Wilmington University
BAC 301 - Cost Accounting I
Test - Chapters 1, 2 and 3

Problem #1

Complete a performance report for the month of May, 2007 for the Daily Bulletin, a regional newspaper showing four columns:

1. Actual results
2. Budgeted amount
3. Difference: actual result minus budgeted amount
4. Difference as a percentage of budged amount

Use the following data:

Adverting pages sold: 910
Budgeting advertising pages 900
Advertising revenue $4,368,000
Budget advertising revenue $4,410,000

Give the variances for:
1. Number of pages as a dollar and percentage.
2. Total advertising revenue as a dollar and percentage.
3. Average rate per page as a dollar and percentage.

Does the report indicate any cause of managerial investigation?

Problem #2

Evans Inc. had the following activities during the year.

Direct materials:
Beginning inventory $ 40,000
Purchases 123,200
Ending inventory 20,800
Direct manufacturing labor 32,000
Manufacturing overhead 24,000
Beginning work in process inventory 1,600
Ending work in process inventory 8,000
Beginning finished goods inventory 48,000
Ending finished goods inventory 32,000

1. What is the cost of direct materials used during the year
2. What is the cost of goods manufacturing for the year
3. What is the cost of goods sold for the year
4. What amount of prime costs was added to production during the year
5. What amount of conversion costs was added to production during the year
 
Problem #3

Ballpark Concessions currently sells hot dogs. During a typical month, the stand reports a profit of $9,000 with sales of $50,000, fixed costs of $21,000, and variable costs of .64 per hot dog.

Next year the company plans to start selling nachos for $3 per unit. Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808. Initial sales of nachos should total 5,000 units. Most of the nacho sales are anticipated to come from current hot dog purchasers, therefore, monthly sales of hot dogs are expected to decline to $20,000.

After the first year of nacho sales, the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month.

1. Determine the monthly breakeven sales in dollars before adding nachos.
2. Determine the monthly breakeven sales during the first year of nacho sales, assuming a constant sales mix of 1 hotdog and 2 units of nachos.