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ACCT 505 Week 8 Final Exam New

ACCT 505 Week 8 Final Exam New

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Author: Christine Farr
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1. (TCO F) Willow Creek Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor hours for the upcoming year at 38,500 labor hours. The estimated variable manufacturing overhead was $7.37 per labor hour and the estimated total fixed manufacturing overhead was $601,328. The actual labor hours for the year turned out to be 41,721 labor hours.
Required:
Compute the company's predetermined overhead rate for the recently completed year. (Points : 25)
2. (TCO F) Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company's cash budget for October in good form. (Points : 25)
2. (TCO D) Lindon Company uses 4,500 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $69,000 as follows:
Direct materials

$16,000

Direct labor

18,000

Variable manufacturing overhead

10,000

Fixed manufacturing overhead

25,000

Total costs

$69,000

An outside supplier has offered to provide Part X at a price of $11 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer. (Points : 30)


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