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SIM - OISP Practice Problems

The document contains information about various accounting topics including job costing, cost-volume-profit (CVP) analysis, cash budgeting, variance analysis, and departmental performance analysis. Specifically: 1) It provides details on estimating the total cost of a job order for an advertising campaign including direct costs of labor hours and overhead application rates. 2) It asks calculation questions related to a company's direct material, direct labor, and factory overhead costs and their inclusion in inventory accounts. 3) It asks to prepare forecasted income statements and calculate degree of operating leverage to assess two alternative production methods based on given sales volume and cost information. 4) It provides cash receipt and payment forecasts and asks

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196 views4 pages

SIM - OISP Practice Problems

The document contains information about various accounting topics including job costing, cost-volume-profit (CVP) analysis, cash budgeting, variance analysis, and departmental performance analysis. Specifically: 1) It provides details on estimating the total cost of a job order for an advertising campaign including direct costs of labor hours and overhead application rates. 2) It asks calculation questions related to a company's direct material, direct labor, and factory overhead costs and their inclusion in inventory accounts. 3) It asks to prepare forecasted income statements and calculate degree of operating leverage to assess two alternative production methods based on given sales volume and cost information. 4) It provides cash receipt and payment forecasts and asks

Uploaded by

Bùi Đức Nghị
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Job Costing

1. Plumley Ad Agency contracted with a company to prepare an ad campaign. Plumley


uses a job order costing system. Plumley estimates that the job will take 145 designer
hours at $90 per hour and 85 staff hours at $45 per hour. Plumley uses two overhead rates
in applying overhead to jobs: Designer-related at $100 per designer hour and staff-related
at $50 per staff hour. Determine the total estimated cost for this job. (code:127)

2. Key Manufacturing Co. applies factory overhead to production on the basis of direct
labor costs. Assume that at the beginning of the current year the company estimated that
direct material costs would be $178,800, direct labor costs would be $154,000, and factory
overhead costs would be $231,000. (Code:130)

(1) If the $28,000 cost of Key's goods in process inventory included $5,200 of direct labor
cost, what amount of direct materials cost was included?
(2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost,
determine the direct labor cost and factory overhead cost of the finished goods inventory. 

CVP Analysis

1. A company is looking into two alternative methods of producing its product. The
following information about the two alternatives is available. If the company's expected
sales volume is 35,000 units, which alternative should be selected? Prepare forecasted
income statements and compute degree of operating leverage to assess the alternatives.  
(Code: 147)

2. The sales mix of Palm Company is 5 units of A, 3 units of B, and 1 unit of C. Per unit
sales prices for each product are $30, $40, and $50, respectively. Variable costs per unit
are $14, $24, and $34, respectively. Fixed costs are $597,600. What is the break-even
point in composite units and in units of A, B, and C? 

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Cash Budget

1. Slim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to
meet this requirement at a cost of 1% interest per month (paid monthly). Loans are repaid
at month's end from any excess cash. The cash balance on July 1 is $8,400. Cash
receipts other than for loans received for July, August, and September are forecasted as
$24,000, $32,000, and $40,000, respectively. Payments other than for loan or interest
payments for the same period are planned at $28,000, $30,000, and $32,000, respectively
at July 1, there are no outstanding loans.

Required: Prepare a cash budget for July, August, and September. (Code: 146)

2. Del Carpio, Inc., sells two products, Widgets and Gadgets. The sales forecast in units
for the first quarter of the coming year is:
  

Cash sales are 30% of each product's monthly sales. The remaining sales are credit sales
which are collected as follows: 70% in the month of sale, 20% the next month, and 10% in
the following month. Unit sale prices are $30 and $20 for Widgets and Gadgets,
respectively.
Determine the company's cash receipts for March from its current and past sales. (Code:
148)

Variance Analysis

1. Gates Company reports the following information regarding the production on one of its
products for the month. Compute the direct materials cost variance, the direct materials
price variance, the direct materials quantity variance and identify each as either favorable
or unfavorable. (Code: 157)

2. Gates Company reports the following information regarding the production on one of its
products for the month. Compute the direct labor cost variance, the direct labor rate
variance, the direct labor efficiency variance and identify each as either favorable or

2
unfavorable.

Department Performance

1. Naples operates a retail store and has two service departments and two operating
departments, Shoes and Clothing. During the current year, the departments had the
following direct expenses and occupied the flowing amount of floor space.

The advertising department developed and aired 150 spots. Of these spots, 60 spots were
for Shoes and 90 spots were for Clothing. The store sold $1,500,000 of merchandise
during the year; $675,000 in Shoes and $825,000 in Clothing. Indirect expenses include
rent, utilities, and insurance expense. Total indirect expenses of $220,000 are allocated to
all departments. Prepare a departmental expense allocation spreadsheet for Naples. The
spreadsheet should assign (1) direct expenses to each of the four departments, (2)
allocate the indirect expenses to each department on the basis of floor space occupied, (3)
the advertising department's expenses to the two operating departments on the basis of
ad spots placed promoting each department's products, (4) the administrative
department's expenses based on the amount of sales. Complete the departmental
expense allocation spreadsheet. (Code: 157)

2. Eleanor Reed, the manager of the Marinette Plant of the Wisconsin Company is
responsible for all of the plant's costs except her own salary. There are two operating
departments within the plant, Departments A and B. Each department has its own
manager. There is also a maintenance department that provides services equally to the
two operating departments. The following information is available.

3
  

Department managers are responsible for the wages and supplies in their department.
They are not responsible for their own salary. Building rent, utilities, and maintenance are
allocated to each department based on square footage.
Complete the responsibility accounting performance reports below that list costs
controllable by the manager of Department A, the manager of Department B, and the
manager of the Marinette plant. (Code 154)

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