GOODMAN SCHOOL OF BUSINESS, BROCK UNIVERSITY Form KN6mG10s462

THIS EXAMINATION WILL NOT BE DEPOSITED IN THE LIBRARY RESERVE

Page 1 of 6
Final Examination: April 2021
Course: ACTG 2P12 Sections 1 & 2 Number of pages: 6
Date & Place of Exam: Wed Apr 14, 2021. ONLINE. Number of students: 137
Time of Examination: 1400-1700 EST (except for students Number of hours: 3
granted accommodations). Instructor: Dr. A. Shome

PLEASE NOTE THE FOLLOWING IMPORTANT INSTRUCTIONS CAREFULLY:

Question 1 consists of 20 multiple-choice questions (MCQs) that are accessible through a test
on the Tests & Quizzes tool on Sakai. Please complete these MCQs on Sakai, making sure to do
so WELL BEFORE 1745 EST, at which time the test will be auto-submitted regardless of whether
you have completed it or not. Students granted accommodations: please complete within your
specific time limits. No extensions will be possible once the time limits are reached.

For Questions 2 through 5, please write your answers on a blank sheet of paper (either plain or
lined), using a ball-point pen with black ink only. DO NOT use red ink. Please make sure that
your writing is clear and legible, and that your name and student ID number appear in the top
margin of each sheet of paper used. If your answer to a question does not fit on one page, use
another sheet, making sure to clearly indicate where the answer is being continued.

After having written your answers to Questions 2 through 5, please scan your answer sheets to
a PDF format and upload the scanned file to the Assignments tool on Sakai. Name the file as
YOURLASTNAME-YOURFIRSTNAME.PDF. Please make sure that your scanned file is uploaded
to the Assignments tool WELL BEFORE 1745 EST. Scanning to a format other than PDF is NOT
permitted. Students granted accommodations: please upload within your specific time limits. No
extensions will be possible once the time limits are reached.

Show all your calculations for Questions 2 through 5. Answers unsupported by calculations will
not be awarded any marks. No examination aid other than non-programmable calculators, non-
electronic dictionaries and writing aids are permitted. Use of unauthorized materials will
automatically result in the award of a zero grade for this examination.

Question Maximum Marks Available Marks Awarded

1 (Multiple Choice questions on Sakai) 20

2 (Problem) Hand-written response 25

3 (Problem) Hand-written response 25

4 (Problem) Hand-written response 10

5 (Problem) Hand-written response 20

Total 100

*Section 4: Wed 1100-1230 Th 255

Good luck!
QUESTION 1 (MULTIPLE CHOICE QUESTIONS NUMBERED 1 THROUGH 20): 20
marks. Please complete this part of the exam using the Tests & Quizzes tool on Sakai.

QUESTIONS 2, 3, 4 AND 5:
PLEASE ANSWER QUESTIONS 2, 3, 4 AND 5 ON BLANK SHEETS OF PAPER (EITHER
PLAIN OR RULED), USING A BALL-POINT PEN WITH BLACK INK ONLY. DO NOT USE
RED INK. PLEASE MAKE SURE THAT YOUR WRITING IS CLEAR AND LEGIBLE. IF YOUR
ANSWER TO A QUESTION DOES NOT FIT ON ONE PAGE, USE ANOTHER SHEET,
MAKING SURE TO CLEARLY INDICATE WHERE THE ANSWER IS BEING CONTINUED.

PLEASE WRITE YOUR FULL NAME AND STUDENT ID# IN THE TOP MARGIN OF EACH
SHEET OF PAPER USED.

AFTER HAVING WRITTEN YOUR ANSWERS TO QUESTIONS 2 THROUGH 5, PLEASE

SCAN YOUR ANSWER SHEETS TO A PDF FORMAT AND UPLOAD THE SCANNED FILE
TO THE ASSIGNMENTS TOOL ON SAKAI. NAME THE FILE AS YOURLASTNAME-
YOURFIRSTNAME.PDF. PLEASE MAKE SURE THAT YOUR SCANNED FILE IS UPLOADED
TO THE ASSIGNMENTS TOOL BEFORE 1745 EST. SCANNING TO A FORMAT OTHER
THAN PDF IS NOT PERMITTED. STUDENTS GRANTED ACCOMMODATIONS: PLEASE
UPLOAD WITHIN YOUR SPECIFIC TIME LIMITS. NO EXTENSIONS WILL BE POSSIBLE
ONCE THE TIME LIMITS ARE REACHED.

SHOW ALL YOUR CALCULATIONS FOR QUESTIONS 2 THROUGH 5. ANSWERS

UNSUPPORTED BY CALCULATIONS WILL NOT BE AWARDED ANY MARKS. NO
EXAMINATION AID OTHER THAN NON-PROGRAMMABLE CALCULATORS, NON-
ELECTRONIC DICTIONARIES AND WRITING AIDS ARE PERMITTED.

USE OF UNAUTHORIZED MATERIALS WILL AUTOMATICALLY RESULT IN THE AWARD

OF A ZERO GRADE FOR THIS EXAMINATION.

Form KN6mG10s462
*Section 4: Wed 1100-1230 Th 255
QUESTION 2: 25 marks
SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. NO MARKS WILL BE AWARDED FOR
ANSWERS TO THE PROBLEMS UNSUPPORTED BY CLEARLY SHOWN CALCULATIONS. ROUND ALL
CALCULATIONS UP TO TWO DECIMAL PLACES.

Hasak Corp makes 100 kg containers of vegetable seeds, and has the following unit standard
costs for direct materials and direct labour:
Direct materials (70 kg @$3.00 per kg) $210.00
Direct labour (0.30 hours at $20.00 per hour) $6.00
Total standard costs per 100 kg container: $216.00

The following activities were recorded in June:

1. 2,100 containers were manufactured
2. 85,000 kg of materials costing $37,000 were purchased.
3. 222,000 kg of materials were used.
4. $27,000 was paid for 355 hours of direct labour.

There were neither beginning nor ending WIP inventories on hand.

Required:
a) Compute the direct materials variances. 10 marks
b) Compute the direct labour variances. 10 marks
c) Suggest rational explanations for each variance. 5 marks

Form KN6mG10s462
*Section 4: Wed 1100-1230 Th 255
QUESTION 3: 25 marks
SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. NO MARKS WILL BE AWARDED FOR
ANSWERS TO THE PROBLEMS UNSUPPORTED BY CLEARLY SHOWN CALCULATIONS. ROUND ALL
CALCULATIONS UP TO TWO DECIMAL PLACES.

OJ Small Company needs a cash budget for the month of April, 2016. The company’s controller has
provided you with the following information and assumptions:

1. The April 1, 2016 cash balance is expected to be $10,000.

2. All sales are on account. Credit sales are collected over a three-month period—60 percent in
the month of sale, 40 percent in the month following sale, and 0 percent in the second month
following sale. Actual sales for February and March were $110,000 and $80,000, respectively. April’s
sales are budgeted at $37,000.
3. Marketable securities are expected to be sold for $22,000 during the month of April.
4. The controller estimates that direct materials totalling $50,000 will be purchased during April.
70 percent of a month’s raw materials purchases are paid in the month of purchase with the remaining
30 percent paid in the following month. Accounts payable for March purchases total $14,000, which
will be paid in April.
5. During April, direct labour costs are estimated to be $17,000.
6. Manufacturing overhead is estimated to be 20 percent of direct labour costs, Further, the
controller estimates that approximately 10 percent of the manufacturing overhead is depreciation on
the factory building and equipment.
7. Selling and administrative expenses are budgeted at $16,000 for April. Of this amount, $6,000 is
for depreciation.
8. During April, OJ Small Company plans to buy a new delivery van costing $33,000. The company
will pay cash for the van.
9. OJ Small Company owes $26,000 in income tax, which must be paid in April.
10. OJ Small Company must maintain a minimum cash balance of $16,000. To bolster the cash
position as needed, an open line of credit is available from the bank.

Required: Prepare the following:

a) A schedule of cash collections for April. 6 marks
b) A schedule of cash payments for raw materials for April. 4 marks
c) A cash budget for the month of April. Indicate in the financing section any borrowing that will
be necessary during the month. 15 marks

Form KN6mG10s462
*Section 4: Wed 1100-1230 Th 255
QUESTION 4: 10 marks
SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. NO MARKS WILL BE AWARDED FOR
ANSWERS TO THE PROBLEMS UNSUPPORTED BY CLEARLY SHOWN CALCULATIONS. ROUND ALL
CALCULATIONS UP TO TWO DECIMAL PLACES.

Paulsen Company produced and sold 4,000 units of product and is operating at 40% of plant capacity.
Unit information about its product is as follows:

Sales Price $190.00

Variable manufacturing cost $60.00
Fixed manufacturing cost ($30,000 ÷ 7,000) 4.29 64.29
Profit per unit $125.71

The company received a proposal from a foreign company to buy 700 units of Paulsen Company's
product for $80.00 per unit. This is a one-time only order and acceptance of this proposal will not
affect the company's regular sales. The president of Paulsen Company is reluctant to accept the
proposal because he is concerned that the company will lose money on the special order. All fixed
costs are allocated to individual products.

Required:
Prepare a schedule reflecting an incremental analysis of this proposal. Indicate the effect the
acceptance of this order might have on the company's income. 10 marks

Form KN6mG10s462
*Section 4: Wed 1100-1230 Th 255
QUESTION 5: 20 marks
SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. NO MARKS WILL BE AWARDED FOR
ANSWERS TO THE PROBLEMS UNSUPPORTED BY CLEARLY SHOWN CALCULATIONS. ROUND ALL
CALCULATIONS UP TO FOUR DECIMAL PLACES.

Megatron Technologies Inc. is a national semi-conductor chip manufacturer and retailer that supplies
microchips to various industries such as the automotive industry, the aerospace industry, and the
computing industry. Presented below is information pertaining to two of its largest divisions,
Automotive and Aerospace (in thousands of dollars):

Sales Operating Income Total Assets

Automotive $5,250,000 $704,000 $2,915,000
Aerospace $1,600,000 $270,000 $2,660,000

Megatron has a specified target rate of return of 33%.

Requirements (round all calculations to four decimal places):

1. Calculate each division’s ROI. 3 marks

2. Calculate each division’s profit margin. Interpret your results. 4 marks
3. Calculate each divisions asset turnover. Interpret yours results. 4 marks
4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your
results. 4 marks
5. Calculate each division's RI. Interpret your results and offer recommendations for any division
with negative RI. 5 marks

END OF EXAM

Form KN6mG10s462
*Section 4: Wed 1100-1230 Th 255