ADMS3510 – Midterm Exam #1– February 8, 2015 VERSION A Sign in # __________
Last Name: _________ First Name: __________________
Student Number: _____________________
Please Indicate Section;
3510 M – Monday; 7 to 10pm; Robert Umana
3510 N – Thursday; 4 to 7pm; Robert Umana
3510 O – Thursday; 4 to 7pm; Bob Murison
Please turn off your cell phones and place cell phone, books, notes, backpacks, coats, etc. to the side, rear or the front of the classroom before the final examination commences.
Please make sure that there is at least one empty seat between you and any other student sitting beside you in the same row and have out for display your 2 pieces of independent photo identification during the final examination to facilitate verification.
Fill in your name and student number in the section above. Answer the questions in the answer book. You may write with a pencil or pen.
This is a closed book final examination, no collaboration is allowed and no formula sheets are allowed or will be provided. No additional time for lateness.
Two hours are allowed to complete the final examination (total of 50 marks).
You are allowed the use of a simple (non-programmable) calculator. Sharing of calculators is not permitted. Cell phones are not allowed as calculators.
PLEASE DO NOT ASK ANY QUESTIONS. Your Professor and Invigilators will not answer nor clarify whatever issues you have in the exam paper. If it is necessary, state your assumptions on the final examination pages.
If you leave early, please respect your fellow students by leaving quietly. Do not leave the room in the last 15 minutes of the final examination.
DO NOT TAKE THE EXAMINATION PAPER WITH YOU.
Summary of Marks: Good Luck!
Question 1 (25 marks)
The Pie Commission has two direct cost categories: direct materials and direct manufacturing labour. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labour-hours (DMLH). Pies are baked in batches of 80. Following are some pertinent data for The Pie Commission Company:
Direct manufacturing labour use 2.56 DMLH per batch Marketing expense for the year $72,380 Variable manufacturing overhead $4.39 per DMLH
The Pie Commission recorded the following additional data for the year ended September 30, 2014: Planned (budgeted) output 2,975,000 pies Actual production 2,438,063 pies Direct manufacturing labour 69,500 DMLH Actual variable MOH $450,500
a) What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labour-hours is The Pie Commission budgeting?) (3 marks)
b) Prepare a variance analysis of variable manufacturing overhead. Show all your detailed work. Round to 3 decimal places. (16 marks)
c) Discuss the variances you have calculated and give possible explanations for them. (6 marks)
a) Denominator level = (planned budgeted output/# of pies baked per batch) x DML use per batch
=[(2,975,000/80) x 2.56) = 95,200 hours
a) Output units (pies) 2,438,063 2,438,063
b) Direct manufacturing labour-hours 69,500 78,018(****)
c) Labour-hours per output unit (b/a) 0.029 0.032
d) Variable manuf. Overhead (MOH) costs $450,500 $342,499(ii)
e) Variable MOH per labour-hour (d/b) $6.482 $4.39
f) Variable MOH per output unit (d/a) $0.185 $0.140
**** -> [(2,438,063/80) x 2.56] = 78,018 hours
(ii) -> $4.39 x 78,018 = $342,499 Flexible Budget: Allocated:
Actual Costs Budgeted Input Qty.