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Exercise 20-3

Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

 Department Quarter 1 Quarter 2 Quarter 3 Quarter 4

Average hourly billing rates are: auditing \$81, tax \$94, and consulting \$102.

Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

 GARZA AND NEELY, CPAs Sales Revenue Budget For the Year Ending December 31, 2012 Quarter 1 Quarter 2 Dept. Billable Hours Billable Rate Total Rev. Billable Hours Billable Rate Total Rev.
 GARZA AND NEELY, CPAs Sales Revenue Budget For the Year Ending December 31, 2012 Quarter 3 Quarter 4 Dept. Billable Hours Billable Rate Total Rev. Billable Hours Billable Rate Total Rev.
 GARZA AND NEELY, CPAs Sales Revenue Budget For the Year Ending December 31, 2012 Year Dept. Billable Hours Billable Rate Total Rev.

Exercise 22-1

(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.)

 Standard cost \$ 22.89

Brief Exercise 23-3

In Harley Company it costs \$28 per unit (\$19 variable and \$9 fixed) to make a product that normally sells for \$46. A foreign wholesaler offers to buy 4,450 units at \$27 each. Harley will incur special shipping costs of \$2 per unit. Assuming that Harley has excess operating capacity.

Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

 Reject Order Accept Order Net Income Increase (Decrease)
 The special order should beaccepted.

Brief Exercise 23-4

Vintech Manufacturing incurs unit costs of \$7 (\$5 variable and \$2 fixed) in making a subassembly part for its finished product. A supplier offers to make 15,500 of the part at \$5.90 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.

Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

 Make Buy Net Income Increase (Decrease) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost
 The decision should be tomake the part.

Brief Exercise 23-6