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Question(s) / Instruction(s):

ACCT 251 MID-TERM EXAM: Chapters 16, 19, 20, & 21

Problem

1.            The following is a list of various costs of producing sweatshirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.

 

(a)          Lubricants used to oil machinery.

(b)          Warehouse rent of $6,000 per month plus $.50 per square foot of storage used.

(c)           Thread.

(d)          Electricity costs of $.025 per kilowatt-hour.

(e)          Janitorial costs of $2,000 per month.

(f)           Advertising costs of $10,000 per month.

(g)          Sales salaries.

(h)          Color dyes for producing different colors of sweatshirts.

(i)            Salary of the production supervisor.

(j)           Straight-line depreciation on sewing machines.

(k)          Patterns for different designs. Patterns typically last many years before being replaced.

(l)            Hourly wages of sewing machine operators.

(m)         Property taxes on factory, building, and equipment.

(n)          Cotton and polyester cloth.

(o)          Maintenance costs with sewing machine company. The cost is $2,000 per year plus $.001 for each machine hour of use.

2.            Calculate the following:

(a)          If Bart Company's budgeted sales are $600,000, fixed costs are $250,000, and variable costs are $390,000, what is the budgeted contribution margin ratio?

               

(b)          If the contribution margin ratio is 35% for Gray Company, sales are $800,000, and fixed costs are $140,000, what is the operating profit?

3.            For the current year ending April 30, Phillip Company expects fixed costs of $60,000, a unit variable cost of $50, and a unit selling price of $90.

(b)          Compute the sales (units) required to realize an operating profit of $8,000.

4.            Currently, the unit selling price is $30, the variable cost, $14, and the total fixed costs, $96,000. A proposal is being evaluated to increase the selling price to $34.

(a)          Compute the current break-even sales (units).

 (b)         Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.

5.            On October 31, the end of the first month of operations, Carswell & Co. prepared the following income statement based on absorption costing:

Carswell & Co.

Income Statement

For Month Ended October 31, 20-

Sales (2,600 units)                            $104,000

Cost of goods sold:                         

  Cost of goods manufactured    $85,500

  Less ending inventory (400 units)           11,400 

  Cost of goods sold                           74,100

Gross profit                        $ 29,900

Selling and administrative expenses                          21,500

Income from operations                               $  8,400

If the fixed manufacturing costs were $42,000 and the variable selling and administrative expenses were $15,600, prepare an income statement in accordance with the variable costing concept.

 

 

 

 

 

6.            Based on the following production and sales data of Concrete Co. for March of the current year, prepare (a) a sales budget and (b) a production budget.

                Product T             Product X

Estimated inventory, March 1    28,000 units        20,000 units

Desired inventory, March 31       32,000 units        15,000 units

Expected sales volume:                               

  Area I  320,000 units      260,000 units

  Area II 190,000 units      130,000 units

Unit sales price $6           $14

7.            Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows:

August  $100,000

September         185,000

October               225,000

The company expects to sell 40% of its merchandise for cash. Of the sales on account, one third are expected to be collected in the month of the sale and the remainder in the following month.

Prepare a schedule indicating cash collections of accounts receivable for August, September, and October.

 

 

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