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Accounting & MIS 3300
Exam II
Autumn 2012
Instructions:
1.
Read each question carefully and answer fully. Ignore income tax
unless instructed to consider it. Unless otherwise stated the income
tax rate is 40%. Variances are isolated at earliest possible point.
2.
Problems not supported by relevant and readable computations are
subject to point loss. Where appropriate, terms like “unfavorable,”
“favorable,” “better off,” “worse off,” etc. must be included with number
answers. Dollar amounts should include a dollar sign; unit amount
should include an indication of the unit.
3.
Budget your time carefully. It is generally better to finish half of each
problem than to complete all of half the problems. Students who
continue to work on exams after instructed to stop will receive a zero
on this exam.
4.
It is the student's responsibility to verify that all the listed problems
and pages are contained is this booklet. Unanswered questions
receive zero points regardless of reason.
Approximate
Points
Approximate
Time
Problem
Pages
I
2-3
42
18 – 23 minutes
II
4
21
8 – 12 minutes
III
5
28
11 – 15 minutes
IV
6
9
3 – 5 minutes
100
40 – 55 minutes
Total
Page 2 of 6
PROBLEM I (VERY LIMITED TO NO PARTIAL CREDIT)
Required: For each of the following cases, place your answer in the box and provide
supporting calculations.
Part A. The Alpha Company uses standard costing had the following budget and actual
results for 20x1:
Units
Variable Manuf. Overhead
Fixed Manufacturing Overhead
Actual
47,000
$800,000
$380,000
Budget
44,000
$766,920
$371,800
Calculate the items listed below:
Variable Manuf. Overhead Flexible-Budget Variance
Fixed Manufacturing Overhead Spending Variance
Fixed Manuf. Overhead Production-Volume Variance
Part B. In this, their first year of operations, Beta Company believes they will produce and
sell 20,000 units and allows 2.2 kilos of direct material per unit at standard cost of $9.70
per kilo. They allow ¾ hours of direct labor per unit at a standard rate or $24.80 per hour.
They purchased 42,000 kilos of direct material for $398,000. They used 36,000 kilos to
produce 16,500 units. Direct labor costing $328,000 and using 13,400 direct labor hours
was used. Beta’s sold 14,600 units. Beta isolates variance as soon as possible. Calculate
the items listed below:
Direct Materials Price Variance
Direct Materials Efficiency Variance
Direct Labor Price Variance
Direct Labor Efficiency Variance
Page 3 of 6
PROBLEM I CONTINUED
Part C. Charlie Company uses standard costing. During 20x1, they expected to
manufacture 22,000 units. Their standards allow 1.4 machine hours per unit of output.
Budgeted fixed manufacturing overhead is $9.50 per machine hour, and budgeted variable
manufacturing overhead is $3.35 per hour. During 20x1, 21,000 units were produced using
30,240 machine hours. Actual fixed manufacturing overhead was $280,000 and actual
variable manufacturing overhead was $100,000. Calculate the items listed below:
Variable Manufacturing Overhead Spending Variance
Variable Manufacturing Overhead Efficiency Variance
Fixed Manufacturing Overhead Spending Variance
Fixed Manuf. Overhead Production-Volume Variance
Part D. Delta Company uses standard costing. Prior to the start of 20x1, they produce a
static budget that called for $127,500 in variable and $223,125 in fixed manufacturing
overhead, based on 34,000 units. Their standards allow 1.25 machine hours per unit of
output. During 20x1, 38,000 units were produced using 50,000 machine hours. Actual total
(variable and fixed) manufacturing overhead was $400,000. Calculate the items listed
below:
Total Manufacturing Overhead Spending Variance
Total Manufacturing Overhead Efficiency Variance
Total Manuf. Overhead Production-Volume Variance
Page 4 of 6
PROBLEM II
The Edison Company has the following standards:
Direct Materials
Direct Labor
Manufacturing Overhead
1.2 lbs. @ $14.00 per lb.
2.5 hours @ $19.00 per hr.
80% of direct labor
$16.80
47.50
38.00
$102.30
and the following results:
Revenues
Cost of direct materials purchased
Direct Material Price Variance
Direct Material Efficiency Variance
Direct Labor Efficiency Variance
Direct Labor Flexible-Budget Variance
$1,450,000
275,480
3,880 U
36,400 U
23,750 U
15,000 U
Edison used a denominator level of units of 20,000, actually manufactured 17,000 units,
and sold 16,400. Calculate the items requested below:
Standard direct labor hours allowed for actual output
Actual direct labor hours worked
Actual direct labor wage rate
Standard pounds of direct materials allowed
Actual pounds of direct materials used
Actual pounds of direct materials purchased
Actual direct materials price per pound
Page 5 of 6
PROBLEM III
The Finlay Company had the following budgeted amounts for 20x1, its first year of
operations:
Per Unit Amounts:
Selling Price
Direct Material Cost per Unit
Variable Manufacturing Costs other than Direct Materials
Variable Non-Manufacturing Costs (per units sold)
Amounts as Totals (not per unit)
Fixed Manufacturing Costs
Fixed Non-Manufacturing Costs
$
60
12
9
6
$
15,000
5,500
Lee produces uses normal costing, estimating 1,000 units of production. Finlay actually
produced 1,100 units and sold 700. Lee closes production-volume variance, if any, to cost of
goods sold.
Part A. Produce a variable-costing income statement for 20x1 in good form:
Part B. Produce an absorption-costing income statement for 20x1 in good form.
Part C. Calculate and present 20x1 throughput-costing net income:
Page 6 of 6
PROBLEM IV
The George Company had the following information for last year:
Month
1
2
3
4
5
6
7
8
9
10
11
12
Customers Revenue
22,586 $ 212,954
30,595
140,599
25,236
146,523
21,845
146,961
32,298
178,390
30,151
127,744
24,214
137,519
23,498
143,197
22,311
171,817
16,568
223,473
15,318
131,356
16,420
120,669
Use the high-low method to determine and present the equation relating revenue to
customers: