ACC 400 Final Exam (Written Type)
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1.) Trim Force Corp. had the following information in their accounting records:
Work in process inventory, beginning balance $50,000
Cost of direct materials used $350,000
Direct labor cost applied to production $200,000
Cost of finished goods manufactured $750,000
Manufacturing overhead during production was $250,000. What was the work in process inventory on hand at the end of the year?
2.) Walsh Corp. uses direct labor hours to determine their applied manufacturing overhead. They use a rate of $30 per direct labor hour. During the production period, company employees worked 10,000 direct labor hours, and had actual overhead costs of $305,000.
a.) Record the year-end journal entry to close out the Manufacturing Overhead account to the Cost of Goods Sold account.
b.) Was manufacturing overhead underapplied or was it overapplied?
3.) Sorin Corp. uses process costing for its two production departments: Cutting and Painting. The company’s manufacturing information for the month of August is provided below:
Beginning work in process $1,000 $1,200
Costs transferred in ? ?
Costs incurred in Aug $3,500 $5,000
Ending work in process $2,000 $2,500
a.) Record the transfer costs from the cutting department to the painting department in Aug.
b.) Record the transfer costs from the painting department to the finished goods inventory account in Aug.
4.) Badin Corp. has the following information about its most popular product line:
Sales price per unit $50
Variable cost per unit $25
Total fixed manufacturing & overhead costs $400,000
Compute the following:
a.) Unit contribution margin.
b.) Units that must be sold to break even.
c.) Units that must be sold to earn an operating income of $500,000.
5.) Complete Dillon Corp.’s flexible budget for 75,000 units using the information listed below:
25,000 Units 50,000 Units 75,000 Units
Sales $375,000 $750,000
Cost of Goods Sold $250,000 $500,000
Gross Profit on Sales $125,000 $250,000
Operating expenses ($10,000 of it is fixed) $35,000 $60,000
Operating Income $90,000 $190,000
Income Taxes (30% of operating income) $27,000 $57,000
Net Income $63,000 $133,000
Assume that cost of goods sold and any variable operating expenses vary directly with sales and that income taxes remain constant at 30%.
6.) Del Sol Healthcare is considering two capital investment proposals. The information for both projects is listed below:
Proposal #1 Proposal #2
Cost of the investment $250,000 $300,000
Estimated salvage value $25,000 $30,000
Average estimated net income $50,000 $60,000
Calculate the return on average investment for both proposals and discuss which one would be the best option for investment.