# Acc406 Final Exam

Pages: 10 (2030 words) Published: April 3, 2013
Question # 1 (4 marks)

Reardon Inc. publishes accounting textbooks and expects to sell 6,000 during the coming year. The average selling price per textbook is \$75. Projected costs for 6,000 textbooks are as follows:

Direct Materials\$94,500
Direct Labour\$45,000

*Total Fixed Manufacturing Overhead increases to \$128,000 for production levels over 7500 textbooks

Required:

1) Determine total variable manufacturing costs to produce one textbook. 2) Determine total manufacturing costs to produce 7,000 textbooks. 3) What is the total fixed manufacturing costs to produce 6,000 textbooks. 4) What is the total manufacturing costs to produce 9,000 textbooks.

Question # 2 (8 marks)

Horizon Products Incorporated produces and sells yoga related training products, how to videotapes, a basic equipment set, and an advanced yoga handbook.

Last year Horizon sold 10,000 videos, 5,000 equipment sets, and 2,000 handbooks.

Information on the three products is as follows:

VideotapeEquipment SetHandbook

Price (per unit) \$12 \$15 \$9
Variable cost (unit) 4 6 6.50 Total fixed cost\$69,420

Required:

1) What is the sales mix of videotapes, equipment sets, and handbooks? What is the package contribution margin?
2) Compute the breakeven quantity of each product.
3) Prepare an Income Statement for Horizon for the previous year. 4) What is the overall contribution margin ratio? What is the overall breakeven sales revenue? 5) Compute the Margin of Safety for the previous year.

Question # 3 (9 marks)

Part # 1 (4 marks)

Kyle Fricker Inc. has set the following standards for one unit of beer production.

Direct Material\$36/unitDirect Labour\$63/unit

Quantity4 pounds/unitQuantity3 hours/unit
Price\$9 per poundRate\$21 per hour

Actual costs incurred in the production of 2,000 units were as follows:

Direct Materials\$72,540 (9.30 per pound)
Direct Labour\$115,206 (21.10 per hour)
All material used were purchased during the period.

Required:
Compute the following variances and indicate whether each is favorable or unfavorable: Direct Material Price Variance, Direct Material Quantity Variance, Direct Labour Rate Variance, Direct Labour Efficiency Variance.

Part # 2 (5 marks)
The following data pertain to Terrific Taffy Ltd.

Standards

Standard Variable Overhead Rate \$9.00 per machine hour.
Standard Quantity of machine hours4 hours per case of taffy. Budgeted Fixed Overhead \$120,000.
Budgeted Output 10,000 cases

Actual results were as follows:

Actual output 9,000 cases

Actual machine time 40,500 machine hours

Required:
Calculate the following variances and state if favorable or unfavorable: Variable Manufacturing Overhead Spending Variance, Variable Manufacturing Overhead Efficiency Variance, Fixed Manufacturing Overhead Spending Variance, Fixed Manufacturing Overhead Denominator (Volume) Variance.

Question # 4 (3 marks)

Maureen owns and operates a café and her fixed costs are \$10,500 per month. Luncheons and dinners are served. The average total bill excluding tax and tips is \$9.00 per customer. Maureen’s present variable costs average \$4.80 per meal.

Required:

a) How many meals must be served to attain a profit before taxes of \$4,200 per month? b) Maureen’s rent and other fixed costs rise to a total of \$14,700 per month. Assume that variable costs also rise to \$5.75 per meal. If Maureen increases her average price to \$11.00, how many meals must she now serve to make \$4,200 profit per month? c) Maureen’s...