CMA Canada

Saskatchewan Partner

AMAP: Accelerated Management Accounting Program

2010 - 2011

Assignment: MA 1, 2, 3

Due: Sunday, February 20, 2011: 11 p.m.

Please use the excel spread sheet to record your answers and send them to:

[email protected]
1) The following information pertains to Tom's Country Wood Shop:

Beginning finished goods, 1/1/x1 $ 15,000

Ending finished goods, 12/31/x1 9,500
Cost of goods sold 56,000
Sales 112,500
Operating expenses 25,000

What is the cost of goods manufactured for 20x1?

a. $ 31,500
b. $ 50,500
c. $ 56,500
d. $ 61,500
e. $ 66,500

Frazer, Inc. had the following activities in the year:

Direct materials:
Beginning inventory $ 100,000
Purchases 308,000
Ending inventory 52,000
Direct manufacturing labour 80,000
Manufacturing overhead 60,000
Ending work in process inventory 20,000
Beginning work in process inventory 4,000
Ending finished goods inventory 80,000
Beginning finished goods inventory 120,000

2) What is Frazer's cost of goods sold?

a. $ 400,000
b. $ 440,000
c. $ 464,000
d. $ 516,000
e. $ 520,000

3) What is Frazer's cost of goods manufactured?

a. $ 536,000
b. $ 512,000
c. $ 496,000
d. $ 480,000
e. $ 476,000
Use the information below to answer the following questions 4 through 9.

Consider the following data of the Vancouver Company for the year:

$ $
Sandpaper 10,000 Leasing costs - plant 120,000
Materials handling 100,000 Amortization - equip. 70,000
Coolants & lubricants 7,000 Property taxes - equip 10,000
Indirect mfg. labour 86,000 Fire insurance - equip. 5,000
Direct mfg. labour 680,000 Direct mat. purchased 980,000
Direct mat., Jan 1 120,000 Direct mat. Dec 31 86,000
Finished goods, Jan 1 210,000 Sales 4,000,000
Finished goods, Dec 31 400,000 Sales commissions 200,000
WIP, Jan 1 30,000 Sales salaries 180,000
WIP, Dec 31 20,000 Advertising costs 150,000
Administration costs 250,000

4) What is the unit cost for the direct materials for the year assuming 2,000,000 units
are produced (direct materials costs are $ 1.00 per unit when 1,014,000 units are
produced)?

a. $ 1.10
b. $ 0.95
c. $ 0.80
d. $ 1.00
e. $ 1.08

5) What is the unit cost for the plant leasing cost for the year assuming 2,000,000 units
are produced (plant leasing costs are $ 0.118 per unit when 1,014,000 units are
produced)?

a. $ 0.35
b. $ 0.12
c. $ 0.18
d. $ 0.04
e. $ 0.06

6) What is the cost of goods sold for Vancouver Company?

a. $ 1,502,000
b. $ 1,922,000
c. $ 2,322,000
d. $ 2,302,000
e. $ 1,712,000
7) What is the cost of goods manufactured for the year?

a. $ 2,097,000
b. $ 2,132,000
c. $ 2,112,000
d. $ 2,082,000
e. $ 2,102,000

8) What is the Manufacturing cost incurred for the year?

a. $ 2,132,000
b. $ 2,352,000
c. $ 1,088,000
d. $ 2,102,000
e. $ 2,097,000

9) What is the amount of direct materials used for the year?

a. $ 1,014,000
b. $ 946,000
c. $ 1,031,000
d. $ 894,000
e. $ 860,000
10) Big Sports University is planning to hold a fundraising banquet at one of the local
country clubs. It has two options for the banquet:

1. Foothills Country Club

a. Fixed rental cost of $ 600,
b. plus $ 15.00 per person for food.

2. Downhill Country Club

a. Fixed rental cost of $ 1,080.
b. plus $ 12.00 per person for food.

Big Sports has budgeted $ 900 for administrative and marketing expenses. It plans
to hire a band, which will cost another $ 400. Tickets are expected to be $ 40 per
person. Any other items required for the event will be donated by its local business
supporters.

How many people must purchase tickets assuming option two is chosen, and Big
Sports expects to raise $ 4,820 for the athletic fund? Assume no one pays more
than the cost of his/her ticket.

a. 258 people
b. 514 people
c. 600 people
d. 720 people
e. 610 people

11) Joan Perry has three booth rental options at the bridal fair where she plans to sell
her new product. The booth rental options are:

Option 1: $ 4,000 fixed fee

Option 2: $ 3,000 fixed fee + 5% of all revenues generated at the fair
Option 3: 20% of all revenues generated at the fair.

The product sells for $ 150 per unit. She is able to purchase the units for
$ 50.00 each.

Which option should Joan choose in order to maximize income assuming there is
a 40% probability that 70 units will be sold and a 60% probability that 40 units will
be sold?

a. Option three with expected income of $ 3,640

b. Option two with expected income of $ 1,810
c. Option one with expected income of $ 1,200
d. Option three with expected income of $ 4,060
e. Option two with expected income of $ 4,060
Use the information below to answer the following question(s).

The following information is for Winnie Company:

Product A: Revenue $ 4.00

Variable Cost $ 1.00
Product B: Revenue $ 6.00
Variable Cost $ 2.00
Total fixed costs are $ 40,000

12) What is the operating income assuming actual sales are 300,000 units, and the
sales mix is one unit of Product A and two units of Product B?

a. $ 1,060,000
b. $ 1,040,000
c. $ 1,100,100
d. $ 100,000
e. $ 1,100,000

13) What is the breakeven point assuming the sales mix consists of two units of Product
A and one unit of Product B?

a. 4,000 units of A and 2,000 units of B

b. 8,050 units of A and 4,025 units of B
c. 8,000 units of A and 4,000 units of B
d. 4,000 units of A and 4,000 units of B
e. 4,050 units of A and 2,025 units of B
14) Comics Plus has a current production level of 200,000 comics per month. Unit
costs at this level are:

Direct materials $ 0.125

Direct labour 0.200
Variable overhead 0.075
Fixed overhead 0.100
Marketing - Fixed 0.100
Marketing/distribution - Variable 0.200

Current monthly sales are 180,000 units. Printers, LTD has contacted Comics
Plus about purchasing 15,000 units at $1.00 each. Current sales would not be
affected by the special order, and variable marketing/ distributing costs would not
be incurred on the special order.

What is Comics Plus' change in profits using the contribution margin format if the
order is accepted?

a) $ 9,000 increase
b) $ 2,000 decrease
c) $ 11,000 increase
d) $ 9,000 decrease
e) $ 2,000 increase

15) Crest Information Technologies manufactures three sizes of copiers: light usage,
medium usage, and heavy usage. Potential sales include 200 units of light, 240
units of medium, and 200 units of heavy per month. The maximum machine-
hours available is 12,000 per week. Product information is provided below.

Light Medium Heavy

Marketing Costs ($):
Variable 120 240 400
Fixed 300 500 1,000

Manufacturing costs ($):

Variable 120 240 400
Fixed 80 100 240
Machine-hours per unit 20 40 100

What is the full product cost for heavy usage copiers?

a) $ 800
b) $ 1,400
c) $ 1,240
d) $ 640
e) $ 2,040
16) Action Mopeds manufactures mopeds. The following information pertains to the
company's normal operations per month:

Output units 15,000 mopeds

Machine-hours 4,000 hours
Direct manufacturing labour hours 5,000 hours
Direct manufacturing labour per hour $ 24
Direct materials per unit $ 200
Variable manufacturing overhead costs $ 322,500
Fixed manufacturing overhead costs $ 1,200,000
Marketing and distribution costs $ 1,125,000
Research and development costs $ 900,000

What is the unit cost for establishing a minimum bid on a one-time-only special
order of 1,000 units from an overseas city if all cost relationships remain the
same except for a one-time setup charge of $ 40,000?

a) $ 260.50
b) $ 269.50
c) $ 309.50
d) $ 209.50
e) $ 444.50

17) Central Medical Supply, Inc., a manufacturer of medical testing equipment, has $
240,000 worth of an obsolete line of testing equipment. The obsolete equipment
can be adapted to fit another line of testing equipment at a cost of $ 64,000; the
market value would then be $ 136,000. However, Tripac offered to purchase the
obsolete equipment as is for $ 88,000.

What are the relevant figures above for management in their decision?

a) (136,000 - 64,000); (88,000 - 0)

b) (240,000 + 64,000); (88,000 - 240,000)
c) (240,000 + 64,000); (88,000 - 0)
d) (240,000 + 64,000); (88,000 + 240,000)
e) (136,000 - 64,000); (88,000 - 240,000)
18) Central Medical Supply, Inc., a manufacturer of medical testing equipment, has
$ 240,000 worth of an obsolete line of testing equipment. The obsolete
equipment can be adapted to fit another line of testing equipment at a cost of
$ 64,000; the market value would then be $ 136,000. However, Tripac offered to
purchase the obsolete equipment as is for $ 88,000.

What is the opportunity cost associated with the adaptation of the equipment to
another line of testing equipment assuming Central accepts Tripac's offer?

a) $ 72,000
b) $ 136,000
c) $ 240,000
d) $ 88,000
e) none of the above

19) A company is preparing its budgets for the upcoming year. Current direct
materials cost is $ 150,000, and current direct manufacturing labour is
$ 1,000,000, both of which are expected to increase by 4% next year. Overhead
costs currently are (for the year just ending) variable $ 18,000 and fixed
$ 30,000. The firm expects to achieve a 2% cost reduction in overhead costs
by continuous improvement.

What is the company's expected cost for the upcoming year if production is the
same number of units as the current year?

a) $ 1,175,000
b) $ 1,176,920
c) $ 1,243,040
d) $ 1,196,920
e) $ 1,263,040
Use the following information to answer Question 20 and 21.

In order to increase its profit, CQE Inc. is considering the possibility of adding a new
product, a calculator, to its product line. Three different types of calculator can be
manufactured, each requiring a $ 100,000 investment. The information concerning each
calculator is shown below:

Model Sales Price Cost of Labour Overhead

(Units) Materials Hours Costs
1 50,000 $ 55 $ 15 1.0 $ 9
2 300,000 $ 27 $ 12 0.2 $ 10
3 100,000 $ 35 $ 13 0.5 $7

The labour cost is $16 per hour, and 60% of overhead costs are variable. There are
3,000 hours available each month for the production of these calculators. In order to
ship the calculators, the company has 27,000 boxes available. CQE can pack four
calculators of type 2 or four calculators of type 3 in one box, whereas only one type 1
calculator fits in a box. Where:

X1 = quantity of calculator 1
X2 = quantity of calculator 2
X3 = quantity of calculator 3

20) What is the objective function that will maximize the profit (Max Z) of the company?

a) Max Z = 55X1 + 27X2 + 35X3

b) Max Z = 20.4X1 + 7.8X2 + 11.2X3
c) Max Z = 18.6X1 + 5.8X2 + 9.8X3
d) Max Z = 15X1 + 1.8X2 + 7X3 – (100,000 × 3)
e) None of the above

21) What is the constraint for packaging?

a) 4X1 + X2 + X3 <= 27,000

b) X1 + X2 + X3 <= 27,000
c) X1 + 4X2 + 4X3 <= 27,000
d) 0.25X1 + X2 + X3 <= 27,000
e) None of the above
Grinnell Manufacturing Company has the following information:

Month Budgeted Sales

January $ 76,000
February 85,000
March 92,000
April 79,000

Budgeted Expenses per Month

Wages $ 15,000
Advertising 12,000
Depreciation 3,000
Other 4 percent of sales

Note: All cash expenses are paid as incurred.

22) What are the expected total cash disbursements for expenses in January?

a) $ 30,000
b) $ 29,000
c) $ 33,040
d) $ 30,040
e) $28,200

23) What are the expected total cash disbursements for expenses in March?

a) $ 27,000
b) $ 30,040
c) $ 32,000
d) $ 30,680
e) $ 30,400

24) What is the expected total cash disbursements for expenses in February?

a) $ 32,000
b) $ 30,400
c) $ 30,200
d) $ 30,000
e) $ 34,400
25) Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots
in 20x1. The company had enough beginning inventory of direct materials to
produce 48,000 units. Beginning inventory of finished units totalled 4,000 with a
target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the
company keeps no work-in-process inventory. Direct materials costs for each
flowerpot total $ 2.00 while direct labour is $ 1.00. Factory overhead is $ 0.40
per flowerpot.

What will be the amount of cost of goods sold?

a) $ 122,400
b) $ 139,400
c) $ 101,500
d) $ 136,000
e) $ 149,600

Use the information below to answer the following question(s).

Layne Cedar manufactures cedar chests. The estimated number of chests for
the first three months of 20x1 is as follows:

Month Sales

January 10,000
February 14,000
March 13,000

Finished goods inventory at the end of December is 3,000 units. Ending finished
goods are equal to 30 percent of next month's sales. April 20x1 sales are
expected to total 16,000 units.

26) How many chests will be produced in the first quarter of 20x1?

a) 44,800 chests
b) 48,400 chests
c) 41,800 chests
d) 37,000 chests
e) 38,800 chests
27) Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots
in 20x1. The company had enough beginning inventory of direct materials to
produce 48,000 units. Beginning inventory of finished units totaled 4,000 with a
target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the
company keeps no work-in-process inventory. Direct materials costs for each
flowerpot total $2.00 while direct labour is $1.00. Factory overhead is $0.40 per
flowerpot.

What will be the total costs incurred for direct materials, direct manufacturing
labour, and manufacturing overhead, respectively, for 20x1?

a) $ 0; $ 41,000; $16,000
b) $ 80,000; $ 40,000; $ 16,000
c) $ 0; $ 40,000; $ 16,000
d) $ 84,000; $ 40,000; $ 16,400
e) $ 82,000; $ 41,000; $ 16,400

28) Fair Score Company manufactures scoreboards for athletic events. It expects to
sell 20,000 scoreboards in 20x1. The company has enough beginning inventory
of direct materials to produce 8,000 units. Beginning work-in-process inventory
totals 2,000 units and is 100 percent complete as to material and 50 percent
complete as to labour and overhead. Beginning finished units total 4,000 with a
target ending finished inventory of 3,000 units. The scoreboards sell for $ 800.
There is no ending work-in-process inventory. Direct materials costs for each
scoreboard total $ 200 while direct labour is $ 80. Manufacturing overhead is $
60 per scoreboard.

What will be the total costs of direct materials used in 20x1?

a) $ 3,400,000
b) $ 3,200,000
c) $ 3,600,000
d) $ 3,800,000
e) $ 3,155,000
Contempo Futon manufactures futons. The estimated number of sales for the last
quarter of 20x1 is as follows:

Month Sales

October 20,000
November 25,000
December 30,000

Beginning finished goods should be equal to 30 percent of each month's sales during
these months and 10 percent of each month's sales in other months. January 20x2
sales are anticipated to be 15,000 chairs. The cost to produce a chair is $ 125.

29) How many futons will be produced in the three months?

a) 90,000 futons
b) 82,500 futons
c) 70,500 futons
d) 75,000 futons
e) 98,650 futons

30) What will be the cost of goods manufactured for December?

a) $ 3,937,500
b) $ 3,750,000
c) $ 3,125,000
d) $ 2,625,000
e) $ 2,812,500

31) Fair Score Company manufactures scoreboards for athletic events. It expects to
sell 20,000 scoreboards in 20x1. The company has enough beginning inventory
of direct materials to produce 8,000 units. Beginning work-in-process inventory
totals 2,000 units and is 100 percent complete as to material and 50 percent
complete as to labour and overhead. Beginning finished units total 4,000 with a
target ending finished inventory of 3,000 units. The scoreboards sell for $ 800.
There is no ending work-in-process inventory. Direct materials costs for each
scoreboard total $ 200 while direct labour is $ 80. Manufacturing overhead is $
60 per scoreboard.

What will be the amount of cost of goods sold?

a) $ 6,120,000
b) $ 6,460,000
c) $ 6,800,000
d) $ 8,160,000
e) $ 5,975,000
Use the information below to answer the following question(s).

A company makes table lamps, for which the following standards have been developed:

Standard Inputs Standard Price

Expected for Each Expected per
Unit of Output Unit of Output

Direct materials 20 kilograms $ 2 per kilogram

Direct labour 6 hours $ 8 per hour

During January, production of 100 lamps was expected, but 110 lamps were actually
completed.

Direct materials purchased and used were 2,100 kilograms at an actual price of $ 2.20
per kilogram.

Direct labour cost for the month was $ 5,310, and the actual pay per hour was $ 9.00.

32) The direct-labour efficiency variance for the month of January is

a) $ 70 favourable
b) $ 560 favourable.
c) $ 560 unfavourable
d) $ 630 favourable
e) $ 630 unfavourable

33) The direct-material price variance for January is

a) $ 20 favourable
b) $ 420 unfavourable.
c) $ 420 favourable.
d) $ 400 unfavourable.
e) $ 400 favourable
The following data for a pottery company pertain to the production of 2,000 clay pots
during July.

Direct Materials (All materials purchased were used.):

Standard cost: $ 6.00 per kilogram of clay.

Total actual cost: $ 11,200.
Standard cost allowed for units produced: $ 12,000.
Materials efficiency variance: $ 240 unfavourable.

Direct Manufacturing Labour:

Standard cost: 2 pots per hour at $ 24.00 per hour.

Actual cost per hour: $ 24.50.
Labour efficiency variance: $ 672 favourable.

34) What is the labour price variance for direct manufacturing labour?

a) $ 486 favourable
b) $ 486 unfavourable
c) $ 672 favourable
d) $ 186 favourable
e) $ 672 unfavourable

35) What is the total actual costs of direct manufacturing labour?

a) $ 23,200
b) $ 23,814
c) $ 24,000
d) $ 24,672
e) $ 672
Use the information below to answer the following question(s).

36) Ames Golf Company used the following data to evaluate their current operating
system. The company sells 1 pack of golf balls for $10 per pack. The $10 selling
price is also the budgeted selling price.

Budgeted Actual

Units Sold 1,000,000 990,000

Variable Costs $ 3,000,000 $ 2,500,000
Fixed Costs $ 1,800,000 $ 1,850,000

What is the total static budget variance for Ames Golf Company?

a) $ 350,000 favourable
b) $ 650,000 favourable
c) $ 400,000 favourable
d) $ 390,000 unfavourable
e) $ 450,000 unfavourable

37) Assume that variable manufacturing overhead is allocated according to machine-

hours. Aladdin Company expects to produce 400 cases of Product A using 400
machine-hours. Each machine hour is expected to take 10 KWH of electricity,
which costs $6 per KWH. What is the maximum amount the company would be
willing to pay for the new machine based solely on spending and efficiency
variances if a new energy-efficient machine only used 8 KWH per machine-hour?

a) $ 120
b) $ 4,800
c) $ 4,920
d) $ 4,680
e) $ 4,120
Use the information below to answer the following question(s).

Moeller Electric manufactures light fixtures. The following information pertains to the
company's manufacturing overhead data.

Budgeted output units 30,000 fixtures

Budgeted machine-hours 10,000 hours
Budgeted variable manufacturing
overhead costs for 30,000 fixtures $ 80,625

Actual output units produced 44,000 fixtures

Actual machine-hours used 10,000 hours
Actual variable manufacturing overhead costs $ 121,000

38) What is Moeller Electric's variable manufacturing overhead static budget variance?

a) $ 40,375 unfavourable
b) $ 40,375 favourable
c) $ 2,750 favourable
d) $ 2,750 unfavourable
e) $ 44,000 unfavourable

39) What is the variable manufacturing overhead flexible-budget variance?

a) $ 2,750 unfavourable
b) $ 2,363 favourable
c) $ 387 favourable
d) $ 2,750 favourable
e) $ 2,363 unfavourable

40) What is Moeller Electric's variable manufacturing overhead sales-volume variance?

a) $ 40,375 unfavourable
b) $ 37,625 favourable
c) $ 40,325 favourable
d) $ 37,625 unfavourable
e) $ 2,750 favourable
Use the information below to answer the following question(s).

Munoz, Inc. produces a special line of plastic toy racing cars. Munoz, Inc. produces the
cars in batches. To manufacture a batch of the cars, Munoz, Inc. must set up the
machines and molds. Setup costs are batch-level costs because they are associated
with batches rather than individual units of products. A separate Setup Department is
responsible for setting up machines and molds for different styles of car.

Setup overhead costs consist of some costs that are variable and some costs that are
fixed with respect to the number of setup-hours. The following information pertains to
June 2004.
Actual Static-budget
Amounts Amounts
Units produced and sold 15,000 11,250
Batch size (number of units per batch) 250 225
Setup-hours per batch 5 5.25
Variable overhead cost per setup-hour $40 $38
Total fixed setup overhead costs $ 14,400 $ 14,000

41) Calculate the production volume variance for fixed setup overhead costs.

a) $ 800 unfavourable
b) $ 3,600 unfavourable
c) $ 18,667favourable
d) $ 4,667 favourable
e) $ 15,000 unfavourable

42) Calculate the spending variance for variable setup overhead costs
.
a) $ 1,500 favourable
b) $ 600 unfavourable
c) $ 975 unfavourable
d) $ 700 unfavourable
e) $ 1,500 unfavourable

43) Calculate the efficiency variance for variable setup overhead costs.

a) $ 525 favourable
b) $ 1,500 favourable
c) $ 975 favourable
d) $ 1,900 favourable
e) $ 700 favourable
Use the information below to answer the following question(s).

Beauty Supply Company manufactures shampoo. Your supervisor has provided you
with the following information and informs you that standard costing is used for
manufacturing, marketing, and administrative costs.

January February

Beginning inventory (units) 0 ---

Production (units) 2,500 3,000
Sales (units) 2,250 3,025

Other information:
Selling price $ 20.00
Standard variable manufacturing cost/unit $ 8.00
Standard variable market/admin. cost/unit $ 4.00
Standard fixed manufacturing overhead cost/month $ 40,000
Standard fixed market/admin. cost/month $ 20,000
Budgeted denominator level per month (output units) 4,000

There were no beginning or ending inventories of materials or work in process.

44) What would Beauty Supply Company's operating income (loss) be for January and
February, respectively, using the variable costing approach?

a) $ 18,000 and $ (35,800)

b) $ 18,000 and $ 24,200
c) $ (45,000) and $ (35,500)
d) $ (42,000) and $ (35,800)
e) $ (44,000) and $ (33,809)
45) The following information pertains to ABC Corporation:

Beginning fixed manufacturing overhead in inventory $ 40,000

Ending fixed manufacturing overhead in inventory $ 30,000
Beginning variable manufacturing overhead in inventory $ 20,000
Ending variable manufacturing overhead in inventory $ 9,500
Selling price per unit $ 41
Standard fixed manufacturing costs per unit $ 20
Variable selling and administrative cost per unit $4
Fixed selling and administrative costs $ 16,000
Units produced 10,000
Units sold 9,600

What is the difference between absorption costing operating income and variable
costing operating income?

a) $ 500
b) $ 5,000
c) $ 10,000
d) $ 20,500
e) $ 21,000