compiling your answers into a wold-procesing document. llYhenyou’re ready to submit your answers, refer to the instructions atthe end of your exam booklet. Be certain to indicate the properquestion number before each of your answers. Remember toshow your work if an answer requires a mathematical solution.Answer each of the following 2O questions, Each answer iswofth 5 points.1. The work-in-process inventory account of a manufacturingcompany shows a balance of $3,OOO at the end of anaccounting period. The job-cost sheets of the two incompletejobs show charges of $500 and $3O0 for directmaterials, and charges of $400 and $6OO for direct labor.From this information, it appears that the company isusing a predetermined overhead rate as a percentage ofdirect labor costs. What percentage is the rate?The break-even point in dollar sales for Rice Company is$480,000 and the company’s contribution margin ratiois 40 percent. If Rice Company desires a profit of$84,000, how much would sales have to total?Williams Company’s direct labor cost is 25 percent of itsconversion cost. If the manufacturing overhead for thelast period was $45,0OO and the direct material cost was$25,000, how much is the direct labor cost?ry3lIr5SIt+IIo53.2.4. Grading Company’s cash and cash equivalents consist ofcash and marketable securities. L,ast year the company’scash account decreased by $16,000 and its marketablesecurities account increased by $ZZ,OOO. Cash providedby operating activities was $Z+,O00. Net cash used forfinancing activities was $2O,O00. Based on tJ:is informa_tion, was the net cash flow from investing activities onthe statement of cash flows a net increase or decrease?By how much?Gladstone Footwear Corporation,s flexible budget costformula for supplies, a variable cost, is $Z.gZ per unit ofoutput. The company’s flexible budget performance reportfor last month showed an $8,14O unfavorable spendingvariance for supplies. During that month,21,2SO unitswere produced. Budgeted activity for the month hadbeen 20,9OO units. What is the actual cost per unit forindirect materials?Lyons Company consists of two divisions, A and B. LyonsCompany reported a contribution margin of g60,00O forDivision A, and had a contribution margin ratio of 3Opercent in Division B, when sales in Division B were$24O,OOO. Net operating income for the company was$22,000 and traceable fixed expenses were $45,000. Howmuch were Lyons Company’s common fixed expenses?Atlantic Company produces a single product. For the mostrecent year, the company’s net operating income computedby the absorption costing method was 97,g00, and its netoperating income computed by the variable costing methodwas $10,500. The company’s unit product cost was $1Sunder variable costing and $g+ under absorption costing.If the ending inventory consisted of 1,460 units, howmany units must have been in the beginning inventory?5.6.7.l,fi.’li:;.r,i.: J!1ti.l Final Examination8. Black Company uses the weighted-average method in itsprocess costing system. The company’s ending work-inprocessinventory consists of 6,O0O units, 75 percentcomplete with respect to materials and 50 percent completewith respect to labor and overhead. If the totaldollar value of the inventory is $80,0O0 and the cost perequivalent unit for labor and overhead is $6.O0, what isthe cost per equivalent unit for materials?9. At Overland Company, maintenance cost is exclusively avariable cost that varies directly with machine-hours. Theperformance report for July showed that actual maintenancecosts totaled $11,3L5 and that the associated ratevariance was $146 unf,avorable. If 7,3O0 machine-hourswere actually worked during July, what is the budgetedmaintenance cost per machine-hour?10. The cost of goods sold in a retail store totaled $650,OO0.Fixed selling and administrative expenses totaled $115,000and variable selling and administrative expenses were$420,000. If the store’s contribution margin totaled$590,OO0, how much were the sales?11. Denny Corporation is considering replacing a technologicallyobsolete machine with a new state-of-the-artnumerically controlled machine. The new machine wouldcost $60O,000 and would have a 1O-year useful life.Unfortunately, the new machine would have no salvagevalue. The new machine would cost $2O,00O per year tooperate and maintain, but would save $125,O0O per yearin labor and other costs. The old machine can be soldnow for scrap for $50,00O. What percentage is the simplerate of return on the new machine rounded to the nearesttenth of a percent? (Ignore income taxes in this problem.)Final Examination Iilll: )l#:l:r.iliii’ii.:,li:li,12. Lounsberry Inc. regularly uses material O55P and currentlyhas in stock 375 liters of the material, for which it paid$2,700 several weeks ago. If this were to be sold as is onthe open market as surplus material, it would fetch $6.35per liter. New stocks of the material can be purchasedon the open market for $7.2O per liter, but it must bepurchased in lots of 1,O00 liters. You’ve been asked todetermine the relevant cost of 900 liters of the materialto be used in a job for a customer. What is the relevantcost of the 90O liters of material O55P?13. Harwichport Company has a current ratio of 3.0 andan acid-test ratio of 2.8. Current assets equal $21O,O00,of which $5,OO0 consists of prepaid expenses. Theremainder of current assets consists of cash, accountsreceivable, marketable securities, and inventory. Whatis the amount of Harwichport Companys inventory?14. Tolla Company is estimating the following sales for thefirst six months of next year:JanuaryFebruaryMarchAprilMayJune$350,OOO$300,000$32o,ooo$410,000$450,O00$470,000Sales at Tolla are normally collected as 70 percent in themonth of sale, 25 percent in the month following the sale,and the remaining 5 percent being uncollectible. AIso, customerspaylng in the month of sale are given a 2 percentdiscount. Based on this information, how much cashshould Tolla expect to collect during the month of April?ffi Final Examination1,7.15. Trauscht Corporation has provided the following datafrom its activity-based costing system:16.The company makes 360 units of product P23F a year,requiring a total of 725 machine-hours, 85 orders, and 45inspection-hours per year. The product’s direct materialscost is $42.30 per unit and its direct labor cost is $f +.SSper unit. The product sells for $132.1O per unit. Accordingto the activity-based costing system, what is the productmargin for product P23F?Williams Company’s direct labor cost is 3O percent of itsconversion cost. If the manufacturing overhead for thelast period was $59,500 and the direct materials costwas $37,000, what is the direct labor cost?In a recent period, 13,000 units were produced, and therewas a favorable labor efficiency variance of $23,000.If 40,0OO labor-hours were worked and the standardwage rate was $13 per labor-houq what would be thestandard hours allowed per unit of output?The balance in White Company’s work-in-process inventoryaccount was $t5,OO0 on August 1 and $18,O00 onAugust 31. The company incurred $30,000 in direct laborcost during August and requisitioned $ZS,O00 in rawmaterials (all direct material). If the sum of the debits tothe manufacturing overhead account total $28,000 for themonth, and if the sum of the credits totaled $30,00O, thenwas Finished Goods debited or credited? By how much?18.Acttvity Cost Pool Total Cost Total ActivttyAssembly $7O4,88O 44,OOO machine-hoursProcessing orders $91,428 1,9O0 ordersInspection $I t z,s46 1,950 inspection-hoursFinal Examination19. A company has provided the following data:Sales 4,0OO unitsSales price $80 per unitVariable cost $5O per unitFixed cost $3O,OOOIf the dollar contribution margin per unit is increasedby 1O percent, total fixed cost is decreased by 15 percent,and all other factors remain the same, will net operatingincome increase or decrease? By how much?2O. For the current year, Paxman Company incurred$175,000 in actual manufacturing overhead cost. Themanufacturing overhead account showed that overheadwas overapplied in the amount of $9,OOO for the year.If the predetermined overhead rate was $8.OO perdirect labor-hour, how many hours were workedduring the year?