Review Sheet Final Examination TUG

Final ExaminationStudy Guide

Comprehensive

There are approximately 17 multiple-choice questions on your final exam and seven problems. I feel the problems will be better for you so you can earn partial credit. Please, PLEASE show your work so I will be able to give you the partial credit you deserve. Please let me know if you have questions, I am always available for assistance.

Problems: Make v. Buy Problem (e12-3 & e12-11) Special Order Problem (E12-4 & E12-9) DM or DL Variance Problem (see problem in review, E10-1 and E10-2) Chapter 3 T-Acct problem with over/under applied OH, inc stmt (see HW & notes

along with problem attached) High/Low Problem (see chapter 2 notes, E2-5, E2-11) Breakeven point problems (2) & changes to variables (chapter 5 notes, E5-1, 5-5,

5-16 & E5-7: also see problem attached)

If you would like to work similar problems in the text and would like solutions, please email me and I will work the problems and send you the answers.

Please let me know if you need me!

Good luck!!Nichole

Review Sheet Final Examination--Revised 1

Final ExaminationPractice Questions

1.The following labor standards have been established for a particular product:

Standard labor-hours per unit of output.............. 8.0 hoursStandard labor rate.............................................. $13.10 per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked............. 4,000 hoursActual total labor cost........... $53,000 Actual output......................... 400 units

What is the labor efficiency (RIGHT) variance for the month? A) $10,600 U B) $11,080 U C) $11,080 F D) $10,480 U

2.The direct labor standards for a particular product are:

4 hours of direct labor @ $12.00 per direct labor-hour = $48.00

During October, 3,350 units of this product were made, which was 150 units less than budgeted. The labor cost incurred was $159,786 and 13,450 direct labor-hours were worked. The direct labor variances for the month were:

Labor Rate (LEFT) Variance

Labor Efficiency (RIGHT) Variance

A) $1,614 U $600 UB) $1,614 U $600 FC) $1,614 F $600 UD) $1,614 F $600 F

3. The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output............... 2.8 hoursStandard variable overhead rate................. $16.30 per hour

The following data pertain to operations for the last month:

Actual hours................................................. 7,600 hoursActual total variable overhead cost............. $127,300 Actual output............................................... 2,500 units

What is the variable overhead spending (LEFT) variance for the month? A) $3,420 U B) $3,150 F C) $10,050 U D) $13,200 U

Review Sheet Final Examination--Revised2

4. Suski Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of

standard machine-hours (MHs). The company has provided the following data for the most recent month:

Budgeted level of activity...................................... 7,400 MHsActual level of activity........................................... 7,500 MHsCost formula for variable overhead cost................ $5.90 per MHBudgeted fixed overhead cost................................ $60,000Actual total variable overhead............................... $42,750Actual total fixed overhead.................................... $61,000

What was the variable overhead spending (LEFT) variance for the month? A) $1,500 favorable B) $590 unfavorable C) $910 favorable D) $1,000 unfavorable

Use the following to answer questions 5-6:Standard Company has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor-hours (DLHs) as follows:

Standard overhead costs per unit:Variable portion............. 2 DLHs @ $3 per DLH = $6Fixed portion.................. 2 DLHs @ $5 per DLH = $10

The following data pertain to operations in April:Actual output.................................................... 80,000 unitsActual direct labor cost.................................... $644,000Actual direct labor-hours worked..................... 165,000 DLHsVariable overhead cost incurred....................... $518,000Fixed overhead cost incurred........................... $860,000

5. The variable overhead spending (LEFT) variance for April was: A) $15,000 unfavorable B) $23,000 unfavorable C) $38,000 favorable D) $38,000 unfavorable

6. The variable overhead efficiency (RIGHT) variance for April was: A) $15,000 unfavorable B) $23,000 unfavorable C) $38,000 favorable D) $38,000 unfavorable

7. Marley Company makes three products (X, Y, & Z) with the following characteristics:

ProductX Y Z

Selling price per unit................................. $10 $15 $20Variable cost per unit................................ $6 $10 $10Machine hours per unit.............................. 2 4 10

The company has a capacity of 2,000 machine hours, but there is virtually unlimited demand for each product. In order to maximize total contribution margin, how many units of each product should the company produce? A) 2,000 units of X, 500 units of Y, and 200 units of Z B) 0 units of X, 0 units of Y, and 200 units of Z C) 0 units of X, 500 units of Y, and 0 units of Z D) 1,000 units of X, 0 units of Y, and 0 units of Z


Use the following to answer questions 8:The Talbot Company makes wheels that it uses in the production of bicycles. Talbot's costs to produce 100,000 wheels annually are:

Direct materials......................................... $30,000Direct labor................................................ $50,000Variable overhead..................................... $20,000Fixed overhead.......................................... $70,000

An outside supplier has offered to sell Talbot similar wheels for $1.25 per wheel. If the wheels are purchased from the outside supplier, $15,000 of annual fixed overhead could be avoided and the facilities now being used could be rented to another company for $45,000 per year.

8. If Talbot chooses to buy the wheel from the outside supplier, then the change in annual net operating income due to accepting the offer is a: A) $35,000 increase B) $10,000 decrease C) $45,000 increase D) $70,000 increase

Use the following to answer questions 9:The following are the Jensen Company's unit costs of making and selling an item at a volume of 1,000 units per month (which represents the company's capacity):

Manufacturing:Direct materials............................................. $1.00Direct labor................................................... $2.00Variable overhead......................................... $0.50Fixed overhead............................................. $0.40

Selling and Administrative:Variable........................................................ $2.00Fixed............................................................. $0.80

Present sales amount to 700 units per month. An order has been received from a customer in a foreign market for 100 units. The order would not affect current sales. Jensen's total fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 700 units and 1,000 units. The variable selling and administrative expenses would have to be incurred on this special order as well as for all other sales.

9. How much will the company's profits be increased or (decreased) if it prices the 100 units at $7 each? A) $(30) B) $150 C) $0 D) $310


Use the following to answer questions 10-11:

The Wester Company produces three products with the following costs and selling prices:

ProductA B C

Selling price per unit...................... $21 $12 $32Variable cost per unit..................... $11 $7 $18Fixed cost per unit.......................... $5 $3 $9Direct labor hours per unit............. 0.4 0.1 0.7Machine hours per unit.................. 0.2 0.5 0.2

The company has insufficient capacity to fulfill all of the demand for these three products.

10. If direct labor hours are the constraint, then the three products should be produced in the order: A) A, B, C B) B, A, C C) C, A, B D) A, C, B

11. If machine hours are the constraint, then the three products should be produced in the order: A) A, B, C B) B, C, A C) A, C, B D) C, A, B

Use the following to answer questions 12:Paulsen Company makes two products, W and P, in a joint process. At the split-off point, 50,000 units of W and 60,000 units of P are available each month. Monthly joint production costs are $290,000. Product W can be sold at the split-off point for $5.60 per unit. Product P either can be sold at the split-off point for $4.75 per unit or it can be further processed and sold for $7.20 per unit. If P is processed further, additional processing costs of $3.10 per unit will be incurred.

12. If P is processed further and then sold, rather than being sold at the split-off point, the change in monthly net operating income would be a: A) $147,000 decrease B) $147,000 increase C) $39,000 increase D) $39,000 decrease


Use the following to answer questions 13-14:

Dockham Company makes two products from a common input. Joint processing costs up to the split-off point total $33,600 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

Product X Product Y TotalAllocated joint processing costs................. $14,000 $19,600 $33,600Sales value at split-off point...................... $20,000 $28,000 $48,000Costs of further processing........................ $26,300 $24,500 $50,800Sales value after further processing........... $50,200 $48,600 $98,800

13. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point? A) $23,900 B) $29,900 C) $3,900 D) $9,900

14. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point? A) $(3,900) B) $24,100 C) $32,500 D) $4,500

15. Dedra Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10,000 units in its beginning work in process inventory that were 50% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $37,500. An additional 98,000 units were started into production during the month. There were 17,000 units in the ending work in process inventory of the Welding Department that were 80% complete with respect to conversion costs. A total of $727,080 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $6.322 B) $7.419 C) $7.500 D) $7.310

16.Lumdal Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:

UnitsPercentage complete

Beginning work in process inventory.............. 10,000 90%Started into production during June................. 75,000Ending work in process inventory................... 17,000 40%

According to the company's records, the conversion cost in beginning work in process inventory was $77,490 at the beginning of June. Additional conversion costs of $552,062 were incurred in the department during the month.

What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $8.610 B) $7.361 C) $6.001 D) $8.416


17. Bricker Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 5,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. An additional 81,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 18,000 units in the ending work in process inventory of the Assembly Department that were 80% complete with respect to conversion costs.

What were the equivalent units for conversion costs in the Assembly Department for the month? A) 79,400 B) 82,400 C) 94,000 D) 68,000

18. Jumil Company uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below:

UnitsPercentage complete

Beginning work in process inventory.............................. 4,700 40%Transferred in from the prior department during April.. . 56,600Ending work in process inventory................................... 6,300 60%

What were the equivalent units for conversion costs in the Painting Department for April? A) 58,200 B) 60,380 C) 58,780 D) 55,000

19. Which of the following might be included as a disbursement on a cash budget?Depreciation

on factory Income taxesequipment to be paid

A) Yes YesB) Yes NoC) No YesD) No No

20. Douglas Company plans to sell 24,000 units of Product A during July and 30,000 units during August. Sales of Product A during June were 25,000 units. Past experience has shown that end-of-month inventory should equal 3,000 units plus 30% of the next month's sales. On June 30 this requirement was met. Based on these data, how many units of Product A must be produced during the month of July? A) 28,800 B) 22,200 C) 24,000 D) 25,800


21.Villi Manufacturing Corporation's most recent sales budget indicates the following expected sales (in units):

July August SeptemberExpected unit sales.............230,000 275,000 310,000

Villi wants to maintain a finished goods inventory of 20% of the next month's expected sales. How many units should Villi plan on producing for the month of August? A) 268,000 units B) 282,000 units C) 291,000 units D) 337,000 units

22.For May, Young Company has budgeted its cash receipts at $125,000 and its cash disbursements at $138,000. The company's

cash balance on May 1 is $17,000. If the desired May 31 cash balance is $20,000, then how much cash must the company borrow during the month (before considering any interest payments)? A) $4,000 B) $8,000 C) $12,000 D) $16,000

Use the following to answer questions 23-25:The Gerald Company makes and sells a single product called a Clop. Each Clop requires the use of 1.1 hours of direct labor time. The planned cost of direct labor time is $8.20 per hour. The direct labor workforce is fully adjusted each month to the required workload. The company wishes to prepare a Direct Labor Budget for the first quarter of the year.

23. If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is: A) $164,000 B) $180,400 C) $172,200 D) $195,600

24. If the budgeted direct labor cost for February is $162,360, then the budgeted production of Clops for February is: A) 23,200 units B) 21,000 units C) 19,800 units D) 18,000 units

25.The budgeted direct labor cost per Clop is: A) $7.45 B) $8.20 C) $9.02 D) $9.76


26.The following direct labor standards have been established for product S57S:

Standard direct labor-hours........................1.5 hours per unit of S57S

Standard direct labor wage rate.................. $14.70 per hour

The following data pertain to last month’s operations:

Actual output of product S57S.................... 720 unitsActual direct labor-hours worked................ 1,000Actual direct labor wages paid.................... $14,800

Required:a. What was the labor rate variance for the month?b. What was the labor efficiency variance for the month?


27. The following cost data relate to the manufacturing activities of the Kanaba Company last year:

Manufacturing overhead costs:Property taxes......................................................... $ 1,500Utilities, factory..................................................... 2,500Indirect labor.......................................................... 5,000Depreciation, factory.............................................. 12,000Insurance, factory................................................... 3,000 Total....................................................................... $24,000

Other costs incurred:Purchases of direct materials................................. $16,000Direct labor cost..................................................... $20,000Advertising 40,000Depreciation: Selling & Admin 10,000Selling & Admin Wages 16,000Utilities: Selling & Admin 5,000

Sales for the year 130,000

Inventories:Raw materials, January 1....................................... $4,000Raw materials, December 31................................. $3,500Work in process, January 1.................................... $3,000Work in process, December 31.............................. $3,750Finished Goods, January 1..................................... $68,000Finished Goods, December 31............................... $60,000

The company uses a predetermined overhead rate to apply manufacturing overhead cost to production. The rate last year was $5.00 per machine-hour; a total of 5,000 machine-hours were recorded for the year.

Required:

a. Compute the amount of under- or overapplied overhead cost for the year.b. Calculate Cost of Goods Manufactured for the year. c. Calculate COGS. The company closes any under/overapplied overhead to COGS.d. Prepare an income statement.


.

27b. The following cost data relate to the manufacturing activities of the Kanaba Company last year:

Manufacturing overhead costs:Property taxes......................................................... $ 1,900Utilities, factory..................................................... 3,200Indirect labor.......................................................... 10,000Depreciation, factory.............................................. 6,000Insurance, factory................................................... 4,000 Total....................................................................... $25,100

Other costs incurred:Purchases of direct materials................................. $19,000Direct labor cost..................................................... $26,000Advertising 13,000Depreciation: Selling & Admin 20,000Selling & Admin Wages 28,000Utilities: Selling & Admin 9,000

Sales for the year 142,000

Inventories:Raw materials, January 1....................................... $8,000Raw materials, December 31................................. $4,500Work in process, January 1.................................... $6,000Work in process, December 31.............................. $9,250Finished Goods, January 1..................................... $12,000Finished Goods, December 31............................... $14,000

The company uses a predetermined overhead rate to apply manufacturing overhead cost to production. The rate last year was $4.00 per machine-hour; a total of 6,000 machine-hours were recorded for the year.

Required:

a. Compute the amount of under- or overapplied overhead cost for the year.b. Calculate Cost of Goods Manufactured for the year. c. Calculate COGS. The company closes any under/overapplied overhead to COGS.d. Prepare an income statement.


28. Zoran Corporation manufactures and sells a single product; cordless telephones. Zoran is considering upgrading its current manufacturing facilities with more modern equipment. Relevant cost data under the current facility and the upgraded facility is provided below:

Current UpgradedManufacturing costs:

Direct materials cost per unit.................. $20.00 $20.00Direct labor cost per unit........................ $18.00 $10.00Variable overhead cost per unit.............. $34.00 $24.00Fixed overhead cost in total.................... $43,000 $160,000

Selling and administrative expenses:Variable expense per unit....................... $5.00 $5.00Fixed expense in total............................. $12,000 $12,000

Under either system, Zoran will sell the cordless phones for $125 per phone.

Required:a. What is the break-even point (in number of phones) of each option?


Answers:

1. Answer: D Level: Easy LO: 3 2. Answer: C Level: Medium LO: 3 Source: CIMA, adapted 3. Answer: A Level: Easy LO: 4 4. Answer: A Level: Medium LO: 3 5. Answer: B Level: Medium LO: 3 Source: CMA, adapted 6. Answer: A Level: Medium LO: 4 Source: CMA, adapted 7. Answer: D Level: Medium LO: 5 8. Answer: A Level: Medium LO: 3 9. Answer: B Level: Medium LO: 4 10. Answer: B Level: Hard LO: 5 11. Answer: D Level: Medium LO: 5 12. Answer: D Level: Medium LO: 6 13. Answer: C Level: Medium LO: 6 14. Answer: A Level: Medium LO: 6 15. Answer: D Level: Medium LO: 2,3,4 16. Answer: D Level: Medium LO: 2,3,4 17. Answer: B Level: Medium LO: 2,3 18. Answer: C Level: Medium LO: 2,3 19. Answer: C Level: Medium LO: 8 20. Answer: D Level: Medium LO: 3 21. Answer: B Level: Medium LO: 3 22. Answer: D Level: Easy LO: 8 23. Answer: B Level: Easy LO: 5 24. Answer: D Level: Easy LO: 5 25. Answer: C Level: Easy LO: 5 26. Answer: a. Labor rate variance = (AH × AR) – (AH × SR)

= $14,800 – (1,000 × $14.70) = $100 U

b. Labor efficiency variance = SR(AH – SH*)= $14.70 (1,000 – 1,080) = $1,176 F

*SH = Standard hours per unit × Actual output= 1.5 × 720 = 1,080

28. Current:($43,000 + $12,000) ÷ ($125 – $20 – $18 – $34 – $5) = 1,146 phones (rounded)Upgraded:($160,000 + $12,000) ÷ ($125 – $20 – $10 – $24 – $5) = 2,606 phones (rounded)


27.(storage room) (factory floor) (warehouse)Raw Materials WIP FG COGS4000 3000 68000

160001650

0

165002000

0 60750 60750 68750 68750 1000

2500

0 3500 3750 60000 67750

OHActual Applied2400

0 25000 d) 1000 Inc Stmt:1000 Sales 130000

0 - COGS 67750Gross Margin 62250

a) 1000 overapplied - Depr Exp 10000b) 60750 - Wages Exp 16000c) 67750 - Advertising Exp 40000

- Utilities Exp 5000Net Income -8750


27b(storage room) (factory floor) (warehouse)Raw Materials WIP FG COGS

8000 60001200

0 19000

22500 22500 692506925

0 67250 67250 26000 1100 24000

4500 92501400

0 68350

(temporary account)

OH25100 24000

1100 1100

sales 142000-cogs -68350gm 73650- selling/admin -70000net income 3650

A 1100 underappliedB 69250C68350


Review Sheet Final Examination TUG

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