FATİH
UNIVERSITY
FACULTY
OF ECONOMIC AND ADMINISTRATIVE SCIENCES
DEPARTMENT
OF MANAGEMENT
FINAL
EXAM
Instructor:
Ali COSKUN
Duration:
90 Minutes
June 27, 2003
Sporting
Company manufactures pool cues. It expects to sell 20,000 cues in 2003. The
company had enough beginning inventory of direct materials to produce 24,000
cues. Beginning inventory of finished cues totaled 2,000 with a targeted ending
inventory of 2,500 cues. The cues sell for $12.00 and the company keeps no
work-in-process inventory. Direct materials costs for each cue total $2.00,
while direct labor is $4.00. Manufacturing overhead is $0.80 per
cue.
a.
How many cues will be produced in 2003?
b.
What will be the amount of cost of goods sold?
c.
What will be the total costs incurred for direct materials, direct manufacturing
labor, and manufacturing overhead, respectively, for 2003?
d.
How much is the gross profit for 2003?
QUESTION 2
The Shadow Company makes table lamps, for which the following standards have been developed:
Standard Inputs
Standard Price
Expected
for Each
Expected per
Unit
of Output
Unit
of Output
Direct materials
20 pounds $2
per pound
Direct labor 6
hours
$8
per hour
During
July, production of 100 lamps was expected, but 110 lamps were actually
completed.
Direct
materials purchased and used were 2,100 pounds at an actual price of $2.20 per
pound.
Direct
labor cost for the month was $5,310, and the actual pay per hour was
$9.00.
a.
How much is the direct-labor efficiency variance for the month of
July?
b.
How much is the direct-material price variance for July?
QUESTION 3
Flexy
Company reported the following information about the production and sales of its
only product during its first month of operations:
Sales ($100 per unit)
$ 150,000
Direct materials used
50,000
Direct labor
30,000
Variable factory overhead
20,000
Fixed factory overhead
25,000
Variable selling and
administrative expenses
10,000
Fixed selling and administrative
expenses
15,000
Ending
inventories:
Direct
materials
-0-
WIP
-0-
Finished
goods
500
units
Prepare
an income statement using variable costing method.
QUESTION 4
Atlantis
Company has a current production level of 22,000 units per month. Unit costs at
this level are:
Direct materials
$0.25
Direct labor
0.40
Variable manufacturing
overhead 0.15
Fixed manufacturing
overhead
0.20
Fixed marketing
expenses
0.20
Variable
marketing/distribution expenses
0.30
Current
monthly sales are 19,000 units. Barry Company has contacted Atlantis Company
about purchasing 1,500 units at $1.80 each. Current sales would not be affected
by the special order, and variable marketing/ distributing costs would not be
incurred on the special order.
What
is Atlantis Company's change in profits using the contribution margin format if
the order is accepted?
QUESTION 5
Tracy
Corporation manufactures two products AA and BB. The following information was
gathered:
AA
BB
Selling price per
unit
$18.00
$22.00
Variable cost per
unit
13.00
18.00
Total fixed costs
$25,000
Tracy
Corporation manufactures and sells three units of AA for every two units of BB.
a.
If the company sold 1,500 units of AA, how much operating income (loss) would it
report?
b.
If Bradley Corporation could produce and sell either 9,000 units of AA or 6,000
units of BB at full capacity, what should it produce and
sell?
QUESTION 6
Computer Monitors, Inc., currently sells monitors for $270. It has costs of $210. A competitor is bringing a new monitor to market that will sell for $225. Management believes it must lower the price to $225 to compete in the market for monitors. Marketing believes that the new price will cause sales to increase by 10 percent, even with a new competitor in the market. Computer Monitor, Inc.'s sales are currently 10,000 monitors per year.
a.
What is the target cost if target profit is 25 percent of sales?
b.
What is the target selling price if costs cannot be reduced and target profit is
changed to 20 percent of sales?
c.
What is the change in operating income if marketing is correct and only the
sales price is changed?