The managers of

company X are discussing ways to allocate the costs of support departments

(Support Department IT and Support Department HR) to production departments (Operating Department A and Operating Department B). The following information is available:

If Company X uses the step down method of allocating support department costs (beginning with Support Department IT),

the support department HR costs allocated to the Operating Department A are:

The following information is available for Company X:

• Units sold: 3600
• Units produced 3000
• Fixed manufacturing costs: $ 262909
• Budgeted production was 3200 units

What will

be the Production Volume Variance of Company X, in variable costing?

• Negative PVV = favourable adjustment to cogs (cogs decreases)
• Positive PVV = unfavourable adjustment to cogs (cogs increases)

Comment on the following article, extracted from the textbook (Horngren, 16th edition, page 159).

While this is an open-book exam, direct copying of content from the textbook or class notes will not earn points. Answers should demonstrate your understanding and application of the concepts.

Company X presents the following information:

• Beginning inventory of Finished goods: $68000
• Ending inventory of Finished goods: $34000
• Beginning inventory of Work in progress: $85000
• Ending inventory of Work in progress: $51000
• Direct materials used in production: $17000
• Direct Labor and overhead costs: $102000

Based on the information above, determine the cost of goods sold (COGS) for the period.

The following information is available for Company

X:

• Revenue

  = $400000

• Selling

  price = $40/unit

• Fixed costs = $200000

• Operating

  income before taxes = $100000

How much is the net income after taxes if the

company sells 20000 units, assuming an income tax rate of 20% ?

Company X manufactures a single product. For each unit, $3327 of direct material is used and there is $2000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $29 per direct manufacturing labor hour.

Calculate the profit earned on 50 units if each unit sells for $9000.

Company X produced 3000 units and presents the following information:

Manufacturing costs

• Variable cost: $150 /unit
• Fixed cost: $166 /unit

Inventory data

• Beginning inventory: 1200 units

• Ending inventory: 2200 units

If Company X uses an absorption costing system, what is the amount of fixed manufacturing costs expensed in the Income statement assuming no variances?

Company X manufactures and sells a single product. The following data is available for Year 1:

• Total revenue: $5000000
• Cost of merchandise: 25% of revenue
• Sales commissions: 5% of revenue
• Marketing variable expenses: 10% of revenue
• Annual fixed selling expenses $704944
• Annual fixed administrative expenses $1802915

The company’s margin of safety in terms of revenues is:

Comment on the following article, extracted from the textbook (Horngren, 16th edition, page 368).

While this is an open-book exam, direct copying of content from the textbook or class notes will not earn points. Answers should demonstrate your understanding and application of the concepts.

Comment on the following article, extracted from the textbook (Horngren, 16th edition, page 99). (hint: your comment should include 3 valid different points that relate the case to the topics covered in the course. You can relate directly to chapter 3, or choose topics covered from other chapters. Please note that we do not reward replications from the case or direct reproductions of the textbook theory concepts in your answer.)