400 $ 14,000

41) Calculate the production volume variance for fixed setup overhead costs.

a) $ 800 unfavourable

b) $ 3,600 unfavourable

c) $ 18,667favourable



42) Calculate the spending variance for variable setup overhead costs .

a) $ 1,500 favourable

b) $ 600 unfavourable

c) $ 975 unfavourable

d) $ 700 unfavourable


43) Calculate the efficiency variance for variable setup overhead costs.

a) $ 525 favourable


c) $ 975 favourable


e) $ 700 favourable

Use the information below to answer the following question(s). Beauty Supply Company manufactures shampoo. Your supervisor has provided you with the following information and informs you that standard costing is used for manufacturing, marketing, and administrative costs.

January February Beginning inventory (units) 0 --- Production (units) 2,500 3,000 Sales (units) 2,250 3,025 Other information: Selling price $ 20.00 Standard variable manufacturing cost/unit $ 8.00 Standard variable market/admin. cost/unit $ 4.00 Standard fixed manufacturing overhead cost/month $ 40,000 Standard fixed market/admin. cost/month $ 20,000 Budgeted denominator level per month (output units) 4,000

There were no beginning or ending inventories of materials or work in process.

44) What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the variable costing approach?

a) $ 18,000 and $ (35,800) b) $ 18,000 and $ 24,200

c) $ (45,000) and $ (35,500) d) $ (42,000) and $ (35,800) e) $ (44,000) and $ (33,809)

45) The following information pertains to ABC Corporation:

Beginning fixed manufacturing overhead in inventory $ 40,000 Ending fixed manufacturing overhead in inventory $ 30,000 Beginning variable manufacturing overhead in inventory $ 20,000 Ending variable manufacturing overhead in inventory $ 9,500 Selling price per unit $ 41 Standard fixed manufacturing costs per unit $ 20 Variable selling and administrative cost per unit $ 4 Fixed selling and administrative costs $ 16,000 Units produced 10,000 Units sold 9,600

What is the difference between absorption costing operating income and variable costing operating income?

a) $ 500

b) $ 5,000

c) $ 10,000

d) $ 20,500

e) $ 21,000

CMA Canada Assignment: MA 1, 2, 3docshare01.docshare.tips/files/5714/57146398.pdf · Assignment: MA...

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