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Accounting & MIS 3300
Exam II
Autumn 2014
Instructions:
1.
Read each question carefully and answer fully. Ignore income tax
unless instructed to consider it. 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 start
early or continue to work on exams after instructed to stop will receive
penalties as outlined in the syllabus.
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
32
13 – 18 minutes
II
3
32
13 – 18 minutes
III
4-5
36
14 – 19 minutes
100
40 – 55 minutes
Total
Page 2 of 5
PROBLEM I
Tardis Company has the following per-unit standards for 20x1:
Direct Materials
Direct Labor
Variable Manu. Overhead
Fixed Manu. Overhead
3.5 lbs. @ $12.50 per lb.
5 direct-labor hours @ $22.00 per direct-labor hour
3 machine hours @ $11.50 per machine hour
3 machine hours @ $14.50 per machine hour
Tardis used a denominator level of 20,000 units. Actual production was 19,000 units using
56,000 machine hours, and the following occurred:
Direct Materials:
Direct Labor:
Manu. Overhead:
Purchased 75,000 lbs. for $933,750 and used 68,000 lbs.
Paid $2,136,000 for 96,000 direct-labor hours
Incurred $696,000 (variable) and $858,000 (fixed)
Required: Compute the variances requested and place in boxes below.
Direct Material Price
Variance
Direct Labor Price
Variance
Variable Manu.
Overhead Spending
Variance
Fixed Manu.
Overhead Spending
Variance
Direct Material
Efficiency Variance
Direct Labor
Efficiency Variance
Variable Manu.
Overhead Efficiency
Variance
Fixed Manu.
Production-Volume
Variance
Page 3 of 5
PROBLEM II
The Taggert Company uses standard costing and applies overhead based on directlabor hours. For 20x1, they calculate a denominator level of 80,000 direct-labor hours
producing a static budget of $1,304,000 in direct-labor cost, $696,000 in variable
manufacturing overhead, and $592,000 in fixed manufacturing overhead. At the end of
20x1, the following variances were calculated:
Direct Material Price Variance
Direct Material Efficiency Variance
Variable Manu. Overhead Efficiency Variance
Variable Manu. Overhead Flexible-Budget Variance
Fixed Manu. Overhead Spending Variance
Fixed Manu. Overhead Production-Volume Variance
$ 64,000 F
$ 44,000 U
$ 21,750 F
$ 7,500 F
$ 6,000 F
$ 37,000 U
The firm spent $0.40 less per kilo on materials and spent $0.25 more per direct-labor hour
compared to the standards. They budget 1.5 direct-labor hours and 3.4 kilos per unit. They
used 175,000 kilos of material. They allocate overhead based on direct-labor hours.
Required: Compute the items requested and place in boxes below.
Number of units manufactured
Standard price per kilo of direct material
Kilos of direct material purchased
Direct labor price variance
Direct labor efficiency variance
Variable overhead spending variance
Actual fixed overhead
Fixed overhead efficiency variance
Page 4 of 5
PROBLEM III
The Coleman Company began operations in June of 20x1 and decided to use FIFO for
inventory calculations. The following is known:
June 20x1
July 20x1
Production
2100 units
1900 units
Sales (@ $100 per unit)
1800 units
2000 units
Budgeted Direct Materials
$18 per unit
$18 per unit
Budgeted Other Variable Manufacturing $26 per unit
$26 per unit
Budgeted Fixed Manufacturing
$50,000 per month $50,000 per month
Variable Operating Costs
$9 per unit sold
$9 per unit sold
Fixed Operating Costs
$8,000 per month
$8,000 per month
The firm uses a denominator level of 2000 units per month and there are no price,
spending, or efficiency variances in either month.
Required: Present the July 20x1 income statement in good form under the specified costing
methods. Round to nearest whole dollar.
Actual Absorption
Normal Absorption with variances closed to
Cost of Goods Sold
Page 5 of 5
Actual Variable Costing
Actual Throughput Costing