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ACCT 505 Entire Course (New)
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ACCT 505 Week 1-7 All Discussion Questions
ACCT 505 Week 1 Case Study
ACCT 505 Week 2 Quiz Job Order and Process Costing Systems
ACCT 505 Week 2 Quiz Set 2
ACCT 505 Week 3 Case Study II
ACCT 505 Week 4 Midterm Exam
ACCT 505 Week 5 Course Project 1 LBJ Company (New)
ACCT 505 Week 5 Measuring Performance - Course Project A
ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for
Decisions
ACCT 505 Week 7 Capital Budgeting Course Project
ACCT 505 Week 7 Course Project 2 Capital Budgeting Decision (New)
ACCT 505 Final Exam Guide (New) Set 1

ACCT 505 Midterm Exam (New) Set 1
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ACCT 505 Final Exam (Devry)
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ACCT 505 Final Exam
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ACCT 505 Final Exam (New) All 3 Set
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Score 248/250
Multiple Choice 2
Short 2

Essay 7
Question 1 : (TCO E) Designing a new product is a(n)
2. Question : (TCO G) Given the following data, what would ROI be?
Sales $70,000
Net operating income $10,000
Contribution margin $20,000
Average operating assets $50,000
Stockholder's equity $25,000
1. Question : (TCO C) Longiotti Corporation produces and sells a single
product. Data
concerning that product appear below.
Selling price per unit $375.00
Variable expense per unit $144.00
Fixed expense per month $1,686,300
Required:

Determine the monthly breakeven in units or dollar sales. Show your
work!
2. Question : (TCO B) Maverick Corporation uses the weighted-average
method in its
process costing system. Data concerning the first processing department
for
the most recent month are listed below.
Work in process, beginning:
Units in beginning work in process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,600
Materials costs added during the month $112,500
Conversion costs added during the month $210,300
1. Question : (TCO D) Topple Company produces a single product.
Operating data for the

company and its absorption costing income statement for the last year
are
presented below.
Units in beginning inventory 2,000
Units produced 9,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Cost of goods sold 60,000
Gross margin 40,000
Less selling and admin. expenses 28,000
2. Question : (TCO I) (Ignore income taxes in this problem.) Bill Anders
retires in 8 years.

He has $650,000 to invest and is considering a franchise for a fast-food
outlet. He would have to purchase equipment costing $500,000 to equip
the
outlet and invest an additional $150,000 for inventories and other
working
capital needs. Other outlets in the fast-food chain have an annual net
cash
inflow of about $160,000. Mr. Anders would close the outlet in 8 years.
He
estimates that the equipment could be sold at that time for about 10% of
its
original cost. Mr. Anders' required rate of return is 16%.
Required:
Part A: What is the investment's net present value when the discount rate
is
16%?
Part B: Refer to your calculations. Is this an acceptable investment?
Why or
why not?

3. Question : (TCO A) The following data (in thousands of dollars) have
been taken from the accounting records of the Maroon Corporation for
the just-completed
year.
Sales 1,300
Raw materials inventory, beginning 25
Raw materials inventory, ending 30
Purchases of raw materials 250
Direct labor 350
Manufacturing overhead 500
Administrative expenses 300
Selling expenses 250
Work in process inventory, beginning 150
Work in process inventory, ending 100
Finished goods inventory, beginning 80
Finished goods inventory, ending 110
Use the above data to prepare (in thousands of dollars) a schedule of
Cost
of Goods Manufactured and a Schedule of Cost of Goods Sold for the
year.
In addition, what is the impact on the financial statements if the ending
finished goods inventory is overstated or understated?

4. Question : (TCO F) Walker Corporation is preparing its cash budget
for November. The
budgeted beginning cash balance is $43,000. Budgeted cash receipts
total $117,000 and budgeted cash disbursements total $122,000. The
desired
ending cash balance is $55,000. The company can borrow up to
$100,000 at
any time from a local bank, with interest not due until the following
month.
Required:
Prepare the company's cash budget for November in good form. Make
sure
to indicate what borrowing, if any, would be needed to attain the desired
ending cash balance
5. Question : (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected
the following
operating information for its current month's activity. Using this
information,
prepare a flexible budget analysis to determine how well BLH
performed in

terms of cost control.
Static Budget
Activity level (in units) 5,250 5,178
Variable costs:
Indirect materials $24,182 $23,476
Utilities $22,356 $22,674
Fixed costs:
Administration $63,450 $65,500
Rent $65,317 $63,904
6. Question : (TCO H) Lindon Company uses 7,500 units of Part Y each
year as a
component in the assembly of one of its products. The company is
presently
producing Part Y internally at a total cost of $119,000 as follows.
Direct
materials
$26,000
Direct labor 28,000
Variable
manufacturing
overhead

20,000
Fixed
manufacturing
overhead
45,000
Total costs $119,000
An outside supplier has offered to provide Part Y at a price of $12 per
unit. If
Lindon stops producing the part internally, one third of the fixed
manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage
or
disadvantage of accepting the outside supplier's offer. Please state
clearly
whether the part should be made or bought and share your work.
7. Question : (TCO B) Sandler Corporation bases its predetermined
overhead rate on the
estimated machine hours for the upcoming year. Data for the upcoming
year
appear below.

Estimated machine hours 75,000
Estimated variable manufacturing
overhead $4.50 per machine hour
Estimated total fixed manufacturing
overhead $825,000
The actual machine hours for the year turned out to be 77,000.
Required:
Compute the company's predetermined overhead rate.
Set 2
1. (TCO C) Madlem, Inc., produces and sells a single product whose
selling price is $120.00 per unit and whose variable expense is $46.20
per unit. The company's fixed expense is $405,900 per month.
Required: Determine the monthly breakeven in either unit or total dollar
sales. Show your work! (Points : 25)

Question 2.2. (TCO B) Industrial Supply Corporation uses the weighted-
average method in its process costing system. Data concerning the first
processing department for the most recent month are listed below.
Ending work in process:
Units in ending work-in-process inventory 1,200
Percentage complete for materials 75%
Percentage complete for conversion 30%
Required: Calculate the equivalent units for conversion for the month in
the first processing department. (Points : 25)

Question 1.1. (TCO D) The following absorption costing income
statement and additional data are available from the accounting records
of Bernon Co. for the month ended May 31, XXXX. During the
accounting period, 17,000 units were manufactured and sold at a price of
$60 per unit. There were no beginning inventories.
Bernon Co.
Absorption Costing Income Statement
for the Month Ended May 31, XXXX
Sales (17,000 @ $60) $1,020,000
Gross profit $ 408,000
Selling and administrative expenses 66,000
Income from operations $ 342,000
Additional Information:

Cost Total Cost Number of Units Unit Cost
Manufacturing costs:
Variable $442,000 17,000 $26
Fixed 170,000 17,000 10
Total $612,000 $36
Selling and administrative expenses:
Variable ($2 per unit sold) $34,000
Fixed 32,000
Total $66,000
Required: Prepare a new income statement for the year using variable
costing. Comment on the differences, if any, between the absorption
costing and the variable costing income statements. (Points : 30)
Question 2.2. (TCO I) (Ignore income taxes in this problem.) Simpson
Beauty Products Corporation is considering the production of a new
conditioning shampoo that will require the purchase of new mixing
machinery. The machinery will cost $700,000, is expected to have a
useful life of 10 years, and is expected to have a salvage value of

$70,000 at the end of 10 years. The machinery will also need a $45,000
overhaul at the end of Year 5. A $60,000 increase in working capital will
be needed for this investment project. The working capital will be
released at the end of the 10 years. The new shampoo is expected to
generate net cash inflows of $150,000 per year for each of the 10 years.
Simpson's discount rate is 18%.
Items Year(s) Amount 18% Factor Present Value
Cost of machinery Now ($700,000) 1 ($700,000)
Working capital increase Now ($60,000) 1 ($60,000)
Annual cash inflows 1–10 $150,000 4.494 674,100
Overhaul 5 ($45,000) 0.437 ($19,665)
Salvage value 10 $70,000 0.191 13,370
Working capital release 10 $60,000 0.191 11,460
Net present value ($80,735)
Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Simpson go ahead with
the new conditioning shampoo? (Points : 30)

Question 3.3. (TCO A) The following data (in thousands of dollars) have
the just-completed year.
Sales 1,700
Direct labor 360
Work-in-process inventory, beginning 120
Work-in-process inventory, ending 150
Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for
the year. In addition, what is the impact on the financial statements if the
ending finished goods inventory is overstated or understated? (Points :
25)

Question 4.4. (TCO F) Walker Corporation is preparing its cash budget
for November. The budgeted beginning cash balance is $43,000.
Budgeted cash receipts total $117,000 and budgeted cash disbursements
total $122,000. The desired ending cash balance is $55,000. The
company can borrow up to $100,000 at any time from a local bank, with
interest not due until the following month.
Required:
sure to indicate what borrowing, if any, would be needed to attain the
desired ending cash balance(Points : 25)
Question 5.5. (TCO F) The following overhead data are for a department
of a large company.
Actual Costs Incurred Static Budget
Activity level (in units) 360 340
Variable costs:

Electricity $2,536 $2,414
Fixed costs:
Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be
useful in assessing how well costs were controlled in this department.
(Points : 25)
Question 6.6. (TCO H) McMullen Co. uses 10,000 units of Part X each
year as a component in the assembly of one of its products. The
company is presently producing Part X internally at a total cost of
$125,000 as follows.
Direct materials $40,000
Direct labor 30,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 30,000

An outside supplier has offered to provide Part X at a price of $10 per
unit. If McMullen stops producing the part internally, one third of the
fixed manufacturing overhead would be eliminated.
or disadvantage of accepting the outside supplier's offer. Please state
clearly whether the part should be made or bought and share your work.
(Points : 30)
Question 7.7. (TCO B) Buckhorn Corporation bases its predetermined
overhead rate on the estimated machine hours for the upcoming year.
Data for the upcoming year appear below.
Estimated variable manufacturing overhead $7.77 per machine hour
Estimated total fixed manufacturing overhead $888,000
Required: Compute the company's predetermined overhead rate. (Points
: 25)

Set 3
(TCO E) Preparing purchase orders is a(n) (Points : 5)
batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
2. (TCO G) Given the following data, what would ROI be?
Sales $70,000
(Points : 5)
28.6%

20.0%
40.0%
50.0%
3. (TCO C) Heckaman Corporation produces and sells a single product.
Data concerning that product appear below.
Fixed expense per month $299,115
4. TCO B) Industrial Supply Corporation uses the weighted-average
method in its process costing system. Data concerning the first

5. (TCO D) Topple Company produces a single product. Operating data
for the company and its absorption costing income statement for the last
year are presented below.
Units in beginning inventory 0
Units sold 7,000
Sales $100,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing
overhead totals $18,000 for the year. The fixed manufacturing overhead
was applied at a rate of $2 per unit. Variable selling and administrative
expenses were $1 per unit sold.
costing. Comment on the differences between the absorption costing and
the variable costing income statements. (Points : 30)

6. (TCO I) (Ignore income taxes in this problem.) Simpson Beauty
Products Corporation is considering the production of a new
machinery. The machinery will cost $700,000, is
Required:
Part A: What is the net present value of this investment opportunity?
Part B: Based on your answer to (a) above, should Simpson go ahead
with the new conditioning shampoo? (Points : 30)
PART B:
Simpson should not go ahead and purchase the shampoo machine since
the NPV is negative.
7. (TCO A) The following data (in thousands of dollars) have been taken
from the accounting records of Karmana Corporation for the just-
completed year.
8. (TCO F) Matuseski Corporation is preparing its cash budget for
October. The budgeted beginning cash balance is $54,000. Budgeted
cash receipts total $127,000 and budgeted cash disbursements total
$99,000. The desired ending cash balance is $100,000. The company
can borrow up to $150,000 at any time from a local bank, with interest
not due until the following month.

Required: Prepare the company's cash budget for October in good form.
Make sure to indicate what borrowing, if any, would be needed to attain
the desired ending cash balance. (Points : 25)
9. (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the
following operating information for its current month's activity. Using
this information, prepare a flexible budget analysis to determine how
well BLH performed in terms of cost control.
Variable costs:
Utilities $22,356 $22,674
Fixed costs:
Rent $65,317 $63,904
(Points : 25)

10. (TCO H) Lindon Company uses 10,000 units of Part Y each year as
a component in the assembly of one of its products. The company is
presently producing Part Y internally at a total cost of $100,000 as
follows.
Direct materials............................................... $20,000
Direct labor...................................................... 40,000
Variable manufacturing overhead...................... 16,000
Fixed manufacturing overhead.......................
24,000
Total costs.......................................................100,000
unit. If Lindon stops producing the part internally, one third of the fixed
11. (TCO B) Wahr Corporation bases its predetermined overhead rate on
the estimated labor hours for the upcoming year. At the beginning of the
most recently completed year, the company estimated the labor hours for
the upcoming year at 35,000. The estimated variable manufacturing
overhead was $7.25 per labor hour and the estimated total fixed
manufacturing overhead was $585,000. The actual labor hours for the
year turned out to be 33,000.
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Score 248/250
Multiple Choice 2
Short 2
Essay 7
Question 1 : (TCO E) Designing a new product is a(n)
2. Question : (TCO G) Given the following data, what would ROI be?
Sales $70,000

1. Question : (TCO C) Longiotti Corporation produces and sells a single
product. Data
concerning that product appear below.
Fixed expense per month $1,686,300
Required:
Determine the monthly breakeven in units or dollar sales. Show your
work!
2. Question : (TCO B) Maverick Corporation uses the weighted-average
method in its
process costing system. Data concerning the first processing department
for
the most recent month are listed below.

1. Question : (TCO D) Topple Company produces a single product.
Operating data for the
company and its absorption costing income statement for the last year
are
presented below.
Units in beginning inventory 2,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000

Gross margin 40,000
Less selling and admin. expenses 28,000
2. Question : (TCO I) (Ignore income taxes in this problem.) Bill Anders
retires in 8 years.
He has $650,000 to invest and is considering a franchise for a fast-food
outlet. He would have to purchase equipment costing $500,000 to equip
the
outlet and invest an additional $150,000 for inventories and other
working
capital needs. Other outlets in the fast-food chain have an annual net
cash
inflow of about $160,000. Mr. Anders would close the outlet in 8 years.
He
estimates that the equipment could be sold at that time for about 10% of
its
original cost. Mr. Anders' required rate of return is 16%.
Required:

Part A: What is the investment's net present value when the discount rate
is
16%?
Part B: Refer to your calculations. Is this an acceptable investment?
Why or
why not?
3. Question : (TCO A) The following data (in thousands of dollars) have
the just-completed
year.
Sales 1,300
Direct labor 350
Work in process inventory, beginning 150

Work in process inventory, ending 100
Cost
of Goods Manufactured and a Schedule of Cost of Goods Sold for the
year.
In addition, what is the impact on the financial statements if the ending
finished goods inventory is overstated or understated?
4. Question : (TCO F) Walker Corporation is preparing its cash budget
for November. The
budgeted beginning cash balance is $43,000. Budgeted cash receipts
total $117,000 and budgeted cash disbursements total $122,000. The
desired
ending cash balance is $55,000. The company can borrow up to
$100,000 at
any time from a local bank, with interest not due until the following
month.
Required:
sure

to indicate what borrowing, if any, would be needed to attain the desired
ending cash balance
5. Question : (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected
the following
operating information for its current month's activity. Using this
information,
prepare a flexible budget analysis to determine how well BLH
performed in
terms of cost control.
Static Budget
Variable costs:
Utilities $22,356 $22,674
Fixed costs:
Rent $65,317 $63,904
6. Question : (TCO H) Lindon Company uses 7,500 units of Part Y each
year as a

component in the assembly of one of its products. The company is
presently
producing Part Y internally at a total cost of $119,000 as follows.
Direct
materials
$26,000
Direct labor 28,000
Variable
manufacturing
overhead
20,000
Fixed
manufacturing
overhead
45,000
unit. If
Lindon stops producing the part internally, one third of the fixed
or

disadvantage of accepting the outside supplier's offer. Please state
clearly
whether the part should be made or bought and share your work.
7. Question : (TCO B) Sandler Corporation bases its predetermined
overhead rate on the
estimated machine hours for the upcoming year. Data for the upcoming
year
appear below.
Estimated variable manufacturing
overhead $4.50 per machine hour
Estimated total fixed manufacturing
overhead $825,000
Required:
Compute the company's predetermined overhead rate.
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Set 2
1. (TCO C) Madlem, Inc., produces and sells a single product whose
selling price is $120.00 per unit and whose variable expense is $46.20
per unit. The company's fixed expense is $405,900 per month.
Required: Determine the monthly breakeven in either unit or total dollar
sales. Show your work! (Points : 25)
Question 2.2. (TCO B) Industrial Supply Corporation uses the weighted-
average method in its process costing system. Data concerning the first

Ending work in process:
Units in ending work-in-process inventory 1,200
Percentage complete for materials 75%
Percentage complete for conversion 30%
Required: Calculate the equivalent units for conversion for the month in
the first processing department. (Points : 25)

Question 1.1. (TCO D) The following absorption costing income
statement and additional data are available from the accounting records
of Bernon Co. for the month ended May 31, XXXX. During the
accounting period, 17,000 units were manufactured and sold at a price of
$60 per unit. There were no beginning inventories.
Bernon Co.
Absorption Costing Income Statement
for the Month Ended May 31, XXXX
Sales (17,000 @ $60) $1,020,000
Gross profit $ 408,000
Selling and administrative expenses 66,000
Income from operations $ 342,000
Additional Information:
Cost Total Cost Number of Units Unit Cost
Manufacturing costs:
Variable $442,000 17,000 $26
Fixed 170,000 17,000 10
Total $612,000 $36

Selling and administrative expenses:
Variable ($2 per unit sold) $34,000
Fixed 32,000
Total $66,000
costing. Comment on the differences, if any, between the absorption
costing and the variable costing income statements. (Points : 30)
Question 2.2. (TCO I) (Ignore income taxes in this problem.) Simpson
Beauty Products Corporation is considering the production of a new
machinery. The machinery will cost $700,000, is expected to have a
useful life of 10 years, and is expected to have a salvage value of
$70,000 at the end of 10 years. The machinery will also need a $45,000
overhaul at the end of Year 5. A $60,000 increase in working capital will
be needed for this investment project. The working capital will be
released at the end of the 10 years. The new shampoo is expected to
generate net cash inflows of $150,000 per year for each of the 10 years.
Simpson's discount rate is 18%.

Items Year(s) Amount 18% Factor Present Value
Cost of machinery Now ($700,000) 1 ($700,000)
Working capital increase Now ($60,000) 1 ($60,000)
Annual cash inflows 1–10 $150,000 4.494 674,100
Overhaul 5 ($45,000) 0.437 ($19,665)
Salvage value 10 $70,000 0.191 13,370
Working capital release 10 $60,000 0.191 11,460
Net present value ($80,735)
Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Simpson go ahead with
the new conditioning shampoo? (Points : 30)
Question 3.3. (TCO A) The following data (in thousands of dollars) have
the just-completed year.
Sales 1,700

Direct labor 360
Work-in-process inventory, beginning 120
Work-in-process inventory, ending 150
Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for
the year. In addition, what is the impact on the financial statements if the
ending finished goods inventory is overstated or understated? (Points :
25)

Question 4.4. (TCO F) Walker Corporation is preparing its cash budget
for November. The budgeted beginning cash balance is $43,000.
Budgeted cash receipts total $117,000 and budgeted cash disbursements
total $122,000. The desired ending cash balance is $55,000. The
company can borrow up to $100,000 at any time from a local bank, with
interest not due until the following month.
Required:
sure to indicate what borrowing, if any, would be needed to attain the
desired ending cash balance(Points : 25)
Question 5.5. (TCO F) The following overhead data are for a department
of a large company.
Activity level (in units) 360 340
Variable costs:

Electricity $2,536 $2,414
Fixed costs:
Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be
useful in assessing how well costs were controlled in this department.
(Points : 25)
Question 6.6. (TCO H) McMullen Co. uses 10,000 units of Part X each
year as a component in the assembly of one of its products. The
company is presently producing Part X internally at a total cost of
$125,000 as follows.
Direct labor 30,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 30,000

An outside supplier has offered to provide Part X at a price of $10 per
unit. If McMullen stops producing the part internally, one third of the
fixed manufacturing overhead would be eliminated.
or disadvantage of accepting the outside supplier's offer. Please state
clearly whether the part should be made or bought and share your work.
(Points : 30)
Question 7.7. (TCO B) Buckhorn Corporation bases its predetermined
overhead rate on the estimated machine hours for the upcoming year.
Data for the upcoming year appear below.
Estimated variable manufacturing overhead $7.77 per machine hour
Estimated total fixed manufacturing overhead $888,000

Required: Compute the company's predetermined overhead rate. (Points
: 25)
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(TCO E) Preparing purchase orders is a(n) (Points : 5)
batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
2. (TCO G) Given the following data, what would ROI be?
Sales $70,000

(Points : 5)
28.6%
20.0%
40.0%
50.0%
3. (TCO C) Heckaman Corporation produces and sells a single product.
Data concerning that product appear below.
Fixed expense per month $299,115
4. TCO B) Industrial Supply Corporation uses the weighted-average
method in its process costing system. Data concerning the first

5. (TCO D) Topple Company produces a single product. Operating data
for the company and its absorption costing income statement for the last
year are presented below.
Units sold 7,000
Sales $100,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing
overhead totals $18,000 for the year. The fixed manufacturing overhead
was applied at a rate of $2 per unit. Variable selling and administrative
expenses were $1 per unit sold.
costing. Comment on the differences between the absorption costing and
the variable costing income statements. (Points : 30)

6. (TCO I) (Ignore income taxes in this problem.) Simpson Beauty
Products Corporation is considering the production of a new
machinery. The machinery will cost $700,000, is
Required:
Part A: What is the net present value of this investment opportunity?
Part B: Based on your answer to (a) above, should Simpson go ahead
with the new conditioning shampoo? (Points : 30)
PART B:
Simpson should not go ahead and purchase the shampoo machine since
the NPV is negative.
from the accounting records of Karmana Corporation for the just-
completed year.
8. (TCO F) Matuseski Corporation is preparing its cash budget for
October. The budgeted beginning cash balance is $54,000. Budgeted
cash receipts total $127,000 and budgeted cash disbursements total
$99,000. The desired ending cash balance is $100,000. The company

can borrow up to $150,000 at any time from a local bank, with interest
not due until the following month.
Required: Prepare the company's cash budget for October in good form.
Make sure to indicate what borrowing, if any, would be needed to attain
the desired ending cash balance. (Points : 25)
9. (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the
following operating information for its current month's activity. Using
this information, prepare a flexible budget analysis to determine how
well BLH performed in terms of cost control.
Variable costs:
Utilities $22,356 $22,674
Fixed costs:
Rent $65,317 $63,904
(Points : 25)

10. (TCO H) Lindon Company uses 10,000 units of Part Y each year as
a component in the assembly of one of its products. The company is
presently producing Part Y internally at a total cost of $100,000 as
follows.
Direct materials............................................... $20,000
Direct labor...................................................... 40,000
Variable manufacturing overhead...................... 16,000
Fixed manufacturing overhead.......................
24,000
Total costs.......................................................100,000
unit. If Lindon stops producing the part internally, one third of the fixed
11. (TCO B) Wahr Corporation bases its predetermined overhead rate on
the estimated labor hours for the upcoming year. At the beginning of the
most recently completed year, the company estimated the labor hours for
the upcoming year at 35,000. The estimated variable manufacturing
overhead was $7.25 per labor hour and the estimated total fixed
manufacturing overhead was $585,000

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ACCT 505 Midterm Exam (New) 6 Sets
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This Tutorial contains 6 Sets of Midterm Exam 1. (TCO A) Direct
material cost is a part of (Points : 6) Conversion Cost NO.... Prime Cost
NO. Conversion Cost YES.... Prime Cost NO. Conversion Cost YES....
Prime Cost YES. Conversion Cost NO.... Prime Cost YES. Question 2.2.
(TCO A) Total fixed costs (Points : 6) will increase with increases in
activity. will decrease with increases in activity. are not affected by
activity. should be ignored in making decisions because they can never
change. Question 3.3. (TCO A) Property taxes on a company's factory
building would be classified as a(n) (Points : 6) variable cost.
opportunity cost. period cost. product cost. Question 4.4. (TCO C) When
the activity level is expected to increase within the relevant range, what
effects would be anticipated with respect to each of the following?
(Points : 6) Fixed costs per unit decrease and variable costs per unit do
not change. Fixed costs per unit increase and variable costs per unit do
not change. Fixed costs per unit do not change and variable costs per
unit do not change. Fixed costs per unit do not change and variable costs
per unit increase. Question 5.5. (TCO B) Which of the following
statements is true? I. Overhead application may be made slowly as a job
is worked on. II. Overhead application may be made in a single
application at the time of completion of the job. III. Overhead

application should be made to any job not completed at year end in order
to properly value the work in process inventory. (Points : 6) Only
statement I is true. Only statement II is true. Both statements I and II are
true. Statements I, II, and III are true. Question 6.6. (TCO B) Under a
job-order costing system, the product being manufactured (Points : 6) is
homogeneous. passes from one manufacturing department to the next
before being completed. can be custom manufactured. has a unit cost
that is easy to calculate by dividing total production costs by the units
produced. Question 7.7. (TCO F) Equivalent units for a process costing
system using the FIFO method would be equal to (Points : 6) units
completed during the period, plus equivalent units in the ending work-
in-process inventory. units started and completed during the period, plus
equivalent units in the ending work-in-process inventory. units
completed during the period and transferred out. units started and
completed during the period, plus equivalent units in the ending work-
in-process inventory, plus work needed to complete units in the
beginning work-in-process inventory. Question 8.8. (TCO C) The
contribution margin equals (Points : 6) sales - expenses. sales - variable
costs. sales - cost of goods sold. sales - fixed costs. Question 9.9. (TCO
C) Which of the following would not affect the break-even point?
(Points : 6) Variable expense per unit Number of units sold Total fixed
expenses Selling price per unit Question 10.10. (TCO D) Under variable
costing, (Points : 6) inventory costs will be lower than under absorption
costing. inventory costs will be higher than under absorption costing. net
operating income will always be lower than under absorption costing.
net operating income will always be higher than under absorption
costing. 1. (TCO A) The following data (in thousands of dollars) have
been taken from the accounting records of Larop Corporation for the
just-completed year. Sales $950 Purchases of raw materials $225 Direct
labor $250 Manufacturing overhead $295 Administrative expenses $150

Selling expenses $140 Raw materials inventory, beginning $30 Raw
materials inventory, ending $45 Work-in-process inventory, beginning
$20 Work-in-process inventory, ending $55 Finished goods inventory,
beginning $100 Finished goods inventory, ending $135 Prepare a
Schedule of Cost of Goods Manufactured statement in the text box
below. (Points : 15) Schedule of cost of goods manufactured Direct
materials: Question 2.2. (TCO B) The Nebraska Company manufactures
a product that goes through three processing departments. Information
relating to activity in the first department during June is given below.
Percentage Completed Units Materials Conversion Work in process,
June 1 140,000 65% 45% Work in process, Jun 30 120,000 75% 65%
The department started 580,000 units into production during the month
and transferred 600,000 completed units to the next department.
Question 3.3. (TCO C) A tile manufacturer has supplied the following
data. Boxes of tile produced and sold 625,000 Sales revenue $2,975,000
Variable manufacturing expense $1,720,000 Fixed manufacturing
expense $790,000 Variable selling and admin expense $152,000 Fixed
selling and admin expense $133,000 Net operating income $180,000
Question 4.4. (TCO D) The Hampton Company produces and sells a
single product. The following data refer to the year just completed.
Selling price $450 Units in beginning inventory 0 Units produced 25,000
Units sold 22,000 Variable costs per unit: Direct materials $150 Direct
labor $75 Variable manufacturing overhead $25 Variable selling and
admin $15 Fixed costs: Fixed manufacturing overhead $275,000 Fixed
selling and admin $200,000 Required: Compute the cost of a single unit
of product under both the absorption costing and variable costing
approaches. Prepare an income statement for the year using absorption
costing. Prepare an income statement for the year using variable costing.
(Points : 30) Question 1. Question : (TCO A) The variable portion of
advertising costs is a Student Answer: Conversion YES... Period NO.

Conversion YES .... Period YES. Conversion NO.... Period NO.
Conversion NO.... Period YES. Question 2. Question : (TCO A) A cost
incurred in the past that is not relevant to any current decision is
classified as a(n) Student Answer: period cost. incremental cost.
opportunity cost. None of the above Question 3. Question : (TCO A)
Property taxes on a company's factory building would be classified as
a(n) Student Answer: variable cost. opportunity cost. period cost.
product cost. Question 4. Question : (TCO C) Within the relevant range,
variable costs can be expected to Student Answer: vary in total in direct
proportion to changes in the activity level. remain constant in total as the
activity level changes. increase on a per-unit basis as the activity level
increases. increase on a per-unit basis as the activity level decreases.
None of the above Question 5. Question : (TCO B) Which of the
following statements is true? I. Overhead application may be made
slowly as a job is worked on. II. Overhead application may be made in a
single application at the time of completion of the job. III. Overhead
application should be made to any job not completed at year end in order
to properly value the work in process inventory. Student Answer: Only
statement I is true. Only statement II is true. Both statements I and II are
true. Statements I, II, and III are true. Question 6. Question : (TCO B) A
job-order cost system is employed in those situations when Student
Answer: many different products, jobs, or batches of production are
being produced each period. manufacturing involves a single,
homogeneous product that flows evenly through the production process
on a continuous basis. the product moves from department to department
before being completed. the unit cost of production is computed by
dividing the total production costs by the number of units produced.
Question 7. Question : (TCO B) The FIFO method only provides a
major advantage over the weighted-average method in that Student
Answer: the calculation of equivalent units is less complex under the

FIFO method. the FIFO method treats units in the beginning inventory
as if they were started and completed during the current period. the FIFO
method provides measurements of work done during the current period.
the weighted-average method ignores units in the beginning and ending
work-in-process inventories. Question 8. Question : (TCO C) The
contribution margin ratio always increases when the Student Answer:
fixed expenses increase. fixed expenses decrease. variable expenses as a
percentage of net sales increase. variable expenses as a percentage of net
sales decrease. Question 9. Question : (TCO C) Which of the following
would not affect the break-even point? Student Answer: Variable
expense per unit Number of units sold Total fixed expenses Selling price
per unit Question 10. Question : (TCO D) Under variable costing,
Student Answer: inventory costs will be lower than under absorption
costing. inventory costs will be higher than under absorption costing. net
operating income will always be lower than under absorption costing.
costing. Question 1. Question : (TCO A) The following data (in
thousands of dollars) have been taken from the accounting records of
Larden Corporation for the just-completed year. Sales $950 Purchases of
raw materials $170 Direct labor $225 Manufacturing overhead $220
Administrative expenses $180 Selling expenses $140 Raw materials
inventory, beginning $90 Raw materials inventory, ending $80 Work-in-
process inventory, beginning $30 Work-in-process inventory, ending
$20 Finished goods inventory, beginning $100 Finished goods
inventory, ending $70 Prepare a Schedule of Cost of Goods
Manufactured statement in the text box below. Question 2. Question :
(TCO B) The Florida Company manufactures a product that goes
through three processing departments. Information relating to activity in
the first department during June is given below. Percentage Completed
Question 3. Question : (TCO C) Drake Company's income statement for

the most recent year appears below. Sales (45,000 units) $1,350,000
Less: variable expenses 750,000 Contribution margin 600,000 Less:
fixed expenses 375,000 Net operating income $225,000 Question 4.
Question : (TCO D) The Hampton Company produces and sells a single
product. The following data refer to the year just completed. Selling
price $450 Units in beginning inventory 0 Units produced 25,000 Units
sold 22,000 Variable costs per unit: Direct materials $150 Direct labor
$75 Variable manufacturing overhead $25 Variable selling and admin
$15 Fixed costs: Fixed manufacturing overhead $275,000 Fixed selling
and admin $200,000
==============================================
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Score 144/150
Multiple Choice 10
Essay 4

1. (TCO A) Direct material cost is a part of (Points : 6)
Conversion Cost NO.... Prime Cost NO.
Conversion Cost YES.... Prime Cost NO.
Conversion Cost YES.... Prime Cost YES.
Conversion Cost NO.... Prime Cost YES.
Question 2.2. (TCO A) Total fixed costs (Points : 6)
will increase with increases in activity.
will decrease with increases in activity.
are not affected by activity.
should be ignored in making decisions because they can never change.
Question 3.3. (TCO A) Property taxes on a company's factory building
would be classified as a(n) (Points : 6)
variable cost.
opportunity cost.
period cost.
product cost.

Question 4.4. (TCO C) When the activity level is expected to increase
within the relevant range, what effects would be anticipated with respect
to each of the following? (Points : 6)
Fixed costs per unit decrease and variable costs per unit do not
change.
Fixed costs per unit increase and variable costs per unit do not
change.
Fixed costs per unit do not change and variable costs per unit do
not change.
Fixed costs per unit do not change and variable costs per unit
increase.
Question 5.5. (TCO B) Which of the following statements is true?
I. Overhead application may be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the time
of completion of the job.
III. Overhead application should be made to any job not completed at
year end in order to properly value the work in process inventory.
(Points : 6)
Only statement I is true.
Only statement II is true.
Both statements I and II are true.

Statements I, II, and III are true.
Question 6.6. (TCO B) Under a job-order costing system, the product
being manufactured (Points : 6)
is homogeneous.
passes from one manufacturing department to the next before being
completed.
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total production costs
by the units produced.
Question 7.7. (TCO F) Equivalent units for a process costing system
using the FIFO method would be equal to (Points : 6)
units completed during the period, plus equivalent units in the ending
work-in-process inventory.
units started and completed during the period, plus equivalent units in
the ending work-in-process inventory.
units completed during the period and transferred out.
units started and completed during the period, plus equivalent units in
the ending work-in-process inventory, plus work needed to complete
units in the beginning work-in-process inventory.

Question 8.8. (TCO C) The contribution margin equals (Points : 6)
sales - expenses.
sales - variable costs.
sales - cost of goods sold.
sales - fixed costs.
Question 9.9. (TCO C) Which of the following would not affect the
break-even point? (Points : 6)
Variable expense per unit
Number of units sold
Total fixed expenses
Selling price per unit
Question 10.10. (TCO D) Under variable costing, (Points : 6)
inventory costs will be lower than under absorption costing.
inventory costs will be higher than under absorption costing.

net operating income will always be lower than under absorption
costing.
costing.
from the accounting records of Larop Corporation for the just-completed
year.
Sales $950
Purchases of raw materials $225
Direct labor $250
Manufacturing overhead $295
Administrative expenses $150
Selling expenses $140
Raw materials inventory, beginning $30
Raw materials inventory, ending $45
Work-in-process inventory, beginning $20
Work-in-process inventory, ending $55
Finished goods inventory, beginning $100

Finished goods inventory, ending $135
Prepare a Schedule of Cost of Goods Manufactured statement in the text
box below. (Points : 15)
Schedule of cost of goods manufactured
Direct materials:
Question 2.2. (TCO B) The Nebraska Company manufactures a product
that goes through three processing departments. Information relating to
activity in the first department during June is given below.
Percentage Completed
Units Materials Conversion
Work in process, June 1 140,000 65% 45%
Work in process, Jun 30 120,000 75% 65%

Question 3.3. (TCO C) A tile manufacturer has supplied the following
data.
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Question 4.4. (TCO D) The Hampton Company produces and sells a
single product. The following data refer to the year just completed.
Selling price $450

Units sold 22,000
Variable costs per unit:
Direct materials $150
Direct labor $75
Variable manufacturing overhead $25
Variable selling and admin $15
Fixed costs:
Fixed manufacturing overhead $275,000
Fixed selling and admin $200,000
Required:
Compute the cost of a single unit of product under both the absorption
costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing. (Points
: 30)

Extra questions
==============================================
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Multiple Choice 10 9
Essay 4
Question 1. Question : (TCO A) The variable portion of
advertising costs is a
Student Answer: Conversion YES... Period NO.
Conversion YES .... Period YES.
Conversion NO.... Period NO.

Conversion NO.... Period YES.
Question 2. Question : (TCO A) A cost incurred in the past that
is not relevant to any current decision is classified as a(n)
Student Answer: period cost.
incremental cost.
opportunity cost.
None of the above

Question 3. Question : (TCO A) Property taxes on a company's
factory building would be classified as a(n)
Student Answer: variable cost.
opportunity cost.
period cost.
product cost.
Question 4. Question : (TCO C) Within the relevant range,
variable costs can be expected to
Student Answer: vary in total in direct proportion to
changes in the activity level.

remain constant in total as the activity level
changes.
increase on a per-unit basis as the activity level
increases.
increase on a per-unit basis as the activity level
decreases.
None of the above
Question 5. Question : (TCO B) Which of the following
statements is true?

Student Answer: Only statement I is true.
Only statement II is true.
Both statements I and II are true.
Statements I, II, and III are true.
Question 6. Question : (TCO B) A job-order cost system is
employed in those situations when
Student Answer: many different products, jobs, or
batches of production are being produced each period.
manufacturing involves a single, homogeneous
product that flows evenly through the production process on a
continuous basis.
the product moves from department to department
before being completed.
the unit cost of production is computed by
dividing the total production costs by the number of units produced.

Question 7. Question : (TCO B) The FIFO method only provides
a major advantage over the weighted-average method in that
Student Answer: the calculation of equivalent units
is less complex under the FIFO method.
the FIFO method treats units in the beginning
inventory as if they were started and completed during the current
period.
the FIFO method provides measurements of work
done during the current period.
the weighted-average method ignores units in the
beginning and ending work-in-process inventories.
Question 8. Question : (TCO C) The contribution margin ratio
always increases when the
Student Answer: fixed expenses increase.

fixed expenses decrease.
variable expenses as a percentage of net sales
increase.
variable expenses as a percentage of net sales
decrease.
Question 9. Question : (TCO C) Which of the following would
not affect the break-even point?
Student Answer: Variable expense per unit
Number of units sold
Total fixed expenses
Selling price per unit

Question 10. Question : (TCO D) Under variable costing,
Student Answer: inventory costs will be lower than
under absorption costing.
inventory costs will be higher than under
absorption costing.
net operating income will always be lower than
net operating income will always be higher than
Question 1. Question : (TCO A) The following data (in
thousands of dollars) have been taken from the accounting records of
Larden Corporation for the just-completed year.
Sales $950

Purchases of raw materials $170
Direct labor $225
Manufacturing overhead $220
Administrative expenses $180
Selling expenses $140
Raw materials inventory, beginning $90
Raw materials inventory, ending $80
Work-in-process inventory, beginning $30
Work-in-process inventory, ending $20
Finished goods inventory, beginning $100
Finished goods inventory, ending $70
Prepare a Schedule of Cost of Goods Manufactured statement in the text
box below.
Question 2. Question : (TCO B) The Florida Company
manufactures a product that goes through three processing departments.
Information relating to activity in the first department during June is
given below.

Question 3. Question : (TCO C) Drake Company's income
statement for the most recent year appears below.
Sales (45,000 units) $1,350,000
Less: variable expenses 750,000
Contribution margin 600,000
Less: fixed expenses 375,000
Question 4. Question : (TCO D) The Hampton Company
produces and sells a single product. The following data refer to the year
just completed.
Selling price $450

Units sold 22,000
Direct materials $150
Direct labor $75
Variable manufacturing overhead $25
Variable selling and admin $15
Fixed costs:
Fixed manufacturing overhead $275,000
Fixed selling and admin $200,000
==============================================
ACCT 505 Week 1 Case Study (Devry)
www.acct505.com
Top Switch Inc. designs and manufactures switches used in
telecommunications. Serious flooding throughout the state of Tennessee
affected Top Switch’s facilities. Inventory was completely ruined, and

the company’s computer system, including all accounting records, was
destroyed.
Before the unfortunate incident, recovery specialists cleaned the
buildings. The company controller is very nervous and anxious to
recover whatever records he can to support the insurance claim for the
destroyed inventory. After consulting with the cost accountant, they
decide to retrieve the previous year’s annual report for the beginning
inventory numbers. In addition, they also agreed that they need first
quarter cost data.
The cost accountant was working on the first quarter results before the
storm hit, and to his surprise, the report was still in his desk drawer.
After reviewing the data , the information shows the following
information: Material purchases were $ 325,000; Direct Labor was $
220,000. Further discussions between the controller and the cost
accountant revealed that sales were $ 1,350,000 and the gross margin
was 30% of sales. The cost accountant also discovered, while sifting
through the information, that cost of goods available for sale was $
1,020,000 at cost. While assessing the damage, the controller determined
that the prime costs were $ 545,000 up to the time of the damage and
that manufacturing overhead is 65% of conversion cost. The cost
accountant is not sure about all of this, but he decides to see what he can
do with the information.
The beginning inventory numbers are as follows:
Raw Materials, $ 41,000

Work in Process, $ 56,000
Finished Goods, $ 35,000
Required:
Determine the amount of cost in the Raw Materials, Work in Process,
and Finished Goods Inventory as of the date of the storm. ( Hint: You
may wish to reconstruct the various schedules and statements that would
have been affected by the company’s accounts during the period.)
Grading Rubric for Case Study I:
Category
Points
%
Description
Documentation &
Formatting
10
22%
Worksheet will be done in Excel and will contain formulas to receive
maximum credit
Organization and Cohesiveness
15
33%

Calculations for all parts should be organized and correctly labeled.
Content
20
45%
A quality case study will have all required work completed and will be
correct.
Total
45
100%
A quality project will meet or exceed all of the above requirements.
==============================================
ACCT 505 Week 1-7 All Discussion Questions (Devry)
www.acct505.com
Week 1DQ 1 Cost Terms, Classifications, and Behavior
Week 1DQ 2 Research and Application
Week 2DQ 1 Job Order and Process Costing Systems

Week 3DQ 1 Variable Costing and CVP Concepts
Week 4DQ 1 Budgeting Case Study
Week 4DQ 2 Exam Review
Week 5DQ 1 Standards, Variances, Flexible Budgets
Week 6DQ 1 Segment Reporting and Relevant Costs
Week 7DQ 1 Capital Budgeting
Week 7DQ 2 Exam Review
==============================================
ACCT 505 Week 2 Case 3-29 Ethics and the Manager
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CASE 3–29 Ethics and the Manager [Course Objective B] Terri Ronsin
had recently been transferred to the Home Security Systems Division of
National Home Products. Shortly after taking over her new position as
divisional controller, she was asked to develop the division’s
predetermined overhead rate for the upcoming year. The accuracy of the

rate is important because it is used throughout the year and any
overapplied or underapplied overhead is closed out to Cost of Goods
Sold at the end of the year. National Home Products uses direct labor-
hours in all of its divisions as the allocation base for manufacturing
overhead.
To compute the predetermined overhead rate, Terri divided her estimate
of the total manufacturing overhead for the coming year by the
production manager’s estimate of the total direct labor-hours for the
coming year. She took her computations to the division’s general
manager for approval but was quite surprised when he suggested a
modification in the base. Her conversation with the general manager of
the Home Security Systems Division, Harry Irving, went like this:
Ronsin: Here are my calculations for next year’s predetermined
overhead rate. If you approve, we can enter the rate into the computer on
January 1 and be up and running in the job-order costing system right
away this year.
Irving: Thanks for coming up with the calculations so quickly, and they
look just fine. There is, however, one slight modification I would like
to see. Your estimate of the total direct labor-hours for the year is
440,000 hours. How about cutting that to about 420,000 hours?
Ronsin: I don’t know if I can do that. The production manager says she
will need about 440,000 direct labor-hours to meet the sales projections
for the year. Besides, there are going to be over 430,000 direct labor-
hours during the current year and sales are projected to be higher next
year.
Irving: Teri, I know all of that. I would still like to reduce the direct
labor-hours in the base to some- thing like 420,000 hours. You probably
don’t know that I had an agreement with your predecessor as divisional

controller to shave 5% or so off the estimated direct labor-hours every
year. That way, we kept a reserve that usually resulted in a big boost to
net operating income at the end of the fiscal year in December. We
called it our Christmas bonus. Corporate headquarters always seemed as
pleased as punch that we could pull off such a miracle at the end of the
year. This system has worked well for many years, and I don’t want to
change it now.
Required:
Assume the following information:
Direct Materials $40 per unit
Direct Labor $20 per unit
Total Estimated Manufacturing Overhead
$8,400,000
Manufacturing overhead is allocated based on estimated direct-labor
hours.
Each unit of product requires 1 direct labor hour.
1. Calculate the cost of one unit of product, assuming that the overhead
per unit is based on Terri Ronson’s estimate of 440,000 hours. (Round
all dollar figures to two decimal places.)
a. If 441,000 units were produced, how much overhead was applied to
work in process.

2. Calculate the cost of one unit of product, assuming that the overhead
per unit is based on her supervisors preferred estimate of 420,000 hours.
(Round all dollar figures to two decimal places.)
a. If 441,000 units were produced, how much overhead was applied to
work in process.
3. During the year, the company produced and sold 441,000 units, and
incurred actual overhead of $8,500,000, what is the under/overapplied
overhead if:
a. The estimated Direct Labor Hours is 440,000.
b. The estimated Direct Labor Hours is 420,000.
c. All over-applied and under-applied overhead applied directly to cost
of goods sold. Assume that the company had $1,000,000 in net operating
income before the over/under applied overhead adjustment is made.
What is the revised net income after the over/underapplied overhead
adjustment?
4. Should Terri Ronson go along with the general manager’s request to
reduce the direct labor hours in the predetermined overhead rate
computation to 420,000 hours? Be sure to discuss the operational and
ethical issues related to this decision.
Deliverables:
1. Submit an Excel spreadsheet that documents the calculations made for
steps 1-3 above. All items should be clearly labeled, and appropriate
formulas should be used to perform your calculations.

2. For step 4, submit a 5-7 minute narrated PowerPoint (preferably using
VoiceThread) that highlights your discussion of the operational and
ethical issues that Teri is facing as a result of the request to reduce the
direct labor hours. Be sure to make a recommendation in regard to
making this decision. The presentation should be 3-4 slides.
3. Post your PowerPoint and workbook on behalf of your team to the
Week 2 Dropbox for the case study.
4. NOTE: as a team project, a team collaboration tool (such as Cisco
Spark) should be used for the students to collaborate on the project!
==============================================
ACCT 505 Week 2 Quiz Job Order and Process
Costing Systems (Devry)
www.acct505.com
1.
Question :
(TCO F) For which situation(s) below would an organization be more
likely to use a job-order costing system of accumulating product costs
rather than a process costing system?

2.
Question :
(TCO F) Process costing would be appropriate for each of the following
except:
3.
Question :
(TCO F) Lucas Company uses the weighted-average method in its
process costing system. The company adds materials at the beginning of
the process in the Forming Department, which is the first of two stages
in its production process. Information concerning operations in the
Forming Department in October follows:
Units
Material Cost
Work in process on October 1
6,000
$3,000
Units started in October
50,000
$25,560
Units completed and transferred to next Department during October
44,000

What was the materials cost of work in process at on October 31?
4.
Question :
(TCO F) In a job-order costing system, the use of direct materials that
have been previously purchased is recorded as a debit to:
5.
Question :
(TCO F) During December at Ingrim Corporation, $74,000 of raw
materials were requisitioned from the storeroom for use in production.
These raw materials included both direct and indirect materials. The
indirect materials totaled $6,000. The journal entry to record the
requisition from the storeroom would include a:
6.
Question :
(TCO F) Valles Corporation had $22,000 of raw materials on hand on
February 1. During the month, the company purchased an additional
$75,000 of raw materials. The journal entry to record the purchase of
raw materials would include a:
1.
Question :
(TCO F) Whether a company uses process costing or job-order costing
depends on its industry. A number of companies in different industries
are listed below:

i. Brick manufacturer
ii. Contract printer that produces posters, books, and pamphlets to order
iii. Natural gas production company
iv. Dairy farm
v. Coal mining company
vi. Specialty coffee roaster (roasts small batches of specialty coffee
beans)
For each company, indicate whether the company is most likely to use
job-order costing or process costing.
i. Brick manufacturer Process Costing ii. Contract printer that produces
posters, books, and pamphlets to order Job Order Costing iii. Natural gas
production company Process Costing iv. Dairy farm Process Costing v.
Coal mining company Process Costing vi. Specialty coffee roaster
(roasts small batches of specialty coffee beans) Job Order Costing
2.
Question :
(TCO F) Job 484 was recently completed. The following data have been
recorded on its job cost sheet:
Direct materials
$57,240
Direct labor hours

1,692 DLHs
Direct labor wage rate
$12 per DLHS
Number of units completed
3,600 units
The company applies manufacturing overhead on the basis of direct
labor-hours. The predetermined overhead rate is $24 per direct labor-
hour.
Compute the unit product cost that would appear on the job cost sheet
for this job.
3.
Question :
(TCO F) Miller Company manufactures a product for which materials
are added at the beginning of the manufacturing process. A review of the
company's inventory and cost records for the most recently completed
year revealed the following information:
Units
Materials
Conversion
Work in process. Jan. 1 (80% complete with respect to conversion costs)

100,000
$100,000
$157,500
Units started into production
500,000
Costs added during the year:
Materials
$650,000
Conversion
$997,500
Units completed during the year
450,000
The company uses the weighted-average cost method in its process
costing system. The ending inventory is 50% complete with respect to
conversion costs.
Required:
i. Compute the equivalent units of production and the cost per equivalent
units for materials and for conversion costs.

ii. Determine the cost transferred to finished goods.
iii. Determine the amount of cost that should be assigned to the ending
work in process inventory.
4.
Question :
(TCO F) Weisinger Corporation has provided the following data for the
month of January:
Inventories
Beginning
Ending
Raw materials
$28,000
$29,000
Work In process
$16,000
$14,000
Finished goods
$42,000
$54,000

Additional Information
Raw material purchases
$56,000
Direct labor costs
$87,000
Manufacturing overhead cost incurred
$51,000
Indirect materials included in manufacturing overhead costs incurred
$3,000
Manufacturing overhead cost applied to work in process
$55,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of
Cost of Goods Sold in good form.
==============================================

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Essay 4
Multiple Choice 6
Question 1. Question : (TCO B) Assume there is no beginning
work in process inventory and the ending work in process inventory is
100% complete with respect to materials costs. The number of
equivalent units with respect to materials costs under the weighted
average method is
Student Answer: the same as the number of units
completed.
less than the number of units put into production.
the same as the number of units put into
production.
less than the number of units completed.

Question 2. Question : (TCO B) For which situation(s) below
would an organization be more likely to use a job-order costing system
of accumulating product costs rather than a process costing system?
Student Answer: A steel factory that processes iron
ore into steel bars
A computer consulting firm
A factory that processes sugar and other
ingredients into candy
All of the above

Question 3. Question : (TCO B) Luft Company uses the
weighted-average method in its process costing system. Operating data
for the first processing department for the month of June appear below.
Units Percent Complete With Respect to Conversion
Beginning work in process inventory 11,000 90%
Started in production during June 58,000
Ending work in process inventory 17,000 10%
According to the company’s records, the conversion cost in beginning
work in process inventory was $79,893 at the beginning of June.
Additional conversion costs of $343,830 were incurred in the
department during the month.
What was the cost per equivalent unit for conversion costs for the
month? (Round to three decimal places.)
Student Answer: $7.891
$8.070
$5.928
$4.584

Question 4. Question : (TCO B) In a job-order costing system,
the use of direct materials that have been previously purchased is
recorded as a debit to
Student Answer: raw materials.
finished goods.
work in process.
manufacturing overhead.
Question 5. Question : (TCO B) During October, Crusan
Corporation incurred $62,000 of direct labor costs and $4,000 of indirect

labor costs. The journal entry to record the accrual of these wages would
include a
Student Answer: debit to work in process of
$66,000.
credit to work in process of $66,000.
debit to work in process of $62,000.
Question 6. Question : (TCO B) During February, Degan Inc.
transferred $60,000 from work in process to finished goods and recorded
a cost of goods sold of $65,000. The journal entries to record these
transactions would include a
Student Answer: debit to finished goods of $65,000.

credit to cost of goods sold of $65,000.
credit to finished goods of $60,000.
* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)
Grading Summary
These are the automatically computed results of your exam. Grades for
essay questions, and comments from your instructor, are in the ―Details‖
section below. Date Taken: 5/15/2016
Time Spent: 1 h , 27 min , 22 secs
Points Received: 71 / 90 (78.9%)
Grade Details – All Questions
Page: 1 2

Question 1. Question : (TCO B) Some companies use process
costing and some use job-order costing. Which method a company uses
depends on its industry. Several companies in different industries are
listed below.
5. Frozen cranberry juice processor
ii. Custom boat builder
iii. Concrete block manufacturer
iv. Winery that produces a number of specialty wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
vi. External auditing firm
For each company, indicate whether the company is most likely to use
job-order costing or process costing.
Question 2. Question : (TCO B) Job 728 was recently completed.
The following data have been recorded on its job cost sheet.

Direct labor hours 1,220 labor hours
Direct labor wage rate $15 per labor hour
Machine hours 1,550 machine hours
Number of units completed 4,500 units
The company applies manufacturing overhead on the basis of machine
hours. The predetermined overhead rate is $18 per machine hour.
Compute the unit product cost that would appear on the job cost sheet
for this job.
Question 3. Question : (TCO B) Harmon Company uses the
weighted average method in its process costing system. The Curing
Department of Harmon Company reported the following information for
the month of November.
Units Percent complete with respect to materials Percentage
complete with respect to conversion
Work in process, November 1 10,000 100% 80%
Units started 28,000

Completed and transferred out 30,000
Work in process, November 30 8,000 100% 30%
Costs for November Materials Conversion
Work in process, November 1 $34,500 $48,600
Added during the month $146,000 $194,400
All materials are added at the beginning of the process.
Required: Compute the following items using the weighted average
method.
5. The equivalent units of production for materials
ii. The cost per equivalent unit for conversion
iii. The total cost assigned to units transferred out of the curing
department during November
iv. The cost assigned to work in process inventory as of November 30

Question 4. Question : (TCO A) Hunsicker Corporation has
provided the following data for the month of January.
Inventories Beginning Ending
Raw materials $30,000 $33,000
Work in process $20,000 $18,000
Finished goods $52,000 $50,000
Additional Information
Raw material purchases $63,000
Direct labor costs $92,000
Manufacturing overhead cost incurred $75,000
Indirect materials included in manufacturing overhead costs
incurred $6,000
Manufacturing overhead cost applied to work in process
$72,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of
Cost of Goods Sold in good form.
==============================================

ACCT 505 Week 3 Case Study 4–20 Ethics and the
Manager
www.acct505.com
CASE 4–20 Ethics and the Manager, Understanding the Impact of
Percentage Completion on Profit—Weighted-Average Method [Course
Objective B] Gary Stevens and Mary James are production managers in
the Consumer Electronics Division of General Electronics Company,
which has several dozen plants scattered in locations throughout the
world. Mary manages the plant located in Des Moines, Iowa, while Gary
manages the plant in El Segundo, California. Production managers are
paid a salary and get an additional bonus equal to 5% of their base salary
if the entire division meets or exceeds its target profits for the year. The
bonus is determined in March after the company’s annual report has
been prepared and issued to stockholders.
Shortly after the beginning of the New Year, Mary received a phone call
from Gary that went like this:
Gary: How’s it going, Mary?
Mary: Fine, Gary. How’s it going with you?
Gary: Great! I just got the preliminary profit figures for the division for
last year and we are within $200,000 of making the year’s target profits.
All we have to do is pull a few strings, and we’ll be over the top!

Mary: What do you mean? Gary: Well, one thing that would be easy to
change is your estimate of the percentage completion of your ending
work in process inventories. Mary: I don’t know if I can do that, Gary.
Those percentage completion figures are supplied by Tom
Winthrop, my lead supervisor, who I have always trusted to provide us
with good estimates.
Besides, I have already sent the percentage completion figures to
corporate headquarters. Gary: You can always tell them there was a
mistake. Think about it, Mary. All of us managers are doing as much as
we can to pull this bonus out of the hat. You may not want the bonus
check, but the rest of us sure could use it.
The final processing department in Mary’s production facility began the
year with no work in process inventories. During the year, 210,000 units
were transferred in from the prior processing department and 200,000
units were completed and sold. Costs transferred in from the prior
department totaled $39,375,000. No materials are added in the final
processing department. A total of $20,807,500 of conversion cost was
incurred in the final processing department during the year.
Required:
1. Tom Winthrop estimated that the units in ending inventory in the
final processing department were 30% complete with respect to the
conversion costs of the final processing department. If this estimate of
the percentage completion is used, what would be the Cost of Goods
Sold for the year? (Note: Since all units completed were sold, the cost of
goods transferred out = Cost of Goods Sold.)

2. Gary is recommending that the completion percentage by
adjusted by 10 percentage points in order to assist the team in making
their bonus.
a. Calculate the cost of goods sold if the ending inventory is 20%
complete in regard to conversion costs. Would net income increase or
decrease if this option was chosen over the 30% completion percentage?
How much is the increase?
b. Calculate the cost of goods sold if the ending inventory is 40%
complete in regard to conversion costs. Would net income increase or
decrease if this option was chosen over the 30% completion percentage?
How much is the increase?
c. Based on your calculations, which percentage is Gary suggesting that
Mary use for her ending inventory calculations.
3. Do you think Mary James should go along with the request to
alter estimates of the percentage completion? Why or why not?
==============================================
ACCT 505 Week 3 Case Study II (Devry)
www.acct505.com
Springfield Express is a luxury passenger carrier in Texas. All seats are
first class, and the following data are available:

Number of seats per passenger train car
90
Average load factor (percentage of seats filled)
70%
Average full passenger fare
$160
Average variable cost per passenger
$70
Fixed operating cost per month
$3,150,000
What is the break-even point in passengers and revenues per month?
What is the break-even point in number of passenger train cars per
month? If Springfield Express raises its average passenger fare to $ 190,
it is estimated that the average load factor will decrease to 60 percent.
What will be the monthly break-even point in number of passenger cars?
(Refer to original data.) Fuel cost is a significant variable cost to any
railway. If crude oil increases by $ 20 per barrel, it is estimated that
variable cost per passenger will rise to $ 90. What will be the new break-
even point in passengers and in number of passenger train cars?
Springfield Express has experienced an increase in variable cost per
passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The
company has decided to raise the average fare to $ 205. If the tax rate is
30 percent, how many passengers per month are needed to generate an
after-tax profit of $ 750,000? (Use original data). Springfield Express is
considering offering a discounted fare of $ 120, which the company
believes would increase the load factor to 80 percent. Only the

additional seats would be sold at the discounted fare. Additional monthly
advertising cost would be $ 180,000. How much pre-tax income would
the discounted fare provide Springfield Express if the company has 50
passenger train cars per day, 30 days per month? Springfield Express has
an opportunity to obtain a new route that would be traveled 20 times per
month. The company believes it can sell seats at $ 175 on the route, but
the load factor would be only 60 percent. Fixed cost would increase by $
250,000 per month for additional personnel, additional passenger train
cars, maintenance, and so on. Variable cost per passenger would remain
at $ 70. Should the company obtain the route? How many passenger
train cars must Springfield Express operate to earn pre-tax income of $
120,000 per month on this route? If the load factor could be increased to
75 percent, how many passenger train cars must be operated to earn pre-
tax income of $ 120,000 per month on this route? What qualitative
factors should be considered by Springfield Express in making its
decision about acquiring this route?
Grading Rubric for Case Study II:
Category
Points
%
Description
Documentation & Formatting
5
11%
Case Study will be completed in Word or Excel and contain necessary
formulas to receive maximum credit

Organization & Cohesiveness
5
11%
Calculations for all parts should be organized and correctly labeled. In a
quality case study, all questions should be addressed in a clear, concise
manner.
Editing
5
11%
Quality work will be free of any spelling, punctuation or grammatical
errors. Sentences and paragraphs ( where appropriate) will be clear,
concise and factually correct
Content
30
67%
A quality project will have all of the required work completed and will
be correct.
Total
45
100%
A quality project will meet or exceed all of the above requirements.
==============================================

ACCT 505 Week 4 Midterm Exam (Devry)
www.acct505.com
1.
Question :
(TCO A) Wages paid to an assembly line worker in a factory are a
2.
Question :
(TCO A) A cost incurred in the past that is not relevant to any current
decision is classified as a(n)
3.
Question :
(TCO A) Depreciation of office buildings and office equipment is also
known as
4.
Question :
(TCO A) When the activity level is expected to increase within the
relevant range, what effects would be anticipated with respect to each of
the following?

5.
Question :
(TCO F) Which of the following statements is true?
6.
Question :
(TCO F) A job-order cost system is employed in those situations where
7.
Question :
(TCO F) The FIFO method only provides a major advantage over the
weighted-average method in that
8.
Question :
(TCO B) The contribution margin ratio always decreases when the
9.
Question :
(TCO B) Which of the following would not affect the break-even point?
10.

Question :
(TCO E) In an income statement prepared using the variable costing
method, variable selling and administrative expenses would
1.
Question :
(TCO A) The following data (in thousands of dollars) have been taken
from the accounting records of Larop Corporation for the just-completed
year:
Sales.................................................................................
$910
Purchases of raw materials................................................
$225
Direct labor.......................................................................
$245
Manufacturing overhead....................................................
$265
Administrative expenses....................................................
$150
Selling expenses................................................................
$140
Raw materials inventory, beginning.....................................
$15

Raw materials inventory, ending.........................................
$45
Work-in-process inventory, beginning.................................
$20
Work-in-process inventory, ending.....................................
$55
Finished goods inventory, beginning...................................
$100
Finished goods inventory, ending.......................................
$135
Required: Prepare a Schedule of Cost of Goods Manufactured in the text
box below.
2.
Question :
(TCO F) The Illinois Company manufactures a product that goes
through three processing departments. Information relating to activity in
the first department during June is given below.
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%

Required: Compute the equivalent units of production for the first
department for June, assuming that the company uses the weighted-
average method of accounting for units and costs.
3.
Question :
(TCO B) A tile manufacturer has supplied the following data:
Boxes of tile produced and sold 625,000
Sales revenue $2,975,000
Variable manufacturing expense $1,720,000
Fixed manufacturing expense $790,000
Variable selling and admin expense $152,000
Fixed selling and admin expense $133,000
Required:
a. Calculate the company's unit contribution margin.
b. Calculate the company's unit contribution ratio.
c. If the company increases its unit sales volume by 5% without
increasing its fixed expenses, what would the company's net operating
income be?
4.

Question :
(TCO E) Lehne Company, which has only one product, has provided the
following data concerning its most recent month of operations:
Selling price
$ 125
Units in beginning inventory
600
Units oroduced
3000
Units sold
3500
Units in ending inventory
100
Direct materials
$ 15
Direct labor
$ 50
Variable manufacturing overhead
$ 8
Variable selling and admin

$ 12
Fixed costs:
Fixed manufacturing overhead
$ 75,000
Fixed selling and admin
$ 20,000
The company produces the same number of units every month, although
the sales in units vary from month to month. The company's variable
costs per unit and total fixed costs have been constant from month to
month.
Required:
a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing
method.
d. Prepare an income statement for the month using the absorption
costing method.
==============================================
ACCT 505 Week 5 Course Project 1 LBJ Company
(New)

www.acct505.com
COURSE PROJECT 1 INSTRUCTIONS
You have just been contracted as a budget consultant by LBJ Company,
a distributor of bracelets to various retail outlets across the country. The
company has done very little in the way of budgeting and at certain
times of the year has experienced a shortage of cash.
You have decided to prepare a cash budget for the upcoming fourth
quarter in order to show management the benefits that can be gained
from proper cash planning. You have worked with accounting and other
areas to gather the information assembled below.
The company sells many styles of bracelets, but all are sold for the same
$10 price. Actual sales of bracelets for the last three months and
budgeted sales for the next six months follow:
The concentration of sales in the fourth quarter is due to the Christmas
holiday. Sufficient inventory should be on hand at the end of each month
to supply 40% of the bracelets sold in the following month.
Suppliers are paid $4 for each bracelet. Fifty-percent of a month's
purchases is paid for in the month of purchase; the other 50% is paid for
in the following month. All sales are on credit with no discounts. The

company has found, however, that only 20% of a month's sales are
collected in the month of sale. An additional 70% is collected in the
following month, and the remaining 10% is collected in the second
month following sale. Bad debts have been negligible.
Monthly operating expenses for the company are given below:
Variable expenses:
Sales commissions 4% of sales
Fixed expenses:
Advertising $220,000
Rent $20,000
Salaries $110,000
Utilities $10,000
Insurance $5,000
Depreciation $18,000
Insurance is paid on an annual basis, in January of each year.
The company plans to purchase $22,000 in new equipment during
October and $50,000 in new equipment during November; both
purchases will be for cash. The company declares dividends of $20,000
each quarter, payable in the first month of the following quarter.
Other relevant data is given below:

Cash balance as of September 30 $74,000
Inventory balance as of September 30 $112,000
Merchandise purchases for September $200,000
The company maintains a minimum cash balance of at least $50,000 at
the end of each month. All borrowing is done at the beginning of a
month; any repayments are made at the end of a month.
The company has an agreement with a bank that allows the company to
borrow the exact amount needed at the beginning of each month. The
interest rate on these loans is 1% per month and for simplicity we will
assume that interest is not compounded. At the end of the quarter, the
company will pay the bank all of the accrued interest on the loan and as
much of the loan as possible while still retaining at least $50,000 in cash.
Required:
Prepare a cash budget for the three-month period ending December 31.
Include the following detailed budgets:
1.
a. A sales budget, by month and in total.
b. A schedule of expected cash collections from sales, by month and in
total.
c. A merchandise purchases budget in units and in dollars. Show the
budget by month and in total.
d. A schedule of expected cash disbursements for merchandise
purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determine any
borrowing that would be needed to maintain the minimum cash balance
of $50,000.
==============================================
ACCT 505 Week 6 Case Study Balanced Scorecard
Case (700 words Paper)
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ACCT505 – Managerial Accounting
Team Case Study 3 – Week 6
Balanced Scorecard Case
(Course Objective G)
Many companies are using the Balanced Scorecard System to assist in
their performance management. According to Garrison, Noreen, and
Brewer (2015) a balanced scorecard ―consists of integrated set of
performance measures that are derived from and support a company’s
strategy‖ (p. 490). In a Balanced Scorecard System the company’s
strategy is translated into a system of performance measures that are
used to monitor the company’s performance in meeting its strategic
objectives.

As part of a two-member team, your task is to identify and discuss the
key performance measures of a balanced scorecard. Then, find three
companies that are currently using a Balanced Scorecard System by
doing an internet and library database search. Internet searches as well
searches of financial databases, such as Yahoo Finance, should help you
in your efforts. Then discuss in as much detail as possible the specifics
of the balanced scorecard that is being used by these companies.
Deliverable
Your team should prepare a 700 words Paper, explaining the specifics of
the balanced scorecard system of the three companies you selected in
your research. This presentation should include your analysis of the
advantages and disadvantages of each company’s Balanced Scorecard
System. Be sure to clearly document the performance measures being
used by each of the three companies.
Your PowerPoint presentation should be narrated using Voice Thread or
similar technology. All team members must participate in the narration
of the PowerPoint presentation.
APA standards are required to be followed for this presentation.
Reference
Garrison, R.H., Noreen, E.C, & Brewer, Brewer, P.C. (2015).
Managerial Accounting (15th ed.). New York, NY: McGraw-Hill.
==============================================

ACCT 505 Week 6 Quiz Segment Reporting and
Relevant Costs for Decisions (Devry)
www.acct505.com
Question :
(TCO D) Return on investment (ROI) is equal to the margin multiplied
by
2.
Question :
(TCO D) For which of the following decisions are opportunity costs
relevant?
The decision to make or buy a needed part
The desision to keep or drop a product line
(A)
Yes
Yes
(B)
Yes
No

(C)
No
Yes
(D)
No
No
3.
Question :
(TCO D) Last year, the House of Orange had sales of $826,650, net
operating income of $81,000, and operating assets of $84,000 at the
beginning of the year and $90,000 at the end of the year. What was the
company's turnover, rounded to the nearest tenth?
1.
Question :
(TCO D) Data for December concerning Dinnocenzo Corporation's two
major business segments-Fibers and Feedstocks-appear below:
Sales revenues, Fibers
$870,000
Sales revenues, Feedstocks
$820,000
Variable expenses, Fibers
$426,000

Variable expenses, Feedstocks
$344,000
Traceable fixed expenses, Fibers
$148,000
Traceable fixed expenses, Feedstocks
S156,000
Common fixed expenses totaled $314,000 and were allocated as follows:
$129,000 to the Fibers business segment and $185,000 to the Feedstocks
business segment.
Required:
Prepare a segmented income statement in the contribution format for the
company. Omit percentages; show only dollar amounts.
2.
Question :
(TCO D) Wryski Corporation had net operating income of $150,000 and
average operating assets of $500,000. The company requires a return on
investment of 19%.
Required:

i. Calculate the company's current return on investment and residual
income.
ii. The company is investigating an investment of $400,000 in a project
that will generate annual net operating income of $78,000. What is the
ROI of the project? What is the residual income of the project? Should
the company invest in this project?
3.
Question :
(TCO D) Tjelmeland Corporation is considering dropping product
S85U. Data from the company's accounting system appear below.
Sales
$360,000
Variable Expenses
$158,000
Fixed Manufacturing Expenses
$119,000
Fixed Selling and Administrative Expenses
$94,000
All fixed expenses of the company are fully allocated to products in the
company's accounting system. Further investigation has revealed that
$55,000 of the fixed manufacturing expenses and $71,000 of the fixed

selling and administrative expenses are avoidable if product S85U is
discontinued.
Required:
i. According to the company's accounting system, what is the net
operating income earned by product S85U? Show your work!
ii. What would be the effect on the company's overall net operating
income of dropping product S85U? Should the product be dropped?
Show your work!
4.
Question :
(TCO D) Fouch Company makes 30,000 units per year of a part it uses
in the products it manufactures. The unit product cost of this part is
computed as follows.
Direct Materials
$15.70
Direct Labor
$17.50
Variable Manufacturing Overhead
$4.50
Fixed Manufacturing Overhead

$14.60
Unit Product Cost
$52.30
An outside supplier has offered to sell the company all of these parts it
needs for $51.90 a unit. If the company accepts this offer, the facilities
now being used to make the part could be used to make more units of a
product that is in high demand. The additional contribution margin on
this other product would be $219,000 per year.
If the part were purchased from the outside supplier, all of the direct
labor cost of the part would be avoided. However, $6.20 of the fixed
manufacturing overhead cost being applied to the part would continue
even if the part were purchased from the outside supplier. This fixed
manufacturing overhead cost would be applied to the company's
remaining products.
Required:
i. How much of the unit product cost of $52.30 is relevant in the
decision of whether to make or buy the part?

ii. What is the net total dollar advantage (disadvantage) of purchasing
the part rather than making it?
iii. What is the maximum amount the company should be willing to pay
an outside supplier per unit for the part if the supplier commits to
supplying all 30,000 units required each year?
5.
Question :
(TCO D) Biello Co. manufactures and sells medals for winners of
athletic and other events. Its manufacturing plant has the capacity to
produce 15,000 medals each month; current monthly production is
14,250 medals. The company normally charges $115 per medal. Cost
data for the current level of production are shown below.
Variable Costs
Direct Materials
$969,000
Direct Labor
$270,750
Selling and Administrative
$270,075
Fixed Costs
Manufacturing
$370,550

Selling and Administrative
$89,775
The company has just received a special one-time order for 600 medals
at $102 each. For this particular order, no variable selling and
administrative costs would be incurred. This order would also have no
effect on fixed costs.
Required:
Should the company accept this special order? Why?
==============================================
www.acct505.com
Multiple Choice 3
Short 5

Question 1. Question : (TCO D) Return on investment (ROI) is
equal to the margin multiplied by
Question 2. Question : (TCO D) For which of the following
decisions are opportunity costs relevant?
The decision to make or buy a needed part The decision to
keep or drop a product line
Question 3. Question : (TCO D) Last year, the House of Orange
had sales of $826,650, net operating income of $81,000, and operating
assets of $84,000 at the beginning of the year and $90,000 at the end of
the year. What was the company's turnover, rounded to the nearest
tenth?
Question 1. Question : (TCO D) Data for December concerning
Dinnocenzo Corporation's two major business segments-Fibers and
Feedstocks-appear below.
Sales revenues, Fibers $870,000
Sales revenues, Feedstocks $820,000
Variable expenses, Fibers $426,000

Variable expenses, Feedstocks $344,000
Traceable fixed expenses, Fibers $148,000
Traceable fixed expenses, Feedstocks $156,000
Common fixed expenses totaled $314,000 and were allocated as follows:
$129,000 to the Fibers business segment and $185,000 to the Feedstocks
business segment.
Required:
Prepare a segmented income statement in the contribution format for the
company. Omit percentages; show only dollar amounts.
Question 2. Question : (TCO D) Wryski Corporation had net
operating income of $150,000 and average operating assets of $500,000.
The company requires a return on investment of 19%.
Required:
i. Calculate the company's current return on investment and residual
income.

ii. The company is investigating an investment of $400,000 in a project
that will generate annual net operating income of $78,000. What is the
ROI of the project? What is the residual income of the project? Should
the company invest in this project?
ii. Return on investment = Net operating income / Average operating
assets = $78,000 / $400,000 = 19.5%
Question 3. Question : (TCO D) Tjelmeland Corporation is
considering dropping product S85U. Data from the company's
accounting system appear below.
Sales $360,000
Variable Expenses $158,000
Fixed Manufacturing Expenses $119,000
Fixed Selling and Administrative Expenses $94,000

All fixed expenses of the company are fully allocated to products in the
company's accounting system. Further investigation has revealed that
$55,000 of the fixed manufacturing expenses and $71,000 of the fixed
selling and administrative expenses are avoidable if product S85U is
discontinued.
Required:
i. According to the company's accounting system, what is the net
operating income earned by product S85U? Show your work!
ii. What would be the effect on the company's overall net operating
income of dropping product S85U? Should the product be dropped?
Show your work!
Question 4. Question : (TCO D) Rosiek Corporation uses part
A55 in one of its products. The company's accounting department
reports the following costs of producing the 4,000 units of the part that
are needed every year.
Per Unit
Direct Materials $2.80
Direct Labor $6.30
Variable Overhead $8.50

Supervisor's Salary $2.60
Depreciation of Special Equipment $6.80
Allocated General Overhead $6.10
An outside supplier has offered to make the part and sell it to the
company for $32.30 each. If this offer is accepted, the supervisor's salary
and all of the variable costs, including direct labor, can be avoided. The
special equipment used to make the part was purchased many years ago
and has no salvage value or other use. The allocated general overhead
represents fixed costs of the entire company. If the outside supplier's
offer were accepted, only $4,000 of these allocated general overhead
costs would be avoided. In addition, the space used to produce part A55
could be used to make more of one of the company's other products,
generating an additional segment margin of $26,000 per year for that
product.
Required:
i. Prepare a report that shows the effect on the company's total net
operating income of buying part A55 from the supplier rather than
continuing to make it inside the company.
ii. Which alternative should the company choose?

Question 5. Question : (TCO D) A customer has asked
Clougherty Corporation to supply 4,000 units of product M97, with
some modifications, for $40.10 each. The normal selling price of this
product is $48.00 each. The normal unit product cost of product M97 is
computed as follows.
Direct Materials $18.50
Direct Labor $1.20
Variable manufacturing overhead $8.40
Fixed manufacturing overhead $3.90
Unit product cost $32.00
Direct labor is a variable cost. The special order would have no effect on
the company's total fixed manufacturing overhead costs. The customer
would like some modifications made to product M97 that would
increase the variable costs by $5.70 per unit and that would require a
one-time investment of $31,000 in special molds that would have no
salvage value. This special order would have no effect on the company's
other sales. The company has ample spare capacity for producing the
special order.
Required:

Determine the effect on the company's total net operating income of
accepting the special order. Show your work!
==============================================
ACCT 505 Week 7 Course Project 2 Capital
Budgeting Decision (New)
www.acct505.com
ACCT 505 Course Project 2 Hampton Company
Capital Budgeting Decision
Hampton Company: The production department has been investigating
possible ways to trim total production costs. One possibility currently
being examined is to make the cans instead of purchasing them. The
equipment needed would cost $1,000,000, with a disposal value of
$200,000, and would be able to produce 27,500,000 cans over the life of
the machinery. The production department estimates that approximately
5,500,000 cans would be needed for each of the next 5 years.
The company would hire six new employees. These six individuals
would be full-time employees working 2,000 hours per year and earning
$15.00 per hour. They would also receive the same benefits as other

production employees, 15% of wages in addition to $2,000 of health
benefits.
It is estimated that the raw materials will cost 30¢ per can and that other
variable costs would be 10¢ per can. Because there is currently unused
space in the factory, no additional fixed costs would be incurred if this
proposal is accepted.
It is expected that cans would cost 50¢ each if purchased from the
current supplier. The company’s minimum rate of return (hurdle rate)
has been determined to be 11% for all new projects, and the current tax
rate of 35% is anticipated to remain unchanged. The pricing for the
company’s products as well as number of units sold will not be affected
by this decision. The unit-of-production depreciation method would be
used if the new equipment is purchased.
Required:
1. Based on the above information and using Excel, calculate the
following items for this proposed equipment purchase.
o Annual cash flows over the expected life of the equipment
o Payback period
o Simple rate of return
o Net present value
o Internal rate of return
The check figure for the total annual after-tax cash flows is $271,150.
2. Would you recommend the acceptance of this proposal? Why or
why not? Prepare a short, double-spaced paper in MS Word elaborating
on and supporting your answers.

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ACCT 505 Redefined Education--acct505.com

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