Acct 505 Final Exam 100% Correct Answers

ACCT 505 Final Exam 100% Correct Answers

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Description:

1. (TCO C) Silver City, Inc., has collected the following operating information below for its current month’s activity. Using this information, prepare a flexible budget analysis to determine how well Silver City performed in terms of cost control.

Actual Costs Incurred

Static Budget

Activity level (in units)

5,250

5,178

Variable Costs:

Indirect materials

$24,182

$23,476

Utilities

$22,356

$22,674

Fixed Costs:

Administration

$63,450

$65,500

Rent

$65,317

$63,904

2. (TCO D) Globe Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by Globe to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor.

The Accounting Department provided the following detail regarding the annual cost to produce electronic hinges:

Direct materials

$54,000

Direct labor

60,000

Variable manufacturing overhead

36,000

Fixed manufacturing overhead

90,000

Total costs

$240,000

The Procurement Department provided the following supplier pricing:

Supplier A price per hinge

$11.00

Supplier B price per hinge

$10.75

Supplier C price per hinge

$10.50

The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet Globe’s technical specifications and quality requirements.

If Globe stops producing the part internally, 10% of the fixed manufacturing overhead would be eliminated.

Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage (in dollars) of accepting an outside supplier’s offer. Should the company buy the parts? If so, from which supplier?

3. (TCO E) Mesa Company produces a single product. Operating data for...