Business Exam Solutions

5/21/2018 Business Exam Solutions

1/15

J MES

COOK

UNIVERSITyr

AUSTRALIA

STUDY PERIOD

1

2011 EXAMINATION

Cairns

and Townsville

CAMPUS

STUDENT NAME:

STUDENT NUMBER:

SUBJECT CODE: 8X2012:03

SUBJECT NAME:

Cost and Management Accounting

EXAMINER:

Dr. Rafiuddin Ahmed

Number of pages, in

and any attachments

Paper must be hande

0 Yes

Release to the Libra

0 Yes

WORK

PHONE NO

MOBILE/AFTER HO

CONTACT PERSON

FOR

ENQUIRIES ON THE DAY OF THE EXAMS

Ifdifferent

Dr. Rafiuddin Ahmed

PHONE NO

DURATION OF EXAMINATION

hours):

PERUSAL TIME

minutes):

TOTAL

NUMBER OF QUESTIONS:

INSTRUCTIONS TO STUDENTS:

- Answer all questions

-Value of each question is shown

in

parenthesis

- Total weight of this exam is 60 (60 marks)

Two (2) Hours

Ten (10) Minutes

Four (4)


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BX2012:03

QUESTION ONE

Aunt Ethel s Fancy Cookie Company manufactures and sells three flav

Macaroon, Sugar, and Buttercream. The batch size for the cookies is li

cookies based on the size of the ovens and cookie molds owned

y

the

budgetary projections, the information listed below is available:

Macaroon

Sugar

Butt

Projected sales in units

500,000 800,000 600,0

PER UNIT data:

Selling price 0.80 0.75 0

Direct materials

0.20

0.15 0.

Direct labor

0.04

0.02

0.

Hours per 1 unit batch:

Direct labor hours

2

1

Oven hours 1 1

Packaging hours

0.5

0.5

Total overhead costs and activity levels for the year are estimated as fo

Activity

Direct labor

Oven

Packaging

Required:

Overhead costs

210,000

150,000

360,000

Activity levels

2,400 hours

1,900 oven hours

950 packaging hours

(a) Determine the activity-cost-driver rates packaging and oven costs.

(b) Using the ABC system, for the sugar cookie:

i

compute the estimated overhead costs per thousand coo

ii compute the estimated operating profit per thousand coo

(c) Using a traditional system (with direct labor hours as the overhead


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BX2012:03

QU ST ON TWO

Jordana Woolens sa manufacturer of wool cloth. The information for M

follows:

Beginning work process

,

Units started

Units completed

Beginning work-in-process direct materials

Beginning work-in-process conversion

Direct materials added during month

Direct manufacturinq labor durinq month

Factory overhead

Beginning work process was 40 completed as to labor and overhe

are added at the beginning of the process. All conversion costs are inc

throughout the process. Ending work process was 75 complete. Th

weighted average costing method to calculate cost

of

its products.

Required:

(a) How many units were processed during March?

(b) How many units were completed and transferred to finished goo

how many units remained incomplete at the end of March?

(c) What s the total cost of the units processed (work-in-process) d

(d) What sthe cost per equivalent unit of direct materials and conv

(e) Calculate the total costs assigned to finished goods inventory, a

process inventory.


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BX2012:03

QUESTION THREE

Tessmer Manufacturing Company produces inventory in a highly autom

n

Olathe, Kansas. The automated system

s n

its first year of operation

still unsure

of

the best way

to

estimate the overhead costs of operations

purposes. For the first six months

of

operations, the following data were

January

February

March

April

May

June

Required:

Machine hours

3,800

3,650

3,900

3,300

3,250

3,100

Kilowatt hours

4,520,000

4,340,000

4,500,000

4,290,000

4,200,000

4,120,000

Tota

a) Use the high-low method to determine the estimating cost functio

hours as the cost driver.

b) Use the high-low method to determine the estimating cost functi

hours as the cost driver.

c) For July, the company

r n

the machines for 3,000 hours and use

kilowatt-hours of power. The overhead costs totaled 114,000. W

the best predictor for July? Why?

Total m


5/15

BX2012:03

QUESTION FOUR

Part A

Duffy Corporation has prepared the following sales budget. Collections

of sale, 45

in

the month following the sale, and 10 two months follo

remaining

5

is expected to be uncollectible.

Month ash Sales redit Sales

May 16,000 68,000

June 20,000 80,000

July 18,000 74,000

August 24,000 92,000

September 22,000 76,000

Required:

Prepare a schedule o cash collections for July through Septem

Part

Wilson's Winter Woolens manufactures jackets and other wool clothing

ski parka requires the following:

Direct materials standard 2 square yards t 13.50 per

Direct manufacturing labor standard 1.5 hours at 20.00 per hour

During the third quarter, the company made 1,500 parkas and used 3,1

fabric costing 39,375. Direct labor totaled 2,100 hours or 45,150.

Required:

(a) Compute the direct materials price and efficiency variances for


6/15

Question Paper 2011

Aunt Ethel's Fancy Cookie Company manufactures and sells three flavorMacaroon, Sugar, and Buttercream. The batch size for the cookies is limi

based on the size of the ovens and cookie molds owned by the company. projections, the information listed below is available:

Macaroon Sugar Butte

Projected sales in units 500,000 800,000 600,00

PER UNIT data:Selling price $0.80 $0.75 $0.6

Direct materials $0.20 $0.15 $0.Direct labor $0.04 $0.02 $0.0

Hours per 1000-unit batch:

Direct labor hours 2 1 Oven hours 1 1 Packaging hours 0.5 0.5 0

Total overhead costs and activity levels for the year are estimated as follo

Activity Overhead costs Activity levels

Direct labor 2,400 hoursOven $210,000 1,900 oven hoursPackaging $150,000 950 packaging hours

$360,000

Required:

a. Determine the activity-cost-driver rate for packaging costs.

b. Using the ABC system, for the sugar cookie:1. compute the estimated overhead costs per thousand cookies.2. compute the estimated operating profit per thousand cookies.

c. Using a traditional system (with direct labor hours as the overhead althe sugar cookie:.


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Answer:a.

activity-cost-driver rate = packaging overhead / packaging hours= $150,000 / 950 hours= $157.89 per packaging hour

b.1. To compute the estimated overhead costs for a batch of sugar cook

system), first calculate the activity-cost-driver rate for the oven activity.

activity-cost-driver rate = oven overhead / oven hours= $210,000 / 1,900 hours= $110.53 per oven hour

Then calculate the overhead for a 1,000 cookie batch by multiplying activity hours per batch by the appropriate activity-cost-driver rate for eaoverhead activities and sum to get the total overhead for the batch.

(1 x $110.53) + (.5 x $157.89) = $189.48

2. To compute the estimated operating profit for a batch of sugar cooksystem), subtract the costs from the revenues:

Revenue = 1,000 * $0.75 = $ 750.00Direct Material = 1,000 * $.015 = ($150.00)Direct Labor = 1,000 * $.02 = ($ 20.00)

Overhead = ($189.48)

Operating Profit = $ 390.52

c. 1. To compute the estimated overhead costs for a batch of sugar cooktraditional system), first calculate the overhead rate per direct labor hour.

Overhead per direct labor hour = Total Overhead / Total Direct Lab= $ 360,000 / 2,400 hours= $ 150.00 per direct labor h

Since it takes 1 direct labor hour per 1,000 sugar cookies, the overhea


8/15

d. Traditional system: Operating profit per batch of sugar cookiesABC system: Operating profit per batch of sugar cookies is $390

Because the products do not all require the same proportionate sharesresources, the allocation of the total overhead on that basis is not as accurABC system. The ABC system allocates the overhead based on activity lcategories as well as activity usage by the product lines.

Diff: 2Terms: activity-based costing (ABC)

Objective: 1, 3, 5, 6AACSB: Analytical skills


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