ACC 420

Comprehensive Final Exam

Spring 2020

Problem 1 (8 Marks)

Cecelia Schell is taking four clients (who are not related) on a tour of her retirement development. The clients incurred the following expenses while on the tour. All tour expenses are paid by Cecelia because she has business discounts for most of her business dealings. These expenses will be billed to the clients by Cecelia.

ExpenseAnnaJimFrankBudTotals

Bus ticket$80 $80 $80 $80 $320

Morning break8 10 16 640

Lunch24 20 28 2088

Afternoon break10 48 1032

Cecelia's overhead 56 56 56 56 224

Totals $178$170 $188$172 $704

Required:

Compute the total average cost per client showing average indirect (overhead) and average direct (other) charges separately.

Problem 2 (15 Marks)

Frame Antique manufactures picture frames. Sales for May are expected to be 20,000 units of various sizes. Historically, the average frame requires three meters of framing, one square meter of glass, and two square meters of backing. Beginning inventory includes 3,000 meters of framing, 1,000 square meters of glass, and 1,000 square meters of backing. Current prices are $0.20 per meter of framing, $4.00 per square meter of glass, and $1.50 per square meter of backing. Ending inventory should be 150 percent of beginning inventory. Purchases are paid for in the month acquired.

Required:

a.Determine the quantity of framing, glass, and backing that is to be purchased during May.

b.Determine the total costs of direct materials for May purchases.

Problem 3 (16 Marks)

Brussels Chocolate Company produces chocolates in large batches. One batch of chocolate has the following standard costs and amounts:

Standard kilograms of sugar

125

Standard cost per kilogram of sugar

$1.60

Standard direct labour hours

0.75

Standard direct labour cost per hour

$21.00

Brussels Chocolate Company produced 600 batches of chocolates in the most recent month. Actual input costs and per batch usage levels were as follows:

Actual kilograms of sugar used

126

Actual cost per kilogram of sugar

$1.65

Actual direct labour hours

0.80

Actual direct labour cost per hour

$20.75

Required:

a.Calculate the total material input rate variance.

b.Calculate the total material efficiency variance.

c.Calculate the total labour rate variance.

d.Calculate the total labour efficiency variance.

Problem 4 (21 Marks)

Teri's Furniture uses variance analysis to evaluate manufacturing overhead in its' table factory. The information for the May overhead expenditures is as follows:

Budgeted output units14,000 tables

Budgeted fixed manufacturing overhead$22,400

Budgeted variable manufacturing overhead$3.00 per direct labour hour

Budgeted direct manufacturing labour hours0.2 hour per table

Fixed manufacturing costs incurred $24,000

Direct manufacturing labour hours used 4,000 hours

Variable manufacturing costs incurred $11,000

Actual units manufactured 15,000 tables

Required:

a.Calculate the variable manufacturing overhead rate and efficiency variances; and, the fixed manufacturing overhead rate and production-volume variances.

b.Prepare all necessary journal entries to record the actual costs, allocated costs, and variances. Keep variable and fixed entries separate.

Problem 5 (12 Marks)

Jamie's Hot Dog Stands sells hot dogs at ballparks across Canada for $1.55. Variable costs are $1.15 per unit with fixed production costs of $80,000 per month at a level of 320,000 units. Fixed administrative costs total $25,000. Sales average 320,000 units per month, with planned production of 320,000 hot dogs.

Required:

a.What are break-even unit sales under variable costing?

b.What are break-even unit sales under absorption costing if she sells everything she prepares?

c.What are break-even unit sales under absorption costing if average sales are 399,000 and planned production is changed to 400,000?

Problem 6 (14 Marks)

28) Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Windsor, Ontario. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected:

Machine-hoursKilowatt-hoursTotal Overhead Costs

January3,8004,520,000$138,000

February3,6504,340,000136,800

March3,9004,500,000139,200

April3,3004,290,000136,800

May3,2504,200,000126,000

June3,1004,120,000120,000

Required:

a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.

b.Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.

c.For July, the company ran the machines for 3,150 hours and used 4,180,000 kilowatt-hours of power. The overhead costs totaled $114,000. Which cost driver was the best predictor for July?