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Acc 406 Exam with Answers

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Accounting

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ACC 2301
INTRODUCTORY MANAGEMENT ACCOUNTING
Question 1 (12 marks)
Templar Company, a manufacturing firm, has supplied the following information from
its accounting records for the month of November:
|Factory supplies used |$18,000 |
|Depreciation on factory building |17,000 |
|Salary of company controller |6,000 |
|Factory janitorial costs |5,000 |
|Marketing and promotion |4,500 |
|Direct labor cost |22,000 |
|Purchases of raw materials |10,000 |
|Finished Goods Inventory, Nov. 1 |2,250 |
|Finished Goods Inventory, Nov. 30 |3,750 |
|Work in Process Inventory, Nov. 1 |4,200 |
|Work in Process Inventory, Nov. 30 |2,750 |
|Materials Inventory, Nov. 1 |3,500 |
|Materials Inventory, Nov. 30 |5,100 |
| |Required: Prepare a Statement of Cost of Goods Manufactured for November |
| | |
ANS:
|Templar Company |
|Statement of Cost of Goods Manufactured |
|For the month of November |
|Beginning Materials Inventory |$ 3,500 | |
|Add: Purchases of materials |10,000 | |

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| Materials Available for Use |13,500 | |
|Less: Ending Materials Inventory |5,100 | |
| Materials Used | |$ 8,400 |
| Direct Labor | |22,000 |
| Overhead (18,000 + 17,000 + 5,000) | | 40,000 |
| Total Manufacturing Costs Added | |70,400 |
| Add: Beginning Work in Process Inventory | |4,200 |
| Total Manufacturing Costs In Process | |74,600 |
|Less: Ending Work in Process Inventory | |2,750 |
| Cost of Goods Manufactured | |$71,850 |
Question 2 (10 marks)
The following six months of data were collected on electricity cost and the number of
machine hours in a factory.
| | | |
|Month |Electricity cost |Machine hours |
|June |$25,160 |4,500 |
|July |26,170 |4,810 |
|August |27,250 |5,120 |
|September |26,680 |5,010 |
|October |27,950 |5,430 |
|November |27,500 |5,190 |
Required:
|A. |Using the high-low method, compute the variable electricity cost per machine
hour. |
|B. |Using the high-low method, compute the total fixed cost of electricity. |
|C. |Estimate the total electricity cost to be incurred in December if 5,300 machine

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hours are incurred. |
ANS:
|A. |($27,950 − $25,160)/(5,430 − 4,500) = $3 per machine hour |
| | |
|B. |$27,950 − ($3 × 5,430) = $11,660 |
| | |
|C. |$27,560 = $11,660 + ($3 × 5,300) |
Question 3 (12 marks)
Aaron Company provided the following data for next month:
|Selling price per unit |$400 |
|Variable manufacturing costs per unit |$100 |
|Fixed manufacturing costs per unit |$ 80 |
|Variable selling costs per unit |$ 60 |
|Fixed selling costs per unit |$ 40 |
|Expected production and sales |1,800 units |
Required:
|A. |What is contribution margin per unit? |
|B. |What is the contribution margin ratio? |
|C. |What is the breakeven point in units? |
|D. |What are the sales in dollars needed to obtain a profit of $24,000? |

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