(TCO C) Which of following is NOT true about the direct materials purchases budget? (Points: 5)
The direct materials purchases budget does not affect the forecasted balance sheet.
The direct materials purchases budget is expressed in units and dollars.
The direct materials purchases budget is determined by the anticipated change in the direct materials inventory level and the production budget.
The direct materials purchases budget is used in preparing the budgeted income statement.
2. (TCO G) An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: (Points: 5)
some manufacturing costs (i.e., the cost of idle capacity) will not be assigned to products.
some nonmanufacturing costs are assigned to products.
first-stage allocations may be based on subjective interview data.
all of the above are reasons why an activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles.
3. (TCO G) Activity based budgeting is based upon the premises of activity based costing. ABB would be concerned with all of the following except: (Points: 5)
how resources are consumed by each activity
whether customers are satisfied with a product or service
whether activities are value-adding
what resources are consumed by each activity
1. (TCO A) The Mission of College USA is to become the premier provider of high quality online, graduate studies leading to various business degrees. At the time of the review process, management needs to be sure that the planned course of action with lead to the fulfillment of the organization's mission. Name and give an example of the next four steps that the college should take in articulating its strategic goals beginning with defining a strategy. (Points: 15)
2. (TCO G) You own a bakery. Provide examples of a related outcome, output, activity, and task. In other words, describe a task that is part of an activity that produces an output that results in an outcome for a bakery. Clearly describe your outcome, output, activity, and task. (Points: 15)
3. (TCO A) Your boss wishes to improve the current budgeting process that he has overseen himself for the last 20 years. You have suggested that the company use a Business Process Budget Review Panel. Prepare a very brief description of the roles that each of the four suggested groups of the Business Process Budget Review Panel would play in the 1st level budget review. (Points: 15)
4. (TCO G) Lackadaisical, Inc. has hired you to do an activity analysis since they have not been achieving their organizational goals. Careless, Inc. is a manufacturing firm that has multiple departments used in the production of blenders. After studying the work that is performed in each department, what questions would you try to answer? Please be brief in your response. (Points: 15)
5. (TCO B) The Board of Joyful Toys is meeting to discuss current set of financial statement. Last years performance was significantly below the budgeted amounts. Without having access to the actual and budgeted financial statement, what are some of the possible reasons for this difference in operating income? (Points: 10)
1. (TCO G) A veterinary center has the following data available regarding the activities performed at the front desk on a monthly basis.
Activity Time needed
to complete Volume
Expected
Answer phone
and make appointment 10 minutes 2,100 calls
Check-in for clients 6 minutes 1,600 animals
Check-out and process billing 12 minutes 1,600 animals
Additional information:
Employees work 160 hours per month
Employees salary and benefits average $20 per hour
Required:
1. Determine the FTE (full-time equivalent) needed to perform these activities. Do not round to the whole employee.
2. Determine the cost related to salaries and benefits that should be allocated to each of the activities
(Points: 20)
2. (TCO F)
The N & K Company has the following historical sales data:
Year Sales
2001 $200,000
2002 $300,000
2003 $270,000
2004 $280,000
2005 $320,000
Required:
1. (10 pts) Using the Moving Average Method, predict the sales for 2006 using the data for all of the years provided.
2. (10 pts) Using Exponential Smoothing and that data for all of the years provided, predict the sales for 2006. Assume that the most recent years are the most representative of future sales. In other words, 2005 is more representative of future sales than 2004, that 2004 is more representative than 2003, that 2003 is more representative that 2002, and that 2002 is more representative than 2001.
(Points: 20)
3. (TCO G) The Jeffery Company produces lawn mowers and is considering to shift to activity-based costing. Its controller, Orville Flattengartner, is interested in using a recent order for 100 mowers sold to Davis Lawn and Garder to compare traditional costing with activity-based costing. The costs for this order consist of direct materials of $4,000, purchased parts of $10,000, 120 direct labor hours at an average direct labor pay rate of $20 per hour, and a manufacturing overhead rate of 150% of direct labor costs.
In addition, Orville has collected the following information:
Activity Activity Cost Rate Cost Driver Level
Parts Production $5 per machine hour 200 machine hours
Assembly $10 per direct labor hour 120 direct labor hours
Packaging & Shipping $15 per unit 100 units
Work Cell Setup $100 per setup 3 setups
Required:
1) (10 pts) Using the traditional costing approach, a) compute the total production costs and b) product unit cost for the order
2) (10 pts) Using activity-based costing, a)compute the total production costs and b) product unit cost for the order.
3) (5 pts) What is the difference between the product unit cost using the traditional method versus the activity-based costing method? Which method do you think is the better representation of "true costs"? Why?
(TCO C&D) The Wernicke Company is now preparing detailed budgets for the fourth quarter, October through December, and has assembled the following information to assist in the budget preparation:
(a) The Marketing Department has estimated per unit sales as following for the next 6 months:
October 12,000 January 8,000
November 14,000 February 6,000
December 10,000 March 6,000
The selling price is $100 per unit.
(b) All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:
40% in the month of sale
50% in the month following sale
10% uncollectible
The beginning accounts receivable balance (excluding uncollectible amounts) on October 1 will be $260,000.
(c) The company maintains finished goods inventories equal to 10% of the following month’s sales. The inventory of finished goods on October 1 will be 1,200 units.
(d) Each unit requires 2 pounds of raw materials. To prevent shortages, the company would like the raw material inventory on hand at the end of the month to be equal to 20% of the following month’s production needs. The inventory of raw materials on hand October 1 will be 4,880 pounds.
REQUIRED (10 pts each):
1. What are the cash collections for December? Please show your work.
2.Based upon the budget information, how many units will need to be produced during October? Please show your work.
3. Based upon the budget information, what purchases (in units) will be required for the month of October? Please show your work.
(Points: 30)
2. (TCO B) Adventureland, Inc., manufactures steel hitches for camping trailers. The company’s direct labor rates have been set by the terms of the current labor contract. Direct labor rate standards have been assigned for each job classification. In May 20xx, a young apprentice was being trained during regular working hours to become a machine operator on one of the turret lathes. A timekeeper determined that the apprentice had spent a total of 48 hours as a novice machine operator in May. Standard time for the same work output is 32 hours. The apprentice earned $6.25 per hour in May. The standard direct labor rate for machine operators working on turret lathes is $10 per hour.
a. (24 pts)From the data provided, determine the direct labor efficiency variance and the direct labor rate variance that resulted from the temporary substitution of the apprentice for the regular machine operator. (Note that, according to the labor contract, the apprentice is not entitled to the same rate as a regular machine operator during the training period.)
b. ( 6 pts) Did the company benefit financially from the situation? Why or why not? (Show calculations.)
(Points: 30)
3. (TCO B) The following information is available for the Davis Company regarding the sales of their two products, Blobs and Globs:
Budget Blobs per unit Total Blobs budgeted (100 units) Globs per unit Total Globs budgeted (400 units) Total 500 units
Sales $100 $10,000 $35 $14,000 $24,000
Variable Costs 80 8,000 30 12,000 20,000
Contribution Margin 20 2,000 5 2,000 4,000
Budgeted mix 20% 80%
ACtual Blobs per unit Total Blobs sold (90 units) Globs per unit Total Globs sold (510 units) Total 600 units
Sales $100 $9,000 $35 $17,850 $26,850
Variable Costs 80 7,200 30 15,300 22,500
Contribution Margin 20 1,800 5 2,550 4,350
Actual mix 15% 85%
Calculate the sales volume variance only for both products and the company as a whole:
(Points: 15)
4. (TCO E) The R&W Company is considering two different capital budgeting projects with the following data regarding projections:
Project A Project B
Investment required immediately $200,000 $500,000
Annual cash inflow expected $50,000 over 6 years $100,000 over 10 years
Depreciation over specified number of year with no salvage value expected 8 years 10 years
The company requires a 14% hurdle rate.
Required:
1. Calculate the payback period for both projects
2. Calculate the simple rate of return for both projects
3. Calculate the NPV for both projects
4. Calculate the profitability index for both projects
5. Indicate which project you would choose if there were funds for only one project
Solution
All the questions are solved in a detailed manner with the necessary explanations to help the student understand the concepts in a better manner.
No. of Words:
1,200 words
References:
n/a
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