ACCT 505 Devry Course Tutorial (Tutorialoutlet)
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# ACCT 505 Devry Course Tutorial (Tutorialoutlet)

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## ACCT 505 Week 7 Capital Budgeting Course Project (Devry)

Clark Paints: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost \$200,000 with a disposal value of \$40,000 and would be able to produce 5,500,000 cans over the life of the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of the next five years.

The company would hire three new employees. These three individuals would be full-time employees working 2,000 hours per year and earning \$12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages in addition to \$2,500 of health benefits.

It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted.

It is expected that cans would cost 45¢ per can if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be affected by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased.

Required:

1. Based on the above information and using Excel, calculate the following items for this proposed equipment purchase:

Annual cash flows over the expected life of the equipment Payback period Annual rate of return Net present value Internal rate of return

2. Would you recommend the acceptance of this proposal? Why or why not. Prepare a short double spaced Word paper elaborating and supporting your answer.

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## ACCT 505 Week 1 Case Study (Devry)

Top Switch Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout the state of Tennessee affected Top Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed.

Before the unfortunate incident, recovery specialists cleaned the buildings. The company controller is very nervous and anxious to recover whatever records he can to support the insurance claim for the destroyed inventory. After consulting with the cost accountant, they decide to retrieve the previous year’s annual report for the beginning inventory numbers. In addition, they also agreed that they need first quarter cost data.

The cost accountant was working on the first quarter results before the storm hit, and to his surprise, the report was still in his desk drawer. After reviewing the data , the information shows the following information: Material purchases were \$ 325,000; Direct Labor was \$ 220,000. Further discussions between the controller and the cost accountant revealed that sales were \$ 1,350,000 and the gross margin was 30% of sales. The cost accountant also discovered, while sifting through the information, that cost of goods available for sale was \$ 1,020,000 at cost. While assessing the damage, the controller determined that the prime costs were \$ 545,000 up to the time of the damage and that manufacturing overhead is 65% of conversion cost. The cost accountant is not sure about all of this, but he decides to see what he can do with the information.

The beginning inventory numbers are as follows:

Raw Materials, \$ 41,000
Work in Process, \$ 56,000
Finished Goods, \$ 35,000

Required:

Determine the amount of cost in the Raw Materials, Work in Process, and Finished Goods Inventory as of the date of the storm. ( Hint: You may wish to reconstruct the various schedules and statements that would have been affected by the company’s accounts during the period.)

Grading Rubric for Case Study I:

Category

Points

%

Description

Documentation &

Formatting

10

22%

Worksheet will be done in Excel and will contain formulas to receive maximum credit

Organization and Cohesiveness

15

33%

Calculations for all parts should be organized and correctly labeled.

Content

20

45%

A quality case study will have all required work completed and will be correct.

Total

45

100%

A quality project will meet or exceed all of the above requirements.

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## ACCT 505 Entire Course (Devry)

ACCT 505 Week 1-7 All Discussion Questions

ACCT 505 Week 1 Case Study

ACCT 505 Week 2 Quiz Job Order and Process Costing Systems

ACCT 505 Week 3 Case Study II

ACCT 505 Week 4 Midterm Exam

ACCT 505 Week 5 Measuring Performance - Course Project A

ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for Decisions

ACCT 505 Week 7 Capital Budgeting Course Project

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## ACCT 505 Week 4 Midterm Exam (Devry)

1.

Question :

(TCO A) Wages paid to an assembly line worker in a factory are a

2.

Question :

(TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n)

3.

Question :

(TCO A) Depreciation of office buildings and office equipment is also known as

4.

Question :

(TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following?

5.

Question :

(TCO F) Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.

II. Overhead application may be made in a single application at the time of completion of the job.

III. Overhead application should be made to any job not completed at year end in order to properly value the work in process inventory.

6.

Question :

(TCO F) A job-order cost system is employed in those situations where

7.

Question :

(TCO F) The FIFO method only provides a major advantage over the weighted-average method in that

8.

Question :

(TCO B) The contribution margin ratio always decreases when the

9.

Question :

(TCO B) Which of the following would not affect the break-even point?

10.

Question :

(TCO E) In an income statement prepared using the variable costing method, variable selling and administrative expenses would

1.

Question :

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year:

Sales.................................................................................

\$910

Purchases of raw materials................................................

\$225

Direct labor.......................................................................

\$245

\$265

\$150

Selling expenses................................................................

\$140

Raw materials inventory, beginning.....................................

\$15

Raw materials inventory, ending.........................................

\$45

Work-in-process inventory, beginning.................................

\$20

Work-in-process inventory, ending.....................................

\$55

Finished goods inventory, beginning...................................

\$100

Finished goods inventory, ending.......................................

\$135

Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

2.

Question :

(TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

3.

Question :

(TCO B) A tile manufacturer has supplied the following data:

Boxes of tile produced and sold 625,000

Sales revenue \$2,975,000

Variable manufacturing expense \$1,720,000

Fixed manufacturing expense \$790,000

Variable selling and admin expense \$152,000

Fixed selling and admin expense \$133,000

Net operating income \$180,000

Required:

a. Calculate the company's unit contribution margin.

b. Calculate the company's unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

4.

Question :

(TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

\$ 125

Units in beginning inventory

600

Units oroduced

3000

Units sold

3500

Units in ending inventory

100

Variable costs per unit:

Direct materials

\$ 15

Direct labor

\$ 50

\$ 8

\$ 12

Fixed costs:

\$ 75,000

\$ 20,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income

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## ACCT 505 Week 1-7 All Discussion Questions (Devry)

Week 1DQ 1 Cost Terms, Classifications, and Behavior

Week 1DQ 2 Research and Application

Week 2DQ 1 Job Order and Process Costing Systems

Week 2DQ 2 Research and Application

Week 3DQ 1 Variable Costing and CVP Concepts

Week 3DQ 2 Research and Application

Week 4DQ 1 Budgeting Case Study

Week 4DQ 2 Exam Review

Week 5DQ 1 Standards, Variances, Flexible Budgets

Week 5DQ 2 Research and Application

Week 6DQ 1 Segment Reporting and Relevant Costs

Week 6DQ 2 Research and Application

Week 7DQ 1 Capital Budgeting

Week 7DQ 2 Exam Review

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