1) What is the purpose of a departmental accounting system?
2) Falcon Company’s output for a period was assigned the standard direct labor cost of
$17,160. If the company had a favorable direct labor rate variance of $1,000 and an
unfavorable direct labor efficiency variance of $275, what was the total actual cost of
direct labor incurred during the period?
3) Fields Company currently manufactures one of its parts at a cost of $3.25 per unit.
This cost is based on a normal production rate of 50,000 units. Variable costs are $2.10
per unit, fixed costs related to making this part are $40,000 per year, and allocated fixed
costs are $45,000 per year. Allocated fixed costs are unavoidable whether the company
makes or buys the part. Fields is considering buying the part from a supplier for a
quoted price of $2.80 per unit guaranteed for a three-year period. Should the company
continue to manufacture the part, or should it buy the part from the outside supplier?
Support your answer with analyses.
4) Profit margin = ___________________ divided by net sales.
5) What is a stock split? How is a stock split different from a stock dividend?
6) A company purchased mining property containing 7,350,000 tons of ore for
$1,837,500. In Year 1, it mined and sold 857,000 tons of ore and in Year 2, it mined and
sold 943,000 tons of ore. Calculate the depletion expense for Year 1 and Year 2. What
was the book value of the property at the end of Year 2?
7) The balances for the accounts of Mike’s Maintenance Co. for the year ended
December 31 are shown below. Each account shown had a normal balance.
Calculate the correct balance for Cash and prepare a trial balance.