ACCT 3070 UF Accounting The Advantages of Budgeting Questions

Name ________________________________________________________ 9000 Number _______________________
ACCT 3070 Exam 2 (100 points total)
Fall 2023
Complete all of the following instructions
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Print this first page.
Legibly write your first name, last name, and 9000 number above
Carefully read and sign the Academic Integrity Statement below.
Answer all exam questions beginning on page 2.
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Academic Integrity Statement
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that I have followed Xavier University of Louisiana’s policy on academic integrity as well as the specific
instructions for this exam.
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I will follow all instructions provided on this page and throughout the exam.
I understand that unacceptable submissions will receive a grade of zero points.
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this class as well as Academic Action taken (as explained in the university’s Academic Integrity policy)”
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Student’s Signature
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Date Signed
Formulas Provided:
Ending FG = Beginning FG + COGM – COGS
Ending Materials = Beginning Materials + purchases – Materials used
Ending WIP = Beginning WIP + DM used + DL + applied OH – COGM
MUV = (AQ – SQ)SP
MPV = (AP – SP)AQ
LEV = (AH – SH)SR
LRV = (AR – SR)SH
Exam Questions:
Multiple-Choice Questions. For each of the following multiple-choice questions, circle the letter of your
answer. Concept questions are worth 4 points each. Calculation questions are worth 6 points each. You must
show your work to be considered for partial credit for calculation questions.
1. (Concept) Which of the following is NOT an advantage of budgeting?
a. A budget provides resource information that can be used to improve decision making.
b. A budget provides organizational independence.
c. A budget aids in the use of resources and employees by setting a benchmark that can be
used for the subsequent evaluation of performance.
d. A budget forces managers to plan.
2. (Concept) Which of the following firms would make extensive use of a job-order costing system?
a. A canned foods manufacturer
b. A petroleum refinery
c. An automobile dealership
d. A dental and medical services company
3. (Concept) Normal costing uses which of these costs in work in process?
a. actual overhead
b. budgeted overhead
c. applied overhead
d. variable overhead
4. (Concept) Control can be defined as
a. a quantification of plans, stated in either physical or financial terms, or both.
b. a comprehensive financial plan.
c. identification of corporate objectives.
d. the process of setting standards, receiving feedback on actual performance, and taking
corrective action whenever actual performance deviates significantly from plan.
5. (Concept) Which of the following is the basis for all operating budgets and most financial budgets?
a. sales forecast
b. labor forecast
c. technical forecast
d. delivery forecast
6. (Concept) Which of the following refers to quantitative plans for the future, stated in physical
terms, financial terms, or both?
a. income statement
b. balance sheet
c. budget
d. statement of owner’s equity
7. (Concept) Which of the following factors would cause an unfavorable labor rate variance?
a. using less efficient workers than projected
b. using more highly skilled workers than expected
c. using more unskilled workers than planned
d. using higher quality materials than planned
8. (Concept) If the actual labor rate exceeds the standard labor rate and actual labor hours exceed the
number of hours allowed, then the labor rate variance and labor efficiency variance will be
a.
b.
c.
d.
Labor Rate Variance
Labor Efficiency Variance
Favorable
Unfavorable
Unfavorable
Favorable
Unfavorable
Unfavorable
Favorable
Favorable
9. (Concept) Which of the following is a difference between a job-order costing system and a processcosting system?
a. A job-order costing system is used only by manufacturing firms, while a process-costing
system is used by both manufacturing firms and service firms.
b. A job-order costing system uses cost sheets for assigning labor costs, while a processcosting system uses time tickets for assigning labor costs to processes.
c. A job-order costing system may have fewer work-in-process accounts than a processcosting system, but process costing is simpler and less expensive to operate.
d. A job-order costing system accumulates costs by department, while a process-costing
system accumulates costs by job.
10. (Calculation) Malkovich Company uses a standard costing system. The following information
pertains to direct materials for the month of July:
Standard price per lb.
Actual purchase price per lb.
Quantity used
Standard quantity allowed for actual output
Actual output
$18.00
$16.50
2,950 lbs.
3,000 lbs.
1,000 units
What is the standard quantity of direct materials per unit for Malkovich Company?
a. 3.00 lbs.
b. 3.25 lbs.
c. 3.10 lbs.
d. 3.50 lbs.
11. (Calculation) Colorado Corporation has the following sales forecast for the next quarter:
July
August
September
4,000 units
4,800 units
5,600 units
Sales totaled 3,200 units in June. The June ending finished goods inventory was 800 units. End-ofmonth finished goods inventory levels are planned to be equal to 30% of the next month’s planned
sales.
What is the planned ending inventory of finished goods for August?
a. 1,680 units
b. 3,200 units
c. 1,460 units
d. 1,200 units
Fill-in-the-Blank Problems. For each Calculation problem, put your final answer(s) on the blank line(s)
provided. Round to two decimal places, unless otherwise instructed in the problem. Full credit will be given for
complete answers that show the appropriate unit(s) of measure. Each Problem is worth 10-15 points total.
12. (15 points total) Lincoln Brothers Company makes jobs to customer order. Beginning balances of select
company accounts as of May 1 were:
Materials Inventory
$1,100
Work-in-Process Inventory
$3,400
Finished Goods Inventory
$2,620
Manufacturing Overhead Control
$-0During the month of May, the following transactions occurred:
a) Materials were purchased on account for $45,620.
b) Materials totaling $40,880 were requisitioned for use in producing various jobs.
c) Direct labor payroll for the month was $19,200 with an average wage of $12 per hour.
d) Actual overhead totaling $8,870 was incurred and paid in cash.
e) Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour.
f) Completed jobs costing $59,000 were transferred to Finished Goods.
g) Jobs costing $58,000 were sold on account for $73,850.
a. Required. Journalize the May transactions using the general journal provided.
b. Required. Calculate the ending balances of the following accounts: Materials Inventory, Work-inProcess Inventory, Finished Goods Inventory, and Manufacturing Overhead Control. Hint: You may
want to set up and use T-accounts.
13. (12 points total) Werner Company produces a milk chocolate candy bar. Recently, the company
adopted the following standards for each candy bar made:
Direct materials (9.60 oz. @ $0.20)
$1.92
Direct labor (0.07 hr. @ $18.00)
1.26
Standard prime cost
$3.18
During the first month of production, Werner had the following results:
• Bars produced: 105,000
• Ounces of direct materials purchased: 1,017,600 ounces at $0.23 per ounce
• There are no beginning or ending inventories of direct materials.
• Direct labor: 7,500 hours at $18.15
a. Required. Complete the following analysis for Direct Materials variances and label each type of
variance. Round all dollar amounts to the nearest dollar.
b. Required. Complete the following analysis for Direct Labor variances and label each type of variance.
Round all dollar amounts to the nearest dollar.
14. (15 points total) Perrin Company designs industrial prototypes for outside companies. Budgeted
overhead for the year was $315,000, and budgeted direct labor hours were 21,000. The average wage
rate for direct labor is expected to be $30 per hour. During June, Perrin Company worked on four jobs.
Data relating to these four jobs follow:
Job 39
Job 40
Job 41
Job 42
Beginning balance
$23,600
$32,000
$19,600
$1,800
Materials requisitioned
$21,300
$23,800
$13,600
$13,500
Direct labor cost
$12,400
$20,900
$8,250
$4,400
Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed;
Job 39 was sold on account at 115 percent of cost. Job 40 is the only job in Finished Goods Inventory
and will remain there until sale is finalized. Jobs 41 and 42 remain unfinished at the end of the month.
a. Required. Complete the following job cost sheet for Jobs 39 .
Job 39
Job 40
Balance, June 1
$
$
Direct Materials used
$
$
Direct Labor
$
$
Overhead applied
$
$
TOTAL
$
$
b. Required. The overhead rate based on direct labor cost is
c. Required. Journalize the completion of Jobs 39 and 40.
_______________________________
d. Required. Journalize the sale of Job 39.
e. Required. What is the gross profit on Job 39? ___________________________
f. Required. What is the gross margin on Job 39? ___________________________
15. (10 points total) Star Racks produces coat racks. First Quarter 2024 projected sales and quarterly
beginning and ending inventory data are as follows:
a.
The coat racks are molded and then welded. Each rack requires 4 pounds of metal, which costs $2.50
per pound. The beginning inventory of metal is 6,000 pounds. Star Racks wants to have 6,000 pounds
of metal in inventory at the end of the quarter. Each rack requires 45 minutes of direct labor time,
which is billed at $24 per hour.
Required. In proper format, prepare the Sales Budget report and Production Budget report for Quarter
1, Year 2024.