BRAC UNIVERSITY
BRAC Business School
Mid Term Examination
Semester: Fall 2023
Course Title: Managerial Accounting and Control (ACT 502_3)
Duration: 90 Mts.
Full Marks: 30
(N.B: You are required to answer all the questions. Please write clearly, precisely and legibly.)
1.
In 2013, the accountant at Star Incorporated, a national time-share company, focused
on an internal sales report that illustrates the sales projections to ensure the sales
representatives achieve their goals in 2013; however, the report was not prepared in
accordance with GAAP. The accountant observed that the total sales produced by the
sales representatives in 2012 were $250,000,000. The accountant is in the process of
establishing the new 2013 sales goals for the sales representatives and the accountant
is concerned about the new sales goals in 2013 since the economy is slow and many
individuals and groups are not purchasing time-share condos.
(3)
Is the accountant a management accountant or a financial accountant? What concept
concerns the accountant when the new sales goals are revealed to the sales
representatives and administrative staff? Why?
2.
Direct materials and direct labor will always be completely variable. Do you agree? If
you do not agree, explain why not.
(2)
3.
Winner's Sporting Equipment manufactures sporting goods. Selected costs from the
past year include: Calculate the Period costs for Winner's Sporting Equipment?
Plastics used to make products
$ 151,000
Heating and lighting costs for factory
$65,000
Factory janitor wages
$67,000
Costs of shipping to customers
$11,000
Lubricants used in factory equipment
$2,000
Lighting costs for sales office
$20,000
Depreciation on factory equipment
$23,000
Office supplies for sales office
$6,000
Insurance costs for factory
$13,000
Maintenance worker wages
$99,000
Freight-in (on plastics)
$7,500
Aluminum used to make products
$ 175,000
Assembly-line worker wages
$ 142,000
Salaries of salespeople
$74,000
(3)
4.
Sally's Gift Baskets sells gift baskets, on average, for $125; each gift basket costs, on
average, $60. Debby pays salaries each month of $1,300 and her store rent is $1,000
per month. She also pays sales commissions of 5% of the sales price. In May, 140 gift
baskets were sold.
(6)
Required:
(i)
(ii)
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Prepare a traditional income statement for the month of May.
Prepare a contribution margin income statement for the month of May.
5.
Limand Company, a manufacturer of fine china and stoneware is troubled by
fluctuations in productivity and wants to compute how manufacturing support costs are
related to the various sizes of batches of output. The following data show the results of
a random sample of 10 batches of one pattern of stoneware:
Sample
1
2
3
4
5
6
7
8
9
10
Batch Size (X)
15
12
20
17
12
25
22
9
18
30
(6)
Support Costs, Y
Tk.180
140
230
190
160
300
270
110
240
320
Required:
(i) Using regression analysis, measure the cost function of support costs and batch size.
(ii) Predict the support costs for a batch size of 32.
(iii) Using the high-low method, repeat requirements (i). Should the manager use the
high-low or regression method? Explain.
6.
Chewy Bones manufactures its own brand of pet chew bones. At the end of December
2018, the accounting records showed the following:
Balances:
Direct Materials
Work-in-Process Inventory
Finished Goods Inventory
Beginning
Ending
$ 13,400
$ 10,500
0
0
1,500
5,400
Other information:
Direct materials purchases
Plant janitorial services
$ 39,000
900
Sales salaries
5,100
Delivery costs
1,700
Net sales revenue
115,000
Utilities for plant
1,200
Rent on plant
Customer service hotline costs
9,000
1,600
Direct labor
16,000
Required:
(i) Prepare a schedule of cost of goods manufactured for Chewy Bones for the year
ended December 31, 2018.
(ii) Prepare an income statement for Chewy Bones for the year ended December
31, 2018.
(iii) How does the format of the income statement for Chewy Bones differ from the
income statement of a merchandiser?
(iv) Chewy Bones manufactured 17,500 units of its product in 2018. Compute the
company’s unit product cost for the year, rounded to the nearest cent.
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(10)