ADMS 2510 3.0 Introduction to Management Accounting.
Winter 2015: Section: | Day: | Time: | Instructor: | M | MONDAY | 4-7 | Professor Nemi | N | WEDNESDAY | 7-10 | Professor Shum | O | THURSDAY | 7-10 | Professor Murison | P | MONDAY | 7-10 | Professor Nemi | Q | INTERNET | | Professor Shum | R | THURSDAY | 11:30-2:30 | Professor Ma | S | TUESDAY | 11:30-2:30 | Professor Ma | T | THURSDAY | 4-7 | Professor Beavis |

Instructions:
This is a closed book test;
You are allowed the use of a calculator;
If your principal language is not English you are allowed the use of a dictionary.
There are 4 questions: attempt them all.

Question 1: 20 marks:
You have just been employed by EduRom Co. which was organized on January 1st of the current year. The company manufactures and sells a variety of educational DVDs for personal computers. It is your responsibility to supervise the employees who take orders from customers over the phone and arrange for shipping the orders via Federal Express, Canada Post and other freight carriers.
The company is unsure how to classify your annual salary in its cost records. The company’s cost analyst says that your salary should be classified as a manufacturing (product) cost; the controller says it should be classified as a selling expense; the president says that it does not matter how your salary cost is classified.

Required:
Explain the effects of using each of the cost classifications recommended by the three individuals, and make a recommendation as to which one make most sense.

Question 2: 30 marks:
The trial balance of Tyne Co. as at 1st January was as follows: Cash | $ 7,000 | | Accounts receivable | 12,000 | | Raw materials inventory | 25,000 | | Work-in-process inventory | 5,000 | | Finished goods inventory | 10,000 | | Prepaid insurance | 1,000 | | Plant &