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Management Accounting

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Please only do Questions 1-7

1.
Evergreen Corp. has provided the following data:
Sales per period 1,000 units
Selling price $40 per unit
Variable manufacturing cost $12 per unit
Selling expenses $5,100 plus 5% of selling price
Administrative expenses $3,000 plus 20% of selling price
The number of units needed to achieve a target net operating income of $63,900 would be:
(Points: 5)
4,000 units
3,950 units
4,150 units
4,050 units

2. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points: 5)
Contribution Margin Per Unit - Increases, Contribution Margin Ratio - Increases, Break-Even in Units - Decreases
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - No Change, Break-Even in Units - No Change
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - Increases, Break-Even in Units - No Change
Contribution Margin Per Unit - Increases, Contribution Margin Ratio -No Change, Break-Even in Units - Decreases

3. (TCO B) Variable expenses for Alpha Company are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: (Points: 10)
$250,000
$375,000
$600,000
$150,000

4. (TCO E) The following data were provided by Trusty Corp., which produces a single product:
Year 1 Year 2 Year 3
Units produced 6,000 7,000 8,000
Units Sold 6,000 6,000 6,000
The selling price per unit, variable costs per unit, and total fixed costs are the same for each year. If variable costing is in use, one would expect:
(Points: 5)
net operating income to be erratic over the three-year period.
net operating income to be the same for each year.
the break-even point to be lower in Year 2 than in Year 3.
net operating income to be higher in Year 2 than in Year 1.

5.
(TCO F) Sagon Corporation has provided data concerning the company's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $66,000. Which of the following statements is true?
(Points: 5)
Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000
Actual manufacturing overhead incurred during the month was $66,000
Manufacturing overhead applied to Work in Process for the month was $76,000
Manufacturing overhead for the month was underapplied by $10,000

6.
(TCO F) Monica Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used $4,200
Direct labor hours worked 400
Direct labor rate per hour $7.50
Machine hours used 200
Predetermined overhead rate per machine hour $15.00
What is the total manufacturing cost recorded on Job 1501?
(Points: 10)
$8,800
$10,200
$10,300
$11,100

7. (TCO G) An investment project for which the net present value is $300 would result in which of the following conclusions? (Points: 5)
the net present value is too small; the project should be rejected
the investment project promises slightly more than the required rate of return
the net present value method is not suitable for evaluating this project; the internal rate of return method should be used
the investment project should only be accepted if net present value is zero; a positive net present value indicates an error(s) in the estimates associated with the analysis of this investment.

8. (TCO G) Logan Company is considering two projects, A and B. The following information has been gathered on these projects: (2 pts)
Project A Project B
Initial investment needed................................................................... $40,000 $60,000
Present value of future cash flows...................................................... 60,000 85,000
Useful life......................................................................................... 4 years 4 years
Based on this information, which of the following statements is (are) true?
I. Project A has the highest ranking according to the profitability index criterion.
II. Project B has the highest ranking according to the net present value criterion.
(Points: 5)
Only I
Only II
Both I and II
Neither I and II

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1.
Evergreen Corp. has provided the following data:
Sales per period 1,000 units
Selling price $40 per unit
Variable manufacturing cost $12 per unit
Selling expenses $5,100 plus 5% of selling price
Administrative expenses $3,000 plus 20% of selling price
The number of units needed to achieve a target net operating income of $63,900 would be:
(Points: 5)
4,000 units
3,950 units
4,150 units
4,050 units

Let the number be x units

Profits = 40x - 12x - 5100 - 5%*40x - 3000 - 20%*40x

63900 = 28x - 8100 - 10x

18x = 72000

x = 4000 units

2. (TCO B) Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: (Points: 5)
Contribution Margin Per Unit - Increases, Contribution Margin Ratio - Increases, Break-Even in Units - Decreases
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - No Change, Break-Even in Units - No Change
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - Increases, Break-Even in Units - No Change
Contribution Margin Per Unit - Increases, Contribution Margin Ratio -No Change, Break-Even in Units - Decreases

Answer : Contribution Margin Per Unit - Increases, Contribution Margin Ratio -No Change, Break-Even in Units - Decreases

3. (TCO B) ...

$2.19
See Also This Related BrainMass Solution

Managerial Accounting - JIT, TQM, CI, CO

Following are three separate events affecting the managerial accounting systems for different companies.
Match the management concept(s) that the company is likely to adopt for the event identified.
There is some overlap in the meaning of customer orientation and total quality management and, therefore, some responses can include more than one concept.

Event
_______ 1. The company starts measuring inventory a. Total quality management (TQM)
turnover and discontinues elaborate
inventory records. Its new focus is b. Just-in-time (JIT) system
to pull inventory through the system.
_______ 2. The company starts reporting measures c. Continuous improvement (CI)
on customer complaints and product
returns from customers. d. Customer orientation (CO)
_______ 3. The company starts reporting measures
such as the percent of defective products
and the number of units scrapped.

a. Total quality management (TQM)
b. Just-in-time (JIT) system
c. Continuous improvement (CI)
d. Customer orientation (CO)
------------------------------------------------------------------------

The following calendar year-end information is taken from the December 31, 2005, adjusted trial balance
and other records of Plaza Company.

Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . $ 30,750
Depreciation expense?Office equipment . . . . . . . . . 9,250
Depreciation expense?Selling equipment . . . . . . . . . 10,600
Depreciation expense?Factory equipment . . . . . . . . 35,550
Factory supervision . . . . . . . . . . . . . . . . . . . . . . . . . 104,600
Factory supplies used . . . . . . . . . . . . . . . . . . . . . . . 9,350
Factory utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Inventories
Raw materials, December 31, 2004 . . . . . . . . . . . . 168,850
Raw materials, December 31, 2005 . . . . . . . . . . . . 184,000
Goods in process, December 31, 2004 . . . . . . . . . 17,700
Goods in process, December 31, 2005 . . . . . . . . . 21,380
Finished goods, December 31, 2004 . . . . . . . . . . . 169,350
Finished goods, December 31, 2005 . . . . . . . . . . . 138,490
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677,480
Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . 235,725
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,875
Miscellaneous production costs . . . . . . . . . . . . . . . . 10,425
Office salaries expense . . . . . . . . . . . . . . . . . . . . . . 65,000
Raw materials purchases . . . . . . . . . . . . . . . . . . . . . 927,000
Rent expense?Office space . . . . . . . . . . . . . . . . . . 24,000
Rent expense?Selling space . . . . . . . . . . . . . . . . . . 28,100
Rent expense?Factory building . . . . . . . . . . . . . . . 78,800
Maintenance expense?Factory equipment . . . . . . . . 37,400
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,527,000
Sales discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,500
Sales salaries expense . . . . . . . . . . . . . . . . . . . . . . . 394,560
Check (1) Cost of goods
manufactured, $1,955,650
Problem 18-9A
Sales and costs estimation;
contribution margin analysis
C3 A1
King grocery chain, a market leader, wants to increase sales to its existing customers by creating a
customer orientation to better meet buyer needs and wants. Assume that King hires you as a consultant
to analyze its operations and suggest improvements. King's goal is to increase its contribution
margin by $40,000.
Required
1. To increase King's sales and contribution margin from existing customers, offer three improvements
that you have observed in other stores and believe would be successful here.
2. What level of increase in sales is necessary for King to increase contribution margin by $40,000?
(Hint: With each suggestion in part [1], identify the expected sales dollars and the contribution
margin ratio to meet the $40,000 increase in contribution margin.)
PROBLEM SET B
Problem 18-1B
Managerial accountant's role
C1 C3
This chapter discusses the purposes of managerial accounting and the current business environment.
You are to look through the home electronics section of your local newspaper; the Sunday paper is
often best. Review advertisements of home electronics and note how many manufacturers offer these
products and the factors on which they compete.
Required
Discuss the potential contributions and responsibilities of the managerial accounting professional in
helping a home electronics manufacturer succeed. (Hint: Think about information and estimates that
a managerial accountant might provide new entrants into the home electronics market.)

1. Prepare the company's 2005 manufacturing statement.
2. Prepare the company's 2005 income statement that reports separate categories for (a) selling
expenses and (b) general and administrative expenses.
--------------------------------------------------------------
Resources: Fundamental Accounting Principles, pp. 739 and 745

? Complete Exercise 18-5 on p. 739 and questions 1 and 2 of Problem 18-8A on p. 745.
? Post your answers as an attachment.

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