BUS 2230 Fall 2010 Midterm 1 Version 3 Name: Student Number, Instructions The test is 80 minutes long ‘There will be no questions answered due to the size of the class Write any assumptions made on the paper provided. Part marks will be granted 1 4 2 3 4 ay 5 Total Fl Version3 Page |% 1, The Dean Company produces and sells a single product: a laser printer. The following data refer to the year just completed: Beginning inventory $0 Units produced 20,000 Units sold 19,000 Sales price per unit $350 Selling and administrative expenses: Variable per unit $10 Fixed (total) $225,000 ‘Manufacturing costs Direct materials cost per unit $190 Direct labour cost per unit $40 Variable overhead cost per unit $25 Fixed overhead (total) $250,000 Assume that direct labour is a variable cost. Required: a) Compute the cost of a single unit of product under both the absorption costing and variable costing approaches. ) Prepare an income statement for the year using absorption costing. ©) Prepare an income statement for the year using variable costing. 4) Reconcile the absorption costing and variable costing operating income figures in b) and ¢) above. Version3 Page 2(vw 2. Unified Parcel, Inc. operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if' truck is driven 110,000 kilometres per year, the operating cost is 7.5 cents per kilometre, This cost increases to 8.75 cents per kilometre if a truck is driven 60,000 kilometres per year. Required: Estimate the cost formula for truck operating costs using the high-low method. Version3 Page 4