Accounting 611 – Midterm Exam-Spring 2014

Accounting 611 – Midterm Exam-Spring 2014

Question
	INSTRUCTIONS:
1. This examination covers content covered through Session 6 . The exam ismeant to be an individual effort. Any sharing of answers (giving or receiving) willresult in immediate disciplinary action. You may use your textbook. However, youare not to consult with any other individual about the problems or the processesrequired to complete this exam.
2. There are 6 problems on this exam.
Answer all parts of each problem.
3. Show your work on all problems where appropriate. Label all amounts notgiven in the problem. Also, label your answers! Make it clear what youranswers are. Please show your answers clearly and separate them from
your calculations. Partial credit will be given only where these requirements aremet.
4. Problems 2 and 4 count for 3% each, problem 5 counts for 2%, andProblems 1, 3 and 6 counts for 4% each . Thus the exam counts for 20% of thecourse grade.
5. Submit your answers (not the questions) in your Assignment Portfolio. Yourexam responses are due by Sunday March 23. I strongly suggest that youcomplete this exam and submit your responses at least 24 hours before the finalsubmission deadline.
6. How to submit… Once you are ready to submit all answers, please submitONLY the answers to the questions in your Web Tyco Assignment Portfolio. Post1 individual attachment to your Assignments Folder. Simply submit oneattachment that I can open, and place your answers clearly labeled, in order.
DO NOT SUBMIT MORE THAN ONE ATTACHMENT, AND DO NOT SUBMIT
THE QUESTIONS.
7. Please be sure to follow the directions so the grading can go smoothly. Thanksand good luck on the exam.

Problem 1
Using the following information find the unknown amounts. Assume each set ofinformation is an independent case.
a. Merchandise Inventory

Purchases
Cost of goods sold
Beginning balance
Ending balance

$210,000
223,000
41,000
?

b. Direct Materials

Beginning balance
Ending balance
Purchases
Direct materials used

c. Work-in-process Inventory

Ending balance
Cost of goods manufactured
Beginning balance
Current manufacturing costs

$ 22,000
21,000
8,000
?

d. Finished Goods Inventory

Cost of goods manufactured
Ending balance
Cost of goods sold
Beginning balance

$62,000
20,000
61,000
?

$ 7,000
14,000
48,000
?

Problem 2
Sprint Manufacturing Company produces two products, X and Y. The followinginformation is presented for both products:
X
Y
Selling price per unit
$30
$20
Variable cost per unit
20
5
Total fixed costs are $292,500.
Required:
a. Calculate the contribution margin for each product.
b. Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X forevery unit of Y.
c. Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3units of Y.

Problem 3
Rachel's Pet Supply Corporation manufactures two models of grooming stations, astandard and a deluxe model. The following activity and cost information has beencompiled:
Product
Standard
Deluxe
Overhead costs

Number of
Setups
3
7

Number of
Components
30
50

$40,000

Number of
Direct Labor Hours
650
150

$120,000

Assume a traditional costing system applies the $160,000 of overhead costs based on direct labor hours.
a. What is the total amount of overhead costs assigned to the standard model?
b. What is the total amount of overhead costs assigned to the deluxe model?
Assume an activity-based costing system is used and that the number of setups and thenumber of components are identified as the activity-cost drivers for overhead.
c. What is the total amount of overhead costs assigned to the standard model?
d. What is the total amount of overhead costs assigned to the deluxe model?
Problem 4
Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units.
The cost of placing an order is $80 and the cost of carrying one unit in inventory for oneyear is $25.
Required:
a. Use the economic-order-quantity model to determine the optimal order size.
b. Determine the reorder point assuming a lead time of 10 days and a work year of 250days.
c. Determine the safety stock required to prevent stockouts assuming the maximum leadtime is 20 days and the maximum daily demand is 125 units.
Problem 5
The following data are available for Ruggles Company for the year ended September 30,2011.
Sales:
Expected and actual production:
Manufacturing costs incurred:
Variable:
Fixed:
Nonmanufacturing costs incurred:

24,000 units at $50 each
30,000 units
$525,000
$372,000

Variable:
Fixed:
Beginning inventories:

$144,800
$77,400
none

Required:
a. Determine operating income using the variable-costing approach.
b. Determine operating income using the absorption-costing approach.
Problem 6
Jerry's TV and Appliance Store is a small company that has hired you to perform somemanagement advisory services. The following information pertains to 2011 operations.
Sales (1,000 televisions)
$ 900,000
Cost of goods sold
400,000
Store manager's salary per year
70,000
Operating costs per year
157,000
Advertising and promotion per year 15,000
Commissions (4% of sales)
36,000
Part 1. What was the variable cost per unit sold for 2011?
A) $36
B) $436
C) $678
D) $400
Part 2 What were total fixed costs for 2011?
A) $678,000
B) $436,000
C) $242,000
D) $227,000
Part 3 What are the estimated total costs if Penny's expects to sell 3,000 units next year?
A) $1,550,000
B) $1,332,000
C) $1,671,000
D) $1,453,000
Part 4 Which cost estimation method is being used by Jerry's TV and Appliance Store?
A) the industrial engineering method
B) the conference method
C) the account analysis method
D) the quantitative analysis method