Accounting-FINAL EXAM ACC/400 Accounting for Decision Making

 FINAL EXAM

ACC/400

Accounting for Decision Making

1.) Trim Force Corp. had the following
information in their accounting records:

Work in process inventory, beginning balance	$50,000
Cost of direct materials used	$350,000
Direct labor cost applied to production	$200,000
Cost of finished goods manufactured	$750,000

Manufacturing
overhead during production was $250,000. What was the work in process inventory
on hand at the end of the year?

2.) Walsh Corp. uses direct labor hours
to determine their applied manufacturing overhead. They use a rate of $30 per
direct labor hour. During the production period, company employees worked
10,000 direct labor hours, and had actual overhead costs of $305,000.

a.) Record the year-end journal entry to
close out the Manufacturing Overhead account to the Cost of Goods Sold account.

b.) Was manufacturing overhead
underapplied or was it overapplied?

3.) Sorin Corp. uses process costing for
its two production departments: Cutting and Painting. The company’s
manufacturing information for the month of August is provided below:

	Cutting	Painting
Beginning work in process	$1,000	$1,200
Costs transferred in	?	?
Costs incurred in Aug	$3,500	$5,000
Ending work in process	$2,000	$2,500

a.) Record the transfer costs from the
cutting department to the painting department in Aug.

b.) Record the transfer costs from the
painting department to the finished goods inventory account in Aug.

4.) Badin Corp. has the following
information about its most popular product line:

Sales price per unit	$50
Variable cost per unit	$25
Total fixed manufacturing & overhead costs	$400,000

Compute the
following:

a.) Unit contribution margin.

b.) Units that must be sold to break
even.

c.) Units that must be sold to earn an
operating income of $500,000.

5.) Complete Dillon Corp.’s flexible
budget for 75,000 units using the information listed below:

	25,000 Units	50,000 Units	75,000 Units
Sales	$375,000	$750,000
Cost of Goods Sold	$250,000	$500,000
Gross Profit on Sales	$125,000	$250,000
Operating expenses ($10,000 of it is fixed)	$35,000	$60,000
Operating Income	$90,000	$190,000
Income Taxes (30% of operating income)	$27,000	$57,000
Net Income	$63,000	$133,000

Assume that
cost of goods sold and any variable operating expenses vary directly with sales
and that income taxes remain constant at 30%.

6.) Del Sol Healthcare is considering two
capital investment proposals. The information for both projects is listed
below:

	Proposal #1	Proposal #2
Cost of the investment	$250,000	$300,000
Estimated salvage value	$25,000	$30,000
Average estimated net income	$50,000	$60,000

Calculate
the return on average investment for both proposals and discuss which one would
be the best option for investment.