# MANAGERIAL ACCOUNTING

1)           XYZ CORP HAS THE FOLLOWING DATA:

BUDGETED MACHINE HOURS (DRIVER)                 40,000        PDOHR = 3.9

ACTUAL MACHINE HOURS:

JOB 17                                                    10,500   COGS

JOB 18                                                      6,300   FG

JOB 19                                                     16,800   FG

JOB 20                                                      8,400   WIP

42,000

JOBS 17, 18 & 19 WERE FINISHED.  JOB 17 WAS SOLD.  TOTAL ACTUAL OVERHEAD = \$162,800. WHAT IS ACTUAL OVERHEAD IN FINISHED GOODS AFTER ADJUSTING FOR ANY OVER OR UNDER APPLIED OVERHEAD? (ASSUME OVERHEAD VARIANCE ALLOCATED AMONG WIP, FG AND COGS) (4 POINTS)

ACTUAL OVERHEAD FG   89,540              6,300 + 16,800

42,000            X    162,800

2)          SMITH CORP PURCHASED \$63,000 OF RM DURING THE CURRENT

ACCOUNTING PERIOD.  SMITH INCURRED \$90,000 OF DL AND \$67,000 OF MFG

OVERHEAD. ASSUME COMBINED INVENTORY FOR RM, WIP AND FG INCREASED

BY \$5,800. WHAT IS COGS? (4 POINTS)

COGS 214,200

63,000 + 90,000 + 67,000 – 5,800

3)         JOHNSON HAS THE FOLLOWING INFORMATION FOR THE LAST 4 MONTHS:

MONTH                                UNITS                                   TOTAL COSTS

MAY                                      7,870                                      \$581,510

JUNE                                      7,850                                      \$581,750   LOW UNITS

JULY                                      8,240                                      \$606,940

AUG                                       8,320                                      \$607,600   HIGH UNITS

USING THE HIGH/LOW METHOD, ESTIMATE TOTAL COSTS AT 9,500 UNITS. (4 POINTS)

ESTIMATED TOTAL COSTS 672,500

607,600 – 581,750

8,320 – 7,850            VC/ = 55

55 X 7,850 + 150,000 = 581,750 ALSO 55 X 8,320 + 150,000 = 607,600

55 X 9,500 + 150,000 = 672,500

4)         VAL CORP HAS TOTAL APPLIED OVERHEAD = \$81,400. JOB 9 USED 7,700 MACHINE

HOURS. TOTAL MACHINE HOURS = 22,000. ASSUME JOB 9 IS THE ONLY JOB REMAINING IN WIP AT THE END OF THE ACCOUNTING PERIOD. WHAT IS APPLIED OVERHEAD IN WIP? (4 POINTS)

81,400/22,000 X 7,700 = 28,490

7,700/22,000 X 81,400 = 28,490

NOTE: PDOHR = 3.7

5)           SMITH ALLOCATED ADDITIONAL OVERHEAD TO PRODUCT X = \$84,320 AFTER SWITCHING TO ABC.  PREVIOUSLY OVERHEAD WAS ALLOCATED USING ONLY DIRECT LABOR HOURS.  UNDER ABC OVERHEAD IS NOW ALLOCATED USING BOTH DIRECT LABOR HOURS AND MACHINE HOURS. PRODUCT X USES 76 PERCENT OF MACHINE TIME. \$248,000 HAS BEEN ASSIGNED TO THE MACHINE POOL. WHAT IS PRODUCT X’S DIRECT LABOR PERCENTAGE? (4 POINTS)

DIRECT LABOR PERCENTAGE 42%

(.76 – .42) 248,000 = 84,320

6)          GRACE SAVED \$73,200 WHEN OUTSOURCING 9,200 UNITS.  GRACE SAVED \$49,200

WHEN SHE OUTSOURCED 11,200 UNITS. AT WHAT UNIT LEVEL WILL INSIDE AND OUTSIDE PRODUCTION COSTS BE THE SAME? (4 POINTS)

BREAK EVEN UNITS 15,300

UNITS          SAVINGS

9,200             73,200

11,200             49,200

2,000             24,000

24,000/2,000 = \$12 (EXCESS OF OUTSIDE VC/ OVER INSIDE VC/)

9,200 + 73,200/12 = 15,300

11,200 + 49,200/12 = 15,300

7)    REX HAS THE FOLLOWING COST DATA:

UNITS = 18,000

VC/UNIT = \$11

FC/UNIT = \$25

FIXED COST INCREASE 30 PERCENT AT 19,000 UNITS. WHAT IS TOTAL COST/UNIT AT 25,000 UNITS? (DON’T ROUND) (4 POINTS)

TOTAL COST/UNIT 34.4

VC/UNIT      11

FC/UNIT     23.4     (25 X 18,000)1.3

34.4           25,000

NOTE: TOTAL FC ABOVE 19,000 UNITS = 585,000

8)    REFER TO QUESTION 7. WHAT ARE TOTAL COSTS AT 27,500 UNITS? (2 POINTS)

TOTAL COSTS 887,500

11 X 27,500 + 585,000 = 887,500

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