FINAL EXAM ACC/400 Accounting for Decision Making 1.) Trim Force Corp. had the following information in their accounting records:
FINAL EXAM
ACC/400
Accounting for Decision Making
- 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?
- 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.
- Record the year-end journal entry to close out the Manufacturing Overhead account to the Cost of Goods Sold account.
- Was manufacturing overhead underapplied or was it overapplied?
- 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:
| Cutting | Painting | |
| 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 |
- Record the transfer costs from the cutting department to the painting department in Aug.
- Record the transfer costs from the painting department to the finished goods inventory account in Aug.
- 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:
- Unit contribution margin.
- Units that must be sold to break even.
- Units that must be sold to earn an operating income of $500,000.
- 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%.
- 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.
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