Acct 2211 Exam 2 Computational Practice - Answers
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Acct 2211 Exam 2 Computational Study Guide
1) The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year:
Budgeted costs of operating the materials laboratory
for 100,000 to 200,000 technician hours per year:
Fixed costs per year
$7,800,000
Variable costs
$66
per technician hour
Budgeted long-run usage in hours per year:
Large Plane Department
80,000
technician hours
Small Plane Department
120,000
technician hours
Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Large Plane Department was 60,000 technician hours and by the Small Plane Department was 80,000 technician hours. If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Small Plane Department? A) $14,605,714
B) $9,737,143
C) $8,400,000
D) $12,600,000
Answer: D
Explanation: D) Budgeted materials laboratory costs for Small Plane Department = [(120,000 / 200,000) × $7,800,000] + (120,000 × $66) = $12,600,000
2) Illumination Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:
Budgeted costs of operating the plant for 2,000 to 3,000 hours:
Fixed operating costs per year
$500,000
Variable operating costs
$900
per hour
Budgeted long-run usage per year:
Flashlight Division
2,000 hours
Night Light Division
1,000 hours
Practical capacity
4,000 hours
Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1,500 hours and by the Night Light Division was 800 hours. If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Flashlight Division? A) $2,050,000
B) $1,537,500 C) $1,987,500 D) $1,600,000 Answer: A
Explanation: A) Flashlight Division cost = [(2,000 / 4,000) × $500,000] + (2,000 × $900) = $2,050,000
3 Red Rose Manufacturers Inc. is approached by a potential new customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:
Variable costs:
Direct materials
$160
Direct labor
90
Manufacturing support
115
Marketing costs
65
Fixed costs:
Manufacturing support
135
Marketing costs
55
Total costs
620
Markup (40%)
248
Targeted selling price
$868
What is the contribution margin per unit? A) $190
B) $248
C) $438
D) $620
Answer: C
Explanation: C) Contribution margin per unit = $868 - ($160 + $90 + $115 + $65) = $438
4. Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:
Direct materials
$51.00
Direct labor
35.00
Variable overhead
38.00
Fixed overhead
31.00
Total
$155.00
Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $140.00 each. Rubium will eliminate $93,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives?
A) buy; savings = $93,000 B) buy; savings = $107,000 C) make; savings = $67,000 D) make; savings = $243,000
Answer: C
Explanation: C) Cost to buy: 10,000 × $140.00 = $1,400,000
Cost to make: [($51.00 + $35.00 + $38.00) × 10,000 + $93,000] = $1,333,000
Cost savings = $1,400,000 - $1,333,000 = $67,000; make the subassemblies 5) For 2020, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct
cost rate is $3.00 per unit. The selling price of the product is $18.00. The estimated manufacturing overhead costs are $240,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $300,000 and actual machine hours are 50,000.
Using job costing, the 2020 actual indirect-cost rate is:
A) $6.00 per machine-hour B) $4.80 per machine-hour C) $7.50 per machine-hour D) $7.20 per machine-hour Answer: A
Explanation: A) $300,000 / 50,000 mh = $6.00
6 Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $19 per direct labor-hour. The following data are obtained from the accounting records for October 2020:
Direct materials
$410,000
Direct labor (3,400 hours @ $12/hour)
40,800
Indirect labor
21,000
Plant facility rent
51,000
Depreciation on plant machinery and equipment
42,000
Sales commissions
18,000
Administrative expenses
25,000
The actual amount of manufacturing overhead costs incurred in October 2020 totals:
A) $262,400
B) $114,000
C) $157,000
D) $118,000
Answer: B
Explanation: B) $21,000 + $51,000 + $42,000 = $114,000
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