Part I. 6 Comprehensive problems worth 50
1.Points = 4
Hayes Enterprises produces
miniature parasols. Each parasol consists of $1.20 of variable costs and $.90
of fixed costs and sells for $4.50. A French wholesaler offers to buy 9,000
units at $1.40 each, of which Pederson has the capacity to produce. Hayes will
incur extra shipping costs of $.12 per parasol.
Determine the incremental income or loss that Hayes Enterprises
would realize by accepting the special order.
2.Points = 4
DSD Inc. produces several
models of clocks. An outside supplier has offered to produce the commercial
clocks for DSD for $270 each. R&R needs 2,000 clocks annually. R&R has provided
the following unit costs for its commercial clocks:
Fixed overhead (70% avoidable)
Prepare an incremental analysis, which shows the effect of the
3. Points = 12
The current sections of
Allie Inc.’s balance sheets at December 31, 2013 and 2014, are presented here.
Allieâ€™s net income for 2014 was $210,000. Depreciation expense was
Prepare the net cash provided by operating activities section of
the company’s statement of cash flows for the year ended December 31, 2014,
using the indirect method.
4.Points = 10
Mimi Manufacturing Company
uses a job order cost accounting system and keeps perpetual inventory records.
Prepare journal entries to record the following transactions during the month
Purchased raw materials for $22,000 on account.
Raw materials requisitioned by production:
Paid factory utilities, $2,400 and repairs for factory
Incurred $98,000 of factory labor.
Time tickets indicated the following:
(6,000 hrs. @ $13 per hr.)
(2,500 hrs. @ $8 per hr.)
Applied manufacturing overhead to production based on a predetermined
overhead rate of $10 per direct labor hour worked.
Goods costing $20,000 were completed in the factory and were
transferred to finished goods.
Goods costing $16,000 were sold for $23,000 on account.
5. Points = 12
Company uses a process cost system. The Molding Department adds materials at
the beginning of the process and conversion costs are incurred uniformly
throughout the process. Work in process on May 1 was 75% complete and work in
process on May 31 was 40% complete.
Complete the Production Cost Report for the Molding Department for
the month of May using the above information and the information below.
Data concerning manufacturing
overhead for Arianna Industries are presented below. The Mixing Department is a
An analysis of the overhead costs reveals that all variable costs
are controllable by the manager of the Mixing Department and that 50% of
supervisory costs are controllable at the department level.
The flexible budget formula and the cost and activity for the
months of June and July are as follows:
Prepare the responsibility reports for the Mixing Department for
Comment on the manager’s performance in controlling costs during
the two-month period.
Part II: 25 Multiple choice
questions @ 2 points each = 50 points
Company is a publicly held corporation whose $1 par value stock is actively
traded at $64 per share. The company issued 3,000 shares of stock to acquire
land recently advertised at $200,000. When recording this transaction, Jackson
Land for $200,000.
Common Stock for $192,000.
Land for $192,000.
Paid-In Capital in Excess of Par for $196,000.
Corporation sold 400 shares of treasury stock for $45 per share. The cost for
the shares was $35. The entry to record the sale will include a
Gain on Sale of Treasury Stock for $14,000.
Paid-in Capital from Treasury Stock for $4,000.
Paid-in Capital in Excess of Par for $4,000.
Treasury Stock for $18,000.
3.Which of the following show the proper effect of a stock split and
a stock dividend?
Inc., has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and
40,000 shares of $1 par value common stock outstanding at December 31, 2014.
There were no dividends declared in 2013. The board of directors declares and
pays a $60,000 dividend in 2014. What is the amount of dividends received by
the common stockholders in 2014?
$600,000 bond was retired at 98 when the carrying value of the bond was
$590,000. The entry to record the retirement would include a
bond redemption of $10,000.
bond redemption of $10,000.
bond redemption of $2,000.
bond redemption of $2,000.
6.The following data are available for Two-off Company.
Increase in accounts payable
Increase in bonds payable
Sale of investments
Issuance of common stock
Payment of cash dividends
Net cash provided by financing activities is:
income reported on the income statement for the current year was $220,000.
Depreciation recorded on plant assets was $35,000. Accounts receivable and
inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and
accounts payable decreased by $2,000 and $12,000 respectively. How much cash
was provided by operating activities?
company reports a net loss, it
have a net increase in cash.
be able to pay cash dividends.
be able to get a loan.
be able to make capital expenditures.
9.A creditor would be most interested in evaluating which of the
B) Earnings per share
C) Payout ratio
D) Times interest earned
Company has beginning work in process inventory of $220,000 and total
manufacturing costs of $950,000. If cost of goods manufactured is $940,000,
what is the cost of the ending work in process inventory?
11.The principal difference between a merchandising and a
manufacturing income statement is the
goods sold section.
following data for Good man Company, compute (A) total manufacturing costs and
(B) costs of goods manufactured:
Direct materials used
Beginning work in process
Ending work in process
Beginning finished goods
Ending finished goods
Total Manufacturing Costs
Costs of Goods Manufactured
Inc. uses job order costing for its brand new line of sewing machines. The cost
incurred for production during 2014 totaled $20,000 of materials, $8,000 of
direct labor costs, and $8,000 of manufacturing overhead applied. The company
ships all goods as soon as they are completed which results in no finished
goods inventory on hand at the end of any year. Beginning work in process
totaled $9,000, and the ending balance is $15,000. During the year, the company
completed 20 machines. How much is the cost per machine?
14.For Cevu Company,
the predetermined overhead rate is 75% of direct labor cost. During the month,
$750,000 of factory labor costs are incurred of which $200,000 is indirect
labor. Actual overhead incurred was $420,000. The amount of overhead debited to
Work in Process Inventory should be:
15.Hunten Manufacturing assigns overhead based on machine hours. The
Milling Department logs 1,400 machine hours and Cutting Department shows 3,000
machine hours for the period. If the overhead rate is $5 per machine hour, the
entry to assign overhead will show a
Manufacturing Overhead for $22,000.
Work in Processâ€”Cutting Department for $15,000.
Work in Process for $15,000.
Manufacturing Overhead for $22,000.
Molding Department of Bidwell Company has the following production data:
beginning work process 40,000 units (60% complete), started into production
680,000 units, completed and transferred out 640,000 units, and ending work in
process 80,000 units (40% complete). Assuming materials are entered at the
beginning of the process, equivalent units for materials are:
17.ThoAon, Inc. collected the following production data for the past
If the high-low method is used, what is the monthly total cost
cost = $4,400 + $11/unit
cost = $5,500 + $10/unit
cost = $0 + $15/unit
cost = $3,300 + $12/unit
break-even point of 2,000 units, variable costs are $120,000, and fixed costs
are $64,000. How much is the selling price per unit?
19.The following information is taken from the production budget for
the first quarter:
Beginning inventory in units
Sales budgeted for the quarter
Capacity in units of production facility
How many finished goods units should be produced during the
quarter if the company desires 4,800 units available to start the next quarter?
Manufacturing is planning to sell 1,200 boxes of ceramic tile, with production
estimated at 1,120 boxes during May. Each box of tile requires 44 pounds of
clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and
employees of the company are paid $15.00 per hour. Manufacturing overhead is
applied at a rate of 110% of direct labor costs. Jared has 5,200 pounds of clay
mix in beginning inventory and wants to have 6,000 pounds in ending inventory.
What is the total amount to be budgeted for manufacturing overhead
for the month?
results that are evaluated by a static budget might show
favorable differences that are not justified.
unfavorable differences that are not justified.
materials price variance is $3,600 F and the materials quantity and labor
variances are each $2,800 U, what is the total materials variance?
23.The per-unit standards for direct labor are 1.5 direct labor hours
at $15 per hour. If in producing 2,300 units, the actual direct labor cost was
$46,000 for 3,000 direct labor hours worked, the total direct labor variance is
Maker Company $22 of variable and $15 of fixed costs to produce one Panini
press which normally sells for $57. A foreign wholesaler offers to purchase
1,000 Panini presses at $40 each. Maker would incur special shipping costs of
$5 per press if the order were accepted. Maker has sufficient unused capacity
to produce the 1,000 Panini presses. If the special order is accepted, what
will be the effect on net income?
Manufacturing Company can make 100 units of a necessary component part with the
If Nelson Manufacturing Company purchases the component
externally, $30,000 of the fixed costs can be avoided. At what external price
for the 100 units is the company indifferent between making or buying?