Theories: 2 points each Computation 5 points each

1 D 1 530,000.00
2 D 2 1,331,440.00
3 D 3 210,000.00
4 D 4 18,800.00
5 D

Computation
1
Cost of Units Sold 520,000.00
Desired Ending Inventory 140,000.00
Total Cost of Goods Available for Sale 660,000.00
Beginning Inventory 130,000.00
Budgeted Purchases 530,000.00

2 Sales for 3rd quarter

July 400,000.00
August 420,000.00
September 441,000.00
3rd Quarter Sales 1,261,000.00

Inventory, September 30 370,440.00

Total Requirements 1,631,440.00
Inventory, July 01 300,000.00
1,331,440.00

3 Required pounds for production 180,000.00

Ending Raw Materials 60,000.00
Beginning Raw Materials 30,000.00
Budgeted Purchases 210,000.00

4 Budgeted Beginning Inventory 4,800.00

Budgeted Purchases 20,000.00
Budgeted Ending Inventory 6,000.00
Budgeted Sales in units 18,800.00

5 Budgeted Sales in January 50,000.00

Budgeted Ending Inventory 30,000.00
Total Units Required 80,000.00
Budgeted Beginning Inventory 25,000.00
Budgeted Production 55,000.00

6 April Purchases 112,000.00

May Purchases 72,000.00
Cash Payments in May 184,000.00

7 March Sales 3,465.00

 April Sales 2,240.00
May Sales 3,000.00
Cash Receipts in May 8,705.00

8 Budgeted Sales in January 44,000.00

Budgeted Ending Inventory 30,000.00
Total Units Required 74,000.00
Budgeted Beginning Inventory 14,000.00
Budgeted Production 60,000.00
5 55,000.00
6 184,000.00
7 8,705.00
8 60,000.00
Theories 20
1C 6C
2A 7D
3A 8A
4C 9C
5B 10 C

Computations
1
Number of Muffler Replacements
500 600
Total costs:
Fixed costs 8,400.00 8,400.00
Variable costs 5,000.00 6,000.00
Total costs 13,400.00 14,400.00

Cost per muffler replacement:

Fixed cost 16.80 14.00
Variable cost 10.00 10.00
Total cost per muffler replacement 26.80 24.00

2 Type A Type B
5,000.00 4 9
7,500.00 4 6
Variable Fixed
20,000.00 45,000.00
30,000.00 45,000.00

High and Low Method CHA CLA

22,500.00 20,000.00
7,500.00 5,000.00
HA LA

Y=a+bX
Y a
20,000.00 ?

? 20,000.00

a 15,000.00

2.1 Type A
Units VC/U
10,000.00 4

Type B
Units TFC
 10,000.00 45,000.00

Type C
a bx
15,000.00 10,000.00

2.2
Y = 60,000 + 5(X)

3 Variable Fixed
Utilities Depreciation
80,000.00 48,000.00 60,000.00
100,000.00 60,000.00 60,000.00
0.60
High and Low Method CHA CLA
130,000.00 115,000.00
100,000.00 80,000.00
HA LA

Y=a+bX
Y a
130,000.00 ?

? 130,000.00

a 55,000.00

3.1 0.75
3.2 115,000.00
3.3 263,500.00

4 b 1,750.00
 70 90

30
uffler Replacements
700

8,400.00
7,000.00
15,400.00

12.00
10.00
22.00

Type C 20
4 17
3 13
Mixed
20,000.00
22,500.00

2,500.00
2,500.00 1 VC/u

b(X)
5,000.00

5,000.00

TFC

40,000.00
 45,000.00

Y
25,000.00
110,000.00

Mixed
Maintenance TFOH 15
115,000.00 223,000.00
130,000.00 250,000.00

15,000.00
20,000.00 0.75 VC/u

b(X)
75,000.00

75,000.00

TFC

5.00
Theories 20
1C 6A
2D 7D
3C 8B
4C 9C
5C 10 B

Computation 20
11 BEPu TFC 6,000.00
CM/u 8.00

BEPu 750.00 pounds

12 CM/r CM/u 20.00

SP 50.00 0.40

Additional Units SP
500.00 50.00 25,000.00
10,000.00

13 DISREGARDED

14 CM/u (60,000 * 0.75) + (45,000 * 1.25)

60,000 - 45,000

45,000.00 + 56,250.00
15,000.00

101,250.00
6.75
15,000.00 CM/u

Fixed Cost 60,000.00 6.00

360,000.00
15
Basic Deluxe Total
Sales 40.00 48.00
Variable Costs 30.00 40.00
Contribution Margin 10.00 8.00
x Sales Mix 3.00 1.00 4.00
Contribution margin 30.00 8.00 38.00

Weighted Contribution margin

38.00 9.50
4.00

Fixed Cost 76,000.00 8,000.00 BEPu

WACMu 9.50
40
1
Absorption Costing Variable Costing
COGS 12.00 VCOGS 8.00

Current Period
Produced Sold
15,000.00 13,000.00

Absorption Costing will have a greater Income than Variable Costing by:

Income Statement
Absorption Costing
Sales 234,000.00 Sales
Cost of Sales 156,000.00 VCOS
Gross Profit 78,000.00 Mfg CM
Operating Expenses 66,000.00 VSAE
Operating Profit 12,000.00 CM
FC
Operating Profit

2 30,000.00
DM 96,000.00 3.20
DL 48,000.00 1.60
VFOH 72,000.00 2.40
FFOH 60,000.00 2.00 9.20
VSAE 12,000.00 0.40
FSAE 36,000.00 1.20

2.1 Ending
VCOS/unit Inventory Units
7.20 6,000.00 43,200.00

2.2 Absorption Costing

Sales 384,000.00
CoS 220,800.00
GP 163,200.00
OE 45,600.00
OP 117,600.00

3
Year 1
Absorption Costing Variable Costing
Variable 5.00 5.00
Fixed 15.00 -
20.00 5.00

Year 2
Absorption Costing Variable Costing
 Variable 5.00 5.00
Fixed 12.00 -
17.00 5.00

4 Last Year
4.1 Fixed FOH deferred 13,000.00
Absorption Costing Income = Variable Costing income + Fixed FOH deferred
74,700.00 + 13,000.00
87,700.00

4.2 This Year

Fixed FOH released 7,000.00
Absorption Costing Income = Variable Costing income - Fixed FOH released
82,300.00 - 7,000.00
75,300.00

5 Year 1 Year 2 Year 3 Year 1

Absorption Costing Variable Costi
5.1 DM 110.00 110.00 110.00 110.00
DL 60.00 60.00 60.00 60.00
VFOH 30.00 30.00 30.00 30.00
FFOH 120.00 200.00 218.18 -
320.00 400.00 418.18 200.00
10,000.00 6,000.00 5,500.00
5.2 Year 1 Year 2 Year 3
Units Sold 8,000.00 6,000.00 7,500.00 Units Sold
Absorption Costing
Sales 4,000,000.00 3,000,000.00 3,750,000.00 Sales
Cost of Sales 2,560,000.00 2,400,000.00 3,136,363.64 Var. Cost of Sales
Gross Profit 1,440,000.00 600,000.00 613,636.36 MFG CM
Operating Exp 1,020,000.00 940,000.00 1,000,000.00 VSAE
Operating Profit 420,000.00 - 340,000.00 - 386,363.64 CM
Tax Expense 126,000.00 - - FC
5.4 Net Income 294,000.00 - 340,000.00 - 386,363.64 OP
Tax Expense
Net Income

5.3 Absorption Costing

Year 1 Year 2 Year 3
Ending Inventory 2,000.00 - - 2,000.00 Ending Inventory Unit
Cost Per Unit 320.00 400.00 418.18 Cost Per Unit
Ending Inventory 640,000.00 - - 836,363.64 Ending Inventory
 5 95
Difference
4.00

Difference
2,000.00

sting by:
8,000.00

Variable Costing
234,000.00
104,000.00
130,000.00
26,000.00
104,000.00
100,000.00
4,000.00

10

20
 10

Year 2 Year 3 48
Variable Costing 2
110.00 110.00
60.00 60.00
30.00 30.00
- -
200.00 200.00

Year 1 Year 2 Year 3

8,000.00 6,000.00 7,500.00
Variable Costing
4,000,000.00 3,000,000.00 3,750,000.00
1,600,000.00 1,200,000.00 1,500,000.00
2,400,000.00 1,800,000.00 2,250,000.00
320,000.00 240,000.00 300,000.00
2,080,000.00 1,560,000.00 1,950,000.00
1,900,000.00 1,900,000.00 1,900,000.00
180,000.00 - 340,000.00 50,000.00
54,000.00 - 15,000.00
126,000.00 - 340,000.00 35,000.00

Variable Costing
Year 1 Year 2 Year 3
2,000.00 - - 2,000.00
200.00 200.00 200.00
400,000.00 - - 400,000.00
Theories 10
1A
2B
3A
4B
5D

Computation
1 5
Increase in Annual Income 2,800.00
Additional Required Return 2,400.00
Increase in Residual Income 400.00

2 5.00
Operating Profit 98,000.00
Fixed 462,000.00
CM/u 2.00
Units Sold 280,000.00

3
Unit Variable Cost 4.00 5.00
Incremental unit fixed cost 1.00
Minimum return per P1 addition 0.60
Minimum Selling Price 5.60

4 10.00
4.A Market Price from Outside Suppl 9.00
Variable Cost 5.50
Relevant Cost per unit 3.50
Units to be purchased 10,000.00
Relevant Cost 35,000.00 Decrease in profit

4.B Zero, No change because Leona Division will not purchase from outside supploer

5 10.00
ROI 0.20
Minimum Required Rate 0.12
Difference 0.08
Residual Income 50,000.00
5.1 Average Operating Assets 625,000.00
5.2 Net Operating Income 125,000.00
45.00
 1 0.05 or 5%

2 0.25 or 25.28%

3 5 weeks

4 EOQ
400,000.00
0.1
4,000,000.00
2,000.00 UNITS
Ordering 100.00 Ordering
Carrying 100.00 Carrying
Total 200.00 Total

5 Learning Curve 0.8

ACT/u
1 30
2 24
4 19.2

6
Average hours after 4th batch 37.5
Hours used by 1st batch 58.59

7 ABE 8
ACDE 15
ABCDE 18
7.1 7.2

8 Units CAT/u
1 50
2 40
4 32
6 25.6
8 20.48

8.1 80%
8.2 163.84

9 9.1 Actual Wages Paid 72,310.00

Direct Labor Rate Variance (F) 5,770.00
Direct Labor Efficiency Variance (U) 6,980.00
Total Standard Direct Labor Cost 71,100.00 7,110.00
Standard Labor cost per unit 10.00
9.2 Total Standard Direct Labor Cost 71,100.00 14,220.00
Standard Labor Rate 5.00

9.3 Actual Wages Paid 72,310.00

Direct Labor Rate Variance (F) 5,770.00
Actual Hours at Standard Rate 78,080.00 15,616.00
Standard Rate per hour 5.00

9.4 Materials Purchased 130,760.00

Materials Price Variance (U) 3,500.00
Materials Usage Variance (F) 720.00
Total Standard Direct Materials Cost 127,980.00 21,330.00
Standard Direct Material Price per unit 6.00

9.5 Materials Purchased 130,760.00

Materials Price Variance (U) 3,500.00
Actual Quantity at Standard Price 127,260.00 21,210.00
Standard Direct Material Price 6.00
 5

Current 5

40
250
290 90.00
Savings
5
ACT
30
48
76.8

10

CTT 10
50
80
128
153.6
163.84

Actual Materials Purchased 130,760.00 15

Materials Price Variance (U) 3,500.00
Materials Usage Variance (F) 720.00
Total Standard Material Cost 127,980.00 7,110.00
Standard Material Cost per unit 18
(AR*AH)-(SR*AH)
65