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Trent AndersonApril 30, 2014

ACC502Quiz #1

Chapter 1

A.The cost of each alternative, information about suppliers regarding reliability and productquality. How would outsourced production affect currently owned plant assets. Labor costsincluding staffing reductions, reduction of benefits, etc. Might the plant be sold or subleased.

B.Need info about construction and/or operating and/or rental costs. Information about salesand competition could help too.

Chapter 2

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Chapter 3

A.

Predetermined overhead rate =Estimated overhead costs $600,000Estimated direct labor cost $480,000= 125% direct labor cost

B.Actual manufacturing overhead $639,000Applied manufacturing overhead 625,000Under-applied overhead $14,000

C.Debits to Work-In-Process $1,880,000

Direct labor 500,000Applied manufacturing overhead 625,000Direct materials used $755,000

D.Direct materials used $16,500Direct labor 36,000Applied overhead at 125% of direct labor 45,000Total cost $97,000

Chapter 4

A. 25,000 + 80,000 - 30,000 = 75,000

B.

C. No. The ending work-in-process inventory is only 40% complete with respect to material.If material were introduced at the beginning, the number would be 100%.

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Chapter 5

A. A batch-level activity is performed for each batch of products rather than for each unit.Facility-level is required for an entire process to occur. Examples include plant maintenance,property taxes, etc.

B. Unit-level: $3,640,000 (1)Batch-level: $318,000 (4) + $115,000 (5) = $433,000Product-sustaining: $2,040,000 (3)Facility-level: $1,229,000 (2) + $92,000 (6) + $1,564,000 (7) = $2,885,000

Chapter 6

A.

1. Discretionary fixed2. Variable3. Committed fixed4. Semivariable5. Committed fixed6. Variable

B. Per-unit variable costs remain the same as activity levels change.

C. Semivariable contains both a variable and fixed component.

D. Discretionary fixed costs.

Chapter 7

A.

B. Unit sales to earn $550,400: ($6,016,000 + $550,400) $64 = 102,600

C. The current selling price is $88 per unit ($8,800,000 100,000 units). Gladstone mustmaintain the same per-unit contribution margin to achieve a break-even point of 94,000 units.$4 reduction in variable cost must be matched by a $4-per-unit reduction in revenue, for aselling price of $84 ($88-$4).

D. No effect. A change in fixed costs does not affect the contribution margin.

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Chapter 16

A. The accountant used income instead of cash flows. The cash flows should be discountedto show the TVM, and depreciation shouldnt be considered since there were no taxes.

B.

The project should be accepted because NPV is positive.

C. The NPV is positive using a discount rate of 12%. Internal rate of return > 12%.