FINAL / ACC 3123 / FALL 2010 / PART 1
Write all your answers on the answer sheet below. You must show your work in the space
provided under each question. Use 4-decimals in all your work. The exam is open-book/notes.
You can use Excel and/or your mathematical calculator for your computations. Each answer is
worth equal points.
UPPER CASE ONLY:
LAST-NAME
FIRST-NAME
SEAT #
VERSION 1
Q ANSWER Q ANSWER
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FINAL / ACC 3123 / FALL 2010 / PART 1
1.
The XYZ Inc. uses standard costs to value its inventories. Overhead costs follow:
Actual
Fixed overhead
Variable overhead
Units produced
$220,975
$729,680
19,900
Budget
$238,670
$717,900
20,100
Calculate the Overhead Volume Variance.
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FINAL / ACC 3123 / FALL 2010 / PART 1
2.
Green Lawns fertilizes and applies weed killer to lawns. The company prepared its budgets on
the basis of standard costs. A responsibility report is prepared monthly showing the
differences between flexible budget and actual. Variances are analyzed and reported
separately. Material price variances are computed at the time of purchase.
The following information relates to the current period.
Standard Direct Costs (per average lawn):
Direct Material (fertilizer and weed killer),
1kilogram @ $1 per kilogram…………………………. $ 1
Direct Labor, 2 hours @ $4 per hour………………..
8
Standard Overhead:
Variable (25% of direct labor cost)………………….
2
Fixed (master budget, 3,600 labor hours)……………
1
Total Standard Cost per Average Lawn Serviced
$12
Actual Direct Costs for the Month:
Materials Purchased….
3,000 Kilograms at $.90 per Kilogram
Output………………
1,900 Lawns Serviced Using 2,100 Kilograms of
material
Actual Labor Costs…...
3,200 Hours at $5 per Hour
Actual Overhead:
Variable……………….
$4,500
Fixed…………………..
$1,800
Calculate the Material Quantity Variance.
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FINAL / ACC 3123 / FALL 2010 / PART 1
3.
ABC Company Plans to sell 400,000 units of finished product in July 2011.
(1) Management anticipates a growth rate in sales of 5% per month thereafter and
(2) Desires a monthly ending finished goods inventory (in Units) of 80% of the following
month's estimated sales.
There are 300,000 completed units in the June 30, 2011 inventory
Each unit of finished product requires four pounds of direct material at cost of $1.50 per
pound. There are 1,600,000 pounds of direct material in inventory on June 30, 2011
If the firm desires to stock direct materials at the end of the third quarter equal to 25% of
current production needs, compute the budgeted cost of direct material purchases for the
third quarter ended September 30, 2011.
[Note: Prepare your budget on a quarterly NOT Monthly Basis]
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FINAL / ACC 3123 / FALL 2010 / PART 1
4.
The following information is provided to assist you in evaluating the performance of the
manufacturing operations of the Dartmouth Company:
Units Produced (actual)……………………..
21,000
Estimated Units Produced…………………..
20,000
Budgeted Fixed Overhead…………………..
$80,000
Standard Costs per unit:
Direct Materials…………………………… $1.65 per pound (5 Pounds per unit of
Output)
Direct Labor………………………………. $14 per Hour (30 minutes per unit of Output)
Variable Overhead………………………… $11.90 per Direct Labor Hour
Actual Costs:
Direct Materials Purchased and Used……... $188,700 (102,000 Pounds)
Direct Labor……………………………….. $140,000 (10,700 Hours)
Overhead…………………………………... $204,000 (61% is Variable)
Variable overhead is applied on the basis of direct labor hours.
Calculate the Labor Efficiency Variance.
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FINAL / ACC 3123 / FALL 2010 / PART 1
5.
Arco has developed the following production budget for one of its products for the third
quarter of the year:
Month
July
August
September
Production (units)
18,300
15,400
12,000
Each unit takes 4 pounds of material J56, which costs $3 per pound. Arco has 1,600
pounds of material on hand on June 30th and wants an ending inventory of material J56 at
5 percent of the next month's production. Production in October is expected to be 12,000
units.
What is the cost of the material J56 that needs to be purchased in August?
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FINAL / ACC 3123 / FALL 2010 / PART 1
6.
CD-New is a direct marketer of popular music. Following is information about its
revenue and cost structure:
Selling Price
$13.00 per CD
Variable Costs:
Production (manufacturing costs)
$3.00 per CD
Selling and Administration (non-manufacturing costs)
$1.00 per CD
Fixed Costs:
Production (manufacturing costs)
$1,000,000 per year
Selling and Administration (non-mfg costs)
$3,000,000 per year
Assume that sales are expected to fall from 600,000 units this year to 500,000 units next
year. CD-New would like to raise the price next year (from the current $13.00) to
achieve the same profits next year as they have this year. What would the sales
price have to be next year, to generate the same profits next year as this year?
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FINAL / ACC 3123 / FALL 2010 / PART 1
7.
Iverson’s Manufacturing produces baseball equipment. The standard cost of producing one
unit of model XHR is:
Material (3.50 ounces at $1.30 per ounce)
$4.55
Labor (0.30 hour at $12.00 per hour)
3.60
Overhead
2.20
Total
$10.35
At the start of 2011, Iverson’s planned to produce 80,000 units during the year. Annual
fixed overhead is $56,000 and the standard for variable overhead is $1.50 per unit.
The following information summarizes the results for 2011:
Actual production was 75,000 units.
Purchased 275,000 ounces of material at a total cost of $343,750.
Used 266,250 ounces of material in production.
Employees worked 22,000 hours and were paid $275,000.
Actual overhead incurred was $175,000.
What is the material quantity variance?
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FINAL / ACC 3123 / FALL 2010 / PART 1
8.
Williams Pharmacy Inc. has the following sales budget for the first two quarters of next
year:
January
February
March
$250,000
$200,000
$230,000
April
May
June
$220,000
$245,000
$198,000
Cash collections have been determined to follow the pattern below:
60 percent of sales collected in month of sales
25 percent of sales collected in month after sale
12 percent of sales collected two months after sale
3 percent of sales is uncollectible
What is the budgeted cash collection for the month of March?
9.
The Horner Company makes three products. The cost data for these three products is as
follows:
Selling price
Direct Material Cost
Direct Labor Cost
Other Variable Costs
Product A
$10
4
2
1
Product B
$20
8
2.50
1.50
Product C
$40
11
2
3
Total annual fixed manufacturing costs are $440,000 and the annual fixed nonmanufacturing costs are $400,000. The firm's experience has been that about 20 percent of
dollar sales come from product A, 60 percent from B, and 20 percent from C.
Determine the number of units of Product B to be sold at the break-even point.
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FINAL / ACC 3123 / FALL 2010 / PART 1
10.
Zeppost Inc. has developed the following sales budget for the first six months of the
coming year
Month
January
February
March
April
May
June
Sales
30,000
50,000
70,000
80,000
60,000
50,000
The beginning inventory on January 1 is 8,000 units. The desired ending inventory for the
coming year is to be 25 percent of next month's sales.
Each unit requires 6 units of material X at $8 per unit and 3 units of material Y at $2 per
unit. There are 15,000 units of X and 4,500 units of Y on hand January 1 and the desired
ending inventory for these will be 30 percent of next month's needs for the coming year.
What is the cost of material X to be purchased in March?
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