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Second Practice Midterm ACC3200, Spring 2017 Ex. No. Instructions: 1 You must write your name on this sheet as well as the scantron sheet. 2 Only the answers on the scantron sheet are graded. 3 In addition, 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 Signature You should hand in BOTH the scantron and this exam. First Carnation Corporation's standards for producing a plant fertilizer included 10 pounds of materials at $4 per pound for each bag of fertilizer. Budget: Actual Planned output 2,000 Actual output 2,200 Direct materials used 11 Direct materials purchased 28,000 Direct material purchase price variance $ 5,600 1 The standard direct-material cost allowed for actual output achieved is: A. $ 80,000.00 B. $ 88,000.00 C. $ 96,800.00 D. $ 101,640.00 E. None of the above bags bags pounds per bag pounds unfavorable 2 The purchase price of direct material per pound was: A. B. C. D. E. $ $ $ $ $ 4.00 3.80 4.20 4.23 3.77 Snowwhite Removal removes snow and cleans roads and driveways in Vermont. Their cost formula is given below. For the month of February, the company planned for activity of 17 snow-days. The actual vehicle operating cost for the month was $9,920. The actual level of activity was 13 snow-days. Fixed cost per month $ 3,100 Variable cost $ 421.00 per day 3 What is the activity variance for total cost? A. $ 1,347.00 favorable B. $ 1,347.00 unfavorable C. $ 1,684.00 favorable D. $ 1,684.00 unfavorable E. None of the above Lavender Company produces several products in its factory, including a karate robe. The company uses a standard cost system. According to the standards that have been set for the robes, the factory should work 780 direct labor hours eac month and produce 1,950 robes. Certain standard costs associated with this level of production are as follows: Total $7,020 $2,340 Direct labor Variable manufacturing overhead (based on DLH) Per unit of Product $3.60 $1.20 During April, the factory worked 760 direct labor hours and produced 2,000 robes. The following certain actual costs were recorded during the month Total Variable manufacturing overhead $3,800 Spending variance for Direct Labor: $ Per unit of Product $1.90 400.00 unfavorable 4 The labor rate variance is: A. $ 760 unfavorable B. $ 760 favorable C. $ 360 favorable D. $ 360 unfavorable E. None of the above 5 The variable overhead efficiency variance is: A. $ 120 unfavorable B. $ 120 favorable C. $ 360 favorable D. $ 360 unfavorable E. None of the above Lilac Corporation uses standard costing. The following data are available for April: Actual quantity of direct materials purchased and used Standard price of direct materials Actual purchase price of direct materials Materials price variance Materials spending variance 6 The standard quantity of material allowed for April production is: A. 11,482.35 gallons B. 51,850.00 gallons C. 11,700.00 gallons D. 12,462.50 gallons E. None of the above 12,200 $4.00 $4.25 $3,050 $2,000 gallons per gallon per gallon unfavorable unfavorable Bluebell Corporation has the following overhead budget for the month of October. Budgeted production Budgeted machine hours Budgeted direct labor hours Budgeted variable manufacturing overhead costs: Supplies Utilities Budgeted fixed manufacturing overhead costs: Supervision Insurance Depreciation 20,000 units 6,000 machine hours 8,000 labor hours $24,000 $48,000 $19,500 $ 3,800 $ 8,700 Bluebell employs a standard costing system and applies the variable overhead costs based on the standard machin hours and the fixed overhead the standard labor hours. At the end of October, the company finds its variable overhead and fixed overhead account under- or over-applied by the following amounts: Actual production in October 24,000 units Variable overhead - $ 2,000 underapplied Fixed manufacturing overhead cost $ 3,000 overapplied 7 Determine the actual variable overhead cost per unit of the product (round to the nearest cent): A. $3.68 per unit B. $3.60 per unit C. $3.00 per unit D. $3.52 per unit E. Not determinable. 8 Determine fixed manufacturing overhead budget (spending) variance: A. B. C. D. E. $ 3,400 $ 3,400 $ 6,400 $ 6,400 Not determinable. favorable unfavorable favorable unfavorable Clover Corporation uses a standard costing system in which variable manufacturing overhead is assigned to production on the basis of the number of machine hours. The following data pertain to one month's operations: Standard machine hours allowed for actual production: Actual machine hours for the month: Actual variable manufacturing overhead costs incurred: Variable overhead spending variance: $ $ 3,550 MH 4,000 MH 80,000 5,450 Unfavorable 9 What is variable overhead rate variance? 9,450.00 unfavorable A. $ 9,450.00 favorable B. $ 4,000.00 unfavorable C. $ 4,000.00 favorable D. $ Not determinable E. 10 Edelweiss Company uses a standard costing system and applies its fixed manufacturing overhead (FMOH) costs to products based on the number of labor hours. Some data for last year are given below. The FMOH was overapplied by $2,000. Actual FMOH costs Actual production Volume variance $ 48,000 5,000 units $ 4,000 favorable Determine the budgeted production level in units for the past year. 5,000 A. units 4,800 B. units 4,792 C. units 4,600 D. units E. Need more information A Melbourne-based company Acacia is considering the adoption of an activity-based costing (ABC) system because they suspect that their traditional costing system distorts the product costs. Acacia produces and sells two products A and B. Their traditional costing system uses direct labor hours as the allocation base for manufacturing overhead cost. Additional information: Product A $38 per unit $24 per unit 50,000 units Direct materials (DM) Direct labor (DL) Units produced Product B $28 per unit $12 per unit 200,000 units The production managers decided that major activities are DL labor support, Machine setups, and Parts administration and determined the costs for each activity. They also identified how many DLHs, setups, and parts each product requires as follows: Activity Direct labor support (DLHs) Machine setups (setups) Parts administration (part types) Total MOH Cost $900,000 $600,000 $300,000 $1,800,000 Product A 100,000 DLHs 400 setups 200 parts Product B 200,000 DLHs 100 setups 200 parts 11 Compared with the unit product cost calculated by the ABC system, what is the distortion (difference) created by the traditional costing system for Product A? A. B. C. D. Product A is overcosted by Product A is undercosted by Product A is overcosted by Product A is undercosted by $ $ $ $ 1.65 1.65 6.60 6.60 E. None of the above Marigold Company has the following quarterly forecast for the coming year: Quarter Sales (units) Production (units) First 10,000 10,600 Second 12,000 12,400 Third 16,000 15,800 Fourth 14,000 14,100 Five pounds of raw materials are required for each unit of the product. According to company policy, the raw materials inventory at the end of each quarter should equal 20% of the next quarter's production needs. 12 The budgeted purchases for second quarter raw materials should be: A. 64,000 pounds B. 65,400 pounds C. 13,080 pounds D. 77,800 pounds E. None of the above. Mimosa Company is putting together its budget for the first half of the coming year. Based on its history, the company expects 70% of its Sales to be on credit with the remaining in cash. Mimosa budgeted the following in total Sales per month: Sales January $437,500 February $250,000 March $181,250 April $162,500 May June $212,500 $187,500 As the company is preparing its schedule of cash collections for its treasury department, the following collection curve (schedule) is being used: 55% in the month of sale 30% in the month following sale 10% in the second month following sale 5% uncollectible 13 What is the budged net accounts receivable balance on March 31 for Mimosa Company? A. $74,594 B. $68,250 C. $97,500 D. $55,563 E. None of the above. Petunia Company has budgeted sales for its only product as follows: Sales in units July 110,000 August 98,000 September 130,000 In order to meet demand throughout each month, the company plans to maintain an ending inventory balance equal to 35% of the following months sales. 14 According the their budget, how many units does the company plan to produce in August? A. 105,000 units B. 86,800 units C. 109,200 units D. 143,500 units E. None of the above. Foxglove Company, a growing retailer, is preparing its budget for the first half of the year assuming the following for Sales in each month: Sales January $200,000 February $220,000 March $242,000 April $266,200 May June $292,800 $332,000 For budget purposes, the following assumptions are used: a. b. c. d. The company's Gross Margin is 20%. All merchandise is purchased in the month prior to the month of Sale. 75% of merchandise purchases are made on credit with the rest paid in Cash. For credit purchases, 30% is paid in the month of purchase, 50% in the month following, and the remaining 20% in the second month after purchase. e. Half of Sales are made on Credit with the other 50% in Cash each month. f. Collections on credit sales are expected to be 60% in the month of sale and the remainder in the following month. g. h. i. k. Selling and administrative expenses of $15,000 per month include $2,500 of depreciation expense. The company incurs interest expense of $1,000 per month which it pays in Cash in March and June. Foxglove will be declaring a dividend of $10,000 in February and paying to shareholders in March. The budgeted balance in Retained Earnings on January 31 is $250,000. 15 Foxglove's budgeted cash disbursements related to merchandise purchases for the month of March would be: A. B. C. D. E. $146,916 $249,128 $200,156 $195,888 None of the above. 16 Foxglove's budgeted Retained Earnings balance at the end of February would be: A. $265,500 B. $278,000 C. $268,000 D. $270,500 E. None of the above. Heather Company uses the weighted-average method in its process-costing system. Operating data for the first processing department for September appear below for the physical flow of units, and for direct materials (DM) and conversion costs (CC). Beginning WIP inventory Started into production during September Ending WIP inventory % of % of completion: completion: Units DM CC 900 60% 50% 11,760 2,100 90% 70% DM Beginning WIP inventory Cost added during September $ $ $ 48,600 $ 7,425 17 Compute the equivalent units of production for the processing department Direct materials Conversion A. 12,660 units 10,560 units B. 11,760 units 11,010 units C. 10,410 units 12,660 units D. 12,450 units 12,030 units E. None of the above. 18 Determine the cost of the units transferred out to the next department. A. $ 84,480 B. $ 147,000 C. $ 132,000 D. $ 152,265 None of the above. E. CC 13,409 82,831 Rosemary Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Assembly Processing Orders Inspection Total Cost $ 368,000 $ 50,600 $ 107,250 Total Activity 23,000 machine hours 1,100 orders 1,650 inspection-hours Data concerning one of Rosemary's products is given below: Selling price Direct materials cost Direct labor cost Annual production and sales Annual machine hours Annual orders Annual inspection hours $ $ $ 165.00 33.00 42.00 4,000 11,500 440 495 per unit per unit per unit units MHs orders hours 19 According to the activity-based costing system, the product margin for this product is: A. $ 97,075 B. $ 155,760 C. $ 123,585 D. $ 360,000 E. None of the above. The Sunflower, Inc makes and sells tasty hamburgers for $8 per unit with a unit variable cost of $6. All sales are for cash and the variable costs are paid immediately. The company has budgeted the following data for November. Sales Cash, beginning balance Selling and administrative (of which depreciation, $5,000) Required minimum cash balance $ $ $ 20,000 units 34,000 53,000 33,000 20 If necessary, the company will borrow cash from a bank on the first day of November. Assume that th borrowing can be made in any (exact) amount, but bears interest at 2% per month. The November interest will be paid in cash during November. What is the closest amount of cash that must be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance? A. B. C. D. E. $ 7,000 $ 7,143 $ 12,000 $ 12,245 None of the above