CSU ACT 321 - Exam 1

ACT321 Exam 1 Ver. A Name_________________________All work must be shown, legible and understandable to get full credit on all problems. Caution: do not assume I understand work done on your calculator. Work carefully, there will be little, if any, partial credit allowed. Put your name on ALL pages.Wilson CorporationWilson Corporation has the following data for use of its machineryMonth Usage CostJun600 $750Jul650 775Aug420 550Sept500 650Oct450 5701.(10pts) Refer to Wilson Corporation. Using the high-low method determine the variable and fixed cost.$775 - 650(.98) = $775 - 637 = $138Denver CorporationThe records of Denver Corporation revealed the following data for the current year.Work in Process$ 73,150Finished Goods115,000Cost of Goods Sold133,650Direct Labor111,600Direct Material84,2002.(10pts.) Refer to Denver Corporation. Assume that Denver has under applied overhead of $37,200 and that thisamount is material. What journal entry is needed to close the overhead account? (Round decimals to nearest whole percent.)WIP: $(73,000/321,000) * $37,200 = $ 8,556 FG: $(115,000/321,000) * $37,200 = $13,392 CGS: $(133,000/321,000) * $37,200 = $15,2523.(10pts.) Refer to Denver Corporation. Assume that Denver has under applied overhead of $10,000 and that thisamount is immaterial. What is the balance in Cost of Goods Sold after the under applied overhead is closed?COGS + Under applied Overhead = Adjusted COGSACT321 Exam 1 Ver. A Name_________________________$133,650 + $ 10,000 = $143,650Awesome Athletics, IncAwesome Athletics, Inc. has developed a new design to produce hurdles that are used in track and field competition. Management estimates expected annual capacity to be 90,000 units; overhead is applied using expected annual capacity. The company's cost accountant predicts the following current year activities and related costs:Standard unit variable manufacturing costs $12Variable unit selling expense $5Fixed manufacturing overhead (actual & budgeted) $495,000Fixed selling and administrative expenses $136,000Selling price per unit $35Units of sales 80,000Units of production 85,000Units in beginning inventory 10,000Costs incurred are as expected. Under- or over applied fixed overhead is to be written off to Cost of Goods Sold.Required:4.(10pts.) Determine the amount of under- or over applied fixed overhead using:(a) variable costing(b) absorption costing5.(20pts.) Prepare projected income statements using(a) variable costing (b) absorption costing.ACT321 Exam 1 Ver. A Name_________________________ANS:1. a. $0b. (90,000 - 85,000)  $5.50 = $27,500 U2. a. Sales (80,000  $35) =$2,800,000- VC (80,000  $17) = (1,360,000)CM$1,440,000- FC  (631,000 )Income before income taxes$ 809,000b. Sales (80,000  $35)$2,800,000- COGS ($17.50  80,000)(1,400,000)GM$1,400,000- S&A  (536,000 )Income before income tax before volume var.$ 864,000- under applied   (27,500 )Income before income taxes$ 836,500ACT321 Exam 1 Ver. A Name_________________________Anderson EnterprisesInventories: March 1 March 31Raw material$18,000 $15,000Work in process9,000 6,000Finished goods27,000 36,000Additional information for March:Raw material purchased$42,000Direct labor payroll$30,000Direct labor rate per hour$ 7.50Overhead rate per direct labor hour$ 10.006.(10Pts.) Refer to Anderson Enterprises. For March, prime cost incurred wasANS: ABegin Inv Purch Ending InvRaw Materials $18,000 $42,000 $(15,000) $45,000 Rate HoursDirect Labor $ 7.50 4,000* 30,000*$(30,000/7.50) $75,0007.(10Pts.) Refer to Anderson Enterprises. For March, conversion cost incurred wasa. $30,000.b. $40,000.c. $70,000.d. $72,000.ANS: CBegin Inv Purch Ending InvDirect Labor $ 7.50 4,000* 30,000 Rate HoursOverhead $ 10.00 4,000* 40,000*$(30,000/7.50) $70,0008.(10 pts) Refer to Anderson Enterprises. For March, Cost of Goods Manufactured wasBeginning WIP Inventory $ 9,000 Raw Materials $ 45,000 Direct Labor 30,000 Factory Overhead 40,000 115,000 Ending WIP Inventory (6,000) $ 118,000ACT321 Exam 1 Ver. A Name_________________________Parrish CompanyParrish Company uses activity-based costing. The company produces two products: IPods and MP3 players. The annual production and sales volume of IPods is 8,000 units and of MP3 players is 6,000 units. There are three activity cost pools with the following expected activities and estimated total costs:ActivityCost PoolEstimatedCostExpected ActivityIPodsExpected ActivityMP3 playersTotalActivity 1 $20,000 100 400 500Activity 2 $37,000 800 200 1,000Activity 3 $91,200 800 3,000 3,8009.(20 Pts.) Refer to Parrish Company. Using ABC, the cost per unit of IPods is approximately: Activity Cost Allocation Cost per Unit1 $20,000 * 100/500 = $ 4,000 / 8,000 $0.502 $37,000 * 800/1,000 = $29,600 / 8,000 3.703 $91,200 * 800/3,800 = $19,200 / 8,000 2.40 Total Cost per Unit