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PRINCIPLES OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II INSTRUCTIONS TOTAL SCORE INSTRUCTIONS Part II of the Midterm Exam consists of 5 accounting problems having a m total of 50 points plus an extra credit problem with a maximum score of Complete this Part II according to the following instructions: 1. Complete all questions by filling in the blanks or completing the temp appropriate . NOTE: The "Score" spaces (in red) on each page are for th use only. This test is open book meaning that you may use your textbo other material supplied by the instructor (PowerPoint slides, etc.) but no sources. Otherwise the test is subject to the GCC Honor Code and you own work without assistance from any other person and without the u unauthorized materials. 2. When you are finished, save your work as lastnamefirstinitial-midter trainumc-midterm). Do not be alarmed if a "Minor loss of fidelity" pop appears. Simply click on "Continue." 3. Submit the saved Excel file by returning to the Midterm Exam - Part II Learning Units on Blackboard. Use the "Browse my Computer" button i the test to locate the file on your computer and attach your Excel file to Then click on the "Save and Submit" button at the bottom of the test pa Blackboard. 4. This test must be completed and submitted within the four (4) hour ti specified for Part II. The completed test must be submitted over Blackbo than the due date specified in the test description in Weekly Learning Un IONS unting problems having a maximum point with a maximum score of 5 points. g instructions: ks or completing the templates as ed) on each page are for the instructor's you may use your textbook, notes, and erPoint slides, etc.) but not outside GCC Honor Code and you must do your person and without the use of any astnamefirstinitial-midterm. (Example: Minor loss of fidelity" pop-up box he Midterm Exam - Part II under Weekly se my Computer" button in Question 1 of d attach your Excel file to Quesion 1. the bottom of the test page on within the four (4) hour time limit be submitted over Blackboard not later tion in Weekly Learning Units. PRINCIPALS OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II QUESTION 1 (10 POINTS) SCORE For each item shown below, classify it as a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product. Cost item Administrative salaries Direct labor Advertising Property tax on the factory Factory maintenance Direct materials Depreciation on factory equipment Interest expense Factory supplies Assembly line supervisor salary Product of period cost? Product Period iod cost, by placing an X in so indicate whether it is a product. Direct or indirect cost? Direct Indirect PRINCIPALS OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II QUESTION 2 (10 POINTS) SCORE: Key Manufacturing Co. applies factory overhead to production on the basis of direct labor costs Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000. (1) Key's goods in process inventory at the end of the year was $28,000 which included $5,20 of direct labor cost. What amount of direct materials cost was included? (2) Key's finished goods inventory was $34,300 of which direct materials cost were $8,100. Determine the direct labor cost and factory overhead cost of the finished goods inventory. HINT: You must calcuate the company's predetermined overhead rate (POHR) to answer these questions. Show your answers in the spaces below. Also show in the space provided the perdetermined overhead rate (POHR) used in your calculations Predetermined overhead rate (POHR) (1) Direct materials cost included in goods in process inventory (2) Direct labor cost included in finished goods inventory Factory overhead cost included in finished goods inventory basis of direct labor costs. ted that direct material actory overhead costs ,000 which included $5,200 d? terials cost were $8,100. hed goods inventory. e (POHR) to answer these ded the perdetermined PRINCIPALS OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II QUESTION 3 (10 POINTS) SCORE: Harbor Manufacturing Company uses a process cost accounting system. Materials are added at the beginning of the process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process cost accounting. The following are the operating and cost data information for October. The October 1 beginning Goods in Process Inventory consisted of 20,000 units. The costs for this inventory are: Direct materials - $82,500 Direct labor - $24,400 Factory overhead - $48,800 Factory overhead is applied at 200% of direct labor cost. During October the company added the following costs to its Goods in Process Inventory: Direct materials - $240,000 Direct labor - $68,000 Factory overhead - $136,000 During October, the company completed and transferred 60,000 units of its product to finished goods. At the end of the month, the goods in process inventory consisted of 15,000 units that were 40% complete with respect to conversion costs (direct labor and factory overhead) and 100% complete with respect to materials. REQUIRED: Prepare the company's process cost summary for October using the weighted average method. Use the template to the right for your answer. HARBOR MANUFACTURING COMPANY Process Cost Summary For the Month Ended October 31 Costs charged to Production: Costs of beginning goods in process Direct materials Conversion Costs incurred during this period: Direct materials Conversion Total costs to account for Unit Cost Information: Units to account for: Beginning goods in process Units started this period Total units to account for Equivalent Units of Production (EUP): Units completed and transferred out Units of ending goods in process: Direct materials Conversion Equivalent units of production Costs per EUP: Costs of beginning goods in process Costs incurred this period Total costs Divided by EUP Cost per EUP Cost Assignment and Reconciliation: Costs transferred out (cost of goods manufactured): Direct materials Conversion Costs of ending goods in process: Direct materials Conversion Total costs accounted for Units Units accounted for: Completed and transferred ou Ending goods in process Total goods accounted for Direct Materials Conversion Costs EUP EUP EUP EUP Direct Materials Conversion Costs EUP EUP ccounted for: mpleted and transferred out ing goods in process l goods accounted for EUP EUP Units PRINCIPLES OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II QUESTION 4 (10 POINTS) SCORE Wilton Company is analyzing two alternative methods of producing its product. The production ma variable costs can be reduced 40% by installing a machine that automates production, but fixed cos Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machin Variable costs per unit Fixed costs Selling price per unit Income tax rate Alternative 1 $ 20 $ 200,000 $ 40 25% REQUIRED: (a) Compute the break-even point in units and dollars for both alternatives. Enter your answers in spaces below. You may show your calculations (recommended) in the space to the right. (b) Prepare a forecasted income statement in the contribution margin format for both alternatives 30,000 units will be sold. Use the income statement templates below for your answers. (a) Breakeven points: Alternative 1: In units In dollars (b) Forecasted income statements: Alternative 1: Sales Total variable costs Contribution margin Fixed costs Net income before taxes Income taxes Net income CALCULATIONS: ts product. The production manager indicates that mates production, but fixed costs would increase. 2 shows costs after the machine is installed. Alternative 2 ? $ 274,400 $ 40 25% natives. Enter your answers in the designated e space to the right. n format for both alternatives assuming that w for your answers. Alternative 2: In units In dollars Alternative 2: Sales Total variable costs Contribution margin Fixed costs Net income before taxes Income taxes Net income PRINCIPLES OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II QUESTION 5 (10 POINTS) SCORE: Thomas Co. provides the following fixed budget data for 2009: Sales (20,000 units) Cost of goods sold: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Operating expenses Fixed Variable Income from operations $ $ $ 600,000 $ 500,000 100,000 $ 52,000 48,000 $ 651,000 $ 550,000 101,000 $ 51,500 49,500 200,000 160,000 60,000 80,000 12,000 40,000 The company's actual activity for 2009 follows: Sales (21,000 units) Cost of goods sold: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Operating expenses: Fixed Variable Income from operations $ $ 231,000 168,000 73,500 77,500 12,000 39,500 REQUIRED: Prepare a flexible budget performance report for the year using the contribution margin format. Use the template at the right for your answer. THOMAS COMPANY Flexible Budget Performance Report For the Year Ended December 31, 2009 Flexible Budget Units Sales Variable costs: Direct materials Direct labor Variable overhead Variable operating expenses Total variable costs Contribution margin Fixed costs: Fixed overhead costs Fixed operating expenses Total fixed costs Income from operations Actual Variance Favorable (F) or Unfavorable (U) PRINCIPLES OF ACCOUNTING II ACC 212 (FALL 2016) MIDTERM EXAM - PART II EXTRA CREDIT (5 POINTS) SCORE: A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted costs and activities. Use this information to compute (a) the company's overhead rates for each of the three activities and (b) the amount of overhead allocated to Product A. Use the spaces below for your answers. Budgeted Budgeted Activity Overhead Cost Pool Cost Activity 1 $ 160,000 Activity 2 111,000 Activity 3 180,000 Total $ 451,000 Product A 400 2,000 1,200 Product B 1,600 1,000 10,800 ANSWER: Overhead Rates: Activity 1 per unit of activity Activity 2 per unit of activity Activity 3 per unit of activity Overhead allocated to Product A Total 2,000 3,000 12,000