WEEK 5
Instructor: Rudy Ramdayal
Important Dates
Date
Test
Chapter(s)
Weighting
Towards Final
Mark
In Class written/online
Feb 13, 2024
Mid-Term
Chapters 1, 2, 3 and 4
20%
NOTE: For Quizzes and Assignments due dates:
End-of-Chapter Quizzes: = 15%
- CHAPTERS 1 TO 4: OPEN JANUARY 8 AND DUE
FEBRUARY 11
Multi-Chapter Quizzes: - = 10%
- NUMBER 1: OPEN JANUARY 8 AND DUE
FEBRUARY 11
McGrawhill Connect Assignments: = 25%
- OPEN JANUARY 8 AND DUE APRIL 14
Mid-Term Exam:
- 29 Questions (MCQ)
- 120 Minutes
- Marks (1 to 6)
- 1 Attempt
- Chapters (1 to 4)
CHAPTER 4 Cost-Volume-Profit Relationships (WEEK 4 AND 5)
HW Exercise 4-10, 4-11, 4-14 – textbook, Exercise
4-16 – textbook.
- MARGIN OF SAFETY:
-
DEGREE OF OPERATING LEVERAGE
- KAHOOT – CHAPTER 4
PRACTICE INCLASS ACTIVITY FOR TEST 1
Chapter 2
#1
The following data (in thousands of dollars) have been taken from the accounting records of
Larsen Corporation for the year just ended:
Sales
Purchases of raw materials*
Direct labour
Manufacturing overhead
Administrative expenses
Selling expenses
Raw materials inventory, beginning*
Raw materials inventory, ending*
Work in process inventory, beginning
Work in process inventory, ending
Finished goods inventory, beginning
Finished goods inventory, ending
$860
$150
$110
$210
$130
$180
$40
$80
$20
$80
$80
$150
Required:
(a.) Prepare a schedule of cost of goods manufactured in good form.
(b.) Compute the cost of goods sold.
(c.) Using data from your answers above as needed, prepare an income statement in good form.
#2
The following data (in thousands of dollars) have been taken from the accounting records of
Larmont Corporation for the year just completed:
Sales
Purchases of raw materials*
Direct labour
Indirect labour
Indirect material
Other Factory Overhead
Administrative expenses
Selling expenses
Raw materials inventory, beginning*
Raw materials inventory, ending*
Work in process inventory, beginning
Work in process inventory, ending
Finished goods inventory, beginning
Finished goods inventory, ending
$990
$100
$240
$100
$10
$100
$100
$140
$20
$80
$50
$30
$160
$150
*Raw Materials Inventory consist of both direct and indirect materials.
Required:
(a.) Prepare a schedule of cost of goods manufactured in good form.
(b.) Compute the cost of goods sold.
(c.) Using data from your answers above as needed, prepare an income statement in good form.
CHAPTER 3
#1
Selected information about Buehler Corporation's operations at high and at low levels of activity
follow:
Number of Units Produced
Total manufacturing
overhead costs
Direct material cost per unit
Direct labour cost per unit
Level of Activity
Low
25,000
$575,000
High
30,000
$680,000
$5
$6
$5
$6
Using the high-low method, what is the total variable cost per unit of product?
#2
The Stephens Leadership Centre provides training seminars in personal development and time
management. The company is relatively new and management is seeking information regarding
the Centre's cost structure. The following information has been gathered since the inception of
the business in January of the current year:
January
February
March
April
May
June
Seminars offered
10
12
15
18
16
13
Costs incurred
$17,000
18,800
20,900
23,762
21,800
19,400
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per
month.
Chapter 4
#1
The following is Arkadia Corporation's contribution format income statement for last month:
Sales
Less: variable expenses
Contribution margin
Less: fixed expenses
Operating income
$1,200,000
800,000
400,000
300,000
$100,000
The company has no beginning or ending inventories and produced and sold 20,000 units during
the month.
Required:
a) What is the company's contribution margin ratio?
b) What is the company's break-even in units?
c) If sales increase by 100 units, by how much should operating income increase?
d) How many units would the company have to sell to attain target operating income of
$125,000?
e) What is the company's margin of safety in dollars?
f) What is the company's degree of operating leverage?
g) If the tax rate is 30%, how many units must be sold to attain an after tax profit of $84,000?
#2
The following monthly budgeted data are available for the International Company:
Sales
Variable expenses
Contribution margin
Product A
$500,000
300,000
$200,000
Product B
$300,000
210,000
$90,000
Budgeted operating income for the month is $220,000.
Required:
a) Calculate the break-even sales for the month.
b) Calculate the margin of safety.
c) Calculate the degree of operating leverage.
Product C
$900,000
720,000
$180,000