Study Guides (238,613)
Tiemei L I (16)
Midterm

4 Pages
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School
University of Ottawa
Department
Course
Professor
Tiemei L I
Semester
Winter

Description
Solutions of the midterm exam_2014Winter ADM3346 Cost Accounting Section M Question 1 (15) a. (4) Flow of Production Physical units Calculation Conversion EU Completed Beginning work-in-process 6,000 6000*(1-2/3) = 2,000 Started and completed(S&C) 27,000 24,000 -6,000 = 18,000 Work in process ending 12,000 12,000*(1-1/2)= 6,000 Accounted for 45,000 26,000 Flow of Production Physical units Calculation Transferred-in EU Completed Beginning work-in-process 6,000 0 = 0 Started and completed(S&C) 27,000 24,000 -6,000 = 18,000 Work in process ending 12,000 12,000*100% = 12,000 Accounted for 45,000 30,000 b. (5) Flow of Production Physical units Calculation DM EU Beginning work-in-process 6,000 6000*0= 0 Started and completed(S&C) 27,000 24,000-6,000= 18,000 Work in process ending 12,000 12,000*100%= 12,000 Accounted for 45,000 30,000 Costs Totals Direct materials Conversion Transferred-in Costs added during period 58,800 \$19,200 \$15,600 \$24,000 Divided by equivalent units 30,000 26,000 30,000 Equivalent unit costs \$2.04 \$0.64 \$0.60 \$0.80 c. (6) Assignment of costs: Calculation Work in process, beginning \$9,800 Completion of beginning inventory DM 0 0 CC (2,000 × \$0.60) 1,200 TI 0 0 Total beginning inventory costs \$11,000 Started and Completed (18,000 × \$2.04) 36,720 Total costs assigned to completed and transferred out units \$47,720           1 Question 2 (4) Toche Andersen & Co.  Income Statement  For the month Ended September 30     Calculation    Sales revenue  \$140*1,000hr  \$140,000   Cost of services         Direct labour  \$70*1,000hr      70,000      Overhead allocated  \$12*1,000hr      12,000      Overapplied  service overhead  (\$10,000‐\$12,000)      (2,000)   Gross margin         60,000   Marketing and administration         42,000   Operating income        \$18,000       Question 3 (5) a. (4) Incremental analysis:     Revenues will increase by (6,000  \$4.40* = \$26,400) + \$1,500 =  \$27,900     Costs will increase by 6,000  \$3.40**    (20,400)     Fixed overhead will not change         –             No any incremental marketing costs                                                –            Change in operating income    \$ 7,500   Note: * all manufacturing costs per unit= 1.5 + 1.1 +0.8 +1=\$4.40 ** manufacturing variable costs per unit=1.5 + 1.1 +0.8=\$3.40 b. (1) Accept the contract.     Question 4 (13) a. (8) Regression 1 Total material handling costs =\$628,680 - \$1127.80*Shipments 1) # of shipments seems plausible 2 2) Adjusted R of 0.19 is not larger than the guideline of 30%; so bad ‘fit’ 3) t statistic of Fixed cost=628,680.11/7,134.58 =88.11 which is significant but t statistic of X = -1,127.80/2578.40 = - 0.44 which is not larger than 2.00 so insignificant 4) DW=-2<0.87<2 indicating residuals significantly correlated to dependent variable. There may be other factors impact department costs. Regression 2 Total material handling costs =\$237 + 0.12*Value of materials 1) Value of materials seems plausible 2) Adjusted R 2of 0.91 is much larger than the guideline of 30%; so very good ‘fit’ 3) t statistic of Fixed cost=236.79/37.98 =6.23 which is significant and t statistic of X = 0.123/0.007 = 17.57 which is larger than 2.00 so significant 4) DW=2.12>2 indicating residuals are not correlated to dependent variable. 2 b. (3) Regression 2 is better to be used for material handling costs. 2
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