No 1: Adrian T. Corporation is a wholesaler that sells a single product.

Management has provided the following cost data for two levels of monthly
sales volume.
 
Sales units                                                           5000                               
10000
Cost of goods sold                                          $117000                           
$193000
Selling and Administrative costs                     $588000                           
$637000
Selling price per unit                                       $170                                    $170
 
Q. The best estimate of the net operating income if 6570 units are sold is:
 
372,650
A. $ 

Answer

No 1 5000 10000 VC TVC FC

Cost of goods sold    117000 193000 15.2 152000 41000
Selling and Administrative
costs  588000 637000 9.8 98000 539000

6570
111690
sales @ 170 0
cogs 99864
Selling and Administrative
costs  64386
952650
FC 41000
539000
NOI 372650
No 2

Rw material consumed = Beginning raw material +Raw material purchases - Ending raw materials

Raw materia consumed = $40,000 + $63,000 - $24,000 = $79,000

Direct material cost = Raw material consumed - Indirect material cost = $79000 - $5,000 = $74,000

Cost of production = Direct material cost + Direct labor cost + Manufacturing cost applied

Cost of production = $74,000 + $70600 + $48,000 = $ 192,600

Cost of goods manufactured = Beginning WIP + Cost of production - Ending WIP

Cost of goods manufactuued = $23,000 + $192,600 - $17,000 = $198,600

Unadjusted cost of gooods sold = Beginning finished goods + Cost of goods manufactured - Ending
finished goods

Unadjusted cost of goods sold = $50,000 + $198,600 - $72,000 = $ 176,600

Manufacturing overhead overapplied = Manufactuing overhead applied - Manufacturing overhead

incurred

Manufacturing overhead underappied = $55,000 - $48000 = $7,000

Adjusted cost of goods sold = Unadjusted cost of goods sold - Manufacturing overhead overappllied
= $176600+7,000 = $183,600

No 3

Iago O. Corporation has the following budgeted sales for the last half of next
year:
                                                                Cash Sales           Credit Sales
                July ………………                $50000                 $150000
                August………….                   $55000                 $170000
                September…..                        $45000                 $130000
                October……….                     $50000                 $145000
                November……                     $60000                 $385000
                December……                      $80000                 $350000
 
The company is in the process of preparing a cash budget and must
determine the expected cash collections by month. To this end, the following
information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
 
Q. What is the budgeted accounts receivable balance on December 31?
 
178500
A. $ 
Workings

40%*350,000+110%*385000 = 140,000 + 38,500 = 178,500

No 4: The following monthly data are available for Antonio T. Corporation and
its only product: 
 
Unit selling price                                              $120        
Unit variable expenses                                      $90         
Total fixed expenses                                        $150000 
Actual monthly sales                                       19300 units
 
Q. What was the margin of safety in dollars for the company during the
month?
 
1716,000
A. $    

19300*120- (150,000/.25) = 1716,000

No 5: Miranda T. Corporation manufactures two products: A and B. The

company's accounting records revealed the following per-unit costs for direct
materials and direct labor:
                                                       Product A       Product B
Production volume (units)                  4,000            5,000
Direct materials                                     $40              $60
Direct labor:
2.5 hours at $10/hour                           $25
2 hours at $10/hour                                                   $20
 
Management is considering a shift to activity-based costing and gathered the
following manufacturing overhead data:
                                                                                                                             
            Expected Activity
Activity Cost Pool                  Estimated OH Cost          Activity cost
driver           Product A             Product B
Setups                                      $240000                          Number of
setups                80                           40
General factory                       $2350000                           Direct labor
hours           10,000                    10,000
Machine processing                $120000                            Machine
hours                2,000                       1,000
 
Q. Suppose the company uses conventional job-order costing with a
plantwide predetermined overhead rate and direct labor hours as the
allocation base. Assuming that actual and expected direct labor hours are the
same, what is the unit product cost of Product B under conventional job-order
costing?
 
351
A. $ 
(80+20+(2710,000/20,000*2) = 80+20+271 = 351

No 6
Montano O. Corporation makes beautiful products. The firm’s capacity is
1,000 units. The results for the first year of operations are based on 1,000
units made and sold and can be found below:
 
Direct materials used, variable $4000 
Administrative office salaries, fixed $10000 
Factory supervision, fixed $4000 
Sales commissions, variable ?? 
Depreciation, factory building, fixed $11000 
Depreciation, administrative office equipment, fixed $500 
Indirect materials, factory, variable $2000 
Direct labor, variable $8000 
Advertising, fixed ?? 
Insurance, factory, fixed $1500
Administrative office supplies (billing), variable $1000 
Property taxes, factory, fixed $2000 
Utilities, factory, fixed $3790
Sales $150000
Net Operating Income $89000
Contribution Margin $130000
 
Q. What was the Montano O.'s advertising cost for the year?
 
8210
A. $ 

Answer

Total fixed expenses = Contribution margin - Net operating income

= 130,000 - 89,000

= $41,000

Total fixed expenses = Administrative office salaries + Factory supervision + Depreciation, Factory
building + Depreciation, office equipment + Advertising + Insurance, factory + Property taxes, factory
+ Utilities, factory

41,000 = 10,000 + 4,000 + 11,000 + 500 + Advertising + 1,500 + 2,000 + 3,790

Advertising = $8210

No 7

Stephano T. Corporation sells a single product.

They want to achieve a target income of $195000 next year.
 
Price                                             $40.00/unit
Contribution margin ratio             50%
Annual fixed expenses                  $330000
 
Q. How many units of the product do they have to sell to achieve the target?
 
26,250
A.   units

Answer

(330000+195000)/20 = 26,250 units

No 8

Alonso T. Corporation uses the weighted-average method in its process

costing system. In their first processing department, the company worked on
1,050 equivalent units of production with respect to conversion costs in April.
 
Additional information for April is:  
                                                                                                                             
                  
Beginning inventory          230 units                  40%
complete                                                                  
Started                             1,345 units
Completed and transferred out   700
units                                                                                     
 
Q. The % of completion of the ending inventory in work-in-process with
respect to conversion cost is:
 
50.514
A.   % (enter % amount, not decimal; ex. 22, not 0.22)            

230*.6 = 138

470 *100% = 470

608

875*.50514 442

Total

1575 1050
No 9

The following data are for the month of March for the Lodovico O.
Corporation:
 
                                                         Planning (static) Budget            Actual
Results
Sales (in units)                                      10000                                          14890
Selling Price per unit                              $85                                              $86
Variable Cost per unit                             $60                                              $62
Total Fixed Costs                               $135000                                       
$133000
 
Q. What is the Lodovico’s flexible budget net operating income?
 

NOI = 14,890(85-60)-135,000 = 372,250-135000= 237,250

No 10:

Emilia O. Corporation’s operational data are below:

- Sales are budgeted at $260000 for November, $327000 for December, and
$210000 for January. All sales are credit sales.
 - Collections are expected to be 80% in the month of sale, 19% in the month
following the sale, and 1% uncollectible.
- The cost of goods sold is 65% of sales.
- The company desires to have an ending merchandise inventory at the end of
each month equal to 60% of the next month's cost of goods sold. Payment for
merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $20300.
- Monthly depreciation is $20000.
-  Ignore taxes.
 
Q. December cash disbursements for merchandise purchases would be:
 
A. $ 
Answer

Cogs = 260,000*.65 = 169,000

Payments(purcahsee) = 169,000 + Clstock -openign stock =169,000+(.65*210,000*.6)- (260,000*.65*.6)

 =169,000 + 127,530-101400 = 195,130

No 11

Bianca O. Corporation's info is below:

 
Sales $100000
VC $50000
FC $20000
NOI $30000
 
Q. How much is Bianca's CM?
 
50,000
A. $ 

(100,000-50,000)=50,000

N0 12

Cassio O. Corporation’s operational data are below:

- Sales are budgeted at $260000 for November, $230000 for December, and
$274000 for January. All sales are credit sales.
 - Collections are expected to be 80% in the month of sale, 19% in the month
following the sale, and 1% uncollectible.
- The cost of goods sold is 65% of sales.
- The company desires to have an ending merchandise inventory at the end of
each month equal to 60% of the next month's cost of goods sold. Payment for
merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $20300.
- Monthly depreciation is $20000.
-  Ignore taxes.
 
Q. Accounts payable at the end of December would be:
 
A. $ 
Payments(purcahsee) = 149,500 + Clstock -openign stock =149,500+(.65*210,000*.6)- (230,000*.65*.6)

=149,500 + 81,900- 89700 = 141,700

No 13:

Gonzalo T. Corporation, a large retailer of boots assembled the information

shown below for the quarter ended June 30:
 
Total sales revenue $208000
Selling price per pair of boots $800
Variable selling expense per pair of boots $247
Variable administrative expense per pair of boots $20
Total fixed selling expense $30000
Total fixed administrative expense $20000
Beginning merchandise inventory $30000
Ending merchandise inventory $20000
Merchandise purchases $52400
 
Q. What was the contribution margin for each pair of boots sold during the
quarter?
 
A. $ 
Sales = 208,000/800 = 260
COGS = (30,000+52400-20000)/260 = 62400/260 = 240
(800-240-247-20)=293

No 15

Desdemona O. Corporation makes and sells tasty burritos for $8 per unit with
a unit variable cost of $6. All sales are for cash and the variable costs are paid
immediately. The company has budgeted the following data for March:
Sales                                                                                                              
22680 units
Cash, beginning balance                                                                                
$34000
Selling and administrative (of which depreciation, $5,000)                         
$53000
Required minimum cash balance                                                                  
$68040
 
If necessary, the company will borrow cash from a bank on the first day of
March. Assume that the borrowing can be made in any (exact) amount, but
bears interest at 3% per month. The March interest will be paid during
subsequent months.
 
Q. What is the closest amount of cash that must be borrowed on March 1 to
cover all cash disbursements and to obtain the desired March 31 cash
balance?
 
36,680
A. $ 

NO 16:

At the beginning of the quarter Prospero T. Corporation estimated its total

overhead for the quarter to be $200000 and its total machine hours to be
20000. The company’s actual machine hours for the quarter were 29450. The
company uses job-order costing with machine hours as the allocation base.
 
At the end of the quarter, the books reveal following actual results:
 
Advertising Expense $100000
Direct Labor $90000
Purchases of Raw Materials $130000
Rent, Factory Building $70000
Indirect Labor $60000
Sales Commissions $35000
Utilities, Factory $20000
Maintenance, Factory Equipment $15000
CEO Salary $8000
Depreciation, Factory Equipment $30000
 
Q. What is the amount of over- or under-applied OH? (Enter just the amount.)
 
A. $ 

(338,000-29450*10)=43500
NO 17

Ferdinand T. Corporation uses the weighted-average method in its process-

costing system. Operating data for the first processing department for March
appear below for the physical flow of units, and for direct materials (DM) and
conversion costs (CC).
 
Units                                                                                      % of completion:
DM      % of completion: CC
Beginning WIP inventory                                      1,820               60%
50%
Started into production during September:          22,000
Ending WIP inventory                                          3,700                90%
70%
 
                                                          DM                         CC
Beginning WIP inventory               $6552                  $5096
Cost added during March             $142058              $70231
 
Q. Determine the cost of the units transferred out to the next department.
 
194243
A. $ 

Workings:

DM CC

Units transferred out 20120 20120 =1820+22000-3700

Ending WIP inventory:

3700 x 90% 3330

3700 x 70% 2590

Equivalent units 23450 22710

DM CC

Beginning WIP inventory 6552 5096

Cost added 142058 70231

 Total costs 148610 75327

/ Equivalent units 23450 22710

Cost per Equivalent unit 6.34 3.32

DM CC Total

Units transferred out 20120 20120

X Cost per Equivalent unit 6.34 3.32

Cost of Units transferred out 127507 66736 194243

NO 18

Gratiano O. Corporation makes beautiful products. The firm’s capacity is

1,000 units. The results for the first year of operations are based on 1,000
units made and sold and can be found below:
 
Direct materials used, variable $4000 
Administrative office salaries, fixed $10000 
Factory supervision, fixed $4000 
Sales commissions, variable ?? 
Depreciation, factory building, fixed $11000 
Depreciation, administrative office equipment, fixed $500 
Indirect materials, factory, variable $2000 
Direct labor, variable $8000 
Advertising, fixed ?? 
Insurance, factory, fixed $3450
Administrative office supplies (billing), variable $1000 
Property taxes, factory, fixed $2000 
Utilities, factory, fixed $3000 
Sales $150000
Net Operating Income $89000
Contribution Margin $130000
 
Q. What was the Gross Margin for the Gratiano O. for the past year?
 
A. $ 

Cost of goods sold = Direct materials + Factory supervision + Depreciation, factory building +
Indirect materials + Direct labor + Insurance factory + Property taxes, factory + Utilities factory

= $4,000 + $4,000 + $11,000 + $2,000 + $8,000 + $3,450 + $2,000 + $3,000

= $37,450

Gross margin for the past year = Sales - COGS = $150,000 - $37,450 = $112,550

NO 19

Othello S. Corporation produces and sells a single product. The information

about their operation for the last month is given below.
 
Price per unit $40.00
Contribution margin ratio 50%
Fixed expenses $8000
Operating leverage 2
 
Q. How many units did they sell during the last month?
 
A.   units
Answer

800 units

No 20

Sebastian T. Corporation has a margin of safety percentage of 20% based on

its actual sales.
 
The break-even point is $760000 and the variable expenses are 60% of sales.
 
Q. Given this information, the actual profit is:
 
76000
A. $ 

Total sales=Breakeven sales+MOS

Hence breakeven=(1-0.2)=0.8Sales

Hence Total sales=(760,000/0.8)=$950,000

Hence MOS=(950,000*.2%)=$190,000

Contribution margin=Sales-Variable expenses = 950,000*.4 = 380,000

Hence actual profit=(380,000 - .4*760,000) = 380,000-304,000 = 76000

Actual profit = 190,000*.4 = 76000 as well.

No 21
Richard III Corporation manufactures two products: A and B. The company's
accounting records revealed the following per-unit costs for direct materials
and direct labor:
 
                                                    Product A             Product B
Production volume (units)              4,000                      5,000
Direct materials                              $40                          $60
Direct labor:
2.5 hours at $10/hour                      $25
2 hours at $10/hour                                                        $20
 
Management is considering a shift to activity-based costing and gathered the
following manufacturing overhead data:
 
                                                                                                                Expected Activity
Activity Cost Pool      Estimated OH Cost     Activity cost driver             Product A           Product B
Setups                          $240000                 Number of setups                    80                        40
General factory              $1750000                  Direct labor hours               10,000                 10,000
Machine processing      $120000                   Machine hours                      2,000                  1,000
 
Q. Assuming that actual activity is the same as expected activity, what is
the unit product cost of Product B under activity-based costing?
 
A. $ 

Set up cost = 240,000/120 = 2000 per set up

General factory = 1750,000/ 20,000 = 87.5
Machine processing = 120,000/3000 = 40

For unit B
5000 units
DM @60 300,000
Dl @ 20 100,000
Set up cost @2000 80,000
General factory @87.5 875,000
Machine processing @40 40,000
Total cost 1395,000
 Unit cost 279(1395000/5000)

No 22
Brabantio O. Corporation has the following budgeted sales for the last half of
next year:
                                                                Cash Sales           Credit Sales
                July ………………                $120000                 $150000
                August………….                   $372000                 $170000
                September…..                        $454000                 $130000
                October……….                      $376000                 $145000
                November……                       $124000                 $200000
                December……                       $334000                 $350000
 
The company is in the process of preparing a cash budget and must
determine the expected cash collections by month. To this end, the following
information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
 
Q. The total cash receipts during November would be:
 
300500
A. $ 

No 24

Francisco T. Corporation sells lollipops.

 
Selling price                        $8.00 /unit
Variable expense                 $2.00/unit
Current Sales                     13,000 units
 
Francisco T. found that the current net operating income is equal to 0.31 of
current sales.
 
Q. What is Franciso's fixed cost?
 
45760
A. $ 

13000*8*.31 = 32,240
104000-26,000-32,240 = 45,760

No 25
Boatswain T. Corporation has provided the following data from its activity-
based costing system:
Activity Cost Pool                             Total Cost                            Total Activity
Assembly                                             $728000                             52000
machine hours
Processing Orders                              $48100                                1300 orders
Inspection                                           $76500                                1500
inspection-hours
 
Data concerning one of Boatswain's products is given below:
Selling price $178.00 per unit
Direct materials cost $27.00 per unit
Direct labor cost $36.00 per unit
Annual production and sales 2690 units
Annual machine hours 12000 MHs
Annual orders 500 orders
Annual inspection hours 380 hours
 
Q. According to the activity-based costing system, the product margin for this
product is (total $$ margin, not unit margin):
 
103470
A. $ 
total
selling price 178 478820
Direct materials cost 27 72630
Direct labor cost 36 96840
Assembly    14 168000
 Processing Orders 37 18500
Inspection   51 19380
Units 2690 375350
product margin 103470

No 14
Roderigo O. Corporation is a local library’s educational program. The library
bases its program’s budget on two measures of activity: number of students
and number of courses. In 2018, the library budgeted for 300 students and 15
courses. The library used the following data in its budgeting:
 
                                      Fixed cost per year   VC per student   VC per course  
Tuition per Student
Revenue                                   -                            -                            
-                          $100
Faculty wages                    $4000                        $0                        
$20                            -
Course supplies                 $1000                       $10                        
$50                            -
Administrative expenses   $2000                       $20                        
$30                            -
 
Actual results for the year appear below:
Number of Students      280
Number of Courses        18
Revenue                   $25760
Faculty wages           $8920
Course supplies        $6300
Administrative expenses    $9840
 
Q. What is the spending variance for 2018? (Just the amount.)
 
A. $ 
Spending variance = budgeted costs – actual costs = 17200-25060 = 7860
Budeted costs = 4000+1000+2000 + 280(10+20) + 18(100) = 7000 + 8400+1800= 17200
Actual costs = Faculty wages           $8920 + Course supplies        $6300 +
Administrative expenses    $9840 = $25,060