1. Place your name on this cover sheet. (If there is any risk that your exam booklet will come apart, place your name at the top of every page).
2. Be sure to show all work. Partial credit for incorrect answers, where given, cannot be given unless you show supporting computations. Correct answers not supported by computations may be subject to loss of credit.
3. Academic dishonesty will NOT be tolerated and may result in the maximum penalty. This includes not allowing others to view your answers or computations.
4. The examination remains the property of the Department of Accounting and may not be copied or retained by the student. Do not alter, add, erase, etc. any answers or markings on your exam after the exam period ends OR at any later time.
5. This examination booklet contains 7 total pages, including the cover. It is your responsibility to insure that all pages are contained in this examination booklet.
6. The exam answers will have to be submitted by email attachment to me. The due date for receiving the answers in my in-box is 11PM on 07/22/2012. There will point deductions for late submission of answers. You may type/solve your answers using Excel or Word programs. Please present your answers in a professional and easy to read format. You may also scan and attach your answers if they are hand written.
|Maximum points||Points Received|
|Multiple choice Questions||Posted on Connect||82|
|Problem 1||CVP Analysis||18|
|Problem 4||Activity Based Costing||16|
|Problem 5||COGM, COGS, Income Stmt||18|
Problem 1 – CVP Analysis – 18 Points
Tanner Company’s most recent contribution format income statement is presented below:
The company sells its only product for $15 per unit. There were no beginning or ending inventories.
a. Compute the company’s break-even point in units sold.
b. Compute the total variable expenses at the break-even point.
c. How many units would have to be sold to earn a target profit of $9,000?
d. The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?
e. Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $2. Since the new component would increase the features of the company’s product, the marketing manager predicts that monthly sales would increase by 1,000 units. What should be the overall effect on the company’s monthly net operating income of this change? Show your work
Problem 2 . Costing 8 Points
Fine & Associates is an interior decorating firm in Tucson. The following costs were incurred in a project to redecorate the mayor’s offices:
|Direct material||$ 29,000|
|Direct professional labor||42,000|
The firm’s budget for the year included the following estimates:
|Budgeted direct professional labor||640,000|
Overhead is applied to contracts by using a predetermined overhead rate that is based on direct professional labor cost. Actual professional labor during the year was $655,000 and actual overhead was $793,000.
A. Determine the total cost to redecorate the mayor’s offices.
B. Calculate the under- or overapplied overhead for the year. Be sure to label your answer.