baker ACC122 midterm exam

ACC122 Midterm Exam – Problems (7 points each)

Student Name _______________________________________ Date ___________________

1. Prepare a horizontal analysis by computing the amounts and percentage changes for the following balance sheet items; place your answers in the blanks provided.

	20x6	20x5	Amount	Percentage
Assets
Current assets	$ 6,500	$ 5,000
Property, plant, and equipment	22,000	25,000
Total assets	$28,500	$30,000
Liabilities and Stockholders' Equity
Liabilities	$ 5,500	$10,000
Stockholders' equity	23,000	20,000
Total liabilities and stockholders' equity	$28,500	$30,000

2. Using the following information from an annual report, prepare a vertical analysis of the consolidated balance sheet at June 30, 20x5. (Round percentage answers to one decimal place.)

	June 30, 20x5
	(In millions)
Cash and cash equivalents	$ 584
Accounts and other receivables	182
Merchandise inventories	2,027
Prepaid expenses and other current assets	80
Total current assets	$2,873
Real estate, net	$2,342
Other, net	2,113
Total property and equipment	$4,455
Goodwill, net	$ 374
Other assets	651
Total assets	$8,353
Short-term borrowings	$ 278
Accounts payable	1,617
Accrued expenses and other current liabilities	836
Income taxes payable	107
Total current liabilities	$2,838
Long-term debt	$1,230
Deferred income taxes	362
Other liabilities	243
Total liabilities	$4,673
Common stock	$ 30
Additional paid-in capital	453
Retained earnings	4,757
Foreign currency translation adjustments	(137)
Treasury shares, at cost	(1,423)
Total stockholders' equity	$3,680
Total liabilities and stockholders' equity	$8,353

3.

3. From the following information, compute the ratios indicated and place the proper numbers in the spaces provided. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round answers to one decimal place, and show your work.

Anders Corporation
Balance Sheet
December 31, 20x5
Assets
Cash		$ 30,000
Marketable securities		20,000
Accounts receivable (net)		40,000
Inventory		60,000
Prepaid expenses		16,000
Property, plant, and equipment		234,000
Total assets		$400,000
Liabilities and Stockholders' Equity
Current liabilities		$ 60,000
Long-term liabilities		100,000
Stockholders' equity		240,000
Total liabilities and stockholders' equity		$400,000

Anders Corporation
Income Statement
For the Year Ended December 31, 20x5
Net sales		$160,000
Cost of goods sold		120,000
Gross margin		$ 40,000
Operating expenses
	Selling and administrative expenses	$ 16,000
	Interest expense	8,000
	Income taxes expense	4,000	28,000
Net income		$ 12,000

Anders had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15.00 per share. Dividends paid in 20x5 were $0.60 per share.

Current ratio		Asset turnover
Quick ratio		Return on assets
Receivable turnover		Return on equity
Days' sales uncollected		Debt to equity ratio
Inventory turnover		Interest coverage ratio
Profit margin		Days' inventory on hand
Dividend yield		Price/earnings (P/E) ratio

4. Job #178 consists of 500 units and has total of direct materials, $48,000; direct labor, $58,000; and overhead, $35,000.

a. What is the unit product cost?

b. What are the prime costs per unit?

c. What are the conversion costs per unit?

5. Use the information below for the year ended December 31, 2014, to prepare the statement of cost of goods manufactured.

Inventories	Beginning	Ending
Materials inventory	$32,600	$ 32,500
Work in process inventory	41,200	41,800
Direct materials purchased		168,000
Total direct labor costs		245,200
Total indirect labor costs		52,100
Utilities		27,300
Depreciation		35,000
Small tools		2,500
Factory insurance		1,600
Factory supervision		45,200
Miscellaneous overhead costs		7,200

6. The Work in Process Inventory account for Clinton Company for the month ended September 30 appears below.

Work in Process Inventory
Beginning Balance	0	Completed	135,800
Direct Materials	42,000
Direct Labor	70,000
Overhead	91,000

Overhead is applied based on direct labor dollars. Direct material costs for the one job remaining in work in process on September 30 was $12,300.

a. What was the overhead rate used to apply overhead to jobs?

b. Determine the amount of direct labor charged to the one remaining job. Round you answers to nearest dollars

7. Pretty Pillows, Mfg., manufactures silk throw pillows. Last month the company produced 3,890 pillows. Using job order costing, determine the product unit cost for one pillow based on the following costs: production facility utilities, $1,600; depreciation on production equipment, $650; indirect materials, $400; direct materials, $5,300; indirect labor, $1,000; direct labor, $3,500; sales commissions, $4,000; president's salary, $8,000; insurance on production facility, $1,000; advertising expense, $900; rent on production facility, $6,000; rent on sales office, $4,000; and legal expense, $600. Round your answer to two decimal places.

8. The following are monthly totals taken from the log of laser printer used by the Hardcopy Printing International. Cost was based on a flat fee plus a declining cost per copy made after a minimum number of copies had been made each month.

Month	Number of Copies Made	Total Cost
July	38,720	$11,880
August	33,440	10,560
September	36,190	11,248
October	44,330	13,283
November	42,240	12,760
December	53,790	15,648

To differentiate the variable and fixed costs in the use of this machine for future planning, use the high-low method to (a) determine the variable cost per copy (round your answers to two decimal places) and (b) compute the fixed and variable costs for the months of August and December (round your answers to nearest whole number).

9. Denapasa Manufacturing leases a vacuum cleaning system for a basic monthly fee plus an additional cost per hour used above a given minimum for each month. Given below is the information for the most recent six-month period on the number of machine hours of use and the total cost under this lease.

Month	Machine Hours	Total Cost
7	6,300	$58,200
8	4,400	49,935
9	4,700	52,390
10	5,200	54,440
11	5,600	56,620
12	5,000	53,800

You are to provide information for planning concerning the variable and fixed cost elements in this lease. Use the high-low method to (a) determine the variable cost per machine hour and (b) compute the fixed and variable costs for months 7 and 8.

10. Campground Inc. is considering the production and sale of propane lamps. Annual fixed costs associated with the project are expected to total $60,000. In addition, each lamp would sell for $12 and would require $7 in variable costs. Calculate (a) the breakeven point in units, (b) the breakeven point in dollars, (c) the number of lamps that must be sold to earn a profit of $120,000, and (d) the operating income or loss at a sales volume of 16,000 lamps