Name:

Student Number:

Instructions:
All the questions for this assignment can be found in the tabs that follow this tab.
Provide your answers in the spaces provided. Make sure you show your work and
let excel do the calculations for you.
Once the assignment is complete, submit the completed excel file in the appropriate
submission folder.

Grading (once I grade the assignment your mark will be updated here):
Question # Marks Your Mark
Ch 6 10 0
Ch 7 20 0
Ch 7&8 10 0
Ch 9&12 10 0
Ch 10a 5 0
Ch 10b 10 0
Ch 11 10 0
Totals 75 0 0%
Marks Please leave Column A blank as I would like to use it for marking purposes.
Filling Smoker Company (FSC) makes two types of barbeque smokers - Basic and Hi-Tech. Here is information abou
product lines:
0
Basic Hi-Tech
Selling price per unit $ 430 $ 670
Direct materials per unit 165 425
Direct labour per unit 60 90
Direct labour hours per unit 2.0 3.0
Estmated annual unit sales 75,000 25,000
(assume inventory is constant)

FSC has a traditional costing system where manufacturing overhead is applied to units on the basis of direct labour
estimates that for the upcoming year it will incur:

Estimated manufacturing overhead $ 2,700,000

Estimated total direct labour hours 225,000

Required (where possible complete your work in the space immediately below each question. If you ne
more space insert additional rows):
1 What is the total cost and gross margin per unit for the Basic and Hi-Tech models assuming FSC uses a tradition

2
FSC is looking at adopting an activity based costing system instead of using the traditional costing system. Prel
shows that manufacturing overhead costs can be sorted into 4 activity cost pools as follows:
Expected Activity
Activity Estimated
Activity Measure Overhead Costs Basic
direct labour
Supporting direct labour hours $ 1,150,000 150,000
Batch costs # of setups 1,240,000 75
Product related # of products 210,000 1
Other square feet 100,000 15,000
$ 2,700,000

What is the total cost and the gross margin per unit for the Basic and the Hi-tech models using Activity Based C
3 Comment on the difference in the resulting cost per unit for each model between the traditional costing and a
costing. Which is more accurate? Why?
 and Hi-Tech. Here is information about these two

ed to units on the basis of direct labour hours. FSC

tely below each question. If you need

h models assuming FSC uses a traditional costing system?

ing the traditional costing system. Preliminary work

cost pools as follows:
Expected Activity

Hi-Tech Total

75,000 225,000
275 350
1 2
17,500 32,500

e Hi-tech models using Activity Based Costing?

l between the traditional costing and activity based
Marks Please leave Column A blank as I would like to use it for marking purposes.
Bloom Corp. produces one product that sells at $20 per unit and sells best on Valentine's Day and
Mother’s Day. As a result peak sales occur in February and May of each year. Budgeted sales in units
for the first six months of the coming year are:
0
Month Units
January 12,000
February 32,000
March 18,000
April 34,000
May 30,000
June 15,000

25% of all sales are cash sales and the rest are on account. Past experience shows that the company
collects 25% of a month’s credit sales in the month of sale. Another 65% of credit sales is collected in
the month following sale, and the remaining 10% of credit sales is collected in the second month
following sale. Bad debts are negligible and can be ignored.

To ensure that sales volumes can be met, the company requires that ending inventory for a particular
month reflect 15% of next month's sales. Assume June 30 closing inventory will be 1,500 units.

Required:
a)
Prepare a sales budget in dollars and a schedule of cash collections from sales, by month and in total, for
the second quarter (10 marks).

b) If the company prepares a budgeted balance sheet as of June 30, compute the accounts receivable as of
that date (5 marks).

c) Prepare a production budget by month and in total for the second quarter (5 marks).
Valentine's Day and
Budgeted sales in units

ows that the company

edit sales is collected in
the second month

ventory for a particular

ll be 1,500 units.

by month and in total, for

accounts receivable as of

arks).
Marks Please leave Column A blank as I would like to use it for marking purposes.

CBH Associates is reeling from a decline in profits because of competition. For its most
recent year end, its controller has prepared following variance analysis and concluded
that the company has done very well controlling its costs:
0
Budgeted Actual Variance
Variable Costs:
Professional labour $ 1,000,000 $ 940,000 $ 60,000 F
Travel 50,000 40,000.00 $10,000 F
Supplies 100,000 90,000.00 $10,000 F

Fixed Costs:
Professional labour 400,000 405,000 -$5,000 U
Facilities Csots 250,000 265,000 -$15,000 U
Insurance 80,000 78,000 $2,000 F

Total Costs $ 1,880,000 $ 1,818,000 $ 62,000

For the year CBH Associates projected that it would generate $2,000,000 of revenues; it
actually generated $1,800,000. The company has consulted with you for help in
understanding what is happening. You decide to address the following items.
1 Comment on the usefulness of the report above in performing cost control
evaluation. (3 marks)

2 Prepare an alternative performance report to enable more meaningful cost control

evaluation (use flexible budgeting and identify volume and price variances). (7
marks)
Marks Please leave Column A blank as I would like to use it for marking purposes.
The CFO of Carrie Electric Auto, Mary Scofield is debating an investment. The investment is projected to earn $100
will require the company to acquire $600,000 in assets. The following chart summarizes Mary’s decision:

Before After
0 Investment Investment
Sales $ 3,500,000 $ 4,100,000
Operating Income $ 600,000 $ 700,000
Average Operating Assets 3,000,000 3,600,000

Required:
a.)
Assume Mary is evaluated based on growth in the company’s ROI. Compute the Return on
Investment including the margin and turnover components for the company before and after the
investment. Would you recommend Mary make the investment? Why (refer to margin and
turnover in your answer)? (5 marks)
b.)
Assume Mary is evaluated based on growth in the company’s residual income. The company’s
required rate of return is 15%. Compute the company’s residual income before and after the
investment. Would you recommend Mary make the investment? (3 marks)
c.)
Give at least one advantage and one disadvantage of using measures like ROI and residual income
to evaluate company performance. (2 marks)
e investment is projected to earn $100,000 annually and
ummarizes Mary’s decision:

ute the Return on

any before and after the
refer to margin and

come. The company’s

before and after the
ks)
ROI and residual income
Marks Please leave Column A blank as I would like to use it for marking purposes.

When Mr. Ree Active, president and chief executive of Precious Products Inc., first saw the segmented income stat
flew into his usual rage: “When will we ever start showing a real profit? I'm starting immediate steps to eliminate th
unprofitable lines!”
0
Product Lines
Total U V
Sales $250,000 $100,000 $75,000
Variable expenses 119,000 37,000 35,000
Contribution margin 131,000 63,000 40,000
Traceable fixed expenses* 98,000 31,000 37,000
Common expenses, allocated 32,900 18,000 10,500
Operating income (loss) $100 $14,000 -$7,500

*These traceable expenses could be eliminated if the product lines to which they are traced were discontinued

Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support you
answer. (5 marks)
, first saw the segmented income statement below, he
arting immediate steps to eliminate those two

duct Lines
W
$75,000
47,000
28,000
30,000
4,400
-$6,400

ich they are traced were discontinued.

e a report in good form to support your

Marks Please leave Column A blank as I would like to use it for marking purposes.

0 Hutchison Inc. makes three products. Information related to these products are as follows:

Products
X Y Z
Selling price per unit $ 67.90 $ 57.70 $ 43.90
Direct materials per unit $ 12.10 $ 10.30 $ 8.60
Direct labour per unit $ 14.10 $ 8.00 $ 6.80
Variable manufacturing overheard $ 2.60 $ 2.20 $ 1.80
Variable selling cost per unit $ 2.50 $ 2.20 $ 2.50
Mixing minutes per unit 2.7 3.3 4.7
Monthly demand in units 1,000 3,000 3,000

The mixing machines are potentially the constraint in the production facility. A total of 25,800 minutes
are available per month on these machines. Direct materials and direct labour are variable costs.

Required:
a. How many minutes of mixing machine time is required to meet demand for all three products? (2
marks)

b. How much of each product should be produced to maximize operating profits? (6 marks)

c. Up to how much should Hutchison be willing to pay for one additional hour of mixing machine time
if they made the best use of the existing mixing machine capacity? (2 marks)
e as follows:

total of 25,800 minutes

are variable costs.

for all three products? (2

rofits? (6 marks)

our of mixing machine time

arks)
Marks Please leave Column A blank as I would like to use it for marking purposes.

Barry Cabs is a sole proprietorship that owns and operates one taxi cab. The company purchased its cab 5 years ag
When it purchased the cab it expected it to be useful for 8 years with a residual value of $5,000. Barry thinks he co
today for $14,000.

Barry is considering replacing the old cab with a new, all-electric taxi. The all electric car would cost $60,000 and w
expected useful life of 8 years. Over its 8 year life, the cab would reduce annual operating costs (mostly gas and m
$8,000 per year for the first 6 years, and $10,000 per year thereafter. After 8 years, it is expected the taxi would ha
residual value. Barry’s cost of borrowing is 15% and assume no tax implications.
0

Required:
1 What is the payback period for replacing the exiting cab with the new electric taxi? (2 marks)

2 What is the net present value of replacing the existing cab with the new electric one? (4 marks)

3 What is the internal rate of return for replacing the existing cab with the new electric one? (2 marks)

4 What is the profitability index for replacing the existing cab with the new electric one? (2 marks)
e company purchased its cab 5 years ago for $40,000.
dual value of $5,000. Barry thinks he could sell the cab

l electric car would cost $60,000 and would have an

nual operating costs (mostly gas and maintenance) by
8 years, it is expected the taxi would have a $2,000
ons.

lectric taxi? (2 marks)

electric one? (4 marks)

e new electric one? (2 marks)

w electric one? (2 marks)