ACCOUNTING

Final Exam: Problems from your textbook

Complete the following problems from your textbook. The problems must be completed using either Word or Excel.

Question #1 – Problem 3-25 (pp. 131–132)

Question #2 – Problem 6-22 (p. 270)

Question #3 – Problem 9-19 (pp. 403–404)

Question #4 – Problem 11A-9 (pp. 498–499)

Question #5 – Problem 13-21 (pp. 614–615)

Submit your Final Exam to the Dropbox area in the course. For details on using the Dropbox please click the Academic Tools tab above, then Dropbox Guide.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AC505: Advanced Managerial/Cost Accounting

Unit 6 Final Exam

Professor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Final Exam

Question #1 – Problem 3-25 (pp. 131–132)Multiple Departments; Overhead Rates; Underapplied or Overapplied Overhead[LO3, LO5, LO8]

Hobart, Evans, and Nix is a small law firm that employs 10 partners and 12 support persons. The firm uses a job-order costing system to accumulate costs changeable to each client, and it is organized into two departments-the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to change the costs of these departments to its clients. At the beginning of the year, the firm’s management made the following estimates for the year:

 

Department
Research and Development  

Litigation

Research-hour 24,000
Direct attorney-hour 9,000 18,000
Legal forms and supplies $16,000 $5,000
Direct attorney cost $450,000 $900,000
Departmental overhead cost $840,000 $360,000

 

The predetermined overhead rate in the Research and Documents Department is based on research-hours, and the rate in the Litigation Department is based on direct attorney cost.

The costs charged to each client are made up of three elements: legal forms and supplies used, direct attorney cost incurred, and an applied amount of overhead from each department in which work is performed on the case.

Case 418-3 was initiated on February 23 and completed on May 16. during this period, the following costs and time were recorded on the case:

 

Department
Research and Development  

Litigation

Research-hour 26
Direct attorney-hour 7 114
Legal forms and supplies $80 $40
Direct attorney cost $350 $5,700

 

Required:

  1. Compute the predetermined overhead rate used during the year in the Research and Documents Department. Compute the rate used in the Litigation Department.
  2. Using the rates you computed in (1) above, compute the total overhead cost applied to Case 418-3.
  3. what would be the total cost changed in Case 418-3? Show computations by department and in total for the case.
  4. At the end of the year, the firm’s records revealed the following actual cost and operating data for all cases handled during the year:

     

Department
Research and Development  

Litigation

Research-hour 24,000
Direct attorney-hour 9,000 18,000
Legal forms and supplies $16,000 $5,000
Direct attorney cost $450,000 $900,000
Departmental overhead cost $840,000 $360,000

 

Determine the amount of underapplied or overapplied overhead cost in each department for the year.

 

Question #2 – Problem 6-22 (p. 270) Basics of CVP Analysis; Cost Structure[LO1, LO3, LO4, LO5, LO6]

Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

 

Sales (19,500 units x $30 per unit) $585,000
Variable expenses 409,500
Contribution margin 175,500
Fixed expenses 180,000
Net operating loss $(4,500)

 

Required:

  1. Compute the company’s CM ratio and its break-even point in both units and dollars.
  2. The president believes that a $ 16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $ 80,000 increase in monthly sales. If the president is right, what will be the effect on the company’s monthly net operating income or loss? (Use the incremental approach in preparing your answer.)
  3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $ 60,000 in the monthly advertising budget, will cause unit sales to double. What will the new contribution format income statement look like if these changes are adopted?
  4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would help sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of $9,750?
  5. Refer to the original data. By automating certain operations, the company could reduce variable costs by $ 3 per unit. However, fixed costs would increase by $ 72,000 each month.
    1. Compute the new CM ratio and the new break-even point in both units and dollars.
    2. Assume that the company expects to sell 26,000 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for alternative.)
    3. Would you recommend that the company automate its operations? Explain.

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»