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Accounting & MIS 3300
Exam II
Spring 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
35
12 – 17 minutes
II
3
30
14 – 19 minutes
III
4-5
35
14 – 19 minutes
100
40 – 55 minutes
Total
Page 2 of 5
PROBLEM I
Aster Company has the following per-unit standards for 20x1:
Direct Materials
Direct Labor
Variable Manu. Overhead
7 lbs. @ $6.50 per lb.
4 direct-labor hours @ $14.00 per direct-labor hour
3 machine hours @ $7.00 per machine hour
Budgeted fixed manufacturing overhead was $414,000. Aster used a denominator level of
12,000 units. Actual production was 13,000 units using 37,500 machine hours, and the
following occurred:
Direct Materials:
Direct Labor:
Manu. Overhead:
Purchased 98,000 lbs. for $622,300 and used 98,000 lbs.
Paid $711,360 for 49,400 direct-labor hours
Incurred $674,000 of all manufacturing overhead
Required: Compute the seven (7) variances requested and place in boxes below.
Direct Material Price
Variance
Direct Labor Price
Variance
Manufacturing
Overhead Spending
Variance
Manufacturing OH
Production-Volume
Variance
Direct Material
Efficiency Variance
Direct Labor
Efficiency Variance
Manufacturing
Overhead Efficiency
Variance
X
X
Page 3 of 5
PROBLEM II
The Baxter Company produced 3,200 units including the following standards:
Direct Materials
Direct Labor
Variable Manu. OH
$7.50 per kilo
5 hours @ $10.00 per hr.
$4.40 per direct-labor hour
and the following results:
Direct Materials Price Variance
Direct Materials Efficiency Variance
Average Actual Price per kilo
Kilos Used
Direct Labor Efficiency Variance
Average Actual Wage Rate per hour
Actual Fixed Manufacturing Overhead
Fixed Manu. Overhead Spending Variance
Fixed Manufacturing Overhead
Total Manu. Overhead Flex. Budget Variance
$1,470 F
$1,500 F
$7.36
11,000
$12,000 U
$10.74
$137,500
$11,500 U
$3,100 underallocated
$14,200 U
Calculate the ten (10) items requested below:
Standard Kilos
Var. Manu. OH
Allowed per unit
Spending Variance
Kilos Purchased
Var. Manu. OH
Efficiency Variance
Direct Labor Hours
Actual Total
Used
Variable Manu. OH
Direct Labor Price
Budgeted Fixed
Variance
Manu. Overhead
Denominator Level
Production Volume
in Units
Variance
Page 4 of 5
PROBLEM III
The Catter Company began operations in March of 20x1 and decided to use weightedaverage for inventory calculations. The following is known:
March 20x1
April 20x1
Production
800 units
700 units
Sales (@ $140 per unit)
600 units
800 units
Budgeted Direct Materials
$24 per unit
$24 per unit
Budgeted Other Variable Manufacturing $36 per unit
$36 per unit
Budgeted Fixed Manufacturing
$31,500 per month $31,500 per month
Variable Operating Costs
$8 per unit sold
$8 per unit sold
Fixed Operating Costs
$10,000 per month $10,000 per month
The firm uses a denominator level of 750 per month and there are no price, spending, or
efficiency variances in either month.
Required: Present the April 20x1 income statement in good form under the specified
costing methods.
Actual Absorption
Normal Absorption with variances closed to
Cost of Goods Sold
Page 5 of 5
Actual Variable Costing
Actual Throughput Costing