Accounting-ACT 5733 – Advanced Managerial Accounting

ACT 5733 – Advanced Managerial AccountingWinter 2013Mid-Term ExamDirections: Answer all the questions. Please submit your work in Word or PDF formats only.You can submit an Excel file to support calculations, but please “cut and paste” yoursolutions into the Word or PDF file. Be sure to show how you did your calculations. Also,please be sure to include your name at the top of the first page of your file. You can use anysources you wish, except for other people. There is no time limit to complete the exam, otherthan it is due at 11:59 PM Eastern on February 10, 2013. The exam will count 30 percent towardyour course grade. The point value for each question is noted. If you have any questions, pleasee-mail me at or Good luck!Question #1 (8 points)If a CMA is confronted by an ethical dilemma, what does the IMA Standards of Ethical Behaviorfor Practitioners of Management Accounting and Financial Management recommend the persondo? Be specific in your response.Question #2 (15 points)Consider the following information, prepared based on a capacity of 60,000 units:CategoryVariable manufacturing costsFixed manufacturing costsVariable marketing costsFixed marketing costsCost per Unit$12.00$3.50$4.00$2.50Capacity cannot be added and the firm currently sells the product for $25 per unit.Consider each of these scenarios independent of each other.a) The company is currently producing 60,000 units per month. A potential customer hascontacted the firm and offered to purchase 10,000 units this month only. The customer iswilling to pay $23 per unit. Since the potential customer approached the firm, there will be novariable marketing costs incurred. Should the company accept the special order? Why or whynot? Be specific.b) The company is currently producing 45,000 units per month. A potential customer hascontacted the firm and offered to purchase 10,000 units this month only. Since the potentialcustomer approached the firm, there will be no variable marketing costs incurred. What is theminimum amount that the firm should be willing to accept for this order?c) The company is considering selling 1,000 units that are in danger of becoming obsolete. Whatis the minimum price it would be willing to take for the 1,000 units?Question #3 (10 points)List and describe three ways a firm can determine long-run prices. As part of your answers, besure to describe when each method would be most appropriate and the strengths and weaknessesof each method.Question #4 (44 points)Consider the following information:Beginning inventory (units)Budgeted units to be producedActual units producedUnits soldVariable manufacturing costs per unit producedVariable marketing costs per unit soldFixed manufacturing costsFixed marketing costsSelling price per unitVariable costing operating incomeAbsorption costing operating incomeVariable costing beginning inventoryAbsorption costing beginning inventoryVariable costing ending inventoryAbsorption costing ending inventoryPVVAllocated fixed manufacturing costsQ103,8004,000Q2JA$125$40$600,000$250,000$400BCDEFGHI4,2004,0004,000$125$40$600,000$250,000$400$90,000Q33004,100QR$125$40$600,000$250,000$400SK$130,500$12,500TULMNOP$12,500$27,500V$615,000There are no price, efficiency, or spending variances, and any production-volume variance isdirectly written off to cost of goods in the quarter in which it occurs.Complete the missing figures from the above Table.Q1ABCDEFGHIQ2JKLMNOPQ3QRSTUVQuestion #5 (15 points)a) What is the goal of the EOQ model?b) Why does a firm hold “safety stock?”c) What costs are a firm trying to balance when it decides on how much safety stock to hold?Question #6 (8 points)What is the justification for using backflush costing? Be specific!

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