NJCU Accounting: Strategic Profitability Analysis Midterm exam 2. value: 6.00 points The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the company’s two products using the data that are given below: Wall Mirrors Specialty Windows Total expected units produced 11 900 1 710 Total expected material moves 1 190 1 610 Expected direct labor-hours per unit 7 8 The total materials handling cost for the year is expected to be $17 148.70. If the materials handling cost is allocated on the basis of direct labor-hours how much of the total materials handling cost would be allocated to the Wall Mirrors? (Round your intermediate calculations to 2 decimal places. Round your final answer to the nearest whole dollar.) $9 566 $14 994 $7 917 $12 894 3. value: 6.00 points Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company’s three activity cost pools as follows: Processing $49 800; Supervising $31 300; and Other $22 000. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing) Batches (supervising) Product S5 12 700 1 410 Product F5 850 600 Total 13 550 2 010 What is the overhead cost assigned to Product S5 under activity-based costing? (Round your intermediate calculations and final answer to 2 decimal places.) $53 221.70 $46 736.00 $68 689.70 $21 953.70 4. value: 6.00 points Fogle Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system: Overhead costs: Wages and salaries $159 000 Other expenses 105 000 Total $264 000 Distribution of resource consumption: Activity Cost Pools Making Bouquets Delivery Other Total Wages and salaries 50% 30% 20% 100% Other expenses 35% 55% 10% 100% The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Activity Making bouquets 101 090 bouquets Delivery 13 400 deliveries What would be the total overhead cost per delivery according to the activity based costing system? In other words what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest cent.) $6.16 $7.44 $8.73 $7.87 5. value: 6.00 points Capizzi Corporation has an activity-based costing system with three activity cost pools-Machining Order Filling and Other. In the first stage allocations costs in the two overhead accounts equipment depreciation and supervisory expense are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment depreciation $86 300 Supervisory expense $7 400 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.30 0.10 Supervisory expense 0.60 0.20 0.20 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company’s two products follow: Activity: MHs (Machining) Batches (Order Filling) Product Y7 1 960 1 040 Product V2 9 260 1 430 Total 11 220 2 470 How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing? $76 190 $27 370 $1 480 $25 890 6. value: 6.00 points The Rial Company’s income statement for June is given below: Total Division F Division L Sales $489 500 $304 000 $185 500 Variable expenses 240 730 170 240 70 490 Contribution margin 248 770 133 760 115 010 Traceable fixed expenses 130 000 56 000 74 000 Segment margin 118 770 $77 760 $41 010 Common fixed expenses 44 000 Net operating income $74 770 If the sales in Division L increase by 40% while common fixed expenses in the company decrease by $12 200 the segment margin for Division L should: increase by $24 404 increase by $46 004 decrease by $33 804 decrease by $79 204 7. value: 6.00 points Hansen Company produces a single product. During the last year Hansen had net operating income under absorption costing that was $26 250 lower than its income under variable costing. The company sold 15 800 units during the year and its variable costs were $15 per unit of which $11 was variable selling expense. If fixed production cost is $15 per unit under absorption costing every year then how many units did the company produce during the year? 13 775 units 14 600 units 17 550 units 14 050 units 8. value: 6.00 points Eagle Corporation manufactures a picnic table. Shown below is Eagle’s cost structure: Variable cost per table Total fixed cost for the year Manufacturing cost $81 $276 640 Selling and administrative $7 $24 472 In its first year of operations Eagle produced and sold 10 640 tables. The tables sold for $127 each. If Eagle had sold only 9 280 tables in its first year what total amount of cost would have been assigned to the 1 360 tables in finished goods inventory under the absorption costing method? $110 160 $145 520 $72 760 $27 200 Time remaining: 1:07:08 9. value: 6.00 points Craft Company produces a single product. Last year the company had a net operating income of $96 450 using absorption costing and $76 200 using variable costing. The fixed manufacturing overhead cost was $15 per unit. There were no beginning inventories. If 26 800 units were produced last year then sales last year were: 6 550 units 25 450 units 28 150 units 47 050 units 10. value: 6.00 points Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. Last year the company’s estimated manufacturing overhead was $1 600 000 and its estimated level of activity was 50 000 direct labor-hours. The company’s direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted to $1 850 000 with actual direct labor cost of $750 000. For the year manufacturing overhead was: rev: 11_05_2013_QC_38434 11_08_2013_QC_38434 04_12_2014_QC_48269 overapplied by $49 000 underapplied by $49 000 underapplied by $150 000 overapplied by $150 000 11. value: 6.00 points Bocchicchio Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company has provided the following data for February: Cost of goods manufactured $195 600 Manufacturing overhead cost incurred $74 400 Manufacturing overhed cost applied $70 200 Inventories: Beginning Ending Finished goods $70 000 $36 200 The unadjusted cost of goods sold (in other words cost of goods sold before adjusting for any underapplied or overapplied overhead) for February is closest to: $195 600 $229 400 $232 000 $191 400 12. value: 6.00 points Elwood Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. In February the company completed job D68R that consisted of 12 800 units of one of the company’s standard products. No other jobs were in process during the month. The job cost sheet for job D68R shows that the total cost for the job was $678 400. During the month the actual manufacturing overhead cost incurred was $166 200 and the manufacturing overhead cost applied to job D68R was $179 800. And during the month 6 800 completed units from job D68R were sold. No other products were sold. The cost of goods sold that would appear on the income statement for February is closest to: $374 000 $678 400 $664 800 $346 800 13. value: 6.00 points At the beginning of the year manufacturing overhead for the year was estimated to be $415 800. At the end of the year actual direct labor-hours for the year were 23 200 hours the actual manufacturing overhead for the year was $403 200 and manufacturing overhead for the year was overapplied by $14 400. If the predetermined overhead rate is based on direct labor-hours then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: 23 200 direct labor-hours 21 600 direct labor-hours 23 100 direct labor-hours 22 400 direct labor-hours 14. value: 6.00 points The contribution margin ratio is 20% for Grain Company and the break-even point in sales is $243 000. To obtain a target net operating income of $84 000 sales would have to be: (Do not round intermediate calculations.) $327 000 $325 200 $256 200 $663 000 15. value: 6.00 points Cindy Inc. sells a product for $8 per unit. The variable expenses are $4 per unit and the fixed expenses total $35 100 per period. By how much will net operating income change if sales are expected to increase by $42 000? $21 000 increase $14 100 decrease $31 350 increase $6 900 increase 16. value: 6.00 points Product L40O Product Y27L Sales $24 200 $51 200 Variable expenses 9 680 19 810 Contribution margin $14 520 $31 390 If the sales mix were to shift toward Product L40O with total dollar sales remaining constant the overall break-even point for the entire company: would increase. would not change. could increase or decrease. would decrease. 17. value: 6.00 points The following information relates to Clyde Corporation which produced and sold 57 000 units last month. Sales $1 368 000 Manufacturing costs: Fixed $210 000 Variable $205 100 Selling and administrative: Fixed $300 000 Variable $ 45 700 There were no beginning or ending inventories. Production and sales next month are expected to be 47 000 units. The company’s unit contribution margin next month should be: (Round your intermediate calculations and final answer to 2 decimal places) $9.38 $3.80 $23.56 $19.60 18. value: 6.00 points A partial listing of costs incurred during December at Gagnier Corporation appears below: Factory supplies $22 000 Administrative wages and salaries $119 000 Direct materials$167 000 Sales staff salaries $82 000 Factory depreciation $63 000 Corporate headquarters building rent $48 000 Indirect labor $46 000 Marketing $117 000 Direct labor $97 000 The total of the period costs listed above for December is: $131 000 $366 000 $395 000 $455 000 19. value: 6.00 points The following cost data pertain to the operations of Swestka Department Stores Inc. for the month of July. Corporate headquarters building lease $86 000 Cosmetics department sales commissions??Northridge Store $5 800 Corporate legal office salaries $57 800 Store manager’s salary?Northridge Store $10 800 Heating-Northridge Store $11 800 Cosmetics department cost of sales??Northridge Store $31 800 Central warehouse lease cost $6 800 Store security-Northridge Store $13 800 Cosmetics department manager’s salary??Northridge Store $4 800 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company’s stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department? $37 600 $42 400 $31 800 $76 400 20. value: 6.00 points At a volume of 12 000 units Company P incurs $58 000 in factory overhead costs including $22 000 in fixed costs. Assuming that this activity is within the relevant range if volume increases to 14 000 units Company P would expect to incur total factory overhead costs of: $56 000 $64 000 $58 000 $50 000 21. value: 6.00 points A partial listing of costs incurred at Backes Corporation during November appears below: Direct materials$170 000 Utilities factory $19 000 Administrative salaries $112 000 Indirect labor $38 000 Sales commissions $67 000 Depreciation of production equipment $59 000 Depreciation of administrative equipment $43 000 Direct labor $127 000 Advertising $74 000 The total of the manufacturing overhead costs listed above for November is: $413 000 $57 000 $709 000 $116 000
