1.(TCO C) The following overhead data are for a department of a large company.
Actual costs Static Incurred budget
Activity level (in units) 360 340
Variable costs: Indirect materials $4,182 $4,148 Electricity $2,536 $2,414 Fixed costs: Administration $6,540 $6,500 Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.
(Points : 30) |
Question 2.2.(TCO D) Lindon Company uses 5,000 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $80,000 as follows:
Direct materials………………………………………..$18,000
Direct labor………………………………………………20,000
Variable manufacturing overhead………………. 12,000
Fixed manufacturing overhead………………….. 30,000
Total costs……………………………………………….80,000
An outside supplier has offered to provide Part X at a price of $13 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.
Required:Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier’s offer.
(Points : 30) |
Question 3.3.(TCO E) Duif Company’s absorption costing income statement for the last year of operations is presented below.
Sales…………………………………………………$70,000 Less cost of goods sold: Beginning inventory………………………………………. 0 Add cost of goods manufactured………………48,000 Goods available for sale………………………….48,000 Less ending inventory………………………………6,000 Cost of goods sold………………………………..42,000 Gross margin……………………………………….28,000 Less selling and admin. expenses……………..25,000 Net operating income…………………………..$ 3,000
Data on units produced and sold for the year are given below.
Units in beginning inventory……………………………..0 Units produced……………………………………….8,000 Units sold………………………………………………7,000
Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
(Points : 30) |
Question 4.4.(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year. Sales ………………………………………………………$950 Raw materials inventory, beginning …………………$10 Raw materials inventory, ending …………………….$30 Purchases of raw materials ………………………….$120 Direct labor ………………………………………………$200 Manufacturing overhead ……………………………..$230 Administrative expenses ……………………………..$100 Selling expenses ………………………………………..$140 Work-in-process inventory, beginning ………………$70 Work-in-process inventory, ending ………………….$40 Finished goods inventory, beginning ………………$100 Finished goods inventory, ending ……………………$80
Use these data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, elaborate on the relationship between these schedules as they relate to the flow of product costs in a manufacturing company. (Points : 25) |
|