Student Name: _________________________________________ Foster School of Business Student Code of Conduct: By signing below you acknowledge that you are a part of a learning community at the Foster School of Business that is committed to the academic standards of honesty, respect, and integrity, and that you will adhere to these standards while completing this quiz. _____________________________ Student SignatureAccounting 225 A Quiz 2A – January 23, 2014 Name:__________________________________________ Score:________/15 Quiz Section (Circle): Nabil Manji 10:30 11:30 Katrice Kubota-Teruya 1:30 2:30 You have 30 minutes to complete this quiz. Show ALL work on these pages, credit may not be given for correct answers with no support. Attempt all questions. True / False (0.5 point each, 2 points total) T/F 1. Traditional format income statements are prepared primarily for internal reporting purposes. F 2. Before any adjustments, the manufacturing overhead account had a net debit balance at the end of the period. Therefore, manufacturing overhead was over-applied for the period. F 3. Directly writing off under-applied manufacturing overhead to Cost of Goods Sold would, all else equal, decrease net income in a given period. T 4. In a contribution format income statement, sales minus cost of goods sold equals the contribution margin. F Multiple Choice (1 point each, 6 points total) 5. Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost? High-Low Least-Squares Regression A. Yes Yes B. Yes No C. No Yes D. No No 6. The term “relevant range” means the range of activity over which: A. relevant costs are incurred. B. costs may fluctuate. C. production may vary. D. the assumptions about fixed and variable cost behavior are reasonably valid.7. Iadanza Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $195.70 per unit. Sales volume (units) 6,000 7,000 Cost of sales $457,800 $534,100 Selling and administrative costs $621,000 $639,100 The best estimate of the contribution margin when 6,300 units are sold is: A. $752,220 B. $638,190 C. $100,170 D. $177,030 Variable cost of sales per unit = $475,800 / 6,000 = $76.3 Variable selling/admin per unit = $(639,100-621,000) / (7,000-6,000) = $18.1 Total variable cost per unit = $76.3 + $18.1 = $94.4 Total CM at 6,300 units = 6300 x $(195.7 – 94.4) = $638,190 8. Blore corporation reports that at an activity level of 7,300 units its total variable cost is $511,803 and its total fixed cost is $76,650. What would be the total cost, both fixed and variable, at an activity level of 7,500 units? Assume that this level of activity is within the relevant range. A. $604,575 B. $602,475 C. $596,514 D. $588,453 Variable cost per unit = $511,803 / 7,300 = $70.11 Total variable cost at 7,500 units = 7,500 x $70.11 = $525,825 Total cost @ 7,500 units = $525,825 variable + $76,650 fixed = $602,475Use the following information for questions 9 and 10: Gresset Inc. has provided the following data for the month of April. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead (MOH) applied listed below are all for the current month. Manufacturing overhead for April was over-applied by $6,000. The company allocates any under- or over-applied manufacturing overhead to Work in Process, Finished Goods, and Cost of Goods Sold at the end of the month on the basis of manufacturing overhead applied during the month in those accounts. 9. The Work in Process inventory at the end of April, after allocation of any under- or over-applied manufacturing overhead for the month, is closest to: A. $4,050 C. $4,259 B. $4,081 D. $4,290 Total over-applied MOH = $6,000 (per the problem) Total MOH applied during April = $65,000 (per the problem) Relative MOH weights for each account: WIP = 1,300 / 65,000 = 2% FG = 10,400 / 65,000 = 16% COGS = 53,300 / 65,000 = 82% WIP pre-adjusted ending balance = $4,170 (per the problem) Adjustment of 2% over-applied MOH = reduce by $120 for new ending balance of $4,050 10. The journal entry to record the allocation of any under- or over-applied manufacturing overhead for April would include the following: A. debit to Finished Goods of $44,280 C. debit to Finished Goods of $960 B. credit to Finished Goods of $960 D. credit to Finished Goods of $44,280 Adjustments due to over-applied MOH are: $120 reduction (credit) to WIP $960 reduction (credit) to FG $4,920 reduction (credit) to COGSProblems 11. (3 points) The management of Harrigill Corporation would like to have a better understanding of the behavior of its inspection costs. The company has provided the following data: Management believes that inspection cost is a mixed cost that depends on direct labor-hours. Using the high-low method, estimate the following (round to the nearest cent): A. The variable cost per direct-labor hour is: High activity level = September @ 5,078 hours and $48,721 Low activity level = November @ 4,980 hours and $48,125 Variable cost per DLH = $(48721-48125) / (5078-4980) = $6.08 B. The fixed cost per month is: At low activity level, total cost = $48,125 Variable cost represents $6.08 x 4,980 hours = $30,278.40 Therefore, fixed costs = $48,125 - $30,278.40 = $18,746.60 C. The total cost for December’s inspection, where 5,200 Direct Labor-Hours are expected: Total cost = (5,200 DLH x $6.08 per DLH) + $18,746.60 = $50,362.2012. (4 points) ABC Stores, a merchandising company, reported the following results and information for January: Number of units sold: ............................................................ 450 Selling price: ............................................................................ $400 Cost of goods sold per unit: ................................................ $175 Additionally, ABC determines selling and admin costs with the following equations: Selling: $50,000 + $60 per unit sold Admin: $80,000 + $10 per unit sold Cost of goods sold is an entirely variable cost in this company. Required: A. Prepare a neat, labeled traditional-format income statement for January. Revenue (450x$400) = ...................................... $180,000 COGS (450x$175) = ................................................