• University of Texas, Arlington

• ACCT 4302

ACCT 4302 SAMPLE EXAM 2

1. ANSWER ALL THREE QUESTIONS

2. PLEASE SHOW ALL SUPPORTING

CALCULATIONS TO EARN PARTIAL CREDIT

3. DO NOT DETACH STAPLE

QUESTION 1

1

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Adrian Power manufactures small power supplies for car stereos. The company uses flexible

budgeting techniques to deal with the seasonal and cyclical nature of the business. The

accounting department provided the accompanying data on budgeted manufacturing costs for the

month of January:

ADRIAN POWER

Planned Level of Production for January

Budgeted production (in units) 14,000

Variable costs (vary with production)

Direct materials $140,000

Direct labor 224,000

Indirect labor 21,000

Indirect materials 10,500

Maintenance 6,300

Fixed costs

Supervision 24,700

Other (depreciation, taxes, etc.) 83,500

Total plant costs $510,000

Actual operations for January are summarized as

ADRIAN POWER

Actual Operations for January

Actual production (in units) 15,400

Actual costs incurred

Direct materials $142,400

Direct labor 259,800

Indirect labor 27,900

Indirect materials 12,200

Maintenance 9,800

Supervision 28,000

Other costs (depreciation, taxes, etc.) 83,500

Total plant costs $563,600

REQUIRED

a. Prepare a report comparing the actual operating results with the flexible budget.

b. Write a short memo analyzing the report prepared in (a). What likely managerial implications

do you draw from this report? What are the numbers telling you? (No more than ¾ of a

page)