Managerial Accounting Project

MANAGERIAL ACCOUNTING
PROJECT
From: MR. HORTENSI 305-237-5143 jose.hortensi@mdc.edu I am
available to help you, make sure you let me know if you need help.
To: MANAGERIAL ACCOUNTING STUDENTS.
This project is an excellent way to summarize the entire MANAGERIAL accounting

course. Hopefully, you will have the opportunity to learn by applying what you have
learned in the classroom and solve for the answers. This project is a selection of one
small problem from every chapter. It will test your accounting knowledge and it will
assess if you were able to master the main objectives of this accounting course.
Instructions:
 PLEASE DO NOT PROCRASTINATE AND TAKE FULL ADVANTAGE OF THIS

PROJECT. NO PARTIAL CREDIT AFTER DUE DATE.
 BE CREATIVE AND PROFESSIONAL. USE ALL RESOURCES AVAILABLE,

BUT MAKE SURE YOU DO YOUR OWN WORK. If I find that two
projects are the same, both students will get an “F”.
 I ENCOURAGE YOU TO USE EXCEL (FORMULAS, FUNCTIONS, ETC.)
 TAKE THIS PROJECT AS A LEARNING OPPORTUNITY TO LEARN AND TO

BE PREPARED FOR THE FINAL EXAM.
 YOU HAVE THE FREEDOM TO DO IT BY HAND OR USING EXCEL.

NEATNESS WILL COUNT…BE PROFESSIONAL
DUE DATE: ON OR BEFORE DEC 12TH. The goal is for you to be able to do the
entire project and have the opportunity to verify/check your
answers (before you submit it). That way not only you get full
CREDIT, but you will also be better prepared for the final exam.
1
Interoffice Memo
FINAL PROJECT - ACG 2071
Problem
1. The following account appears in the ledger after only part of the postings have been completed for July,
the first month of the current fiscal year:
Work in Process
Balance, July 1 53,200 |
Direct materials 147,000 |
Direct labor 120,000 |
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead
incurred for July was $75,000. Jobs completed during the month totaled $301,200.
(a) Prepare the journal entries to record (1) the application of factory overhead to
production during July and (2) the jobs completed during July.
(b) What was the balance of the factory overhead account on July 31?
(c) Was factory overhead overapplied or underapplied on July 31?
(d) Determine the cost of the unfinished jobs on July 31.

2. Six selected transactions for the current month are indicated by letters in the following T accounts in a job
order cost accounting system:
Materials Work in Process

| (a) (a) | (d)
(b) |
Wages Payable (c) |
| (b) (f) |
Factory Overhead Finished Goods

(a) | (c) (d) | (e)
(b) | (f) (f) |
Cost of Goods Sold

(e) |
(f) |
Describe each of the six transactions.

3. Chang Co. manufacturers its products in a continuous process involving two departments, Machining and
Assembly. Present entries to record the following selected transactions related to production during June:
(a) Materials purchased on account, $225,000.
(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect
materials; Assembly, $4,900 indirect materials.
(c) Direct labor used by Machining, $23,000, Assembly, $47,000.
10/30/2003 Confidential 2
Interoffice Memo
(d) Depreciation expenses: Machining, $2,000; Assembly, $8,000.
(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300
(f) Machining Department transferred $98,300 to Assembly Department; Assembly

Department transferred $83,400 to finished goods.
(g) Cost of goods sold, $72,000.

4. Calculate the following:
(a) If Bart Company's budgeted sales are $600,000, fixed costs are $250,000, and
variable costs are $390,000, what is the budgeted contribution margin ratio?
(b) If the contribution margin ratio is 25% for Gray Company, sales are $800,000, and
fixed costs are $140,000, what is the operating profit?
5. For the past year, Chandler Company had fixed costs of $70,000, unit variable costs of $32, and a unit
selling price of $40. For the coming year, no changes are expected in revenues and costs, except that
property taxes are expected to increase by $10,000. Determine the break-even sales (units) for (a) the past
year and (b) the coming year.
6. If a company with a break-even point at $700,000 in sales revenue had fixed costs of $262,500, variable
costs of $500,000, and actual sales of $1,000,000, determine (a) the margin of safety expressed in dollars,
(b) the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d) the
operating income.
7. Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as
follows:
August $100,000
September 185,000
October 225,000
The company expects to sell 40% of its merchandise for cash. Of the sales on account, one third are
expected to be collected in the month of the sale and the remainder in the following month.
Prepare a schedule indicating cash collections of accounts receivable for August, September, and October.
8. Standard costs and actual costs incurred for the manufacture of 8,000 units of product were as follows:
Standard Costs Actual Costs

Direct materials:
8,000 lbs. @ $30.00 7,750 lbs. @ $30.20
Direct labor: 10,000 hours @ $36.50 10,250 hours @ $38.00
Determine (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time
variance, rate variance, and total direct labor cost variance.
Interoffice Memo
9. The sales, income from operations, and invested assets for each division of Winston Company are as
follows:
Income
from Invested
Sales Operations Assets
Division C $4,000,000 $410,000 $3,500,000
Division D 3,500,000 600,000 4,000,000
Division E 2,250,000 750,000 7,000,000
Management has established a minimum rate of return for invested assets of 10%.
(a) Determine the residual income for each division.
(b) Based on residual income, which of the divisions is the most profitable?
10. On January 1 of the current year, C. F. Hartley Co. commenced operations. It operated its plant at 100% of
capacity during January. The following data summarized the results for January:
Units
Production 50,000
Sales ($18 per unit) 42,000
Inventory, January 31 8,000
======
Total Cost or Expense

Manufacturing costs:
Variable $575,000
Fixed 75,000
Total $650,000
========
Selling and administrative expenses:
Variable $ 33,600
Fixed 10,500
Total $ 44,100
========
(a) Prepare an income statement in accordance with absorption costing.

(b) Prepare an income statement in accordance with variable costing.
Interoffice Memo

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MANAGERIAL ACCOUNTING

To: MANAGERIAL ACCOUNTING STUDENTS.

This project is an excellent way to summarize the entire MANAGERIAL accounting

 PLEASE DO NOT PROCRASTINATE AND TAKE FULL ADVANTAGE OF THIS

 BE CREATIVE AND PROFESSIONAL. USE ALL RESOURCES AVAILABLE,

 I ENCOURAGE YOU TO USE EXCEL (FORMULAS, FUNCTIONS, ETC.)

 TAKE THIS PROJECT AS A LEARNING OPPORTUNITY TO LEARN AND TO

 YOU HAVE THE FREEDOM TO DO IT BY HAND OR USING EXCEL.

FINAL PROJECT - ACG 2071

(c) Was factory overhead overapplied or underapplied on July 31?

(d) Determine the cost of the unfinished jobs on July 31.

Materials Work in Process

Factory Overhead Finished Goods

Cost of Goods Sold

Describe each of the six transactions.

(a) Materials purchased on account, $225,000.

(c) Direct labor used by Machining, $23,000, Assembly, $47,000.

(d) Depreciation expenses: Machining, $2,000; Assembly, $8,000.

(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300

(f) Machining Department transferred $98,300 to Assembly Department; Assembly

(g) Cost of goods sold, $72,000.

Standard Costs Actual Costs

(a) Determine the residual income for each division.

Total Cost or Expense

(a) Prepare an income statement in accordance with absorption costing.

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