ACCT 5100 The salary paid to the maintenance supervisor

| June 14, 2018

ACCT 5100 – Bonus Assignment – Due Monday July 18th in classPart I. Transaction Analysis (is on the Answer Sheet)Part II. Cost Classification-Multiple ChoiceSelect the best answer for each question.1. The salary paid to the maintenance supervisor in a manufacturing plant is an example of:A)B)C)D)Product Cost Manufacturing OverheadNoYesYesNoYesYesNoNo2. Wages paid to the factory supply shop foreman are considered an example of:A)B)C)D)Direct Labor Period CostYesYesYesNoNoYesNoNo3. Property taxes on a manufacturing plant are an element of:A)B)C)D)Conversion cost Period costYesNoYesYesNoYesNoNo4. The variable portion of the cost of electricity for a manufacturing plant is a:A)B)C)D)Conversion cost Period costYesNoYesYesNoYesNoNo5. Which of the following would most likely be included as part of manufacturing overhead in theproduction of a wooden table?A) The amount paid to the individual who stains the table.B) The commission paid to the salesperson who sold the table.C) The cost of glue used in the table.D) The cost of the wood used in the table.6. Which of the following would most likely not be included as manufacturing overhead in furniturefactory?A) Glue in a chair.B) The amount paid to the individual who stains a chair.C) The workman’s compensation insurance of the supervisor who oversees production.D) The factory utilities of the department in which production takes place.7. The property taxes on the factory building for a manufacturer would be an example of:A)B)C)D)Prime Cost Conversion CostNoYesYesNoYesYesNoNo8. Direct materials cost is a:A)B)C)D)Period cost Product costYesNoNoNoNoYesYesYes9. If the level of activity increases within the relevant range:A) variable cost per unit and total fixed costs also increase.B) fixed cost per unit and total variable cost also increase.C) total cost will increase and fixed cost per unit will decrease.D) variable cost per unit and total cost also increase.10. For planning, control, and decision-making purposes:A) fixed costs should be converted to a per unit basis.B) discretionary fixed costs should be eliminated.C) variable costs should be ignored.D) mixed costs should be separated into their variable and fixed components.11. When the activity level is expected to decline within the relevant range, what effects would beanticipated with respect to each of the following?A)B)C)D)Fixed cost per unitIncreaseIncreaseNo changeNo changeVariable cost per unitNo changeIncreaseNo changeIncrease12. Within a relevant range, the amount of variable cost per unit:A) differs at each activity level.B) remains constant at each activity level.C) increases as activity increases.D) decreases as activity increases.13. When the level of activity increases within the relevant range, how does each of the following change?A)B)C)D)Average cost per unit Total variable cost Fixed cost per unitIncreasesIncreasesIncreasesIncreasesNo changeIncreasesDecreasesNo changeDecreasesDecreasesIncreasesDecreases14. The selling price per unit less the variable cost per unit is theA) fixed cost per unit.B) gross margin.C) margin of safety.D) contribution margin per unit.15. The strategy MOST likely to reduce the breakeven point would be toA) increase both the fixed costs and the contribution margin.B) decrease both the fixed costs and the contribution margin.C) decrease the fixed costs and increase the contribution margin.D) increase the fixed costs and decrease the contribution margin.16. The breakeven point decreases ifA) variable cost per unit increases.B) total fixed costs decrease.C) contribution margin per unit decreases.D) selling price per unit decreases.Part III. CVP Analysis and Cost BehaviorUse the following for the next 6 questions: GH Company publishes and sells grade school textbooks tobookstores. The costs of publishing a grade school textbook is as follows. Each book sells for $10 percopy.Fixed expenses for each new edition of the textbook:Copy editingArt workTypesettingVariable expenses per copy of the book:Printing and bindingSalespersons’ commissionsAuthor’s royalties$5,000$3,500$36,500$2.00$0.75$1.251. Compute the contribution margin per unit of a grade school textbook.2. How many copies of each edition of a grade school textbook should be sold in order to break-even?3. The GH Company wants to make $22,500 profit on publishing and selling any edition of grade schooltextbook. How many copies must be printed and sold to achieve this target profit?4. Currently GP Company is selling 12,000 copies of a grade school textbook. Management feels thatsales could be increased by 1,500 textbooks if the selling price per textbook was reduced by $1.00 percopy. What would be the change in profit if the selling price is reduced?5. Assume the GP Company is considering spending $6,000 for advertising each edition of grade textbookfor the purpose of increasing sales. Minimum of how many additional textbooks should be sold in order tojustify this proposal?Data for next 3 questions: Cheney Manufacturing produces a single product that sells for $200. Variablecosts per unit equal $50. The company expects total fixed costs to be $120,000 for the next month at theprojected sales level of 2,000 units. In an attempt to improve performance, management is considering anumber of alternative actions. Each situation is to be evaluated separately.6. What is the current breakeven point in terms of number of units?7. Suppose that management believes that a $24,000 increase in the monthly advertising expense will resultin a considerable increase in sales. Sales must increase by how much (in units) in order to justify thisadditional expenditure?8. Suppose that management believes that a 20% reduction in the selling price will result in a 20% increasein sales. What would be the change in operating income if the selling price is reduced?9. Ball Corporation has provided the following cost data for last year when 100,000 units were producedand sold:Raw materials$200,000Direct labor100,000Manufacturing overhead200,000Selling and administrative expense150,000All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling andadministrative expense. There are no beginning or ending inventories. If the selling price is $10 per unit,what would be the amount of net operating income from producing and selling 110,000 units?10. The following information pertains to Sisk Company. Compute Sisk’s break-even point in number ofunits.Sales (25,000 units)$500,000Manufacturing expenses:Variable170,000Fixed35,000Selling and general expenses:Variable5,000Fixed30,00011. Southwestern College is planning to hold a fundraising banquet at one of the local country clubs. It hastwo options for the banquet:OPTION 1:Crestview Country Cluba. Fixed rental cost of $1,000.b. $12 per person for food.OPTION 2:Tallgrass Country Cluba. Fixed rental cost of $3,000.b. A caterer who charges $8.00 per person for food.Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire aband, which will cost another $800. Tickets are expected to be $30 per person. Local business supporterswill donate any other items required for the event. Organizers of the event believe that 600 people will beattending the event. How much would be profit if Southwestern College chooses the optimal option?12. Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit dataapply for sales 1,000 axles per month to regular customers:Direct materials$30Direct manufacturing labor5Variable manufacturing overhead10Fixed manufacturing overhead40Total manufacturing costs$85The plant has capacity for 2,000 axles and company is considering expanding production to 1,500 axles.What would be the total cost of producing 1,500 axles?13. Tire and Spoke Manufacturing currently produces 1,000 bicycles per month. The following per unitdata apply for sales to regular customers:Direct materials$50Direct manufacturing labor5Variable manufacturing overhead14Fixed manufacturing overhead10Total manufacturing costs$79The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. Whatwould be the cost per unit if 2,000 bicycles are produced?Data for the next 2 questions: Donnelly Corporation manufactures and sells T-shirts imprinted with collegenames and slogans. Last year, the shirts sold for $7.50 each, and the variable expense was $2.25 per unit.The company needed to sell 20,000 shirts to break even. The net operating income last year was $8,400.Donnelly’s expectations for the coming year include the following:* The selling price of the T-shirts will be $9.00.* Variable expenses will increase by one third.* Fixed expenses will increase by 10 percent.14. How many T-shirts Donnelly Corporation must sell in order to break even in the coming year?15. If Donnelly Corporation wishes to earn $22,500 in net operating income for the coming year, whatshould be the company’s sales volume in dollars?Part IV. Financial StatementsP1. The balance of accounts for Sun Company for year ended Dec 31, 2015 in random order are as follows:SalesInterest RevenueSalaries ExpenseLandCost of Goods SoldCashAccounts PayableDepreciation ExpenseNotes Payable (due in 5 years)Taxes PayableIncome Tax Expense166545306083282756SuppliesOffice EquipmentAccumulated Dep.—Office EquipDividendsSupplies ExpenseRetained Earnings, Jan. 1Common StockRent ExpenseAccounts ReceivableMerchandise InventoryUtilities Expense613028156421001815508Prepare organized and readable Income Statement, Statement of Retained Earnings, and Balance Sheet(classified) on the sheets provided on the Answers Sheet.P2. Jan opened an accounting firm on January 1, 2010 by investing $40,000 of her own money. During2015, Jan had the following transactions.1) Borrowed $30,000 from bank by issuing a 5-year note.2) Sold its old equipment at book value, $5,000 in cash3) Purchased new equipment for $20,000 in cash.4) Purchased $2000 supplies, paid $800 in cash and the rest was on account.5) Paid $10,000 for rent.6) Provided $120,000 of services, collected $112,000 of it, the rest was on account7) Paid $5,000 for utilities – phone, electricity, water, etc.8) Paid $3000 to bank, of which $1,200 was for interest and the rest was for payoff of principal of a loan.9) Took $8,000 as dividend.10) Recorded $5,000 depreciation expense on equipment.11) Paid $4,000 to IRS for income tax.12) Paid herself $70,000 as salaries.13) Recorded $1,000 used up supplies at the end of the year.Prepare an organized Statement of Cash Flows in the space provided on Answers Sheet.Part V. Financial Statements AnalysisP3. The financial statements of Camino Company appear below:Camino CompanyStatement of Financial PositionAs of December 31 (dollars in thousands)Assets2015Cash and marketable securities$ 110Accounts receivable180Merchandise Inventory110Prepaid expenses80Plant & equipment, net1,850Total assets$2,330LiabilitiesAccounts payable$ 170Salaries Payable60Notes payable, short term240Bonds payable (due in 10 years)490Total liabilities960Stockholders’ equityPreferred stock, $100 par, 15%100Common stock, $15 par430Retained earnings840Total stockholders’ equity1,370Total liabilities & stockholders’ equity$2,3302014$ 105160100801,805$2,250$ 150503005201,0201004307001,230$2,250Camino CompanyIncome StatementFor the Year Ended December 31,(dollars in thousands)20152014Net Sales (all on account)$1,910 $1,500Expenses:Cost of goods sold1,330 1,050Operating expenses ($180 of it was for salaries)230230Interest expense5052Income taxes9050Total Expenses1700 1,382Net income$ 210118For each of the following questions, compute appropriate relevant ratio, then answer the question based onyour interpretation of the ratio results. Make sure to include your numbers for ratios in your answer to eachquestion.Q1. Did Camino Company’s ability to pay short term debts improve in 2015 compared to 2014? Why?Q2. Did Camino Company’s profitability improve in 2015 compared to 2014? Why?Q3. Did Camino Company’s ability to stay in business improve in 2015 compared to 2014? Why?Q4. Camino Company has a policy of collecting its money from customers in less than 20 days. Based on2015 data, how effective is Camino in managing its accounts receivable? WhyQ5. How effective is Camino in managing its inventory based on recent year data (2015)? Camino is in anindustry that companies sells their products in 30 days after purchase.Q6. What was the amount of cash collected by Camino from customers in 2015?Q7. How much was the amount of merchandise inventory purchased by Camino in 2015?Q8. How much was the amount of dividends paid by Camino to shareholders in 2015?

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