Advanced Managerial Accounting Winter 2014 Mid-Term Exam Directions: Answer all the questions….
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Advanced Managerial
Accounting
Winter
2014
Mid-Term
Exam
Directions: Answer all the questions. Please submit your work in Word or PDF
formats only. You can submit an
Excel file to support calculations, but please “cut and paste†your solutions
into the Word or PDF file. Be sure to show how you did your calculations. Also,
please be sure to include your name at the top of the first page of your file.You
can use any sources you wish, except for other people. Please cite any sources
you use. There is no time limit to complete the exam, other than it is due at 11:59
PM Eastern on Sunday, February 9th, 2014. The exam will count 30 percent
toward your course grade. The point value for each question is noted.
Question #1 (16
points)
List and
describe
the four standards in the IMA’s Statement of Ethical Practice. As part of your
answer, be sure to provide an example of an action that violates the standard.
Question #2 (14 points)
Consider the following information,
prepared based on a monthly capacity of 50,000 units:
Category
Cost per Unit
Variable
manufacturing costs
$12.00
Fixed
manufacturing costs
$1.00
Variable
marketing costs
$3.00
Fixed
marketing costs
$2.00
Capacity cannot
be added in the short run and the firm currently sells the product for $20 per
unit.
Consider each of
these scenarios independent of each other.
a)
The company is currently producing 50,000 units per month. A potential customer
has contacted the firm and offered to purchase 10,000 units this month only.
The customer is willing to pay $18 per unit. Since the potential customer
approached the firm, there will be no variable marketing costs incurred. Should
the company accept the special order? Why or why not? Be specific.
b)
The company is currently producing 40,000 units per month. A potential customer
has contacted the firm and offered to purchase 10,000 units this month only. Since
the potential customer approached the firm, there will be no variable marketing
costs incurred. What is the minimum amount that the firm should be willing to
accept for this order?
Question #3 (44
points)
Consider the following information:
Q1
Q2
Q3
Beginning
inventory (units)
0
J
1,100
Budgeted
units to be produced
20,000
20,000
20,000
Actual
units produced
19,000
20,600
Q
Units
sold
A
20,600
R
Variable
manufacturing costs per unit produced
$150
$150
$150
Variable
marketing costs per unit sold
$20
$20
$20
Budgeted
fixed manufacturing costs
$500,000
$500,000
$500,000
Fixed
marketing costs
$200,000
$200,000
$200,000
Selling
price per unit
$300
$300
$300
Variable
costing operating income
B
$1,978,000
S
Absorption
costing operating income
C
K
$1,859,000
Variable
costing beginning inventory ($)
D
$165,000
T
Absorption
costing beginning inventory ($)
E
L
U
Variable
costing ending inventory ($)
F
M
$75,000
Absorption
costing ending inventory ($)
G
N
$87,500
PVV
H
O
V
Allocated
fixed manufacturing costs
I
P
$480,000
There are no
price, efficiency, or spending variances, and any production-volume variance is
directly written off to cost of goods in the quarter in which it occurs.
Complete
the missing figures from the above Table. You
need to show your work in order to be eligible for partial credit.
Q1
Q2
Q3
A
J
Q
B
K
R
C
L
S
D
M
T
E
N
U
F
O
V
G
P
H
I
Question #4 (12
points)
a)
What is the goal of the EOQ model?
b)
Why does a firm hold “safety stock?â€
c)
What costs are a firm trying to balance when it decides on how much safety
stock to hold?
Question #5 (9
points)
What
are some accounting changes that a firm should make if it decides to implement a
JIT inventory management system? Why are those changes necessary? Be specific!
Question #6 (5
points)
What
is the justification for using backflush costing? Be specific!
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