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acc 202 final questions1. Packer Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $81 Units in beginning inventory 300 Units produced 1,800 Units sold 1,600 Units in ending inventory 500 Variable costs per unit: Direct materials $19 Direct labor $16 Variable manufacturing overhead $1 Variable selling and administrative $11 Fixed costs: Fixed manufacturing overhead $34,200 Fixed selling and administrative $3,200 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.Required:a.What is the unit product cost for the month under variable costing? Unit product cost$ b.Prepare a contribution format income statement for the month using variable costing. (Input all amounts as positive values.) Variable costing income statement $ Variable expenses: $ Contribution margin Fixed expenses: $ c.Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Use the reconciliation method.) Net operating income$ 2. Camren Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for December appear below: Sales revenues, Apparel $680,000 Variable expenses, Apparel $299,000 Traceable fixed expenses, Apparel $102,000 Sales revenues, Accessories $770,000 Variable expenses, Accessories $424,000 Traceable fixed expenses, Accessories $100,000 Common fixed expenses totaled $357,000 and were allocated as follows: $161,000 to the Apparel business segment and $196,000 to the Accessories business segment.Required:Prepare a segmented income statement in the contribution format for the company. (Input all amounts as positive values.) TotalApparelAccessories $ $ $ Contribution margin Segment margin $ $ $ . Wartenberg Corporation uses customers served as its measure of activity. The company bases its budgets on the following information: Revenue should be $3.80 per customer served. Wages and salaries should be $38,800 per month plus $1.00 per customer served. Supplies should be $0.60 per customer served. Insurance should be $7,100 per month. Miscellaneous expenses should be $5,100 per month plus $0.30 per customer served.The company reported the following actual results for January: Customers served 30,000 Revenue$115,500 Wages and salaries$66,900 Supplies$15,900 Insurance$6,800 Miscellaneous$15,500 Required:Prepare a report showing the company's revenue and spending variances for January. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Wartenberg CorporationRevenue and Spending VariancesFor the Month Ended January 31 Revenue$ Expenses: Wages and salaries Supplies Insurance Miscellaneous Total expenses Net operating income$ 4. Vera Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 28,000 customers, but actually served 27,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Fixedelementper monthVariableelementper customer Revenue - $5.00 Wages and salaries$35,800 $1.90 Supplies$0 $0.60 Insurance$13,000 $0.00 Miscellaneous$7,500 $0.20 Required:Prepare the company's flexible budget for September based on the actual level of activity for the month.(Input all amounts as positive values.)Vera CorporationFlexible BudgetFor the Month Ended September 30 Revenue$ Expenses: Wages and salaries Supplies Insurance Miscellaneous Total expenses Net operating income$ 5. Blomdahl Corporation makes a product with the following standard costs: InputsStandard Quantityor Hours Standard Priceor Rate Direct materials 5.2 kilos$6.00 per kilo Direct labor 0.3 hours$22.00 per hour Variable overhead 0.3 hours$2.00 per hour The company reported the following results concerning this product in October. Actual output 8,100 units Raw materials used in production 43,130 kilos Actual direct labor-hours 2,570 hours Purchases of raw materials 46,700 kilos Actual price of raw materials$5.70 per kilo Actual direct labor rate$23.70 per hour Actual variable overhead rate$1.80 per hour The materials price variance is recognized when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.Required:a.Compute the materials quantity variance. (Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials quantity variance$ b.Compute the materials price variance. (Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price variance$ c.Compute the labor efficiency variance. (Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor efficiency variance$ d.Compute the direct labor rate variance. (Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance$ e.Compute the variable overhead efficiency variance.(Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead efficiency variance$ f.Compute the variable overhead rate variance. (Input the amount as positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead rate variance$ 6. The management of Rodarmel Corporation is considering dropping product G91Q. Data from the company's accounting system appear below: Sales $370,000 Variable expenses $170,000 Fixed manufacturing expenses $118,000 Fixed selling and administrative expenses $89,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $57,000 of the fixed manufacturing expenses and $40,000 of the fixed selling and administrative expenses are avoidable if product G91Q is discontinued. Required:a.What is the net operating income(loss) earned by product G91Q according to the company's accounting system? (Input the amount as a positive value.) $ b1.What would be the effect on the company's overall net operating income of dropping product G91Q?(Input the amount as a positive value.) Net operating income by$ b2.Should the product be dropped? YesNo7. Mr. Earl Pearl, accountant for Margie Knall Co., Inc., has prepared the following product-line income data: Product TotalABC Sales $100,000 $50,000 $20,000 $30,000 Variable expenses 60,000 30,000 10,000 20,000 Contribution margin 40,000 20,000 10,000 10,000 Fixed expenses: Rent 5,000 2,500 1,000 1,500 Depreciation 6,000 3,000 1,200 1,800 Utilities 4,000 2,000 500 1,500 Supervisors' salaries 5,000 1,500 500 3,000 Maintenance 3,000 1,500 600 900 Administrative expenses 10,000 3,000 2,000 5,000 Total fixed expenses 33,000 13,500 5,800 13,700 Net operating income $7,000 $6,500 $4,200 $(3,700) The following additional information is available: *The factory rent of $1,500 assigned to Product C is avoidable if the product were dropped.*The company's total depreciation would not be affected by dropping C.*Eliminating Product C will reduce the monthly utility bill from $1,500 to $800.*All supervisors' salaries are avoidable.*If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.*Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000. Required:a.Prepare an analysis for Product C. (Input all amounts as a positive value.) $ Less fixed expenses avoided: $ $ b.Whether Product C should be eliminated. YesNo8. Kramer Company makes 4,000 units per year of a part called an axial tap for use in one of its products. Data concerning the unit production costs of the axial tap follow: Direct materials $35 Direct labor 10 Variable manufacturing overhead 8 Fixed manufacturing overhead 20 Total manufacturing cost per unit $73 An outside supplier has offered to sell Kramer Company all of the axial taps it requires. If Kramer Company decided to discontinue making the axial taps, 40% of the above fixed manufacturing overhead costs could be avoided. Assume that direct labor is a variable cost. Required:a1.Assume Kramer Company has no alternative use for the facilities presently devoted to production of the axial taps. If the outside supplier offers to sell the axial taps for $65 each, calculate the total cost for making the axial taps. Total cost$ a2.Should Kramer Company accept the offer? YesNo b.Assume that Kramer Company could use the facilities presently devoted to production of the axial taps to expand production of another product that would yield an additional contribution margin of $80,000 annually. What is the maximum price Kramer Company should be willing to pay the outside supplier for axial taps? Maximum acceptable price$ 9. Humes Corporation makes a range of products. The company's predetermined overhead rate is $16 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead $75,000 Fixed manufacturing overhead $325,000 Direct labor-hours 25,000 Management is considering a special order for 700 units of product J45K at $64 each. The normal selling price of product J45K is $75 and the unit product cost is determined as follows: Direct materials $37.00 Direct labor 18.00 Manufacturing overhead applied 16.00 Unit product cost $71.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. Required:If the special order were accepted, what would be the impact on the company's overall profit? Company's profit$ 10. Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if:production equals sales for that period.production exceeds sales for that period.sales exceed production for that period.the variable manufacturing overhead exceeds the fixed manufacturing overhead.11. A common cost that should not be assigned to a particular product on a segmented income statement is:the product's advertising costs.the salary of the corporation president.direct materials costs.the product manager's salary.12. Olds Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The absorption costing unit product cost was:$97$130$99$207Top of Form13. Abe Company, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under variable costing?$99$81$106$88Bottom of Form14. Abe Company, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing?$88$99$81$10615. Lantto Air uses two measures of activity, flights and passengers, in the cost formulas in its flexible budgets. The cost formula for plane operating costs is $34,810 per month plus $2,850 per flight plus $12 per passenger. The company expected its activity in June to be 70 flights and 292 passengers, but the actual activity was 69 flights and 291 passengers. The actual cost for plane operating costs in June was $236,550. The plane operating costs in the flexible budget for June would be closest to:$237,814$234,952$236,550$234,41716. The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?$1,200 F$9,625 F$8,425 F$990 UTop of Form17. Freestone Company is considering renting Machine Y to replace Machine X. It is expected that Y will waste less direct materials than does X. If Y is rented, X will be sold on the open market. For this decision, which of the following factors is (are) relevant?I. Cost of direct materials usedII. Resale value of Machine XOnly IOnly IIBoth I and IINeither I nor IIBottom of Form18. A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would:decrease by $20,000 per yearincrease by $20,000 per yeardecrease by $10,000 per yearincrease by $30,000 per year19. Lusk Company produces and sells 15,000 units of Product A each month. The selling price of Product A is $20 per unit, and variable expenses are $14 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:decrease by $60,000 per monthincrease by $10,000 per monthincrease by $20,000 per monthdecrease by $20,000 per month20. Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows: An outside supplier has offered to provide the annual requirement of 10,000 of the parts for only $27 each. The company estimates that 30% of the fixed manufacturing overhead costs above will continue if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the per unit dollar advantage or disadvantage of purchasing the parts from the outside supplier would be:$3 advantage$1 advantage$1 disadvantage$4 disadvantage
Solution: Acct 202 final exam