## Pages

This Website Has Been Moved to a New Link

### Denny Corporation is considering replacing

Price: \$12.99

Managerial Accounting Final Part 1

1. Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost \$600,000 and would have a 10-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost \$20,000 per year to operate and maintain, but would save \$125,000 per year in labor and other costs. The old machine can be sold now for scrap for \$50,000. What percentage is the simple rate of return on the new machine rounded to the nearest tenth of a percent? (Ignore income taxes in this problem.)

2. Lounsberry Inc. regularly uses material O55P and currently has in stock 375 liters of the material, for which it paid \$2,700 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch \$6.35 per liter. New stocks of the material can be purchased on the open market for \$7.20 per liter, but it must be purchased in lots of 1,000 liters. You’ve been asked to determine the relevant cost of 900 liters of the material to be used in a job for a customer. What is the relevant cost of the 900 liters of material O55P?

3. Harwichport Company has a current ratio of 3.0 and an acid-test ratio of 2.8. Current assets equal \$210,000, of which \$5,000 consists of prepaid expenses. The remainder of current assets consists of cash, accounts receivable, marketable securities, and inventory. What is the amount of Harwichport Company’s inventory?

4. Tolla Company is estimating the following sales for the first six months of next year:
January \$350,000
February \$300,000
March \$320,000
April \$410,000
May \$450,000
June \$470,000
Sales at Tolla are normally collected as 70 percent in the month of sale, 25 percent in the month following the sale, and the remaining 5 percent being uncollectible. Also, customers paying in the month of sale are given a 2 percent discount. Based on this information, how much cash should Tolla expect to collect during the month of April?

5. Trauscht Corporation has provided the following data from its activity-based costing system:

Activity Cost Pool ……. Total Cost ………..Total Activity
Assembly ………………698,720……………44,000 machine-hours
Processing Orders ……..90,764……………..1,900 orders
Inspection ……………..119,535 ……………1,950 inspection hours
The company makes 360 units of product P23F a year, requiring a total of 725 machine-hours, 85 orders, and 45 inspection-hours per year. The product’s direct materials cost is \$42.30 per unit and its direct labor cost is \$14.55 per unit. The product sells for \$132.10 per unit. According to the activity-based costing system, what is the product margin for product P23F?

6. Williams Company’s direct labor cost is 30 percent of its conversion cost. If the manufacturing overhead for the last period was \$59,500 and the direct materials cost was \$37,000, what is the direct labor cost?

7. In a recent period, 13,000 units were produced, and there was a favorable labor efficiency variance of \$23,000. If 40,000 labor-hours were worked and the standard wage rate was \$13 per labor-hour, what would be the standard hours allowed per unit of output?

8. The balance in White Company’s work-in-process inventory account was \$15,000 on August 1 and \$18,000 on August 31. The company incurred \$30,000 in direct labor cost during August and requisitioned \$25,000 in raw materials (all direct material). If the sum of the debits to the manufacturing overhead account total \$28,000 for the month, and if the sum of the credits totaled \$30,000, then was Finished Goods debited or credited? By how much?

9. A company has provided the following data:
Sales 4,000 units
Sales price \$80 per unit
Variable cost \$50 per unit
Fixed cost \$30,000
If the dollar contribution margin per unit is increased by 10 percent, total fixed cost is decreased by 15 percent, and all other factors remain the same, will net operating income increase or decrease? By how much?

10. For the current year, Paxman Company incurred \$175,000 in actual manufacturing overhead cost. The manufacturing overhead account showed that overhead was overapplied in the amount of \$9,000 for the year. If the predetermined overhead rate was \$8.00 per direct labor-hour, how many hours were worked during the year?