Final Examination Review of Attempt 1Started on: Monday, June 6 2011, 10:54 AM Completed on: Monday, June 6 2011, 12:55 PM Time taken: 2 hours 1 min Overdue: 1 min 8 secs Raw score: 160/320 (50 %) Grade: 160 out of a maximum of 320 Multiple Choice: Choose the best answer to each of the following questions. (16 points each) 1 Marks: 16 LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $14.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 200 and 100 units, respectively. Budgeted direct labor costs for June would be: Answer: a. $1,974,175 b. $564,050 c. $1,979,250 d. $1,984,325 Incorrect Marks for this submission: 0/16. 2 Marks: 16 Muecke Inc. is working on its cash budget for April. The budgeted beginning cash balance is $40,000. Budgeted cash receipts total $150,000 and budgeted cash disbursements total $158,000. The desired ending cash balance is $50,000. To attain its desired ending cash balance for April, the company needs to borrow: Answer: a. $18,000 b. $50,000 c. $0 d. $82,000 the Work in Process entry would consist of a: Answer: a. 3. In the journal entry to record the incurrence of direct labor costs in October. c.Correct Marks for this submission: 16/16.700.816. 3 Marks: 16 Shackleford Corporation's standard wage rate is $13.760 DLHs. In October. the actual wage rate was $14. each unit of output requires 7. d. debit of $287. credit of $287. b. debit of $306.000 units were produced. . credit of $306.700.816.0 DLHs.70 per direct labor-hour (DLH) and according to the standards. Incorrect Marks for this submission: 0/16. and the actual hours were 21.10 per DLH. .... $6 During a recent period the company produced 1.........080 The company records all variances at the earliest possible point in time. Various costs associated with the production of these units are given below: Direct materials purchased (6.................... $10...........000 yards) .. The standard cost card for the product follows: : Direct materials (4 yards @ $5 per yard) ..........850 Variable manufacturing overhead cost incurred .......................500 Direct materials used in production ... Variable manufacturing .........4 Marks: 16 Beakins Company produces a single product...5 hrs @ $4 per /hour) ........... $15 Variable manufacturing overhead (1...200 units of product....5 hours @ $10 per hour) ....... 5...... $17. $20 Direct labor (1....100 hours) ...... $28....000 yards Direct labor cost incurred (2..... $2.625. 5 Marks: 16 Solly Company produces a product for national distribution. $3. The labor rate variance for the period is: Answer: a.700. the company produced 1.500 ounces hours purchased worked and at used a at a total total cost of $7.700 U d.150 F b. Information for the month follows: Materials: Labor: 14. $3. per unit at 60¢ per ounce. During the month of December.000 units. Standards for the product are: Materials: 12 ounces .overhead costs are applied to products on the basis of direct labor hours.Labor: 2 hours per unit at $8 per hour.700 F Correct Marks for this submission: 16/16. $2. cost of $20. The material price variance is: Answer: .150 U c.000 2. ................... $600 F Correct Marks for this submission: 16/16..........a... $600 U b....... Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity ......000 DLHs Overhead costs at the denominator activity level: Variable overhead cost .. 1.... $700 F d.. $700 U c........... ............ 6 Marks: 16 A manufacturing company has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity... ......200 DLHs Standard hours allowed for the actual output ....................450 What was the variable overhead efficiency variance for the period to the nearest dollar? Answer: a................. $1.......197 U ..........................$3.......... $14...... $1..............250 The following data pertain to operations for the most recent period: Actual hours .. 1............................150 U b.....380 Actual total fixed overhead cost ... $12............... 885 DLHs Actual total variable overhead cost ... $4....800 Fixed overhead cost .. . 40.. Manufacturing overhead at Crispy is applied to production on the basis of standard direct labor-hours: Direct labor-hours .......... 56..c.000 Detectors produced ...000 .000 $378.000 60.. $580 U Incorrect Marks for this submission: 0/16.000 Variable overhead cost .... 7 Marks: 16 Crispy Company manufactures smoke detectors and has developed the following flexible budget for its overhead costs....000 70..000 84. $133 U d...000 $315.... $252.000 50.. 43.... 62...... $42.............. The actual results for the year were as follows: Number of detectors produced ...... $714...200 Direct labor-hours incurred .748 Fixed overhead cost .....000 Crispy was expecting to produce 40...000 unfavorable b.. $672........680 favorable c.... $37......Fixed overhead cost ..000 $672..760 favorable .. $278..000 detectors last year.000 What was Crispy's fixed overhead budget variance? Answer: a..000 $672.. $11......640 Variable overhead cost .... ...760 favorable Correct Marks for this submission: 16/16.........500 safes Standard machine-hours per safe ....1 machine-hours Standard supplies cost ..... 8........ 9. 8 Marks: 16 Geschke Corporation........ which produces commercial safes.. has provided the following data: Budgeted production ..70 per machine-hour Actual production ....... $53.........700 safes . 8........d........... $1. ............. $10... $123....Actual machine-hours .. $10. $10..828 F Incorrect Marks for this submission: 0/16......947 F c. 79......828 U d.947 U b.......... $10..100 machine-hours Actual supplies cost . Data concerning this part . 9 Marks: 16 Division A makes a part that it sells to customers outside of the company..642 The variable overhead spending variance for supplies is: Answer: a. ...... 20... $10............. $37 b... the variable cost per unit would be $1 lower.....000 Division B of the same company would like to use the part manufactured by Division A in one of its products.........appear below: Selling price to outside customers . $30 Total fixed costs .............000 units of the part each period............... If Division A sells to Division B rather than to outside customers............. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A... Division A is already selling all of the units it can produce to outside customers........000 Capacity in units ....... What is the lowest acceptable transfer price from the standpoint of the selling division? Answer: a......... $40 .... Division B requires 5.......... $38 d.. $40 Variable cost per unit .......... $39 c..... -$8. $1.300 Correct Marks for this submission: 16/16.130 c. .130 d. $8.Correct Marks for this submission: 16/16. The minimum required rate of return for performance evaluation purposes is 10%. 10 Marks: 16 The Consumer Products Division of Goich Corporation had average operating assets of $800.000 and net operating income of $81. -$1.300 b. What was the Consumer Products Division's residual income in May? Answer: a.300 in May. Joint processing costs up to the split-off point total $35. beet fiber and beet juice. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant.11 Marks: 16 Boney Corporation processes sugar beets that it purchases from farmers. Two intermediate products. ($52) c. Sugar beets are processed in batches.000 a year. 12 Marks: 16 Dodd Company makes two products from a common input. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is? Answer: a. $1 Incorrect Marks for this submission: 0/16. Data concerning these products appear below: . The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. $19 d. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. emerge from the crushing process. Each product may be sold at the split-off point or processed further. ($17) b. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. . $23.. $37. $22...... $14.000 .............000 Sales value at split-off point .............500 $47.000 $50..500 b.........000 $30..400 Sales value after further processing .Product X Product Y Total Allocated joint processing costs .....500 $16.000 Costs of further processing ..500 $93...000 What is the minimum amount the company should accept for Product X if it is to be sold at the splitoff point? Answer: a...000 $35...900 $40..... $20....... $45.......000 $21.. .... $14. 13 Marks: 16 (Ignore income taxes in this problem............) Para Corporation is reviewing the following data relating to an energy saving investment proposal: Initial investment ... 5 years Salvage value ....000 d.............000 Life of the project ..000 Annual cash savings .........500 Correct Marks for this submission: 16/16.... $10... $45....... $50....c... ? What annual cash savings would be needed in order to satisfy the company's 12% required rate of return (rounded to the nearest one hundred dollars)? . The incremental net operating income and incremental net cash flows that would be produced by the machine are: Incremental net operating income Incremental net cash flows Year 1 .300 b..000 . $12.) Vandezande Inc.900 d.100 Correct Marks for this submission: 16/16.Answer: a.. $13.600 c. 14 Marks: 16 (Ignore income taxes in this problem.000 and has a useful life of 5 years with no salvage value. is considering the acquisition of a new machine that costs $370.000 $128. $54. $11... $10. $48. $370....000 $123...000 Year 4 .479 ....000 $126.000 $122. $52. $457.. $49. $234... $31..000 Year 3 .. $87... the net present value of the investment is closest to: Answer: a.000 b.000 Year 5 .000 If the discount rate is 10%.479 c.000 d..000 $105.Year 2 . Project B has the highest ranking according to the internal rate of return criterion... B....000 Internal rate of return . ... and C as possible investment opportunities...... II.000 $475..... 15 Marks: 16 The Golden Company is analyzing projects A....... 16% 20% 18% Consider the following statements: I.... $250............ Each of these projects has a useful life of eight years.. $290.. The following information has been obtained: Project A Project B Project C Initial investment ...........000 Present value of future net cash inflows .....Incorrect Marks for this submission: 0/16........000 $380.......... Project A has the highest ranking according to the project profitability index criterion..000 $422.....000 $503. Only I and III b. Which is true? Answer: a. I. Only II Correct Marks for this submission: 16/16. Project C has the highest ranking according to the net present value criterion.III. 16 Marks: 16 The most recent balance sheet and income statement of Ganim Corporation appear below: Comparative Balance Sheet Ending Balance Beginning Balance . Only II and III d. II and III c. ............. $ 35 $ 34 Accounts receivable ..........................Assets: Cash and cash equivalents .................. 73 75 Inventory .... 54 63 Plant and eq ...................................................