Last name (surname): ____________________ First name: ________________________ Student number: ________________________ Indicate Section o 2510M – Monday; 4 - 7pm;
o 2510N - Wednesday; 7 - 10pm; o 2510P - Monday; 7 - 10pm; o 2510Q - Internet; o 2510R - Friday; 11:30 – 2:30pm; o 2510S - Tuesday; 7 - 10pm; o 2510T - Thursday; 7 - 10pm; o Deferred from earlier term
Shujun Ding VH C Joe Nemi ACW 004 Joe Nemi TEL 0001 Nelson Waweru Marcela Porporato CLH H Shujun Ding CLH H Shujun Ding CLH E
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School of Administrative Studies Atkinson Faculty of Liberal and Professional Studies York University ADMS2510 April 15, 2007, 7 to 10 pm Instructions: - This is a closed book examination and no collaboration is allowed. . - There are a total of 100 marks. - Write your name, student number, and section at the top of the page. - There are five questions. Answer each question on the examination paper, and on the back of a page if necessary. - You must write in pencil or pen. Programmable calculators are not allowed. Cell phones cannot be used as calculators. Dictionaries are not allowed. - You have three hours; you must not leave before 9:00 pm - Place photo identification on your desk at the beginning of the examination to facilitate verification. Good luck. Question 1: ________ Question 2: ________ Question 3: ________ Question 4: ________ Question 5: ________ Total: /100
These agents currently receive a commission of 20% of sales. Seco had already prepared its budget for next year before learning of the sales agents' demand for an increase in commissions. That budgeted income statement appears below:
Seco is considering the possibility of employing its own salespersons. Required: a) Compute Seco's break-even point in sales dollars based upon the company's budgeted income statement. assuming that the company employs its own salespersons [6 marks]. a wholesale supply company..
b) Compute the sales dollars required to attain the target profit of $1.900. Three individuals would be required.000 each.Question 1 (20 marks) Seco Corp. uses independent sales agents to market the company's products.000. plus commissions of 5% of sales. at a salary of $30. a sales manager would be employed at a fixed annual salary of $160. but are demanding an increase to 25% of sales. In addition.000. assuming that the company continues to use independent sales agents and the company agrees to their demand for a 25% sales commission (round the answer to two decimal places) [7 marks].
Question 2: (20 Marks) Jackson Painting paints the interiors and exteriors of homes and commercial buildings.
. The results are listed below: Painting $54.000
Painting overhead Office expense
Required: a) Compute the activity rates (i. Activity Cost Pool Painting Job support Activity Measure Square metres Jobs Annual Activity 10. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system.000 $96.e. whether Seco employs its own salespersons or continues to use the independent sales agents and pays them a 25% commission [7 marks].c) Compute the sales dollars that would be required to generate the same net income. cost per unit of activity) for the Painting and Job Support activity cost pools.000 square metres 320 jobs
The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centres.. Round off all calculations to the nearest whole cent [8 marks].000 $16.000 Job support $42.
the hourly wage of an electronic technician is $3. 10.
Question 3 (20 marks) Weng Fu Lee is a manufacturer of electronic components for toys manufacturers located in Formosa Island.000 direct labour hours were consumed.
. Now he asks you to tell the production manager the size of the batch to employ in producing the doll component. and that a box with 100 doll components costs $40 per month to storage.b) Job M involves painting 63 square metres and has direct materials and direct labour cost of $2. Jackson allocated overhead to jobs using direct labour hours.6 per direct labour hour. the variable overhead allocation rate is $0.070. You talked with the engineer that designed the component and he told you that the standards are the following ones: Direct materials: Silice pads 1 Circuits 5 grams Direct labour of an electronic technician: 20 minutes Set up costs per production run: $2.
c) Before installing an ABC system. a kilogram (or 1.000 components of a doll to be assembled in Australia.000 grams) of circuits cost $100.000 silice pads cost $50. The general manager is exited about the good news just received: they have won a contract to manufacture 10. Calculate the cost of Job M using ABC [8 marks].000 Also you know that 1. Job M consumed 30 hours. Determine the pre-ABC cost of Job M [4 marks].
Required: 1) Determine the optimal production run for the doll component (7 marks)
2) What is the total cost of each doll component (7 marks)
3) If another company offers you to supply the doll component. what is the maximum price that you would consider to start negotiating? (3 marks)
4) What would be your concerns when considering outsourcing this doll component? (2 marks)
This amount includes $2.800 144.000 of depreciation but does not include bad debts expense.000 220.400
Accounts receivable (net of $3.00 320. 38% in the next month and 2%is uncollectible d) Cost of goods sold is 75% of sales.000.000 120.Question 4 (20 marks) Viatu Company Limited May.000 b) Revenues of $ 360. e) Purchases each month are 60% of the current month’s sales and 40% of the following month’s sales. d) Other monthly expenses total $ 48.000 Liabilities and Equity Accounts Payable Common Stock Retained Earnings $ 272.000 $612.000 are expected for June and July 2008 respectively c) The collection Pattern is 60% in the month of sale. 2008 Balance is given below.000 equities
Additional information: a) The company wants a minimum cash balance of $40.000 and $ 480. Required: 1) June cash collections. (2 Marks)
2) June 30th inventory balance. (2 Marks)
. All purchases are paid in the month following the purchase.400
Total Liabilities and 612. Assets Cash $ 40.400 provision for bad debts) Inventory Plant Assets (net of accumulated amortization Total Assets 108.000 $40.
The manager of each division has a quarterly bonus based on return on sales. (10 Marks)
5) Why should a firm want to maintain a minimum cash balance of $40. each one of the three divisions (Shaving Crème Division. Aftershave Division and Cologne Division) being treated as an investment center. At the end of the last quarter of 2006 the following income statement was available:
. aftershave and cologne. The three products are sold in Canada and in the US.3) June 30th retained earnings balance (2 marks)
4) June ash Budget. manufactured and sold by a different division. Each product is designed. including the amount available for investment or to be borrowed in June. while the bonus of the CEO of the company is tied to ROI.000? Who would set such a policy? (4 marks)
Question 5 (20 marks) The Justa Corporation produces and sells three products: shaving crème.
This market was entered during the year 2005 because of excess capacity.000 125.300.000 $100.000.000 100. the following information has been gathered: Shaving crème Sales $500. It was originally believed that the return on sales would improve with time. separable by market. All fixed expenses are based upon a prorated yearly amount.000 $300.000
Management has expressed special concern with the US market because of the extremely poor return on sales. and avoidable if the market is dropped.000 70% 60% 2% 2%
Sales in the US $100.000 52.000 57.000 Aftershave Cologne $400.000 235.000 12. Remaining selling expenses are fixed for the period.000 290.000 40.000 $300.000 45. but after a year no noticeable improvement can be seen from the results reported in the above quarterly statement. Required: Use the case approach to identify and solve the problem faced by Justa Corporation.000 1.000 65.000 $100.000 60.Sales Cost of goods sold Gross margin Selling expenses Administrative expenses Total expenses Net income
All administrative expenses and fixed manufacturing expenses are common to the three products and the two markets and are fixed and unavoidable for the period.000 775.010. In attempting to decide whether to eliminate the regional market.000 Variable manufacturing expenses 60% as a percentage of sales Variable selling expenses as a 3% percentage of sales Sales of products by markets Shaving crème Aftershave Cologne Sales in Canada $400.000 157.000 $400.000
Canada US 1.000 300.000 133.000 105.
.000 8.000 225.
Exhibit 1: Contribution margin of 3 divisions and per market
Shaving crème Aftershave Cologne Company's Canada US Total Canada US Total Canada US Total total Sales 400000 100000 500000 300000 100000 400000 300000 100000 400000 1300000 Variable manuf expens 240000 60000 300000 210000 70000 280000 180000 60000 240000 820000 12000 3000 15000 6000 2000 8000 6000 2000 8000 31000 Variable selling expens Contribution margin Fixed expenses Manufacturing Selling Administrative Net income 148000 37000 185000 84000 28000 112000 114000 38000 152000 449000
190000 74000 52000 133000
Exhibit 2: Segment margins
Sales Variable manuf expenses Variable selling expense Contribution margin Fixed avoidable Selling Segment margin Fixed expenses Manufacturing Administrative Net income Canada US Total 1000000 300000 630000 190000 24000 7000 0 0 346000 103000
190000 52000 133000