Mba515 Midterm

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MBA515 Midterm Exam
Grading Summary
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.| Date Taken:| 11/26/2012| Time Spent:| 1 h , 53 min , 23 secs|

Points Received:| 187.50 / 270  (69.4%)|
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Question Type:| # Of Questions:| # Correct:|
Essay| 6| N/A|
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Grade Details - All Questions|

 1.| Question :| Schlag Inc. expects its sales in January to be $111,000. The company's contribution margin ratio is 65% and its fixed monthly expenses are $64,000.

Required:

Estimate the company's net operating income for January, assuming that the fixed monthly expenses do not change. Show your work! |
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 | Student Answer:|  | Construct the Variable Costing Income Statement Year 1 Sales $111,000 Variable expenses: Variable cost of goods sold Variable selling and administrative expenses - 0 Contribution margin (.65*111000) - 72150 Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses - $64,000 Net operating income = $8,150| |

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 | Points Received:| 45 of 45|
 | Comments:| |
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 2.| Question :| Babb Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:

                       Beginning inventory      Ending inventory   Raw materials        $11,000                    $15,000  Work in process     $32,000                     $14,000  Finished goods     $108,000                    $123,000 

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 17,000 machine-hours and incur $272,000 in manufacturing overhead cost. The following transactions were recorded for the year:

·Raw materials were purchased, $416,000.
·Raw materials were requisitioned for use in production, $412,000 $(376,000 direct and $36,000 indirect). ·The following employee costs were incurred: direct labor, $330,000; indirect labor, $69,000; and administrative salaries, $157,000. ·Selling costs, $113,000.

·Factory utility costs, $29,000.
·Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. ·Manufacturing overhead was applied to jobs. The actual level of activity for the year was 15,000 machine-hours. · Sales for the year totaled $1,282,000.

Required:

a. Prepare a schedule of cost of goods manufactured in good form. b. Was the overhead underapplied or overapplied? By how much? c. Prepare an income statement for the year in good form. The company closes any underapplied or overapplied manufacturing overhead to Cost of Goods Sold. |

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 | Points Received:| 11.25 of 45|
 | Comments:| a. Schedule of cost of goods manufactured a. Direct materials Raw materials inventory, beg $ 11,000 Add: Purchases of raw materials 416,000 Total raw materials available 427,000 Deduct: Raw materials inventory, end 15,000 Raw materials used in Production 412,000 Deduct: Indirect materials included in Manufacturing Overhead 36,000 376,000 Direct Labor 330,000 Manufacturing Overhead applied to Work in Process 240,000 Total manufacturing costs 946,000 Add: Beg work in process inventory 32,000 Deduct: End work in process inventory 14,000 Cost of goods manufactured $946,000 b. Overhead was underapplied by $8,000. Actual was $248,000 and applied was $240,000. c. Income Statement Sales $1,282,000 Cost of Goods Sold 957,000 Gross Margin 325,000 Selling & Administrative Expenses Salaries Expense 157,000 Depreciation Expense 7,000 Selling expense 113,000 277,000 Net operating income $48,000|

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 3.| Question :| The following information summarizes the company's cost structure:

Variable cost per unit-------------------    $1.30...
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