I have an attachment of cost accounting question which I need help with.

Ex. No. First Midterm Examination ACC3200 Fall 2013 Instructions: 1 You must write your name on this sheet as well as the scantron sheet. 2 The answers to the multiple questions should be entered on the scantron sheet. 3 IMPORTANT: You MUST SHOW how you calculated your answers in the space provided below for each question. If you fail to do so, you will NOT RECEIVE credit for the question even if you show the correct answer on the scantron sheet. The Baruch Honor Code is the standard of professional behavior on this exam. When you have completed your exam, please read the following pledge and add your signature to indicate that you have complied with the Honor Code. I PLEDGE THAT I HAVE NEITHER GIVEN NOR RECEIVED ANY UNAUTHORIZED ASSISTANCE ON THIS EXAM, AND THAT ANY VIOLATIONS OF THE HONOR CODE BY OTHERS THAT I HAVE OBSERVED, OR OTHERWISE BECOME AWARE OF, WILL BE REPORTED BY ME TO THE HONOR COUNCIL. Name (Please print) Last First Signature You should hand in BOTH the scantron and this exam. Page 1 of 10 1 The Book of Mormon is one of the biggest musical hits on Broadway. It has received many awards including Tony and Grammy Awards. According to Wikipedia, "High attendance coupled with aggressive pricing allowed the financial backers to recoup their investment of $11.4 million after just nine months of performances." While the highest ticket price was $477, the average price is $170. What is the variable cost per ticket? Assume the following: The theater has 30 performances per month. The theater has 1100 seats. On average, the theater was 95% full (with paying customers). A. $ 131.62 B. $ 56.10 C. $ 161.50 D. $ 39.64 E. $ 129.60 2 Emma Green is employed by Northern Laboratories and is directly involved in preparing the company's leading antibiotic drug. Emma's basic wage rate is $22 per hour. The company pays its employees time and a half (i.e., 150%) for any work in excess of 40 hours per week. In addition, the Lab contributes $10/hour towards Emma's fringe benefits. In the second week of September, Emma worked 47 hours, of which 3 hours were idle time due to the breakdown of lab equipment What is the amount of total wages and fringe benefits Emma earned in the second week of September? A. $ 1,111 B. $ 1,504 C. $ 1,581 D. $ 1,080 E. None of the above. 3 For the same week as in question 2. If the company treats all fringe benefits as part of manufacturing overhead cost, how much of Emma's wages and fringe benefits for the week would be allocated to manufacturing overhead cost? A. B. C. D. E. $ 613 $ 470 $ 536 $ 547 None of the above. Page 2 of 10 4 Platinum Co. is an English manufacturing company whose total factory overhead costs fluctuate somewhat from month to month according to the number of machine-hours worked in its production facility. These costs (in English pounds) for the three months in summer are given below. Unfortunately, the costs are incomplete. Machine-hours Total factory overhead costs June 46,500 214,700 Level of Activity July 62,000 236,400 August 51,150 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 46,500 machine-hours level of activity as follows: 51,150 Indirect materials (variable) Rent (fixed) 123,000 Maintenance (mixed) 40,550 214,700 Total factory overhead costs What total overhead costs would you expect the company to incur at an operating level for August? Use the High-Low Method. A. 68,545 B. 179,265 C. 195,030 D. 221,210 E. 236,170 5 Platinum (above) is considering using a predetermined overhead rate based on capacity. 64,000 Machine hours Capacity of the factory Manufacturing OH cost at the capacity 256,000 If Platinum used the capacity based predetermined rate to apply manufacturing overhead cost, calculate the overor under-applied overhead cost for the month of July: A. B. C. D. E. Underapplied by Overapplied by Underapplied by Overapplied by None of the above 11,600 11,600 8,000 8,000 Page 3 of 10 6 Lavender Corporation uses a job-order costing system and applies manufacturing overhead using a predetermined overhead rate based on direct-labor hours. The following data are available for August: Inventory Raw Material (all direct material) Work in process Finished Goods Beginning $ 28,000 $ 600 $ 35,000 Actual costs for August: Raw material purchase Direct labor salaries paid Direct labor pay rate per hour Manufacturing overhead incurred Information from Lavender's budget: Manufacturing overhead budgeted per month Direct labor hours budgeted per month $ $ $ Ending 32,000 15,000 23,000 $ $ $ $ 51,000 90,000 15 49,000 $ 60,000 7,500 Compute the predetermined overhead rate. A. $ 6.53 per direct labor hour B. $ 15.00 per direct labor hour C. $ 12.00 per direct labor hour D. $ 8.00 per direct labor hour E. None of the above. 7 For the same company above, compute the manufacturing cost for August: A. $190,000 B. $201,000 C. $185,000 D. $197,000 E. None of the above. 8 For the same company above but contrary to the fact, assume that the cost of goods manufactured for August is $200,000. The adjusted cost of goods sold (adjusting for the over or under-applied amount all closed to cost of goods sold) that appears on the income statement for August is: A. B. C. D. E. $213,000 $223,000 $212,000 $211,000 None of above Page 4 of 10 9 Brown Inc. uses machine hours for its predetermined overhead rate. For the year, Brown had an overapplied manufacturing overhead cost of $2,600. The additional information for the last year is given below. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been: Estimated machine hours for the year Actual machines hours for the year Actual manufacturing overhead costs $ The amount of overapplied manufacturing overhead costs 17,300 MH 16,700 MH 352,960 $ 2,600 A. $ 362,948 B. $ 355,560 C. $ 365,641 D. $ 368,335 E. None of the above 10 White Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. Sales units Cost of goods sold Selling and Administrative costs $ $ 6,000 457,800 621,000 Selling price per unit $ 180 The best estimate of the net operating income if 6,300 units are sold is: A. $ 1,200 B. $ 31,200 C. $ 33,900 D. $ 39,300 E. None of the above. Page 5 of 10 $ $ 7,000 510,800 639,000 $ 180 11 Siverquick sells a single product. They want to achieve a target income of $60,000 next year. How many units of the product do they have to sell to achieve the target? Price Contribution margin ratio Annual fixed expenses A. B. C. D. E. $ $ 20.00 40% 240,000 37,500 units 30,000 units 25,000 units 7,500 units None of the above. 12 Redstone Company has gathered the following total cost information for the year ended December 31, 2012. There were no beginning or ending inventories. The company produced and sold 10,000 units. Sales Revenue Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expense $60,000 9,000 7,000 2,000 10,000 6,000 10,000 The company's margin of safety (in dollars) for 2012 is closest to A. $60,000 B. $45,714 C. $31,429 D. $26,667 E. None of the above Page 6 of 10 13 BlueMountain Corporation, a manufacturing company, has provided data concerning its operations for July. Beginning b l Ending balance: Raw Materials $ 37,000 Raw Materials $ 29,000 $ $ 57,000 102,000 Raw Materials purchased Manufacturing overhead cost incurred ($2,000 are indirect materials) The direct materials cost for July was: A. $ 57,000 B. $ 55,000 C. $ 63,000 D. $ 65,000 E. None of the above. 14 Gray Company produces and sells a single product. The information about their operation for the last month is given below. How many units did they sell during the last month? Price per unit Contribution margin ratio Fixed expenses Operating leverage A. B. C. D. E. $ 10.00 40% $ 3,000.00 2 1,000 units 1,200 units 2,000 units 1,500 units None of the above. Page 7 of 10 15 Crimson Company's quality cost report is to be based on the following data: Repairs of goods still under warranty. Customer returns due to defects. Statistical process control. Inspecting finished goods. Downtime caused by quality problems. Debugging errors in software. Training quality engineers. Inspecting materials received from suppliers. $ $ $ $ $ $ $ $ 65,000 100,000 25,000 60,000 50,000 20,000 165,000 10,000 What would be the total prevention cost appearing on the quality cost report? A. $165,000 B. $190,000 C. $225,000 D. $70,000 E. None of the above. 16 What would be the total internal failure cost appearing on the quality cost report? A. B. C. D. E. $165,000 $190,000 $225,000 $70,000 None of the above. Page 8 of 10 17 The Turquoise Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and machine-hours in Dept. B. At the beginning of the year, the company made the following estimates: Direct labor cost Manufacturing Overhead Direct labor hours Machine hours $ $ Dept A 65,000 91,000 8,000 3,000 $ $ Dept B 42,000 48,000 10,000 12,000 They recently received an order for a job from a company in Vermont. The expected cost of this job is: Dept A Dept B Direct labor cost $ 7,000 $ 3,500 Direct labor hours 500 600 Machine hours 100 435 What is the estimated overhead cost for this job? A. $ 1,737.50 B. $ 5,038.75 C. $ 7,400.00 D. $ 11,540.00 E. None of the above 18 Umber, Inc., produces memory enhancement kits for scanners. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (13,400 units at $20 per unit) Variable expenses Fixed expenses Net operating income $ 268,000 160,800 89,000 $ 18,200 The president is convinced that a 10% reduction in the selling price, combined with an increase of $35,000 in the monthly advertising budget, will double unit sales. What will be the new net operating income (loss) if these changes are adopted? A. $ 18,600 B. $ 36,800 C. $ 71,800 D. $ 18,200 E. None of the above. Page 9 of 10 19 Athletic Sports, Inc., produces high-quality sports equipment. The company's Racket Division manufactures two tennis racketsthe Standard and the Deluxethat are widely used in amateur play. Selected information on the rackets is given below: Selling price per racket Variable expenses per racket: Production Selling Standard $ 47.70 $ Deluxe 84.00 $ $ $ $ 28.10 5.50 21.40 2.45 Sales in units over the past two months have been as follows: Standard April 5,000 May 4,000 Deluxe 3,000 3,500 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Fixed production costs Advertising expense Administrative salaries Total $ $ Per Month 107,000 101,000 50,000 258,000 Compute the Racket Division's break-even point in dollar sales for April. A. $ 460,185.43 B. $ 430,000.00 C. $ 467,920.13 D. $ 469,090.91 E. $ 516,000.00 20 Choose the true statement from the following five statements. b. The cost of producing one more unit equals to the unit cost. B. The job cost sheet is used to make record of manufacturing costs actually incurred for each job order. C. Differential cost, opportunity cost and sunk cost are all relevant in decision making. D. The scattergraph plot, high-low method, and least-square regression method are mutually exclusive in E. Firms with lower contribution ratio are less vulnerable to sales downturns. Page 10 of 10