Name__________________________

MBA 631
Fall 2022
Take Home Mid-Term 1

Part 1
Part 1 of the mid-term will be available on Canvas at 8:00pm on Tuesday. The online test is
worth 63 points and should consist of 21 questions. The questions will be a mix of concept
question and computational questions. You will need a calculator for the exam. You will have
75 minutes to complete the exam. A timer may not be displayed so you may have to keep track
of the time yourself. Therefore, use your time wisely.

Part 2
Take home exam. This is an exam and you must do your own work. It is worth 37 points. This
part is due at 6:00pm on Tuesday. For the problems, you must show your work. You may
submit your answers using a Word. Make sure you label your answers. Submit your answers
through Canvas.

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 1. (9 points) Hamilton Company had the following inventory balances at the beginning
and end of the year:

During the year, the company purchased $100,000 of raw material and incurred
$340,000 of direct labor costs. Other data: manufacturing overhead incurred,
$450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income
tax rate, 30%.

Required:

A. Calculate cost of goods manufactured.

B. Calculate cost of goods sold.
C. Determine Hamilton's net income.

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 2. (10 points) Dancer Corporation, which uses a job-costing system, had two jobs in
process at the start of 20x1: job no. 59 ($95,000) and job no. 60 ($39,500). The
following information is available:

• The company applies manufacturing overhead on the basis of machine hours.

Budgeted overhead and machine activity for the year were anticipated to be
$720,000 and 20,000 hours, respectively.
• The company worked on three jobs during the first quarter. Direct materials used,
direct labor incurred, and machine hours consumed were:

• Manufacturing overhead during the first quarter included charges for depreciation
($20,000), indirect labor ($50,000), indirect materials used ($4,000), and other factory
costs ($108,700).
• Dancer completed job no. 59 and job no. 60. Job no. 59 was sold for cash, producing
a gross profit of $24,600 for the firm.

Required:

A. Determine the company's predetermined overhead application rate.

B. Prepare journal entries as of March 31 to record the following. (Note: Use summary
entries where appropriate by combining individual job data.)

1. The issuance of direct material to production, and the direct labor incurred.
2. The manufacturing overhead incurred during the quarter.
3. The application of manufacturing overhead to production.
4. The completion of job no. 59 and no. 60.
5. The sale of job no. 59.

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 3. (10 points) Pink Corporation manufactures two types of transponders—no. 156 and
no. 157—and applies manufacturing overhead to all units at the rate of $76.50 per
machine hour. Production information follows.

The controller, who is studying the use of activity-based costing, has determined that
the firm's overhead can be identified with three activities: manufacturing setups,
machine processing, and product shipping. Data on the number of setups, machine
hours worked, and outgoing shipments, the activities' three respective cost drivers,
follow.

The firm's total overhead of $3,060,000 is subdivided as follows: manufacturing

setups, $260,000; machine processing, $2,400,000; and product shipping, $400,000.

Required:

A. Compute the pool rates that would be used for manufacturing setups, machine
processing, and product shipping in an activity-based costing system.
B. Assuming use of activity-based costing, compute the unit overhead costs of product
nos. 156 and 157 if the expected manufacturing volume is attained.
C. Assuming use of activity-based costing, compute the total cost per unit of product
no. 156.
D. If the company's selling price is based heavily on cost, would a switch to activity-
based costing from the current traditional system result in a price increase or
decrease for product no. 156? Show computations.

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 4. (8 points) Joster Corporation, which has a maximum labor capacity of 30,000 hours
per month, has considerable flexibility with its customers when it comes to project
completion dates. Management is considering the submission of a bid for a job to be
performed for the city of Oxford. Costs for the job are as follows:

Joster's labor force is paid an average of $22 per hour and if the company wins the
bid, it will have three months to complete the work. Management adds a 30% profit
margin to all jobs, computed on the basis of total variable cost.

Required:

A. Compute the lowest total cost that the company would use when figuring its bid,
assuming that Jester has excess capacity.
B. Compute Joster's bid if the company has no excess capacity.

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