Complete The Following Exam By Answering The Questions

Complete The Following Exam By Answering the Questions And Compiling Y

Complete the following exam by answering the questions and compiling your answers into a word-processing document. Be certain to indicate the proper question number before each of your answers. Remember to show your work if an answer requires a mathematical solution. Answer each of the following 20 questions. Each answer is worth 5 points.

Paper For Above instruction

Question 1:

Pember Corporation's total variable cost at an activity level of 8,800 units is $146,520, and its total fixed cost is $219,296. For 8,900 units, calculate:

• Total variable cost
• Total cost
• Average variable cost per unit
• Average fixed cost per unit
• Average total cost per unit

Solution:

Total variable cost increases proportionally with activity level.

Variable cost per unit at 8,800 units: $146,520 / 8,800 = $16.65.

At 8,900 units: Total variable cost = $16.65 * 8,900 = $148,185.

Total fixed costs remain constant at $219,296.

Total cost at 8,900 units: $148,185 + $219,296 = $367,481.

Average variable cost per unit: $16.65 (constant).

Average fixed cost per unit: $219,296 / 8,900 ≈ $24.63.

Average total cost per unit: $367,481 / 8,900 ≈ $41.27.

Question 2:

Job 397 has direct materials of $59,400, 1,254 direct labor-hours (DLHs) at $11 per DLH, and 3,300 units completed. The company applies manufacturing overhead at $37 per DLH. Calculate the unit product cost.

Solution:

Total overhead: $37 * 1,254 = $46,398.

Total direct materials: $59,400.

Total direct labor cost: 1,254 DLHs * $11 = $13,794.

Total manufacturing cost: $59,400 + $13,794 + $46,398 = $119,592.

Unit product cost: $119,592 / 3,300 units ≈ $36.24.

Question 3:

Using the weighted-average method, calculate the equivalent units for materials and conversion costs for the process department with beginning inventory of 700 units (50% complete for materials, 40% for conversion), units started of 23,000, and ending inventory of 200 units (80% complete for materials, 40% for conversion).

Solution:

Equivalent units for materials:

Begin WIP: 700 * 50% = 350 units

Started and completed: 23,000 units (all materials)

Ending WIP: 200 * 80% = 160 units

Total equivalent units for materials: 350 + 23,000 + 160 = 23,510 units.

Equivalent units for conversion:

Begin WIP: 700 * 40% = 280 units

Started and completed: 23,000 units

Ending WIP: 200 * 40% = 80 units

Total equivalent units for conversion: 280 + 23,000 + 80 = 23,360 units.

Question 4:

Hayek Corporation uses FIFO. Given beginning WIP costs of $31,734 (materials) and $30,320 (conversion), additional costs of $91,332 (materials) and $81,864 (conversion), and equivalent units of 7,740 (materials) and 7,580 (conversion), determine the cost per equivalent unit.

Solution:

Cost per equivalent unit for materials:

(31,734 + 91,332) / 7,740 ≈ $15.78.

Cost per equivalent unit for conversion:

(30,320 + 81,864) / 7,580 ≈ $15.31.

Question 5:

Maddaloni International sells a product for $160, with variable expense of $46.40 per unit, and fixed expenses of $219,248. Find the monthly break-even sales in dollars.

Solution:

Contribution margin per unit = $160 - $46.40 = $113.60.

Break-even units: $219,248 / $113.60 ≈ 1,929 units.

Break-even sales in dollars: 1,929 units * $160 ≈ $308,640.

Question 6:

Mitchel Corporation's variable costing net operating income is $55,000, and fixed manufacturing overhead released from inventory under absorption costing is $24,000. Find the absorption costing net operating income.

Solution:

Absorption costing NOI = Variable costing NOI + Fixed manufacturing overhead released = $55,000 + $24,000 = $79,000.

Question 7:

Calder Corporation produces 48,000 units at a selling price of $258 per unit. Variable costs are given as $92 (direct materials), $7.40 (direct labor), $5.20 (variable manufacturing overhead). Fixed costs are $720,000 (direct labor), $3,264,000 (manufacturing overhead), and $1,935,000 (selling & admin). Calculate net operating income for the first year.

Solution:

Total sales: 45,000 units * $258 = $11,610,000.

Total variable costs per unit: $92 + $7.40 + $5.20 = $104.80.

Variable costs for 45,000 units: $104.80 * 45,000 = $4,716,000.

Contribution margin: $11,610,000 - $4,716,000 = $6,894,000.

Total fixed costs: $720,000 + $3,264,000 + $1,935,000 = $5,919,000.

Net operating income: $6,894,000 - $5,919,000 = $975,000.

Question 8:

Mouret Corporation's overhead costs assigned to Product N79A are based on activity rates: setup ($92.68/batch), processing ($95.08/order), assembling ($3.41/hour). Product N79A required 28 batches, 6 orders, and 712 assembly hours. Calculate total overhead allocated.

Solution:

Setup: 28 batches * $92.68 = $2,595.04

Processing: 6 orders * $95.08 = $570.48

Assembling: 712 hours * $3.41 = $2,424.32

Total: $2,595.04 + $570.48 + $2,424.32 ≈ $5,590.00

Question 9:

Manufacturing overhead budget for Paparella is based on 6,000 direct labor-hours; variable rate is $2.00/hour; fixed MOH is $79,200/month (including $21,000 depreciation). Compute the cash disbursements and predetermined overhead rate.

Solution:

Cash disbursements: Variable ($2 * 6,000) = $12,000 + Fixed cash expenses (Total fixed MOH - depreciation): $79,200 - $21,000 = $58,200.

Total fixed MOH cash disbursements: $58,200.

Total cash disbursements: $12,000 + $58,200 = $70,200.

Predetermined overhead rate:

(Variable MOH rate + Fixed MOH) / estimated activity: either per hour or assigned to the planned activity. Typically, rate per hour: $2.00 / hour.

Question 10:

Sund Corporation's April budget based on "customers served" (38,000 customers), fixed and variable expenses per month are given. Prepare the planning budget and calculate net operating income.

Solution:

Revenue: 38,000 * $2.10 = $79,800.

Variable expenses:

Wages & salaries: $25,000 + (38,000 * $0.50) = $25,000 + $19,000 = $44,000

Supplies: 38,000 * $0.30 = $11,400

Insurance: $6,200 (fixed)

Miscellaneous: $2,500 + (38,000 * $0.40) = $2,500 + $15,200 = $17,700

Total variable expenses: $44,000 + $11,400 + $6,200 + $17,700 = $79,300.

Net operating income: Revenue - total expenses = $79,800 - ($79,300 + fixed element) (since fixed element is already included). However, since fixed expenses are explicitly given, subtract total fixed costs from contribution margin.

Calculate contribution margin: $79,800 - variable expenses total. With fixed costs: Wages, supplies, insurance, miscellaneous fixed: sum fixed numbers (say, wages + insurance + fixed miscellaneous).

In the absence of clear fixed numbers for all, approximation or detailed and precise calculation is needed.

Question 11:

Shawl Corporation applied variable overhead based on 8,700 direct labor-hours at 5.5 hours/unit, for 1,560 units produced. Actual variable overhead incurred was $52,635. Find the variable overhead rate variance and efficiency variance.

Solution:

Standard hours for actual production: 1,560 units * 5.5 hours = 8,580 hours.

Standard variable overhead: 8,580 * $6.80 = $58,344.

Actual overhead: $52,635.

Variable overhead rate variance: (Actual rate - Standard rate) * Actual hours:

Actual rate = $52,635 / 8,700 ≈ $6.05.

Variance = ($6.05 - $6.80) * 8,700 ≈ -$6,045 (favorable).

Efficiency variance: (Standard hours for actual output - Actual hours) * Standard rate:

(8,580 - 8,700) * $6.80 = -$816 (favorable).

Question 12:

Kingdon Corporation's overhead includes $7.10 per machine-hour for variable overhead and $207,000 fixed overhead. With 4,600 machine-hours, find the predetermined overhead rate.

Solution:

Total estimated overhead: $207,000 + ($7.10 * 4,600) = $207,000 + $32,660 = $239,660.

Predetermined overhead rate per machine-hour: $239,660 / 4,600 ≈ $52.07.

Question 13:

Pinkney Corporation's direct labor costs for November: standard wage rate $12.20, standard hours 5.3 per unit, actual wage rate $11.20, actual hours 39,720 DLHs, output 7,900 units. Show the journal entry for direct labor costs.

Solution:

Actual direct labor cost: 39,720 DLHs * $11.20 = $445,824.

Journal entry:

Debit Work in Process (or Factory Labor) $445,824

Credit Wages Payable or Cash $445,824.

Question 14:

Iba Industries' sales are $5,820,000, net operating income $436,500, average operating assets $2,000,000, minimum rate of return 18%. Calculate residual income.

Solution:

Required return: 18% * $2,000,000 = $360,000.

Residual income = net operating income - required return = $436,500 - $360,000 = $76,500.

Question 15:

Tullius Corporation considers a special order of 8,000 units at $50 each. Normal price is $53.25, variable unit costs are $18.10 + $7.40 + $5.20 = $30.70. Modifications increase variable costs by $5 per unit, plus a one-time investment of $43,000. Determine the incremental net operating income.

Solution:

Incremental revenue: 8,000 * $50 = $400,000.

Incremental variable costs: ($30.70 + $5) 8,000 = $35.70 8,000 = $285,600.

Incremental contribution margin: $400,000 - $285,600 = $114,400.

Additional investment in molds: $43,000 (cost, not an expense) reduces income:

Incremental net operating income: $114,400 - $43,000 = $71,400.

Question 16:

Hinck Corporation plans to buy a machine costing $520,000, saving $134,000 annually, with current equipment sale of $22,000. Depreciation on new machine is $65,000. Calculate the simple rate of return.

Solution:

Annual net cash inflow: $134,000.

Initial investment: $520,000 - $22,000 = $498,000 (net purchase).

Annual depreciation: $65,000.

Average investment: $498,000 / 2 (assuming straight-line depreciation, but in simple calculation, use initial investment).

Simple rate of return: ($134,000 / $498,000) * 100 ≈ 26.9%.

Question 17:

Schaad Corporation's lease payments are $2,500 at the beginning of each year for 8 years. Discount rate is 14%. Find present value of lease payments.

Solution:

PV = Payment * annuity factor at 14% for 8 years, plus the initial payment if at the beginning.

Using PV of an ordinary annuity: PV = $2,500 * (1 - (1 + r)^-n) / r

PV = $2,500 * [(1 - (1 + 0.14)^-8) / 0.14]

PV ≈ $2,500 * 4.639 = $11,597.50.

Since payments are at beginning, adjust for an annuity due: multiply by (1 + r) ≈ 1.14, PV ≈ $13,243.50.

Question 18:

Brodigan Corporation's project requires $450,000 investment, generates $220,000 annually, with a 30% tax rate and 12% discount rate over 3 years. Depreciation is $150,000 annually, salvage value zero. Calculate net present value.

Solution:

Annual cash inflow after tax: $220,000 * (1 - 0.30) = $154,000.

Add back depreciation: $150,000 (since it's a non-cash expense).

Net cash flow per year: $154,000 + $150,000 = $304,000.

Calculate NPV:

NPV = ∑ (Net cash flow / (1 + r)^t) - initial investment.

NPV = ($304,000 / 1.12 + $304,000 / 1.12^2 + $304,000 / 1.12^3) - $450,000

NPV ≈ ($271,429 + $242,523 + $216,346) - $450,000 ≈ $730,298 - $450,000 = $280,298.

Question 19:

Dukas Corporation's net cash from operating activities is $218,000, net income $203,000, capital expenditures $146,000, dividends $49,000. Calculate its free cash flow.

Solution:

Free cash flow = Net cash from operating activities - Capital expenditures + Non-cash charges (depreciation)

Since depreciation is not explicitly given, assume it's included in operating activities.

Therefore, free cash flow = $218,000 - $146,000 = $72,000.

Question 20:

Mihok Corporation's Year 2 and Year 1 data:

Stockholders' equity total: Year 2 = $775,000, Year 1 = $770,000

Net income Year 2 = $10,000.

Dividend on common stock Year 2 = $5,000.

Share count: common stock at $3 par value, total shares: $300,000 / $3 = 100,000 shares.

Calculate:

a) Earnings per share (EPS): $10,000 / 100,000 = $0.10.

b) Price-earnings ratio: Price per share = $0.97

P/E ratio = $0.97 / $0.10 = 9.7.

c) Dividend payout ratio: $5,000 / $10,000 = 50%.

d) Dividend yield ratio: $5,000 / (100,000 * $0.97) ≈ 5.15%.

e) Book value per share: $775,000 / 100,000 = $7.75.

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting (16