€ 6.99

BUSS1030 Revision Mock Exam April 2017(15 questions)

Question 11Haverhill Products just completed job number 440. In addition to direct labour and direct materials cost, Haverhill allocated $450 of manufacturing overhead to the job. Please provide the journal entry for the allocation of overhead.Question 12Chambers Company sells glass vases at a wholesale price of $2.50 per unit. Variable cost is $1.75 per unit. Chambers' fixed costs are $6 500 per month. Chambers is currently selling 15 000 units per month. If Chambers wants to increase net profit by 20%, how many more units, over and above the current volume, must they sell? (Please round to nearest whole number.) a) 1 166b) 1 333c) 1 267d) 5 666e) None of the aboveQuestion 13Juan Martinez sells guitars for $600 with fixed monthly operating costs as follows:Rent and electricity and gas $960Wages and benefits $1 500Other $900Juan got confused when his accountant told him about contribution margin ratios, but he understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and that anything past that point was pure profit.Juan knows his breakeven point is now 8 units per month, but he is considering raising his price to $660. If he does so, how will that affect the breakeven point?a) It will stay the same.b) It will go up from 8 to 10 unitsc) It will go up from 8 to 12 unitsd) It will go down from 8 to 7 unitse) None of the above
Question 14Which of the following statements is CORRECT if total fixed costs decrease while the sales price per unit and variable costs per unit remain constant?a) The contribution margin increasesb) The breakeven point increasesc) The contribution margin decreasesd) The breakeven point decreasese) None of the aboveQuestion 15Halcyon Company just completed job number 10-B. See details below. Direct labour cost: $2 040 Direct materials cost: $90 Direct labour hours: 75Predetermined manufacturing overhead allocation rate: $34.00 per direct labour hourNumber of units of finished product: 200 unitsWhat was cost per unit of finished product? (Please round to nearest cent.)a) $26.40b) $46.80c) $25.50d) $23.40e) None of the above

Preview document (3 of 8 pages)

Revision / Mock Exam

The income statement and additional data of Eldridge Properties Ltd follow:
Eldridge Properties Ltd
Statement of Financial Performance
for the year ended 30 June 2012
Revenues
Sales revenue
$229,000
Dividend revenue
8,000
$237,000
Expenses
Costs of sales
$103,000
Salary expenses
45,000
Depreciation expense
28,000
Advertising expense
12,000
Interest expense
2,000
Income tax expense
9,000
199,000
Profit
$38,000

Additional data:
a. Beginning accounts receivable were $35,000 while closing accounts receivable were $20,000.
b. Payments to suppliers are the sum of cost of sales plus advertising expense.
c. Payments to employees are $1,000 more than salary expense.
d. Dividend revenue, interest expense and income tax expense equal their cash amounts.
e. Acquisition of non-current assets for cash in the amount of $101,000.
f.
Proceeds from sale of land total $24,000.
g. Proceeds from issue of ordinary shares total $30,000.
h. Payment of long-term bill payable is $15,000.
i.
Payment of dividends is $11,000.
j.
Cash balance at 30 June 2011 was $20,000; 30 June 2012 was $27,000.
Required
1. Prepare Eldridge Properties’ statement of cash flows for the year ended 30 June 2012.
Use the direct method.
2. Evaluate Eldridge’s cash flows for the year.
Eldridge Properties Ltd
Statement of Cash Flows
For the Year Ended 30 June 2012
Cash flows from operating activities:
Receipts:
Collections from customers
($229,000 + $35,000 - $20,000)
$ 244,000
Dividends received
8,000
Total cash receipts
252,000
Payments:
To suppliers ($103,000 + $12,000)
$(115,000)
To employees ($45,000 + $1,000)
(46,000)
For income tax
(9,000)
For interest
(2,000)
Total cash payments
(172,000)
Net cash from operating activities
80,000
Cash flows from investing activities:
Acquisition of non-assets
$(101,000)
Proceeds from sale of land
24,000
Net cash used in investing activities
(77,000)
Cash flows from financing activities:
Proceeds from issue of ordinary shares
$ 30,000
Payment of long-term bill payable
(15,000)
Payments of dividends
(11,000)
Net cash from financing activities
4,000
Net increase in cash
$ 7,000
Cash balance, 30 June 2011
20,000
Cash balance, 30 June 2012
$ 27,000

Req. 2
Evaluation:
Eldridge Properties’ cash flows look fairly strong. Operations are the main source
of cash. The company is investing in new non-current assets without having to
borrow. It was able to issue shares and pay off a long-term bill payable — both
financing transactions. All of these signs are favourable.
Question 1
The records at Smith Company show Job. No. 110 charged with $11 000 of direct materials and $12 500 of
direct labour. Smith Company allocates manufacturing overhead at 85% of direct labour cost. What is the total cost of Job No. 110? a) $20 625
b) $34 125
c) $22 500
d) $21 625
e) None of the above $11 000 + $12 500 + ($12 500 × 85%) = $34 125
Question 2
Axelrod Company has fixed costs of $250 000. Highest production volume this year was in January when there
were 100 000 units produced and total costs of $550 000. In June, the company produced only 60 000 units.
How much was the total cost in June? a) $378 000
b) $430 000
c) $330 000
d) $414 500
e) None of the above
January total variable costs
$550 000 - $250 000 = $300 000
Variable costs per unit
$300 000/100 000 = $3.00
June total variable costs
60 000 × $3.00 = $180 000
June total fixed and variable costs
$180 000 + $250 000 = $430 000
Question 3
Lightfoot Company sells its product for $55 with variable costs of $30 per unit. Total fixed costs are $25 000.
What will be the effect on the breakeven point if variable costs increase by 10% due to an increase in the cost of
direct materials? a) It will increase by approximately 136 units.
b) It will increase by approximately 242 units.
c) It will decrease by approximately 136 units.
d) It will decrease by approximately 242 units.
e) None of the above
Original break-even
$25 000/($55 - $30) = 1 000
New break-even
$25 000/($55 - $33) = 1 136
Increase
1 136 - 1 000 = 136