MANAGERIAL ACCOUNTING PROJECT

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1 MANAGERIAL ACCOUNTING PROJECT From: MR. HORTENSI I am available to help you, make sure you let me know if you need help. To: MANAGERIAL ACCOUNTING STUDENTS. This project is an excellent way to summarize the entire MANAGERIAL accounting course. Hopefully, you will have the opportunity to learn by applying what you have learned in the classroom and solve for the answers. This project is a selection of one small problem from every chapter. It will test your accounting knowledge and it will assess if you were able to master the main objectives of this accounting course. Instructions: PLEASE DO NOT PROCRASTINATE AND TAKE FULL ADVANTAGE OF THIS PROJECT. NO PARTIAL CREDIT AFTER DUE DATE. BE CREATIVE AND PROFESSIONAL. USE ALL RESOURCES AVAILABLE, BUT MAKE SURE YOU DO YOUR OWN WORK. If I find that two projects are the same, both students will get an F. I ENCOURAGE YOU TO USE EXCEL (FORMULAS, FUNCTIONS, ETC.) TAKE THIS PROJECT AS A LEARNING OPPORTUNITY TO LEARN AND TO BE PREPARED FOR THE FINAL EXAM. YOU HAVE THE FREEDOM TO DO IT BY HAND OR USING EXCEL. NEATNESS WILL COUNT BE PROFESSIONAL DUE DATE: ON OR BEFORE DEC 12 TH. The goal is for you to be able to do the entire project and have the opportunity to verify/check your answers (before you submit it). That way not only you get full CREDIT, but you will also be better prepared for the final exam. 1

2 INAL PROJECT - ACG 2071 roblem 1. The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year: Work in Process Balance, July 1 53,200 Direct materials 147,000 Direct labor 120,000 Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200. Prepare the journal entries to record (1) the application of factory overhead to production during July and (2) the jobs completed during July. What was the balance of the factory overhead account on July 31? (c) Was factory overhead overapplied or underapplied on July 31? (d) Determine the cost of the unfinished jobs on July Six selected transactions for the current month are indicated by letters in the following T accounts in a job order cost accounting system: Materials Work in Process (d) Wages Payable (c) (f) Factory Overhead Finished Goods (c) (d) (e) (f) (f) Cost of Goods Sold (e) (f) Describe each of the six transactions. 3. Chang Co. manufacturers its products in a continuous process involving two departments, Machining and Assembly. Present entries to record the following selected transactions related to production during June: Materials purchased on account, $225,000. Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials; Assembly, $4,900 indirect materials. (c) Direct labor used by Machining, $23,000, Assembly, $47, /30/2003 Confidential 2

3 (d) Depreciation expenses: Machining, $2,000; Assembly, $8,000. (e) Factory overhead applied: Machining, $9,700; Assembly, $11,300 (f) Machining Department transferred $98,300 to Assembly Department; Assembly Department transferred $83,400 to finished goods. (g) Cost of goods sold, $72, Calculate the following: If Bart Company's budgeted sales are $600,000, fixed costs are $250,000, and variable costs are $390,000, what is the budgeted contribution margin ratio? If the contribution margin ratio is 25% for Gray Company, sales are $800,000, and fixed costs are $140,000, what is the operating profit? 5. For the past year, Chandler Company had fixed costs of $70,000, unit variable costs of $32, and a unit selling price of $40. For the coming year, no changes are expected in revenues and costs, except that property taxes are expected to increase by $10,000. Determine the break-even sales (units) for the past year and the coming year. 6. If a company with a break-even point at $700,000 in sales revenue had fixed costs of $262,500, variable costs of $500,000, and actual sales of $1,000,000, determine the margin of safety expressed in dollars, the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d) the operating income. 7. Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows: August $100,000 September 185,000 October 225,000 The company expects to sell 40% of its merchandise for cash. Of the sales on account, one third are expected to be collected in the month of the sale and the remainder in the following month. Prepare a schedule indicating cash collections of accounts receivable for August, September, and October. 8. Standard costs and actual costs incurred for the manufacture of 8,000 units of product were as follows: Standard Costs Actual Costs Direct materials: 8,000 $ ,750 $30.20 Direct labor: 10,000 $ ,250 $38.00 Determine the quantity variance, price variance, and total direct materials cost variance; the time variance, rate variance, and total direct labor cost variance. 10/30/2003 Confidential 3

4 9. The sales, income from operations, and invested assets for each division of Winston Company are as follows: Income from Operations Invested Assets Sales Division C $4,000,000 $410,000 $3,500,000 Division D 3,500, ,000 4,000,000 Division E 2,250, ,000 7,000,000 Management has established a minimum rate of return for invested assets of 10%. Determine the residual income for each division. Based on residual income, which of the divisions is the most profitable? 10. On January 1 of the current year, C. F. Hartley Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January: Units Production 50,000 Sales ($18 per unit) 42,000 Inventory, January 31 8,000 ====== Total Cost or Expense Manufacturing costs: Variable $575,000 Fixed 75,000 Total $650,000 ======== Selling and administrative expenses: Variable $ 33,600 Fixed 10,500 Total $ 44,100 ======== Prepare an income statement in accordance with absorption costing. Prepare an income statement in accordance with variable costing. 10/30/2003 Confidential 4

5 10/30/2003 Confidential 5

Beginning Balance Ending Balance Raw materials... $22,000 $25,000 Work in process... $52,000 $34,000 Finished goods...

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