Question No. 1-1

The HASF Company has an annual plant capacity of 50,000 units. Predicted data on sales and costs are given below.

Sales (50 per unit) 1,000,000

Manufacturing cost

Variable (material labor and overhead) 40 per unit

Fixed overhead 30,000

Selling and administrative expenses

Variable (sales commission RS 0.5 per unit) 2 per unit

Fixed 7,000

A special order has been received from outside for 5,000 units at a selling price of 45 per unit this order will no effect on regular sales. The usual sales commission on this order will be reduced by one half.

Required:

1. Should the company accept/ rejectthe order?
2. Keeping in view the above answernarrate rationale to support your answer

Question No. 1-2

The estimated costs of producing 6,000 units of a component are:

Per Unit

Direct Material $10

Direct Labor 8

Applied Variable Factory Overhead 9

Applied Fixed Factory Overhead 12

$1.5 per direct labor dollar

The same component can be purchased from market at a price of $29 per unit. If the component is purchased from market, 25% of the fixed factory overhead will be saved.

Required:

1. Should the component be purchased from the market?
2. Being a production manager, provide your logical opinion on choosing between purchasing the component from market or producing in-house.

Question No. 2

Contemporary Trends sells paint and paint supplies carpet and wallpaper at a single store location in suburban Baltimore Although the company has been very profitable over the year management has seen very profitable over the year management has seen a significant decline in wallpaper sales and earnings Much of this decline is attributable to the internet and to companies that advertise deeply discounted prices in magazines and offer customer free shipping and toll free telephone number recent figures follow:

Paint and supplies

Carpeting

wallpaper

• Sales

190,000(paint and supplies)

230,000(carpeting)

70,000(wallpaper)

• Less variable cost

114,000(pain and supp)

161,000(carp..)

56,000(wallp)

• Fixed costs

28,000(paint and supp)

37,500(carp..)

22,000(wallp..)

• Total cost

142,000(paint and supp)

198,500(carp)

78,000(wallp)

• operating income

48,000(paint and supp)

31,500(carp)

-8,000(wallp)

Management is studying whether to drop wallpaper because of the changing market and accompanying loss if the line is dropped the following changes are expected to occur

1. The vacated space will be remodeled at a cost of 15,000 and will be devoted to an expanded line of high and carpet sales of carpet are expected to increase by 100,000
2. Contemporary can cut wallpapers fixed costs by 50%
3. Sales of paint and paint supplies are expected to fall by 30%
4. Considering(a),(b)and (c), explainyour decisionwhether to dropor retain thewallpaper

Question No. 7

During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows

Total direct labor cost 100,000 @10 per hour

Cost of Material used 70,000

The standards for one units of company product are as follows

Direct Labor Direct Material

-3 hours required for one unit -2 pounds of Material required for one unit

-Rate 24 per hour - Price 20 per pound

Required:

1. Compute the following

• Material variance
• Material quantity variance
• Material price variance

1. Being an accounting expert, elaborate that how standard costingsystem facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question.

Question No. 6

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges are 10,000 per period and are fixed.

Required:

1. Find out variable cost per units and total fixed cost.
2. Assume Company manufactures and sells 10,000 flanges this period their competitor sells flanges for 15 each. can company sell below competitor price and make a profit on the flanges
3. How would be your answer to requirement 2 differ if company made and sold 20,000 flanges this period why?

Question No.5-1

In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASFInc.prepared the following estimated data Costs and Expenses

Variable Fixed

Direct Material 1,600,000

Labor 1,400,000

Factory overhead 600,000 900,000

Selling expenses 240,000 360,000

Administrative expenses 60,000 140,000

Required:

1. What would be the amount of sales at the breakeven point?

• 2,250,000
• 4,000,000
• 3,500,000
• 5,300,000

Question No. 4

HASF Corporation manufactures products A, B, and C from a joint process. Joint costs are allocated on the basis of relative sales value at the end of the joint process.Additional information for HASFare asfollows:

A B C Total

Units produced 12,000 8,000 4,000 24,000

Joint costs 144,000 60,000 36,000240,000

Sales value before additional processing 240,000 100,000 60,000 400,000

Additional costs for further processing 28,000 20,000 12,000 60,000

Sales value if processed further 280,000 120,000 70,000470,000

Required:

1. Which, if any, of products A, B, and C should be processed further and then sold?

Keeping in view the answer of "part a", write downyour critical feedbackto support your answer