question 3 5 7 on the file

Quiz #2 QUESTION 1 Consider the following for the Franklin Street Manufacturing: Change in finished goods inventory $685 increase Change in work-in-process inventory $350 decrease Total manufacturing costs $900 What are the cost of goods manufactured and cost of goods sold? $885, $1,050 $1,100, $1,100 $1,525, $925 $1,250, $565 QUESTION 2 (Not a repeat question.) The Gym Company produces weights in different sizes and sells them to gym equipment distribution companies who in turn sell them to various gyms such as Boston Sports Club or Gold's Gym. The manufacturing plant occupies 70% of the total buildings and grounds. Approximately 80% of the utilities are for the manufacturing plant. External vendors provide all of the materials and supplies. The sales force is paid entirely on commissions. Advertising spending is set by contract at beginning of the year. At full capacity, the plant is capable of producing 500,000 units per year. This year, The Gym Company sold 400,000 units. Information on their costs is listed in the table below. Item Raw materials inventory 1-Jan-2006 31-Dec-2006 $60,000 $20,000 Work-in-process inventory 72,000 88,000 Finished goods inventory 40,000 During the Year 50,000 Total manufacturing costs $1,310,250 Goods available for sale 1,334,250 Cost of goods sold 1,284,250 Purchases of raw materials $164,500 Marketing salaries 236,500 Non factory administrative salaries 235,000 Factory maintenance staff salaries 154,000 Direct labor ? Building rental 250,000 Advertising 148,000 Utilities (Electricity, water, phone...) 120,000 Indirect labor 110,000 Sales commissions (5% of sales) 98,400 Factory equipment depreciation 365,000 The average product cost per unit, as defined by GAAP, of products shipped to customers in 2006 was: $3.34 $3.21 $3.28 Some other amount Cannot be determined QUESTION 3 Given below are the annual costs incurred by Rose's Hallmark store. Cost Item Cards Novelty items Administrative Salaries & benefits Sales associates salary and benefits Wrapping paper and boxes Rent and cleaning cost of store Utilities & operating costs Total Amount $175,000 250,000 $40,000 150,000 25,000 60,000 45,000 Comments Three suppliers used Two suppliers used Rose's salary We use the services of 10 people who we pay by the hour on a part time basis. One supplier used Mall is supplier We control use of utilities, telephones, and other operating costs $745,000 Based on a simple value chain analysis, the most important insight you get is: A. Rose should focus her cost management efforts externally as nearly 2/3rd of her costs are from external suppliers B. Rose's salary costs are too high and she should fire some associates C. The card business has low profit margins and Rose should get out of it D. Rose is running a very inefficient business QUESTION 4 (Not a repeat question.) Precision Harness Company makes wire harnesses for high end sound recording equipment used by sound and movie studios. The following are the beginning and end of year inventory balances: Beg. Bal. End Bal. Raw Materials $55,000 $15,000 Work in Process 150,000 ? Finished Goods 50,000 80,000 During the current year, the following transactions occurred: Raw material worth $80,000 was transferred to WIP inventory Direct labor used was $60,000 Manufacturing overhead of $115,000 was incurred during the period Sales commissions of $20,000 were paid Cost of goods completed (manufactured) and transferred to finished goods were $310,000 What is the amount of raw materials purchased during the year? $120,000 $35,000 $40,000 $80,000 QUESTION 5 (Not a repeat question.) The Gym Company produces weights in different sizes and sells them to gym equipment distribution companies who in turn sell them to various gyms such as Boston Sports Club or Gold's Gym. The manufacturing plant occupies 70% of the total buildings and grounds. Approximately 80% of the utilities are for the manufacturing plant. External vendors provide all of the materials and supplies. The sales force is paid entirely on commissions. Advertising spending is set by contract at beginning of the year. At full capacity, the plant is capable of producing 500,000 units per year. This year, The Gym Company sold 400,000 units. Information on their costs is listed in the table below. Item Raw materials inventory 1-Jan-2006 31-Dec-2006 $60,000 $20,000 Work-in-process inventory 72,000 88,000 Finished goods inventory 40,000 During the Year 50,000 Total manufacturing costs $1,310,250 Goods available for sale 1,334,250 Cost of goods sold 1,284,250 Purchases of raw materials $164,500 Marketing salaries 236,500 Non factory administrative salaries 235,000 Factory maintenance staff salaries 154,000 Direct labor ? Building rental 250,000 Advertising 148,000 Utilities (Electricity, water, phone...) 120,000 Indirect labor 110,000 Sales commissions (5% of sales) 98,400 Factory equipment depreciation 365,000 Assume total fixed costs (product and period) were $1,150,000 and total variable costs (product and period) were $1,280,000 in 2006. Projected unit volume in 2007 is 480,000 units. Assuming The Gym Company's cost structure remains the same as in 2006, the total cost (product and period) per unit in 2007 will be: $5.60 $5.06 $6.08 Some other amount Cannot be determined QUESTION 6 (Not a repeat question.) The value chain for this industry has four primary segments with the following financial data: (millions) Segment 1 Revenue Gross Margin Operating Profit Total Assets Segment 2 Segment 3 Segment 4 $10,000 $8,000 $7,000 $12,000 6,000 3,200 1,400 3,600 800 800 420 360 12,000 7,500 3,500 4,000 The segment that is overall most attractive is: Segment 1 Segment 2 Segment 3 Segment 4 QUESTION 7 (Not a repeat question.) Fisher, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of goods sold $50,000 Work in process inventory, January 1, 2007 12,500 Work in process inventory, December 31, 2007 10,500 Selling and Administrative Expenses 10,000 Net Income 15,000 Factory overhead 10,000 Direct materials inventory, January 1, 2007 12,000 Direct materials inventory December 31, 2007 5,000 Cost of goods manufactured 58,000 Finished goods inventory, January 1, 2007 17,000 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Fisher, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What should be the amount of net sales? $68,500 $70,000 $72,500 $75,000 QUESTION 8 The life-cycle cost of a refrigerator that you purchase includes: A. Its purchase price plus installation and delivery. B. The purchase price, installation, delivery, maintenance, repairs and disposal cost. C. All materials, labor, and overheads plus a fair share of selling and general and administrative costs. D. The purchase price plus costs of extended warranties. QUESTION 9 A trucking business is considering whether to give up its contracted delivery routes and rent the trucks to people who want to move themselves. In this decision, the amount that is currently earned from using the trucks on contract delivery routes is called a(n): Opportunity cost Conversion cost Sunk cost Differential (incremental) cost QUESTION 10 When production levels are expected to decline within a relevant range, what effects would be anticipated with respect to each of the following? 1. Fixed Costs (per Unit) Variable Costs (per Unit) increase no change (A) (B) increase increase (C) no change no change (D) no change increase A Above. B Above. C Above. D Above