FATİH
UNIVERSITY
FACULTY
OF ECONOMIC AND ADMINISTRATIVE SCIENCES
DEPARTMENT
OF MANAGEMENT
MAN 306 MANAGERIAL ACCOUNTING
1st
MIDTERM EXAM
Instructor: ALI COSKUN
Duration: 90 Minutes April 15, 2004
QUESTION 1.
Max Technology Company is an aircraft producing company. The Company
produces and sells two types of product: Complex parts and simple parts.
Management is ready to prepare a master budget for the year 2005. The
executives forecast the following figures:
Expected Target Inventory in Units Budgeted units
Product 1 January 2005
31 December 2005 to be sold Unit Price
Complex part 1,000 units 1,500 units 70,000 units $200
Simple part 7,000 units 3,000 units
120,000 units $ 80
Expected Target Inventory in Unit
Direct material
Material TK
30,000 kg. 20,000 kg. $ 7
Content of
each finished good Direct material TK Direct labor
Complex part 5 kg 10 hours
Simple part 2 kg 2 hours
Direct labor cost is $ 20 per hour
Variable manufacturing overhead is allocated at the rate of $15 per
direct labor hour.
Fixed manufacturing overhead is forecast to be $9,000,000 for 2005.
First in First out method (FIFO) is used for inventory costing.
Required:
a. Prepare
the revenue budget.
b. Prepare
the production budget.
c. Prepare
the direct materials purchase budget.
QUESTION 2.
Kevin Hobbs
has three booth rental options at the county fair where he plans to sell his
new product. The booth rental options are:
Option 1: $10,000 fixed fee
Option 2: $7,500 fixed fee + 6% of all
revenues generated at the fair
Option
The product
sells for $37.50 per unit. He is able to purchase the units for $12.50 each.
Required:
Which
option should Kevin choose in order to maximize income, assuming sales are
expected to be 500 units?
QUESTION
3.
The
Lamp Shade 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
January, production of 110 lamps was expected, but 100 lamps were actually
completed.
Direct
materials purchased and used were 2,100 pounds at an actual price of $1.90 per
pound.
Direct
labor cost for the month was $5,270, and the actual pay per hour was $8.50.
Required:
a. Compute the direct
materials price and efficiency variances for the year.
b. Compute the direct labor
price and efficiency variances for the year.
c. Compute the static
budget variances for direct materials and direct labor for the year.
CHOOSE TWO OF THE
FOLLOWING QUESTIONS AND ANSWER
QUESTION 4.
Alternative
Manufacturing Company produces two products, X and Y. The following information
is presented for both products:
X Y
Selling
price per unit $36 $24
Variable
cost per unit 28 12
Total fixed
costs are $234,000.
Required
a. Contribution margin
for each product
b. Break-even point in
units of both X and Y if the sales mix is 3 units of X for every unit of Y
QUESTION 5.
FC Company has the following sales budget for the last six months
of 2004:
July $75,000
October $60,000
August 80,000 November 100,000
September
90,000 December 70,000
Historically, the cash collection of sales has been as follows:
70 percent of sales
collected in month of sale,
22 percent of sales
collected in month following sale,
7 percent of sales collected in second month
following sale, and
1 percent of sales is
uncollectible.
Required:
Compute the total cash collections for October.
QUESTION 6.
Profit Volume (PV) Graph
for Maximum Company is given below. There are three alternative cost structure
options for the company. Selling price of the product will be same under all of
the options.
