ACC 3200 Practice Problems for the Final Exam Baruch College, CUNY ACCT 3200
22 views 0 purchase
Course
ACCT 3200
Institution
ACCT 3200
ACC 3200 Practice Problems for the Final Exam
1. The following data refers to the Daniels division of Tippett Inc. Daniels sells variable-speed
drills. The standard drill sells for $ 40, and Daniels plans sales of 30,000 units in 2005.
Tippett treats Daniels as an investment center with total at...
acc 3200 practice problems for the final exam 1 the following data refers to the daniels division of tippett inc daniels
Written for
ACCT 3200
All documents for this subject (4)
Seller
Follow
beckyfawcet
Reviews received
Content preview
ACC 3200 Practice Problems for the Final Exam
1. The following data refers to the Daniels division of Tippett Inc. Daniels sells variable-speed
drills. The standard drill sells for $ 40, and Daniels plans sales of 30,000 units in 2005.
Tippett treats Daniels as an investment center with total attributable investment of $
800,000. Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $ 24.
The firm's required rate of return on investment is 15%. The manager is evaluated based on
Residual Income.
1.1 What is the planned Return on Investment in 2005? ____________________________
1.2 A one-time external special order is received to buy from Daniel, 10,000 units of the
standard drill at $30 each. If the order is accepted, Daniels will have to incur additional
m
annual fixed costs of $30,000. Based on the effect on Residual Income for the first year, will
er as
the manager accept this order?
co
eH w
∆OI = ( 30 – 24 ) x 10000 – 30000 = +$30000 Yes
o.
1.3
rs e
Effect on RI for first year _______________ Will accept: Yes or No
ou urc
RI = OI – Cost of Capital. Since the order does not need new investment, cost of capital will
remain unchanged. RI will thus increase by $30000. Yes will accept.
o
aC s
vi y re
2. Cierra, Inc. manufactures computer chips. Currently, the costs per unit are as follows:
direct materials $ 1.00
direct labor 10.00
ed d
variable manufacturing overhead 5.00
ar stu
fixed manufacturing overhead 8.00
Total $ 24.00
Chips Corp., has contacted Cierra with an offer to sell to Cierra 10,000 of the chips for $22.00
sh is
per chip. If Cierra accepts the proposal, $50,000 of the fixed overhead will be eliminated.
Th
Should Cierra make or buy the chips? Justify your answer with calculations.
Avoidable Production Costs: DM $1+ DL $10+ VMO $5+ FMO 50000/10000 = $21
Buy will be ($22 – 21) x 10000 = $10000 more expensive.
This study source was downloaded by 100000850872992 from CourseHero.com on 04-03-2023 09:03:27 GMT -05:00
https://www.coursehero.com/file/10093124/ACC-3200-set2/
, 3. Succulent juice Company manufactures and sells premium tomato juice by the gallon.
Succulent just finished its first year of operations. The following data relates to this first year of
operations. (BFG Inventory =0)
Number of Gallons Produced 80,000
Number of Gallons sold 70,000
Sales Price $3.00/gallon
Unit Product Cost (variable costing) $1.45/gallon
Contribution Margin $84,000
Total Fixed Manufacturing Overhead $?
Total fixed Selling & Administrative $ 25,000
Variable Sales and Administrative $?
Inventory value under absorption costing $29,500
3.1 Prepare an Income statement for Succulent using the Absorption Costing Method. (Hints:
m
er as
How many units were in inventory? What was the cost per unit? Why is the CM only
$84,000? ).
co
eH w
Because EFG Inventory = 10000 x (U.FMO + 1.45) = $29500
There, U.FMO = $1.5 per unit
o.
Thus, Total FMO = $1.5 x 80000 = $120,000
rs e
ou urc
Because CM = (3 – 1.45 – U.S&A Expenses) x 70000 = $84000
U.S&A Expenses = $0.35 per unit
o
Sales (70000 x 3 =) $210000
aC s
vi y re
CGS [(1.45+1.5) x 70000 =] 206500
Gross Margin 3500
Selling and Administrative Costs
49500
ed d
(0.35 x 70000 + 25000 = )
ar stu
Net Income -46000
sh is
3.2 Explain in one or two sentences, the key difference between the net income under Absorption
Th
and the net income under Variable costing. Determine the variable costing net income. Do not
prepare a variable costing income statement.
OIABS – OIVAR = 𝛥Inventory x U.FMO
-$46000 - OIVAR = 10000 x $1.5
Thus, OIVAR = - $61000
Verify this number by making a contribution format income statement.
This study source was downloaded by 100000850872992 from CourseHero.com on 04-03-2023 09:03:27 GMT -05:00
https://www.coursehero.com/file/10093124/ACC-3200-set2/
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller beckyfawcet. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.49. You're not tied to anything after your purchase.
