FATÝH
UNIVERSITY
FACULTY
OF ECONOMIC AND ADMINISTRATIVE SCIENCES
DEPARTMENT
OF MANAGEMENT
MAN
306 MANAGERIAL ACCOUNTING
MIDTERM
EXAM I
Instructor:
ALI COSKUN
Duration:
80 Minutes
March
29, 2005
QUESTION
1. Clever Shoes
Company sells men’s shoes with
identical unit costs and selling
prices. A unit is defined as a pair of shoes. Clever Shoes
expects the following revenue and cost relationships:
Unit variable data (per pair of shoes)
Selling price $50
Cost of shoes $37
Sales commisions $ 2
Monthly fixed data:
Rent $ 5,000
Salaries $19,000
Advertising $20,000
a. What is the monthly breakeven
in units and in dollars
b. If 3,500 units are sold,
what will be the store’s monthly
operating income (loss)?
c. How many units shold
be sold in order to make $15,000 profit.
QUESTION 2. Billiard, Inc. manufactures pool cues. It expects to
sell 20,000 cues in 2005. 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. Factory overhead is $0.80
per cue.
What will be the amount of cost
of goods sold?
QUESTION 3. Jermaine Corporation has budgeted sales of 18,000 units,
target ending finished good inventory of 3,000 units, and a beginning finished
goods inventory of 900 units.
How many units should be
produced?
QUESTION
4. Watson Manufacturing
manufactures and sells a model of snowboard called Swift. Following data was
gathered to prepare the budget for 2005:
Material requirement:
Wood 5
m2 per snowboard at $30 per m2
Fiberglass 3
m per snowboard at $5 per m
Direct manufacturing labor 5 hours per snowboard at $25 per hour
Watson’s management expects to
sell 2,100 snowboards during 2005 at an estimated selling price of $500 per
snowboard.
Variable manufacturing overhead
is allocated at the rate of $7 per direct labor hour. There are also $70,000
fixed manufacturing overhead costs budgeted for 2005. Watson combines both
fixed and variable manufacturing overhead into a single rate based on direct
labor hours. Budgeted marketing and other non-manufacturing costs are $50,000
for 2005.
Inventory estimations: 1/1/2005 31/12/2005
Direct material- wood 1,000 m2 2,000 m2
Direct material- fiberglass 2,000 m
1,000 m
Swift snowboards 200 units 100 units
Assume that Watson uses FIFO
inventory method. There was no ending or beginning WIP inventory.
Prepare ending inventory budget
for both direct materials and finished goods.
QUESTION
5. Flexy Company
manufactures monitors.
Following budgeted
standards are provided for the
month of March 2005:
Average selling price per
monitor $400 per unit
Total direct material cost per monitor $80 per unit
Direct
manufacturing labor
Direct manufacturing labor cost per hour
$25 per hour
Direct manufacturing labor hour 0.6 hours per unit
Direct marketing cost per unit $250 per unit
Fixed overhead $80,000 per month
Sales of 1,500 units are budgeted for March.
Actual March results are as follows:
Unit sales totaled 80% of plans
Actual average selling price declined to
$385
Actual direct manufacturing labor cost is $
27 per hour
Actual direct manufacturing labor hour is 700
hours
Actual total direct material cost per unit
dropped to $78
Actual direct
marketing costs were $230 per unit
Fixed overhead
costs were $77,000
a. Calculate total static budget variance, total sales volume
variance and total flexible budget variance.
b. Calculate price and efficiency variances for direct
manufacturing labor
QUESTION
6. Grinnell
Manufacturing Company has the following information: (All cash expenses are
paid as incurred.)
Month Budgeted
Sales
January $76,000
February 85,000
March 92,000
April 79,000
Budgeted
Expenses per Month
Wages $15,000
Advertising 12,000
Depreciation 3,000
Other 4 percent of sales
What is the expected total cash
disbursements for expenses in February?