3346-midterm-summer-2021

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3346

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Studocu is not sponsored or endorsed by any college or university 3346 Midterm Summer 2021 Cost Accounting (University of Ottawa) Studocu is not sponsored or endorsed by any college or university 3346 Midterm Summer 2021 Cost Accounting (University of Ottawa) Downloaded by Ly Ch (eh.modeling@gmail.com) lOMoARcPSD|19675541

Mid-Term Exam ADM 3346 A Summer 2021 Cost Accounting Professor: John Jarecsni Duration: 180 minutes (3 hours) Statement of Academic Integrity The School of Management does not condone academic fraud, an act by a student that may result in a false academic evaluation of that student or of another student. Without limiting the generality of this definition, academic fraud occurs when a student commits any of the following offences: plagiarism or cheating of any kind, use of books, notes, mathematical tables, dictionaries or other study aid unless an explicit written note to the contrary appears on the exam, to have in his/her possession cameras, radios (radios with headsets), tape recorders, pagers, cell phones, or any other communication device which has not been previously authorized in writing Statement to be signed by the student: I have read the text on academic integrity and I pledge not to have committed or attempted to commit academic fraud in this examination. Signed: not required to sign _________________ Please email me at John.Jarecsni@telfer.uottawa.ca if you have any questions during the exam. During the exam announcements may be made through Brightspace in case there any clarification or corrections. You can submit your exam in Excel or Word or pdf. You can hand write answers and submit them as either pdf or pictures embedded in Word. If submitted different file types, then please include the question number in the file name. This is an open-book exam. Please do not discuss the exam with your classmates. Midterm Exam ADM3346 Summer 2021 Page 1 of 4 Downloaded by Ly Ch (eh.modeling@gmail.com) lOMoARcPSD|19675541

Question 1 (6 marks) Break Even Corp has the following info: 2019 2020 Beginning Inventory (in units) 20 10 Actual Sales (in units) 400 405 Budgeted production (in units) 400 410 Budgeted fixed manufacturing costs (in $) 8,000 8,610 Operating Income using Variable Costing (in $) $ 0 $ 0 In 2018, budgeted manufacturing costs were $55.50 per unit ($35.00 variable and $20.50 fixed costs). In all years, budgeted fixed manufacturing costs = actual fixed manufacturing costs Requireed: 1. What is net income (loss) using absorption costing for 2019 2. How much more (less) net income would be generated based on Variable Costing if an additional unit was produced in 2020. 3. How much more (less) net income would be generated based on Absorption Costing if an additional unit was produced in 2020. 4. Why would the production manager want to produce extra units if Absorption Costing was used in 2020, even if it is likely that the additional units will be excess of market demand and will never be sold. Question 2 (8 marks) Beginning of Year End of Year Raw Material Inventory $ 190 $ 200 Work-in-Progress Inventory 210 165 Finished Goods Inventory 220 125 Budget Actual Machine Hours 100 hours 90 hours Overhead $ 400 $375 Direct Labour Costs $ 110 $ 95 Direct Labour Hours 7 hours 8 hours Material Purchases $ 170 $180 All materials are direct materials. There are no indirect materials. Overhead is allocated based on Machine Hours. Under/over applied overhead is allocated to COGS. Required: A. Calculate Cost of Goods Manufactured and Cost of Goods Sold based on Normal Costing. B. In your own words, describe how Normal Costing differs from Actual Costing. C. Why would a manager prefer Normal Costing over Actual Costing? Midterm Exam ADM3346 Summer 2021 Page 2 of 4 Downloaded by Ly Ch (eh.modeling@gmail.com) lOMoARcPSD|19675541

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Question 3 (4 marks) Cross Distribution Company uses three different independent variables (number of orders, weight of orders, number of letters in delivery address) in three different equations to evaluate costs of the packaging department. The most recent results of the two regressions are as follows: Number of orders: Variable Coefficient Standard Error t -Value Constant $854.50 $571.02 2.10 Predictor Variable $12.40 $1.47 7.12 r 2 = 0.87 Weight of orders: Variable Coefficient Standard Error t -Value Constant $1,642.54 $705.33 1.50 Predictor Variable $9.80 $2.10 4.65 r 2 = 0.72 Number of letters in delivery address: Variable Coefficient Standard Error t -Value Constant $2,143.30 $444.21 1.60 Predictor Variable $(11.80) $3.10 5.32 r 2 = 0.92 Required: a. What are the estimating equations for each cost driver? b. Which cost driver is best and why? Question 4 (6 marks) The food and beverage manager of the Glitz Hotel just got a great deal on beverages for the bar. Instead of buying large 5L containers for $25 each (the equivalent of $2.50 per 500ml), he was instead able to purchase 12,000 cans (1,000 cases of 12-packs) of 500ml cans for $26,640. Beverages are served in 500ml servings. Usually, Glitz sells 800 beverages over a weekend, but they actually went through 900 cans this past weekend. However, out of the 900 cans served to customers, 50 customers had to be refunded due to problems with the quality of the beverage – this meant the actual number of sales was only 850 beverages. Direct labour costs are driven by the number of beverages served. A typical weekend requires four servers each working two 8-hour shifts for a total of 64 hours. Servers are usually paid $12/hour. At the end of the weekend, actual labour costs were $898 for 75 hours. Required: A Calculate the following variances: Material rate Material quantity Direct Labour rate Direct labour efficiency B Briefly explain the variances to the hotel manager, assuming that the variances are inter- related. Assess the special purchase and identify other factors that should be considered (ie. The assessment should be both quantitative and qualitative). Midterm Exam ADM3346 Summer 2021 Page 3 of 4 Downloaded by Ly Ch (eh.modeling@gmail.com) lOMoARcPSD|19675541

Question 5 (6 marks) McTavish Transportation loads Intermodal containers onto railcars. Each railcar can accommodate a maximum size load of 60 feet long x 8 feet wide x 8 feet high. McTavish only loads three sized of intermodal containers: Short Standard Long Container size (L x W x H) (in feet) 10 x 8 x 8 20 x 8 x 8 55 x 8 x 8 Price charged to customer: $ 520 $ 900 $ 2,100 Variable cost per container 280 300 400 McTavish currently has space available on 10,000 railcars. No additional railcars are available. Fixed costs related to loading and the 10,000 railcars is $8,000,000 Various customers have the following containers to be loaded. Total demand is as follows: Short: 36,000 containers Standard: 18,000 containers Long: 3,000 containers McTavish can pick and choose which containers are loaded and which customers to accept. Required: A. How many rail cars would be required to satisfy all of the current demand? B. How many of each container type should McTavish load? Question 6 (6 marks) Arctic Pools installs three types of pools: in-ground, above-ground and hot- tubs. Installation costs and time estimates are as follows: Total Estmated Costs Total Estmated Sales Assembly $1,740,000 In-Ground 300 pools Site Preparaton 120,000 Above-Ground 200 pools Excavaton 480,000 Hot-Tub 100 pools Total Costs $2,340,000 Total Pools 600 pools Average installaton tme per pool In-Ground Above-Ground Hot-Tub Excavaton (in backhoe hours) 8 0 0 Site Preparaton (in prep hours) 10 10 10 Assembly (in assembly hours) 180 10 20 Total hours 198 20 30 Required: Using Actvity Based Costng, what is the cost to install each type of pool? Midterm Exam ADM3346 Summer 2021 Page 4 of 4 Downloaded by Ly Ch (eh.modeling@gmail.com) lOMoARcPSD|19675541