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 2B – January 23, 2014 Name:__________________________________________ Score:________/15 Quiz Section (Circle): Nabil Manji 10:30 11:30 Katrice Kubota-Teruya 1:30 2:30 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. In a contribution format income statement, sales minus cost of goods sold equals the contribution margin. F 2. Directly writing off under-applied manufacturing overhead to Cost of Goods Sold would, all else equal, decrease net income in a given period. T 3. 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 4. Traditional format income statements are prepared primarily for internal reporting purposes. 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. No No B. Yes No C. No Yes D. Yes Yes 6. The term “relevant range” means the range of activity over which: A. relevant costs are incurred. B. the assumptions about fixed and variable cost behavior are reasonably valid. C. production may vary. D. costs may fluctuate.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. $177,030 B. $100,170 C. $638,190 D. $752,220 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 7,800 units? Assume that this level of activity is within the relevant range. A. $623,508 B. $602,475 C. $596,514 D. $588,453 Variable cost per unit = $511,803 / 7,300 = $70.11 Total variable cost at 7,800 units = 7,800 x $70.11 = $546,858 Total cost @ 7,800 units = $546,858 variable + $76,650 fixed = $623,508Use 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 Finished Goods inventory at the end of April, after allocation of any under- or over-applied manufacturing overhead for the month, is closest to: A. $45,240 C. $43,320 B. $44,160 D. $44,400 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% FG pre-adjusted ending balance = $44,280 (per the problem) Adjustment of 16% over-applied MOH = reduces by $960 for new balance of $43,320 10. The journal entry to record the allocation of any under- or over-applied manufacturing overhead for April would include the following: A. credit to Cost of Goods Sold of $4,920 C. credit to Cost of Goods Sold of $231,500 B. debit to Cost of Goods Sold of $231,500 D. debit to Cost of Goods Sold of $4,920 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: A. The variable cost per direct-labor hour is (round to nearest cent): 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 (round to nearest dollar): 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 = $17,846.60 Rounded to nearest dollar = $17,847 C. The total cost for December’s inspection, where 5,100 Direct Labor-Hours are expected (round to nearest dollar): Total cost = (5,100 DLH x $6.08 per DLH) + $17,847 = $48,855 For parts B & C, students’ answers may be off by a couple dollars depending on their rounding of intermediate calculations.12. (4 points) ABC Stores, a merchandising company, reported the following results and information for January: Number of units sold: ............................................................ 450 Selling price: ............................................................................ $425 Cost of goods sold per unit: ................................................ $175 Additionally, ABC determines selling and admin costs with the following equations: Selling: $60,000 + $50 per unit sold Admin: $70,000 + $20 per unit sold Cost of goods sold is an entirely variable cost in this company. Required: A. Prepare a neat, labeled