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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
Similar Posting

Merchandising Operations (Accounting)

See attached file for full problem description.

E1: The decisions that follow were made by the management of Shanahan Shoe Company. Indicate whether each decision pertains primarily to (a) cash flow management, (b) profitability management, (c) choice of inventory system, or (d) control of merchandise operations.

1. Decided to mark each item of inventory with a magnetic tag that set off an alarm if the tag is removed from the store before being deactivated

2. Decided to reduce the credit terms offered to customers from 30 days to 20 days to speed up collection of accounts

3. Decided that the benefits of keeping track of each item of inventory as it is bought and sold would exceed the costs of such a system

4. Decided to raise the price of each item of inventory to achieve a higher gross margin to offset an increase in rent expense

5. Decided to purchase a new type of cash register that can be operated only by a person who knows a predetermined code

6. Decided to switch to a new cleaning service that will provide the same service at a lower cost

E2: The operating budget and actual performance for the six months ended June 30, 20x3 for Pacific Hardware Company appears below.

1. Prepare an operating report that shows budget, actual, and difference.
2. Discuss the results, identifying which differences most likely should be investigated by management.

Budget Actual
Selling expenses
Sales salaries expense $90,000 $102,030
Rent expense, selling space 2,000 1,642
Utilities expense, selling space 18,000 18,000
Advertising expense 12,000 11,256
Depreciation expense, selling fixtures 15,000 21,986
Total selling expenses $143,500 $161,692
General and administrative expenses
Office salaries expense $50,000 $47,912
Office supplies expense 1,000 782
Rent expense, office space 4,000 4,000
Depreciation expense, office equipment 3,000 3.251
Utilities expense, office space 3,000 3.114
Postage expense 500 626
Insurance expense 2,000 2,700
Miscellaneous expense 500 481
Total general and administrative expenses 64,000 62,866
Total operating expenses 207,500 224,558

Budget Actual Difference

E3: Compute the dollar amount of each item indicated by a letter in the following table. Treat each horizontal row of numbers as a separate problem.

Sales Cost of Goods Sold Gross
Margin Operating
Expenses Net
Income
$250,000 $ a $80,000 $ b $24,000
c 216,000 120,000 80,000 40,000
460,000 d 100,000 e (2,000)
780,000 f g 240,000 80,000

E4: A household appliance dealer buys refrigerators from a manufacturer and resells them to its customers.
What is the net cost of the refrigerator to the dealer, assuming it is paid for within ten days of purchase?

a. The manufacturer sets a list or catalogue price of $1,000 for a refrigerator. The manufacturer offers its dealers a 30 percent trade discount.
b. The manufacturer sells the machine under terms of FOB destination. The cost of shipping is $100.
c. The manufacturer offers a sales discount of 2/10, n/30. Sales discounts do not apply to shipping costs.

E5: Using the selected account balances at December 31, 20xx, for City Rental that follow, prepare an income statement for the year ended December 31, 20xx. Show the detail of net sales. The company uses the perpetual inventory system, and Freight In has not been included in Cost of Goods Sold.

Account Name Debit Credit

Sales $237,500
Sales Returns and Allowances $11,750
Cost of Goods Sold 140,000
Freight In 6,750
Selling Expenses 21,500
General and Administrative Expenses 43,500

E6: Give the entries to record each of the following transactions under the perpetual inventory system:

a. Purchased merchandise on credit, terms n/30, FOB shipping point, $2,500.
b. Paid freight on the shipment in transaction a, $135
c. Purchased merchandise on credit, terms n/30, FOB destination, $1,400.
d. Purchased merchandise on credit, terms n/30, FOB shipping point, $2,600, which includes freight paid by the supplier of $200.
e. Returned part of the merchandise purchased in transaction c, $500.
f. Paid the amount owed on the purchase in transaction a.
g. Paid the amount owed on the purchase in transaction d.
h. Paid the amount owed on the purchase in transaction c less the return in e.

E7: On June 15, Tunnale Company sold merchandise for $1,300 on terms of n/30 to Whist Company. On June 20, Whist Company returned some of the merchandise for a credit of $300, and on June 25, Whist paid the balance owed. Give Tunnale's entries to record the sale, return, and receipt of payment under the perpetual inventory system. The cost of the merchandise sold on June 15 was $750, and the cost of the merchandise returned to inventory on June 20 was $175.

June 15

E8: Using the selected year-end account balances at December 31, 20x4, for the Atlanta General Store shown below, prepare a 20x4 income statement. Show the detail of net sales. The company uses the periodic inventory system. Beginning merchandise inventory was $52,000; ending merchandise inventory is $44,000.

Dec 31

E9: Determine the missing data for each letter in the following three income statements for Leominister Wholesale Paper Company (in thousands):

20x4 20x3 20x2
Gross sales $ o $ h $286
Sales returns and allowances 24 19 a
Net sales p 317 b
Merchandise inventory, beginning q i 38
Purchases 192 169 c
Purchases returns and allowances 31 j 17
Freight in r 29 22
Net cost of purchases 189 k d
Goods available for sale 222 212 182
Merchandise inventory, ending 39 l 42
Cost of goods sold s 179 e
Gross margin 142 m 126
Selling expenses t 78 f
General and administrative expenses 39 n 33
Total operating expenses 130 128 g
Net income u 10 27

E10: Using the data in E6- give the entries to record each of the transactions under the periodic inventory system.

E11: Using the relevant data in E7, give the entries to record each of the transactions under the periodic inventory system.

E12: Below are selected account balances of Linley Company for the year ended December 31, 20xx.
Prepare closing entries, assuming that the owner of Linley Company, Sandra Linley, withdrew $40,000 for personal expenses during the year.

Account Name Debit Credit

Sales $297,000
Sales Returns and Allowances $15,200
Cost of Goods Sold 113,000
Freight In 5,600
Selling Expenses 48,500
General and Administrative Expenses 37,200

E13: Selected account balances of the Lakeside Grocery Store for the year ended December 31, 20xx, follow

Account Name Debit Credit

Sales $297,000
Sales Returns and Allowances $11,000
Sales Discounts 4,200
Purchases 114,800
Purchases Returns and Allowances 1,800
Purchases Discounts 2,200
Freight In 5,600
Selling Expenses 48,500
General and Administrative Expenses 37,200

Beginning merchandise inventory was $26,000, and ending merchandise inventory is $22,000. Prepare closing entries, assuming that the owner of Lakeside Grocery, John Grover, withdrew $34,000 for personal expenses during the year.

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