CMA Study Group

part 1 Question

  • 1.  part 1 Question

    Posted 08-11-2012 06:46 AM
    hi every body


    Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
    year are as follows.
                                                                                                 Units
    Beginning inventory of finished goods                                  100
    Production during the year                                                    700
    Sales                                                                                      750
    Ending inventory of finished goods                                         50

                                                                                               Per Unit
    Product selling price                                                              $200
    Standard variable manufacturing cost                                      90
    Standard fixed manufacturing cost                                           20*
    Budgeted selling and administrative costs (all fixed)       $45,000


    *Denominator level of activity is 750 units for the year.

    There were no price, efficiency, or spending variances for the year, and actual selling and
    administrative expenses equaled the budget amount. Any volume variance is written off
    to cost of goods sold in the year incurred. There are no work-in-process inventories.

    Assuming that Dremmon used absorption costing, the amount of operating income earned
    in the last fiscal year was

    a. $21,500.
    b. $27,000.
    c. $28,000.
    d. $30,000.


    thankes




    -------------------------------------------
    Ayda Fahim Samaan
    Accountant
    Mina Tex
    Sidi Beasher
    Egypt
    -------------------------------------------


  • 2.  RE:part 1 Question

    Posted 08-11-2012 07:28 AM
    Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

    Sales (750 x $200) $150,000
    COGS [750 x ($90 + $20)] 82,500
    Underapplied fixed cost (50 x $20) 1,000
    Selling & administrative 45,000
    Operating income $ 21,500

    -------------------------------------------
    Patricia Abels CPA
    Academic
    The University of Findlay
    Findlay OH
    United States
    -------------------------------------------








  • 3.  RE:part 1 Question

    Posted 08-13-2012 04:12 AM
    Dear Patricia 

    Could you please explain why do you subtracts 1000 from operating income this period 

    thanks indeed 




    -------------------------------------------
    Anas Ziadeh
    Accountant
    Jordan Light Vehicel Manufacturing LLC
    Amman
    Jordan
    -------------------------------------------








  • 4.  RE:part 1 Question

    Posted 08-13-2012 07:39 AM
    Any volume variance is written off
    to cost of goods sold in the year incurred


    -------------------------------------------
    Patricia Abels CPA
    Academic
    The University of Findlay
    Findlay OH
    United States
    -------------------------------------------








  • 5.  RE: part 1 Question

    Posted 17 days ago
    how to calculate ( the reason ) underapplied fixed cost ?

    ------------------------------
    Asmaa Mohamed Salah Mahmoud Mostafa
    Unemployed
    Dakahlia
    Egypt
    ------------------------------