8 ACC122 Midterm Exam – Problems (7 points each) Student Name _______________________________________ Date ___________________ 1. Prepare a horizontal analysis by computing the amounts and percentage changes for the following balance sheet items; place your answers in the blanks provided. 20x6 20x5 Amount Percentage Assets Current assets $ 6,500 $ 5,000 Property, plant, and equipment 22,000 25,000 Total assets $28,500 $30,000 Liabilities and Stockholders' Equity Liabilities $ 5,500 $10,000 Stockholders' equity 23,000 20,000 Total liabilities and stockholders' equity $28,500 $30,000 2. Using the following information from an annual report, prepare a vertical analysis of the consolidated balance sheet at June 30, 20x5. (Round percentage answers to one decimal place.) June 30, 20x5 (In millions) Cash and cash equivalents $ 584 Accounts and other receivables 182 Merchandise inventories 2,027 Prepaid expenses and other current assets 80 Total current assets $2,873 Real estate, net $2,342 Other, net 2,113 Total property and equipment $4,455 Goodwill, net $ 374 Other assets 651 Total assets $8,353 Short-term borrowings $ 278 Accounts payable 1,617 Accrued expenses and other current liabilities 836 Income taxes payable 107 Total current liabilities $2,838 Long-term debt $1,230 Deferred income taxes 362 Other liabilities 243 Total liabilities $4,673 Common stock $ 30 Additional paid-in capital 453 Retained earnings 4,757 Foreign currency translation adjustments (137) Treasury shares, at cost (1,423) Total stockholders' equity $3,680 Total liabilities and stockholders' equity $8,353 3. 3. From the following information, compute the ratios indicated and place the proper numbers in the spaces provided. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round answers to one decimal place, and show your work. Anders Corporation Balance Sheet December 31, 20x5 Assets Cash $ 30,000 Marketable securities 20,000 Accounts receivable (net) 40,000 Inventory 60,000 Prepaid expenses 16,000 Property, plant, and equipment 234,000 Total assets $400,000 Liabilities and Stockholders' Equity Current liabilities $ 60,000 Long-term liabilities 100,000 Stockholders' equity 240,000 Total liabilities and stockholders' equity $400,000 Anders Corporation Income Statement For the Year Ended December 31, 20x5 Net sales $160,000 Cost of goods sold 120,000 Gross margin $ 40,000 Operating expenses Selling and administrative expenses $ 16,000 Interest expense 8,000 Income taxes expense 4,000 28,000 Net income $ 12,000 Anders had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15.00 per share. Dividends paid in 20x5 were $0.60 per share. Current ratio Asset turnover Quick ratio Return on assets R.

1. 8
ACC122 Midterm Exam – Problems (7 points each)
Student Name _______________________________________
Date ___________________
1. Prepare a horizontal analysis by computing the amounts and
percentage changes for the following balance sheet items; place
your answers in the blanks provided.
20x6
20x5
Amount
Percentage
Assets
Current assets
$ 6,500
$ 5,000
Property, plant, and equipment
22,000
25,000
Total assets
$28,500
$30,000

2. Liabilities and Stockholders' Equity
Liabilities
$ 5,500
$10,000
Stockholders' equity
23,000
20,000
Total liabilities and stockholders' equity
$28,500
$30,000

3. 2. Using the following information from an annual report,
prepare a vertical analysis of the consolidated balance sheet at
June 30, 20x5. (Round percentage answers to one decimal
place.)
June 30, 20x5
(In millions)
Cash and cash equivalents
$ 584
Accounts and other receivables
182
Merchandise inventories
2,027
Prepaid expenses and other current assets
80
Total current assets
$2,873
Real estate, net

4. $2,342
Other, net
2,113
Total property and equipment
$4,455
Goodwill, net
$ 374
Other assets
651
Total assets
$8,353
Short-term borrowings
$ 278
Accounts payable
1,617
Accrued expenses and other current liabilities
836
Income taxes payable
107
Total current liabilities
$2,838
Long-term debt
$1,230
Deferred income taxes
362
Other liabilities
243
Total liabilities
$4,673
Common stock
$ 30
Additional paid-in capital
453
Retained earnings
4,757
Foreign currency translation adjustments

5. (137)
Treasury shares, at cost
(1,423)
Total stockholders' equity
$3,680
Total liabilities and stockholders' equity
$8,353
3.
3. From the following information, compute the ratios indicated
and place the proper numbers in the spaces provided. Assume
the average for the year is the same as the ending balances for
the balance sheet accounts. Round answers to one decimal
place, and show your work.
Anders Corporation
Balance Sheet
December 31, 20x5
Assets
Cash
$ 30,000
Marketable securities
20,000
Accounts receivable (net)

6. 40,000
Inventory
60,000
Prepaid expenses
16,000
Property, plant, and equipment
234,000
Total assets
$400,000
Liabilities and Stockholders' Equity
Current liabilities
$ 60,000
Long-term liabilities
100,000
Stockholders' equity
240,000
Total liabilities and stockholders' equity
$400,000
Anders Corporation
Income Statement
For the Year Ended December 31, 20x5
Net sales
$160,000
Cost of goods sold

7. 120,000
Gross margin
$ 40,000
Operating expenses
Selling and administrative expenses
$ 16,000
Interest expense
8,000
Income taxes expense
4,000
28,000
Net income
$ 12,000
Anders had 4,000 shares of common stock issued and
outstanding. The market price of common stock at year end was
$15.00 per share. Dividends paid in 20x5 were $0.60 per share.
Current ratio
Asset turnover
Quick ratio
Return on assets

8. Receivable turnover
Return on equity
Days' sales uncollected
Debt to equity ratio
Inventory turnover
Interest coverage ratio
Profit margin
Days' inventory on hand
Dividend yield
Price/earnings (P/E) ratio
4. Job #178 consists of 500 units and has total of direct
materials, $48,000; direct labor, $58,000; and overhead,
$35,000.
a. What is the unit product cost?
b. What are the prime costs per unit?
c. What are the conversion costs per unit?

9. 5. Use the information below for the year ended December 31,
2014, to prepare the statement of cost of goods manufactured.
Inventories
Beginning
Ending
Materials inventory
$32,600
$ 32,500
Work in process inventory
41,200
41,800
Direct materials purchased
168,000
Total direct labor costs
245,200
Total indirect labor costs
52,100
Utilities
27,300

10. Depreciation
35,000
Small tools
2,500
Factory insurance
1,600
Factory supervision
45,200
Miscellaneous overhead costs
7,200

11. 6. The Work in Process Inventory account for Clinton Company
for the month ended September 30 appears below.
Work in Process Inventory
Beginning Balance
0
Completed
135,800
Direct Materials
42,000
Direct Labor
70,000
Overhead
91,000
Overhead is applied based on direct labor dollars. Direct
material costs for the one job remaining in work in process on
September 30 was $12,300.
a. What was the overhead rate used to apply overhead to jobs?
b. Determine the amount of direct labor charged to the one
remaining job. Round you answers to nearest dollars

12. 7. Pretty Pillows, Mfg., manufactures silk throw pillows. Last
month the company produced 3,890 pillows. Using job order
costing, determine the product unit cost for one pillow based on
the following costs: production facility utilities, $1,600;
depreciation on production equipment, $650; indirect materials,
$400; direct materials, $5,300; indirect labor, $1,000; direct
labor, $3,500; sales commissions, $4,000; president's salary,
$8,000; insurance on production facility, $1,000; advertising
expense, $900; rent on production facility, $6,000; rent on sales
office, $4,000; and legal expense, $600. Round your answer to
two decimal places.
8. The following are monthly totals taken from the log of laser
printer used by the Hardcopy Printing International. Cost was
based on a flat fee plus a declining cost per copy made after a
minimum number of copies had been made each month.
Month

13. Number of Copies Made
Total Cost
July
38,720
$11,880
August
33,440
10,560
September
36,190
11,248
October
44,330
13,283
November
42,240
12,760
December
53,790
15,648
To differentiate the variable and fixed costs in the use of this
machine for future planning, use the high-low method to (a)
determine the variable cost per copy (round your answers to two
decimal places) and (b) compute the fixed and variable costs for
the months of August and December (round your answers to
nearest whole number).

14. 9. Denapasa Manufacturing leases a vacuum cleaning system for
a basic monthly fee plus an additional cost per hour used above
a given minimum for each month. Given below is the
information for the most recent six-month period on the number
of machine hours of use and the total cost under this lease.
Month
Machine Hours
Total Cost
7
6,300
$58,200
8
4,400
49,935
9
4,700
52,390
10
5,200
54,440
11
5,600
56,620
12
5,000
53,800
You are to provide information for planning concerning the
variable and fixed cost elements in this lease. Use the high-low
method to (a) determine the variable cost per machine hour and
(b) compute the fixed and variable costs for months 7 and 8.

15. 10. Campground Inc. is considering the production and sale of
propane lamps. Annual fixed costs associated with the project
are expected to total $60,000. In addition, each lamp would sell
for $12 and would require $7 in variable costs. Calculate (a) the
breakeven point in units, (b) the breakeven point in dollars, (c)
the number of lamps that must be sold to earn a profit of
$120,000, and (d) the operating income or loss at a sales volume
of 16,000 lamps