Title: Managerial Accounting

Edition: 15th

Author(s): Garrison, R., Noreen, E., & Brewer, P.

ISBN-13: 978-0-07-802563-1

Website: http://highered.mheducation.com/sites/007802563x/information_center_view0/index.html

Final Exam BSA 346 Paula Beiser Chapters 8 through 13 Name___________________________________ Please show your work below. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 15% 1) Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January. Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. The cost of goods sold is 65% of sales. The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,900. Monthly depreciation is $20,000. Ignore taxes. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. c. Prepare Cash Budgets for November and December. d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted Balance Sheet for the end of December. 10% 2) Harmison Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July was based on 3,000 meals, but the diner actually served 3,500 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.60 per meal; kitchen operations, $4,300 per month plus $1.80 per meal; administrative expenses, $3,100 per month plus $0.80 per meal; and fundraising expenses, $1,200 per month. Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for July. Label each variance as favorable (F) or unfavorable (U). 3) 10% Tammo Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting: In June, the company budgeted for 430 guests and 172 jeeps. The actual activity for the month was 440 guests and 171 jeeps. Required: Prepare the company's planning budget for June. 4) 15% Rardin Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance. e. Compute the variable overhead efficiency variance. f. Compute the variable overhead rate variance. 5) 5% Handle Fabrication is a division of a major corporation. Last year the division had total sales of $36,160,000, net operating income of $2,892,800, and average operating assets of $8,000,000. The company's minimum required rate of return is 12%. Required: What is the division's return on investment (ROI)? 6) 15% Financial data for Redstone Company for last year appear below: The company paid dividends of $32,200 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company. Required: a. Compute the company's margin, turnover, and return on investment for last year. b. The Board of Directors of Redstone has set a minimum required return of 25%. What was the company's residual income last year? 7) 10%The management of Bercegeay Corporation is considering dropping product Y25C. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $117,000 of the fixed manufacturing expenses and $78,000 of the fixed selling and administrative expenses are avoidable if product Y25C is discontinued. Required: a. What is the net operating income earned by product Y25C according to the company's accounting system? Show your work! b. What would be the effect on the company's overall net operating income of dropping product Y25C? Should the product be dropped? Show your work! 8) 10% (Ignore income taxes in this problem.) Farah Corporation has provided the following data concerning a proposed investment project: The company uses a discount rate of 11%. The working capital would be released at the end of the project. Required: Compute the net present value of the project. 9) 10% (Ignore income taxes in this problem.) The management of Kountz Corporation is considering the purchase of a machine that would cost $74,520 and would have a useful life of 8 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $20,000 per year. Required: Determine the internal rate of return on the investment in the new machine. Show your work