a standard cost a changes in direct proportion to changes in the level of activity b 648636

Aug 30, 2021 | Uncategorized

1. A standard cost (a) changes in direct proportion to changes in the level of activity, (b) is an amount incurred at the actual level of production for the period, or (c) is an amount incurred under normal conditions to provide a product or service.

2. What is a cost variance?

3. The following information is available for York Company.

The labor efficiency variance is (a) $3,750 U, (b) $3,750 F, or (c) $3,875 U.

if standard costs are recorded in the manufacturing accounts how are recorded varian 648638

Aug 30, 2021 | Uncategorized

1. A company uses a standard cost accounting system. Prepare the journal entry to record these  direct materials variances:

2. If standard costs are recorded in the manufacturing accounts, how are recorded variances treated at the end of an accounting period?

the following actual financial results are available for may prepare a flexible budg 648644

Aug 30, 2021 | Uncategorized

Santana Company sold 100,000 units of its product in May. For the level of production achieved in May, the budgeted amounts were: sales, $850,000; variable costs, $675,000; and fixed costs, $150,000. The following actual financial results are available for May. Prepare a flexible budget performance report for May.

masters company applies overhead using machine hours and reports the following infor 648651

Aug 30, 2021 | Uncategorized

Masters Company applies overhead using machine hours and reports the following information. Compute the total variable overhead cost variance.

compute the variable overhead spending variance and the variable overhead efficiency 648652

Aug 30, 2021 | Uncategorized

1. Masters Company applies overhead using machine hours and reports the following information. Compute the total variable overhead cost variance.

2. Compute the variable overhead spending variance and the variable overhead efficiency variance.

the following information describes a company s usage of direct labor in a recent pe 648657

Aug 30, 2021 | Uncategorized

The following information describes a company’s usage of direct labor in a recent period. Compute the direct labor rate and efficiency variances for the period.

aigne corp reports the following for november compute the controllable overhead vari 648658

Aug 30, 2021 | Uncategorized

1. Funk Co. expects to produce 48,000 units for the year. The company’s flexible budget for 48,000 units of production shows variable overhead costs of $72,000 and fixed overhead costs of $64,000. For the year, the company incurred actual overhead costs of $122,800 while producing 40,000 units. Compute the controllable overhead variance.

2. Aigne Corp. reports the following for November. Compute the controllable overhead variance for November.

aigne corp reports the following for november compute the controllable overhead vari 648659

Aug 30, 2021 | Uncategorized

1. Aigne Corp. reports the following for November. Compute the controllable overhead variance for November.

2. Compute the volume variance for November.

mesa company s fixed budget for the first quarter of calendar year 2011 reveals the 648661

Aug 30, 2021 | Uncategorized

Mesa Company’s fixed budget for the first quarter of calendar year 2011 reveals the following. Prepare flexible budgets following the format of Exhibit 24.3 that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 7,500, 10,000, and 12,500 units.

prepare a flexible budget performance report that shows any variances between budget 648663

Aug 30, 2021 | Uncategorized

Cimarron Company’s fixed budget performance report for July follows. The $630,000 budgeted expenses include $588,000 variable expenses and $42,000 fixed expenses. Actual expenses include $54,000 fixed expenses. Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.

daytec company s fixed budget performance report for june follows the 440 000 budget 648664

Aug 30, 2021 | Uncategorized

Daytec Company’s fixed budget performance report for June follows. The $440,000 budgeted expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses. Prepare a flexible budget performance report showing any variances between budgeted and actual results. List fixed and variable expenses separately.

sonic company set the following standard costs for one unit of its product for 2011 648666

Aug 30, 2021 | Uncategorized

Sonic Company set the following standard costs for one unit of its product for 2011.

The $3.00 ($2.50 + $0.50) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget information is also available.

During the current month, the company operated at 70% of capacity, employees worked 500,000 hours, and the following actual overhead costs were incurred.

(1) Show how the company computed its predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead. (2) Compute the variable and fixed overhead variances.

prepare a one page report on the results of your analysis comment on the volume of s 648567

Aug 30, 2021 | Uncategorized

Multiproduct break even analysis is often viewed differently when actually applied in practice. You are to visit a local fast food restaurant and count the number of items on the menu. To apply multiproduct break even analysis to the restaurant, similar menu items must often be fit into groups. A reasonable approach is to classify menu items into approximately five groups. We then estimate average selling price and average variable cost to compute average contribution margin. (Hint: For fast food restaurants, the highest contribution margin is with its beverages, at about 90%.)

Required

1. Prepare a one year multiproduct break even analysis for the restaurant you visit. Begin by establishing groups. Next, estimate each group’s volume and contribution margin. These estimates are necessary to compute each group’s contribution margin. Assume that annual fixed costs in total are $500,000 per year.

2. Prepare a one page report on the results of your analysis. Comment on the volume of sales necessary to break even at a fast food restaurant.

wild wood company s management asks you to prepare its master budget using the follo 648572

Aug 30, 2021 | Uncategorized

Wild Wood Company’s management asks you to prepare its master budget using the following information. The budget is to cover the months of April, May, and June of 2011.

Additional Information

a. Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product’s selling price is $25 per unit.

b. Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit.

c. Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in April and $4,000 per month thereafter.

d. Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long term note payable.

e. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale).

f. All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month.

 g. The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short term note to reach the minimum. Short term notes require an interest payment of 1% at each month end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short term notes payable balance.

h. Dividends of $100,000 are to be declared and paid in May.

i. No cash payments for income taxes are to be made during the second calendar quarter. Income taxes will be assessed at 35% in the quarter.

j. Equipment purchases of $55,000 are scheduled for June.

Required

Prepare the following budgets and other financial information as required:

1. Sales budget, including budgeted sales for July.

2. Purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the June 30 budgeted inventory.

3. Selling expense budget.

4. General and administrative expense budget.

5. Expected cash receipts from customers and the expected June 30 balance of accounts receivable.

6. Expected cash payments for purchases and the expected June 30 balance of accounts payable.

7. Cash budget.

8. Budgeted income statement.

9. Budgeted statement of retained earnings.

10. Budgeted balance sheet.

kyoto inc predicts the following sales in units for the coming three months 648589

Aug 30, 2021 | Uncategorized

Kyoto, Inc. predicts the following sales in units for the coming three months:

Each month’s ending inventory of finished units should be 60% of the next month’s sales. The April 30 finished goods inventory is 168 units. Compute Kyoto’s budgeted production (in units) for May.

prepare a sales budget for the months of january february and march 648591

Aug 30, 2021 | Uncategorized

Shay, Inc., is preparing its master budget for the quarter ending March 31. It sells a single product for $25 per unit. Budgeted sales for the next four months follow. Prepare a sales budget for the months of January, February, and March.

the january 1 balance in accounts receivable is 10 000 prepare a schedule of budgete 648592

Aug 30, 2021 | Uncategorized

1. Shay, Inc., is preparing its master budget for the quarter ending March 31. It sells a single product for $25 per unit. Budgeted sales for the next four months follow. Prepare a sales budget for the months of January, February, and March.

2. In addition, sales are 40% cash and 60% on credit. All credit sales are collected in the month following the sale. The January 1 balance in accounts receivable is $10,000. Prepare a schedule of budgeted cash receipts for January, February, and March.

company policy is to end each month with merchandise inventory equal to a specified 648595

Aug 30, 2021 | Uncategorized

Formworks Company prepares monthly budgets. The current budget plans for a September ending inventory of 15,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the three most recent months follow. (1) Prepare the merchandise purchases budget for the months of July, August, and September. (2) Compute the ratio of ending inventory to the next month’s sales for each budget prepared in part 1. (3) How many units are budgeted for sale in October?

kasik co budgeted the following cash receipts and cash disbursements for the first t 648596

Aug 30, 2021 | Uncategorized

Kasik Co. budgeted the following cash receipts and cash disbursements for the first three months of next year.

According to a credit agreement with the company’s bank, Kasik promises to have a minimum cash balance of $30,000 at each month end. In return, the bank has agreed that the company can borrow up to $150,000 at an annual interest rate of 12%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1. Prepare monthly cash budgets for each of the first three months of next year.

sand dollar company purchases all merchandise on credit it recently budgeted the fol 648599

Aug 30, 2021 | Uncategorized

Sand Dollar Company purchases all merchandise on credit. It recently budgeted the following month end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,300,000; June, $1,450,000; July, $1,350,000; and August, $1,400,000. Use the available information to compute the budgeted amounts of (1) merchandise purchases for June, July, and August and (2) cost of goods sold for June, July, and August.

sound check a merchandising company specializing in home computer speakers budgets i 648600

Aug 30, 2021 | Uncategorized

Sound Check, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory in each month to equal 25% of the next month”s budgeted cost of goods sold. All purchases are on credit, and 20% of the purchases in a month is paid for in the same month. Another 50% is paid for during the first month after purchase, and the remaining 30% is paid for in the second month after purchase. The following sales budgets are set: July, $300,000; August, $240,000; September, $270,000; October, $240,000; and November, $210,000. Compute the following: (1) budgeted merchandise purchases for July, August, September, and October; (2) budgeted payments on accounts payable for September and October; and (3) budgeted ending balances of accounts payable for September and October. (Hint: For part 1, refer to Exhibits 23.7 and 23.8 for guidance, but note that budgeted sales are in dollars for this assignment.)

each transmission requires 0 60 pounds of a key raw material nascar company aims to 648602

Aug 30, 2021 | Uncategorized

1. Nascar Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending inventory for the first quarter will be 37,500 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 225,000 units; third quarter, 262,500 units; and fourth quarter, 237,500 units. Company policy calls for the ending inventory of a quarter to equal 20% of the next quarter’s budgeted sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.

2. Each transmission requires 0.60 pounds of a key raw material. Nascar Company aims to end each quarter with an ending inventory of direct materials equal to 50% of next quarter’s budgeted materials requirements. Direct materials cost $175 per unit. Prepare a direct materials budget for the second quarter.

prepare a cash budget for october november and december round interest payments to t 648607

Aug 30, 2021 | Uncategorized

Fabrice Corp. requires a minimum $6,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at monthend. The cash balance on October 1 is $6,000 and the company has an outstanding loan of $2,000. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. Prepare a cash budget for October, November, and December. Round interest payments to the nearest whole dollar.

cambridge inc is preparing its master budget for the quarter ended june 30 budgeted 648608

Aug 30, 2021 | Uncategorized

Cambridge, Inc. is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow:

Sales are 60% cash and 40% on credit. All credit sales are collected in the month following the sale. The March 30 balance sheet includes balances of $12,000 in cash, $12,000 in accounts receivable, $11,000 in accounts payable, and a $2,000 balance in loans payable. A minimum cash balance of $12,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), shipping (3% of sales), office salaries ($3,000 per month) and rent ($5,000 per month). Prepare a cash budget for each of the months of April, May, and June (round all dollar amounts to the nearest whole dollar).

kool ray is preparing its master budget for the quarter ended september 30 budgeted 648609

Aug 30, 2021 | Uncategorized

Kool Ray is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow:

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $12,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $2,000 balance in loans payable. A minimum cash balance of $12,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month). (1) Prepare a cash receipts budget for July, August, and September. (2) Prepare a cash budget for each of the months of July, August, and September. (Round all dollar amounts to the nearest whole dollar.)

The following information is available for Zhao Company:

a. The cash budget for March shows an ending bank loan of $10,000 and an ending cash balance of $48,000. b. The sales budget for March indicates sales of $120,000. Accounts receivable are expected to be 70% of the current month sales.

c. The merchandise purchases budget indicates that $89,000 in merchandise will be purchased on account in March. Purchases on account are paid 100% in the month following the purchase. Ending inventory for March is predicted to be 600 units at a cost of $35 each.

d. The budgeted income statement for March shows net income of $48,000. Depreciation expense of $1,000 and $26,000 in income tax expense were used in computing net income for March. Accrued taxes will be paid in April.

e. The balance sheet for February shows equipment of $84,000 with accumulated depreciation of $30,000, common stock of $25,000, and ending retained earnings of $8,000. There are no changes budgeted in the equipment or common stock accounts.

Prepare a budgeted balance sheet for March.

the company sells a single product at a price of 25 per unit sales in units are fore 648610

Aug 30, 2021 | Uncategorized

Zulu, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 40,000 for January, 60,000 for February, and 50,000 for March. Cost of goods sold is $14 per unit. Other expense information for the first quarter follows. Prepare a budgeted income statement for this first quarter.

prepare a direct materials budget for april may and june 648613

Aug 30, 2021 | Uncategorized

1. Rad Co. provides the following sales forecast for the next four months:

The company wants to end each month with ending finished goods inventory equal to 20% of next month’s sales. Finished goods inventory on April 1 is 174 units. Assume July’s budgeted production is 540 units.

Prepare a production budget for the months of April, May, and June.

2. In addition, assume each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginning raw materials inventory for April was 663 pounds.

Prepare a direct materials budget for April, May, and June.

match the definitions 1 through 9 with the term or phrase a through i 648614

Aug 30, 2021 | Uncategorized

Match the definitions 1 through 9 with the term or phrase a through i.

A. Master budget

B. General and administrative expense budget

C. Budget

D. Safety stock

E. Budgeted income statement

F. Budgeted balance sheet

G. Sales budget

H. Cash budget

I. Merchandise purchases budget

1. A plan that shows the units or costs of merchandise to be purchased by a merchandising company during the budget period.

2. An accounting report that presents predicted amounts of the company’s assets, liabilities, and equity balances at the end of the budget period.

3. A plan showing the units of goods to be sold and the sales to be derived; the usual starting point in the budgeting process.

4. An accounting report that presents predicted amounts of the company’s revenues and expenses for the budgeting period.

5. A quantity of inventory or materials over the minimum to reduce the risk of running short.

6. A comprehensive business plan that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet.

7. A formal statement of a company’s future plans, usually expressed in monetary terms.

8. A plan that shows predicted operating expenses not included in the selling expenses budget.

9. A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from any loans needed to maintain a minimum cash balance and repayments of such loans.

participatory budgeting can sometimes lead to negative consequences identify three p 648615

Aug 30, 2021 | Uncategorized

1. Participatory budgeting can sometimes lead to negative consequences. Identify three potential negative outcomes that can arise from participatory budgeting.

2. Kirk Co. CPA is preparing activity based budgets for 2011. The partners expect the firm to generate billable hours for the year as follows:

The company pays $8 per hour to data entry clerks, $40 per hour to audit personnel, $50 per hour to tax personnel, and $50 per hour to consulting personnel. Prepare a schedule of budgeted labor costs for 2011 using activity based budgeting.

as a result a new policy dictates that ending inventory in any month should equal 40 648616

Aug 30, 2021 | Uncategorized

Pinsetter’s Supply is a merchandiser of three different products. The company’s February 28 inventories are footwear, 15,500 units; sports equipment, 70,000 units; and apparel, 40,000 units. Management believes that excessive inventories have accumulated for all three products. As a result, a new policy dictates that ending inventory in any month should equal 40% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow.

Required

1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.

2. The purchases budgets in part 1 should reflect fewer purchases of all three products in March compared to those in April and May. What factor caused fewer purchases to be planned? Suggest business conditions that would cause this factor to both occur and impact the company in this way.

abacus company sells its product for 125 per unit its actual and projected sales fol 648617

Aug 30, 2021 | Uncategorized

Abacus Company sells its product for $125 per unit. Its actual and projected sales follow.

All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 30% in the month after the sale, 48% in the second month after the sale, and 2% proves to be uncollectible. The product’s purchase price is $100 per unit. All purchases are payable within 12 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 25% of the next month’s unit sales plus a safety stock of 100 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,200,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month end is $60,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $60,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 9% interest rate. On May 31, the loan balance is $32,000, and the company’s cash balance is $60,000.

Required

1. Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July.

2. Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.

3. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.

4. Prepare a table showing the computation of cash payments on product purchases for June and July.

5. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month.

6. Refer to your answer to part 5. Abacus’s cash budget indicates the company will need to borrow more than $40,000 in June and will need to borrow $60,000 in July. Suggest some reasons that knowing this information in May would be helpful to management.

lilliput a one product mail order firm buys its product for 60 per unit and sells it 648618

Aug 30, 2021 | Uncategorized

Lilliput, a one product mail order firm, buys its product for $60 per unit and sells it for $130 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows.

Management expects December’s results to be repeated in January, February, and March of 2012 without any changes in strategy. Management, however, has an alternative plan. It believes that unit sales will increase at a rate of 10% each month for the next three months (beginning with January) if the item’s selling price is reduced to $115 per unit and advertising expenses are increased by 25% and remain at that level for all three months. The cost of its product will remain at $60 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same.

Required

1. Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes. Use a three column format, with one column for each month.

2. Use the budgeted income statements from part 1 to recommend whether management should implement the proposed changes. Explain.

hubert tax service offers tax and consulting services to individuals and small busin 648542

Aug 30, 2021 | Uncategorized

Hubert Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs of three types of tax returns follow. Hubert provides services in the ratio of 4:4:2 (easy, moderate, business). Fixed costs total $20,000 for the tax season. Use this information to determine the (1) selling price per composite unit, (2) variable costs per composite unit, (3) breakeven point in composite units, and (4) number of units of each product that will be sold at the break even point. Round answer to part (3) to two decimals.

use the information to determine the 1 weightedaverage contribution margin 2 break e 648543

Aug 30, 2021 | Uncategorized

1. Hubert Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs of three types of tax returns follow. Hubert provides services in the ratio of 4:4:2 (easy, moderate, business). Fixed costs total $20,000 for the tax season. Use this information to determine the (1) selling price per composite unit, (2) variable costs per composite unit, (3) breakeven point in composite units, and (4) number of units of each product that will be sold at the break even point. Round answer to part (3) to two decimals.

2. Use the information to determine the (1) weightedaverage contribution margin, (2) break even point in units, and (3) number of units of each product that will be sold at the break even point. Round answer to part (2) to one decimal.

the following costs result from the production and sale of 4 000 drum sets manufactu 648545

Aug 30, 2021 | Uncategorized

The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011. The drum sets sell for $250 each. The company has a 25% income tax rate.

Required

1. Prepare a contribution margin income statement for the company.

2. Compute its contribution margin per unit and its contribution margin ratio.

3. Interpret the contribution margin and contribution margin ratio from part 2.

estimate product xt s break even point in terms of a sales units and b sales dollars 648546

Aug 30, 2021 | Uncategorized

Edge Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $150 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $200,000, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $100 per 100 yards of XT rope.

Required

1. Estimate Product XT’s break even point in terms of (a) sales units and (b) sales dollars.

2. Prepare a CVP chart for Product XT like that in Exhibit 22.14. Use 5,500 units (550,000 yards/100 yards) as the maximum number of sales units on the horizontal axis of the graph, and $900,000 as the maximum dollar amount on the vertical axis.

3. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break even point.

alden co s monthly sales and cost data for its operating activities of the past year 648547

Aug 30, 2021 | Uncategorized

Alden Co.’s monthly sales and cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.

Required

1. Prepare a scatter diagram for these data with sales volume (in $) plotted on the horizontal axis and total cost plotted on the vertical axis.

2. Estimate both the variable costs per sales dollar and the total monthly fixed costs using the high low method. Draw the total costs line on the scatter diagram in part 1.

3. Use the estimated line of cost behavior and results from part 2 to predict future total costs when sales volume is (a) $380,000 and (b) $420,000.

compute the predicted break even point in dollar sales for year 2012 assuming the ma 648548

Aug 30, 2021 | Uncategorized

Jetson Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. The maximum output capacity of the company is 40,000 units per year.

Required

1. Compute the break even point in dollar sales for year 2011.

2. Compute the predicted break even point in dollar sales for year 2012 assuming the machine is installed and there is no change in the unit sales price.

3. Prepare a forecasted contribution margin income statement for 2012 that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change, and no income taxes will be due.

4. Compute the sales level required in both dollars and units to earn $140,000 of after tax income in 2012 with the machine installed and no change in the unit sales price. Assume that the income tax rate is 30%.

5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume an income tax rate of 30%.

if sales greatly decrease which product would experience a greater loss explain 648549

Aug 30, 2021 | Uncategorized

Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.

Required

1. Compute the break even point in dollar sales for each product.

2. Assume that the company expects sales of each product to decline to 33,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as just shown with columns for each of the two products (assume a 32% tax rate). Also, assume that any loss before taxes yields a 32% tax savings.

3. Assume that the company expects sales of each product to increase to 64,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement shown with columns for each of the two products (assume a 32% tax rate).

4. If sales greatly decrease, which product would experience a greater loss? Explain.

5. Describe some factors that might have created the different cost structures for these two products.

manufacturing and selling the product required 120 000 of fixed manufacturing costs 648550

Aug 30, 2021 | Uncategorized

This year Cairo Company sold 35,000 units of its only product for $16 per unit. Manufacturing and selling the product required $120,000 of fixed manufacturing costs and $180,000 of fixed selling and administrative costs. Its per unit variable costs follow.

Next year the company will use new material, which will reduce material costs by 60% and direct labor costs by 40% and will not affect product quality or marketability. Management is considering an increase in the unit sales price to reduce the number of units sold because the factory’s output is nearing its annual output capacity of 40,000 units. Two plans are being considered. Under plan 1, the company will keep the price at the current level and sell the same volume as last year. This plan will increase income because of the reduced costs from using the new material. Under plan 2, the company will increase price by 25%. This plan will decrease unit sales volume by 10%. Under both plans 1 and 2, the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the same.

Required

1. Compute the break even point in dollar sales for both (a) plan 1 and (b) plan 2.

2. Prepare a forecasted contribution margin income statement with two columns showing the expected results of plan 1 and plan 2. The statements should report sales, total variable costs, contribution margin, total fixed costs, income before taxes, income taxes (30% rate), and net income.

if the company continues to use the old material determine its break even point in b 648551

Aug 30, 2021 | Uncategorized

National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $55; white, $85; and blue, $110. The per unit variable costs to manufacture and sell these products are red, $40; white, $60; and blue, $80. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $150,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $10; white, by $20; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $20,000. (Round answers to whole composite units.)

Required

1. If the company continues to use the old material, determine its break even point in both sales units and sales dollars of each individual product.

2. If the company uses the new material, determine its new break even point in both sales units and sales dollars of each individual product.

3. What insight does this analysis offer management for long term planning?

the following costs result from the production and sale of 480 000 cd sets manufactu 648552

Aug 30, 2021 | Uncategorized

The following costs result from the production and sale of 480,000 CD sets manufactured by Trace Company for the year ended December 31, 2011. The CD sets sell for $4.50 each. The company has a 25% income tax rate.

Required

1. Prepare a contribution margin income statement for the company.

2. Compute its contribution margin per unit and its contribution margin ratio.

3. Interpret the contribution margin and contribution margin ratio from part 2.

prepare a contribution margin income statement showing sales variable costs and fixe 648553

Aug 30, 2021 | Uncategorized

Jammin Co. manufactures and markets several products. Management is considering the future of one product, electronic keyboards, that has not been as profitable as planned. Since this product is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $225 selling price per unit. The fixed costs for the year are expected to be $30,000, up to a maximum capacity of 700 units. Forecasted variable costs are $150 per unit.

Required

1. Estimate the keyboards’ break even point in terms of (a) sales units and (b) sales dollars.

2. Prepare a CVP chart for keyboards like that in Exhibit 22.14. Use 700 keyboards as the maximum number of sales units on the horizontal axis of the graph, and $180,000 as the maximum dollar amount on the vertical axis.

3. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for keyboards at the break even point.

koto co s monthly sales and costs data for its operating activities of the past year 648554

Aug 30, 2021 | Uncategorized

Koto Co.’s monthly sales and costs data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.

Required

1. Prepare a scatter diagram for these data with sales volume (in $) plotted on the horizontal axis and total costs plotted on the vertical axis.

2. Estimate both the variable costs per sales dollar and the total monthly fixed costs using the high low method. Draw the total costs line on the scatter diagram in part 1.

3. Use the estimated line of cost behavior and results from part 2 to predict future total costs when sales volume is (a) $150 and (b) $250.

prepare a forecasted contribution margin income statement that shows the results at 648555

Aug 30, 2021 | Uncategorized

Caruso Co. sold 40,000 units of its only product and incurred a $100,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $300,000. The maximum output capacity of the company is 80,000 units per year.

Required

1. Compute the break even point in dollar sales for year 2011.

2. Compute the predicted break even point in dollar sales for year 2012 assuming the machine is installed and no change occurs in the unit sales price. (Round the change in variable costs to a whole number.)

3. Prepare a forecasted contribution margin income statement for 2012 that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change, and no income taxes will be due.

4. Compute the sales level required in both dollars and units to earn $280,000 of after tax income in 2012 with the machine installed and no change in the unit sales price. Assume that the income tax rate is 30%.

5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume an income tax rate of 30%.

they have no shared costs this year the company sold 120 000 units of each product s 648556

Aug 30, 2021 | Uncategorized

Dominico Co. produces and sells two products, BB and TT. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 120,000 units of each product. Sales and costs for each product follow.

Required

1. Compute the break even point in dollar sales for each product.

2. Assume that the company expects sales of each product to decline to 104,000 units next year with no change in the unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 35% tax rate, and that any loss before taxes yields a 35% tax savings).

3. Assume that the company expects sales of each product to increase to 190,000 units next year with no change in the unit sales prices. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 35% tax rate).

4. If sales greatly increase, which product would experience a greater increase in profit? Explain.

5. Describe some factors that might have created the different cost structures for these two products.

the company buys its product in bulk and repackages it for resale at the price of 25 648557

Aug 30, 2021 | Uncategorized

This year Jostens Company earned a disappointing 4.2% after tax return on sales (Net income/Sales) from marketing 100,000 units of its only product. The company buys its product in bulk and repackages it for resale at the price of $25 per unit. Jostens incurred the following costs this year.

The marketing manager claims that next year’s results will be the same as this year’s unless some changes are made. The manager predicts the company can increase the number of units sold by 80% if it reduces the selling price by 20% and upgrades the packaging. This change would increase variable packaging costs by 25%. Increased sales would allow the company to take advantage of a 20% quantity purchase discount on the cost of the bulk product. Neither the packaging change nor the volume discount would affect fixed costs, which provide an annual output capacity of 200,000 units.

Required

1. Compute the break even point in dollar sales under the (a) existing business strategy and (b) new strategy that alters both unit sales price and variable costs.

2. Prepare a forecasted contribution margin income statement with two columns showing the expected results of (a) the existing strategy and (b) changing to the new strategy. The statements should report sales, total variable costs (unit and packaging), contribution margin, fixed costs, income before taxes, income taxes, and net income. Also determine the after tax return on sales for these two strategies.

what insight does this analysis offer management for long term planning 648558

Aug 30, 2021 | Uncategorized

Texon Co. manufactures and sells three products: product 1, product 2, and product 3. Their unit sales prices are product 1, $40; product 2, $30; and product 3, $14. The per unit variable costs to manufacture and sell these products are product 1, $30; product 2, $20; and product 3, $8. Their sales mix is reflected in a ratio of 6 : 3: 5. Annual fixed costs shared by all three products are $200,000. One type of raw material has been used to manufacture products 1 and 2. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: product 1 by $10, and product 2, by $5. However, the new material requires new equipment, which will increase annual fixed costs by $50,000.

Required

1. If the company continues to use the old material, determine its break even point in both sales units and sales dollars of each individual product.

2. If the company uses the new material, determine its new break even point in both sales units and sales dollars of each individual product.

3. What insight does this analysis offer management for long term planning?

identify several of the variable mixed and fixed costs that the blackberry services 648560

Aug 30, 2021 | Uncategorized

Research In Motion offers services to Blackberry customers that allows them subscription access for wireless connectivity via a mobile carrier. As you complete the following requirements, assume that the Blackberry services department uses many of Research In Motion’s existing resources such as its software, phone systems, account databases and buildings.

Required

1. Identify several of the variable, mixed, and fixed costs that the Blackberry services department is likely to incur in carrying out its services.

2. Assume that Blackberry services revenues are expected to grow by 25% in the next year. How do you expect the costs identified in part 1 to change, if at all?

3. Based on your answer to part 2, can Research In Motion use the contribution margin ratio to predict how income will change in response to increases in Blackberry services revenues?

both research in motion and apple sell numerous hand held consumer products and each 648561

Aug 30, 2021 | Uncategorized

Both Research In Motion and Apple sell numerous hand held consumer products, and each of these companies has a different product mix.

Required

1. Assume the following data are available for both companies. Compute each company’s break even point in unit sales. (Each company sells many hand held consumer products at many different selling prices, and each has its own variable costs. This assignment assumes an average selling price per unit and an average cost per item.)

2. If unit sales were to decline, which company would experience the larger decline in operating profit? Explain.

write a one page memorandum to the mechanics and owners that describes the direct la 648562

Aug 30, 2021 | Uncategorized

Labor costs of an auto repair mechanic are seldom based on actual hours worked. Instead, the amount paid a mechanic is based on an industry average of time estimated to complete a repair job. The repair shop bills the customer for the industry average amount of time at the repair center’s billable cost per hour. This means a customer can pay, for example, $120 for two hours of work on a car when the actual time worked was only one hour. Many experienced mechanics can complete repair jobs faster than the industry average. The average data are compiled by engineering studies and surveys conducted in the auto repair business. Assume that you are asked to complete such a survey for a repair center. The survey calls for objective input, and many questions require detailed cost data and analysis. The mechanics and owners know you have the survey and encourage you to complete it in a way that increases the average billable hours for repair work.

Required

Write a one page memorandum to the mechanics and owners that describes the direct labor analysis you will undertake in completing this survey.

your team is to prepare two separate lists of questions that enable you to complete 648565

Aug 30, 2021 | Uncategorized

A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational materials at the theater for a set charge per student during school hours. The owner asks your help to prepare a CVP analysis listing the cost and sales projections for the proposal. The owner must propose to the school’s administration a charge per child. At a minimum, the charge per child needs to be sufficient for the theater to break even.

Required

Your team is to prepare two separate lists of questions that enable you to complete a reliable CVP analysis of this situation. One list is to be answered by the school’s administration, the other by the owner of the movie theater.

the following net income calculation is on the denver store manager s performance re 648505

Aug 30, 2021 | Uncategorized

Home Station is a national home improvement chain with more than 100 stores throughout the country. The manager of each store receives a salary plus a bonus equal to a percent of the store’s net income for the reporting period. The following net income calculation is on the Denver store manager’s performance report for the recent monthly period.

In previous periods, the bonus had also been 0.5%, but the performance report had not included any charges for the home office expense, which is now assigned to each store as a percent of its sales.

Required

Assume that you are the national office manager. Write a one half page memorandum to your store managers explaining why home office expense is in the new performance report.

which product line s net sales grew the fastest 648510

Aug 30, 2021 | Uncategorized

Selected product data from Nokia follow.

Required

1. Compute the percentage growth in net sales for each product line from fiscal year 2008 to 2009. Round percents to one decimal.

2. Which product line’s net sales grew the fastest?

3. Which segment was the most profitable?

4. How can Nokia’s managers use this information?

the following information is available for a company s maintenance cost over the las 648523

Aug 30, 2021 | Uncategorized

The following information is available for a company’s maintenance cost over the last seven months. Using the high low method, estimate both the fixed and variable components of its maintenance cost.

mcu phone company sells its cordless phone for 300 per unit fixed costs total 540 00 648524

Aug 30, 2021 | Uncategorized

1. Compute and interpret the contribution margin ratio using the following data: sales, $150,000; total variable cost, $90,000.

2. MCU Phone Company sells its cordless phone for $300 per unit. Fixed costs total $540,000, and variable costs are $120 per unit. Determine the (1) contribution margin per unit and (2) break even point in units.

3. MCU Phone Company sells its cordless phone for $300 per unit. Fixed costs total $540,000, and variable costs are $120 per unit. Determine the (1) contribution margin per unit and (2) break even point in units.

4. How will the break even point in units change in response to each of the following independent changes in selling price per unit, variable cost per unit, or total fixed costs? Use I for increase and D for decrease. (It is not necessary to compute new break even points.)

a recent income statement for volkswagen reports the following in millions assume 70 648528

Aug 30, 2021 | Uncategorized

A recent income statement for Volkswagen reports the following (in € millions). Assume 70 percent of the cost of sales and 70 percent of the selling and administrative costs are variable costs, and the remaining 30 percent of each is fixed. Compute the contribution margin (in € millions). (Round computations using percentages to the nearest whole euro.)

draw an estimated line of cost behavior and determine whether the cost appears to be 648529

Aug 30, 2021 | Uncategorized

A company reports the following information about its sales and its cost of sales. Each unit of its product sells for $500. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.

the left column lists several cost classifications the right column presents short d 648531

Aug 30, 2021 | Uncategorized

The left column lists several cost classifications. The right column presents short definitions of those costs.

In the blank space beside each of the numbers in the right column, write the letter of the cost best described by the definition.

A. Curvilinear cost

B. Step wise cost

C. Fixed cost

D. Mixed cost

E. Variable cost

F. Total cost

1. This cost increases in direct proportion to increases in volume; its amount is constant for each unit produced.

2. This cost remains constant over a limited range of volume; when it reaches the end of its limited range, it changes by a lump sum and remains at that level until it exceeds another limited range.

3. This cost has a component that remains the same over all volume levels and another component that increases in direct proportion to increases in volume.

4. This cost increases when volume increases, but the increase is not constant for each unit produced.

5. This cost remains constant over all volume levels within the productive capacity for the planning period.

6. This cost is the combined amount of all the other costs.

following are five series of costs a through e measured at various volume levels exa 648532

Aug 30, 2021 | Uncategorized

Following are five series of costs A through E measured at various volume levels. Examine each series and identify which is fixed, variable, mixed, step wise, or curvilinear.

use the following information about sales and costs to prepare a scatter diagram dra 648533

Aug 30, 2021 | Uncategorized

1. Orlando Company management predicts that it will incur fixed costs of $250,000 and earn pretax income of $350,000 in the next period. Its expected contribution margin ratio is 60%. Use this information to compute the amounts of (1) total dollar sales and (2) total variable costs.

2. Use the following information about sales and costs to prepare a scatter diagram. Draw a cost line that reflects the behavior displayed by this cost. Determine whether the cost is variable, step wise, fixed, mixed, or curvilinear.

felix co reports the following information about its sales and cost of sales draw an 648534

Aug 30, 2021 | Uncategorized

Felix & Co. reports the following information about its sales and cost of sales. Draw an estimated line of Vcost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high low method to estimate the fixed and variable components of the cost of sales.

use spreadsheet software to use ordinary least squares regression to estimate the co 648535

Aug 30, 2021 | Uncategorized

1. Felix & Co. reports the following information about its sales and cost of sales. Draw an estimated line of Vcost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high low method to estimate the fixed and variable components of the cost of sales.

2.Use spreadsheet software to use ordinary least squares regression to estimate the cost equation, including fixed and variable cost amounts.

time to see company began operations in january 2011 with two operating selling depa 648493

Aug 30, 2021 | Uncategorized

Time To See Company began operations in January 2011 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.

Time To See plans to open a third department in January 2012 that will sell paintings. Management predicts that the new department will generate $35,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,000; advertising, $800; store supplies, $500; and equipment depreciation, $200. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened the new painting department will fill onefifth of the space presently used by the clock department and one sixth used by the mirror department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the painting department to increase total office department expenses by $7,000. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 7%. No changes for those departments’ gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales.

Required

Prepare departmental income statements that show the company’s predicted results of operations for calendar year 2012 for the three operating (selling) departments and their combined totals. (Round percents to the nearest one tenth and dollar amounts to the nearest whole dollar.)

did the plant manager or the operating department managers better manage costs expla 648494

Aug 30, 2021 | Uncategorized

Becky Hoefer, the plant manager of Travel Far’s Indiana plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Hoefer also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments follow.

The office department’s annual budget and its actual costs follow.

Required

1. Prepare responsibility accounting performance reports like those in Exhibit 21.28 that list costs controlled by the following:

a. Manager of the camper department.

b. Manager of the trailer department.

c. Manager of the Indiana plant.

In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount.

2. Did the plant manager or the operating department managers better manage costs? Explain.

do you think delivery costs fit the definition of a joint cost explain 648495

Aug 30, 2021 | Uncategorized

Bloom Orchards produced a good crop of peaches this year. After preparing the following income statement, the company believes it should have given its No. 3 peaches to charity and saved its efforts.

In preparing this statement, the company allocated joint costs among the grades on a physical basis as an equal amount per pound. The company’s delivery cost records show that $30,000 of the $40,500 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $10,500 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.

Required

1. Prepare reports showing cost allocations on a sales value basis to the three grades of peaches. Separate the delivery costs into the amounts directly identifiable with each grade. Then allocate any shared delivery costs on the basis of the relative sales value of each grade.

2. Using your answers to part 1, prepare an income statement using the joint costs allocated on a sales value basis.

3. Do you think delivery costs fit the definition of a joint cost? Explain.

the departmental accounting system has a single account building occupancy cost in i 648496

Aug 30, 2021 | Uncategorized

Dixon’s has several departments that occupy all floors of a two story building that includes a basement floor. Dixon rented this building under a long term lease negotiated when rental rates were low. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.

The building has 7,500 square feet on each of the upper two floors but only 5,000 square feet in the basement. In prior periods, the accounting manager merely divided the $340,000 occupancy cost by 20,000 square feet to find an average cost of $17 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupies. Alex Ferrero manages a department that occupies 2,000 square feet of basement floor space. In discussing the departmental reports with other managers, she questions whether using the same rate per square foot for all departments makes sense because different floor space has different values. Ferrero checked a recent real estate report of average local rental costs for similar space that shows first floor space worth $40 per square foot, second floor space worth $20 per square foot, and basement space worth $10 per square foot (excluding costs for lighting and cleaning). Required

1. Allocate occupancy costs to Ferrero’s department using the current allocation method.

2. Allocate the building rent cost to Ferrero’s department in proportion to the relative market value of the floor space. Allocate to Ferrero’s department the lighting and heating costs in proportion to the square feet occupied (ignoring floor space market values). Then, compute the total occupancy cost allocated to Ferrero’s department.

3. Which allocation method would you prefer if you were a manager of a basement department?

the company s three cost centers and their cost drivers follow 648497

Aug 30, 2021 | Uncategorized

Prairie Landscaping has enjoyed profits for many years, but new competition has cut service revenue by as much as 30%. As a result, the company wants to better understand its costs. It decides to prepare an activity based cost analysis, including an estimate of the average cost of both general landscaping services and custom design landscaping services. The company’s three cost centers and their cost drivers follow.

The two main landscaping units and their related data follow.

Required

1. Compute the cost per cost driver for each of the three cost centers.

2. Use the results from part 1 to allocate costs from each of the three cost centers to both the general landscaping and the custom design landscaping units. Compute total cost and average cost per customer for both the general landscaping and the custom design landscaping units.

3. Without providing computations, would the average cost of general landscaping be higher or lower if all center costs were allocated based on the number of customers? Explain.

the april departmental budgets and actual costs for the two operating departments fo 648499

Aug 30, 2021 | Uncategorized

Aaron Braun, the plant manager of SOS Co.’s Chicago plant, is responsible for all of that plant’s costs other than his own salary. The plant has two operating departments and one service department. The refrigerator and dishwasher operating departments manufacture different products and have their own managers. The office department, which Braun also manages, provides services equally to the two operating departments. A monthly budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than his own, and other office costs plus all costs controlled by the two operating department managers. The April departmental budgets and actual costs for the two operating departments follow.

Required

1. Prepare responsibility accounting performance reports like those in Exhibit 21.28 that list costs controlled by the following:

a. Manager of the refrigerator department.

b. Manager of the dishwasher department.

c. Manager of the Chicago plant.

In each report, include the budgeted and actual costs for the month and show the amount by which each actual cost is over or under the budgeted amount.

2. Did the plant manager or the operating department managers better manage costs? Explain.

prepare reports showing cost allocations on a sales value basis to the three grades 648500

Aug 30, 2021 | Uncategorized

Sarah and Stew Salsa own and operate a tomato grove. After preparing the following income statement, Sarah believes they should have offered the No. 3 tomatoes to the public for free and saved themselves time and money.

In preparing this statement, Sarah and Stew allocated joint costs among the grades on a physical basis as an equal amount per pound. Also, their delivery cost records show that $7,000 of the $8,000 relates to crating the No. 1 and No. 2 tomatoes and hauling them to the buyer. The remaining $1,000 of delivery costs is for crating the No. 3 tomatoes and hauling them to the cannery.

Required

1. Prepare reports showing cost allocations on a sales value basis to the three grades of tomatoes. Separate the delivery costs into the amounts directly identifiable with each grade. Then allocate any shared delivery costs on the basis of the relative sales value of each grade. (Round percents to the nearest onetenth and dollar amounts to the nearest whole dollar.)

2. Using your answers to part 1, prepare an income statement using the joint costs allocated on a sales value basis.

3. Do you think delivery costs fit the definition of a joint cost? Explain.

if research in motion wishes to evaluate each of its product lines how can it alloca 648502

Aug 30, 2021 | Uncategorized

Review Research In Motion’s income statement in Appendix A and identify its revenues for the years ended February 27, 2010, February 28, 2009, and March 1, 2008. For the year ended February 27, 2010, Research In Motion reports the following product revenue mix. (Assume that its product revenue mix is the same for each of the three years reported when answering the requirements.)

Required

1. Compute the amount of revenue from each of its product lines for the years ended February 27, 2010, February 28, 2009, and March 1, 2008.

2. If Research In Motion wishes to evaluate each of its product lines, how can it allocate its operating expenses to each of them to determine each product line’s profitability?

3. Access Research In Motion’s annual report for a fiscal year ending after February 27, 2010, from its the SEC’s EDGAR database. Compute its revenues for its product lines for the most recent year(s). Compare those results to those from part 1. How has its product mix changed?

what is senior security s ethical responsibility in offering professional services 648504

Aug 30, 2021 | Uncategorized

Senior Security Co. offers a range of security services for senior citizens. Each type of service is considered within a separate department. Mary Pincus, the overall manager, is compensated partly on the basis of departmental performance by staying within the quarterly cost budget. She often revises operations to make sure departments stay within budget. Says Pincus, “I will not go over budget even if it means slightly compromising the level and quality of service. These are minor compromises that don’t significantly affect my clients, at least in the short term.”

Required

1. Is there an ethical concern in this situation? If so, which parties are affected? Explain.

2. Can Mary Pincus take action to eliminate or reduce any ethical concerns? Explain.

3. What is Senior Security’s ethical responsibility in offering professional services?

the following is taken from maxwell co s internal records of its factory with two op 648466

Aug 30, 2021 | Uncategorized

The following is taken from Maxwell Co.’s internal records of its factory with two operating departments. The cost driver for indirect labor and supplies is direct labor costs, and the cost driver for the remaining overhead items is number of hours of machine use. Compute the total amount of overhead cost allocated to Operating Department 1 using activity based costing.

which department contributes the largest dollar amount to total overhead which contr 648467

Aug 30, 2021 | Uncategorized

Use the information in the following table to compute each department’s contribution to overhead (both in dollars and as a percent). Which department contributes the largest dollar amount to total overhead? Which contributes the highest percent (as a percent of sales)? Round percents to one decimal.

compute return on assets for each of these best buy divisions each is an investment 648468

Aug 30, 2021 | Uncategorized

Compute return on assets for each of these Best Buy divisions (each is an investment center). Comment on the relative performance of each investment center. Round percents to one decimal.

compute return on assets for each of these best buy divisions each is an investment 648469

Aug 30, 2021 | Uncategorized

1. Compute return on assets for each of these Best Buy divisions (each is an investment center). Comment on the relative performance of each investment center. Round percents to one decimal.

2 .Assume a target income of 12% of average invested assets. Compute residual income for each of Best Buy’s divisions.

walt disney reports the following information for its two parks and resorts division 648472

Aug 30, 2021 | Uncategorized

Walt Disney reports the following information for its two Parks and Resorts divisions.

Assume Walt Disney uses a balanced scorecard and sets a target of 90% occupancy in its resorts. Using Exhibit 21.26 as a guide, show how the company’s performance on hotel occupancy would appear on a balanced scorecard report.

auto market pays 128 000 rent each year for its two story building the space in this 648475

Aug 30, 2021 | Uncategorized

Auto Market pays $128,000 rent each year for its two story building. The space in this building is occupied by five departments as specified here.

The company allocates 65% of total rent expense to the first floor and 35% to the second floor, and then allocates rent expense for each floor to the departments occupying that floor on the basis of space occupied. Determine the rent expense to be allocated to each department. (Round percents to the nearest one tenth and dollar amounts to the nearest whole dollar.)

2. For a recent year L’Oreal reported operating profit of €3,110 (in millions) for its Cosmetics division. Total assets were €11,314 at the beginning of the year and €12,988 (in millions) at the end of the year. Compute return on investment for the year. State your answer as a percent, rounded to one decimal.

prepare a summary table that reports the indirect expenses assigned to each of the f 648476

Aug 30, 2021 | Uncategorized

Won Han Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

(1) Use this information to allocate each of the three indirect expenses across the four departments.

(2) Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

pane company produces two types of glass shelving rounded edge and squared edge on t 648477

Aug 30, 2021 | Uncategorized

Pane Company produces two types of glass shelving, rounded edge and squared edge, on the same  production line. For the current period, the company reports the following data.

Pane’s controller wishes to apply activity based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines.

Use this information to (1) assign these three overhead cost pools to each of the two products using ABC, (2) determine average cost per foot for each of the two products using ABC, and (3) compare the average cost per foot under ABC with the average cost per foot under the current method for each product. For part 3, explain why a difference between the two cost allocation methods exists.

below are departmental income statements for a guitar manufacturer the manufacturer 648478

Aug 30, 2021 | Uncategorized

Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. (1) Prepare a departmental contribution report that shows each department’s contribution to overhead. (2) Based on contribution to overhead, should the electric guitar department be eliminated?

during 2011 the departments had the following direct expenses and occupied the follo 648479

Aug 30, 2021 | Uncategorized

Overroad Cycle Shop has two service departments (advertising and administration) and two operating departments (cycles and clothing). During 2011, the departments had the following direct expenses and occupied the following amount of floor space.

The advertising department developed and distributed 100 advertisements during the year. Of these, 76 promoted cycles and 24 promoted clothing. The store sold $300,000 of merchandise during the year. Of this amount, $225,000 is from the cycles department, and $75,000 is from the clothing department. The utilities expense of $64,000 is an indirect expense to all departments. Prepare a departmental expense allocation spreadsheet for Overroad Cycle Shop. The spreadsheet should assign (1) direct expenses to each of the four departments, (2) the $64,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising department’s expenses to the two operating departments on the basis of the number of ads placed that promoted a department’s products, and (4) the administrative department’s expenses to the two operating departments based on the amount of sales. Provide supporting computations for the expense allocations.

complete the spreadsheet by allocating the expenses of the two service departments a 648480

Aug 30, 2021 | Uncategorized

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Bookworm Bookstore. It reports the total amounts of direct and indirect expenses allocated to its five departments. Complete the spreadsheet by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.

Advertising and purchasing department expenses are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.

the diary showed the following hours and activities spent in the two departments all 648481

Aug 30, 2021 | Uncategorized

Monica Gellar works in both the jewelry department and the hosiery department of a retail store. Gellar assists customers in both departments and arranges and stocks merchandise in both departments. The store allocates Gellar’s $30,000 annual wages between the two departments based on a sample of the time worked in the two departments. The sample is obtained from a diary of hours worked that Gellar kept in a randomly chosen two week period. The diary showed the following hours and activities spent in the two departments. Allocate Gellar’s annual wages between the two departments. (Round percents to one decimal.)

bob daniels manages an auto dealership s service department the recent month s incom 648482

Aug 30, 2021 | Uncategorized

Bob Daniels manages an auto dealership’s service department. The recent month’s income statement for his department follows. (1) Analyze the items on the income statement and identify those that definitely should be included on a performance report used to evaluate Daniels’s performance. List them and explain why you chose them. (2) List and explain the items that should definitely be excluded. (3) List the items that are not definitely included or excluded and explain why they fall into that category.

comart a retailer of consumer goods provides the following information on two of its 648484

Aug 30, 2021 | Uncategorized

Comart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

(1) Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company? (2) Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company? (3) Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on assets. Should the new investment opportunity be accepted? Explain.

which department generates the most net income per dollar of sales which department 648485

Aug 30, 2021 | Uncategorized

Comart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

(1) Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company? (2) Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company? (3) Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on assets. Should the new investment opportunity be accepted? Explain.

2. Compute profit margin and investment turnover for each department. Which department generates the most net income per dollar of sales? Which department is most efficient at generating sales from average invested assets?

mid coast airlines uses the following performance measures classify each of the perf 648486

Aug 30, 2021 | Uncategorized

Mid Coast Airlines uses the following performance measures. Classify each of the performance measures below into the most likely balanced scorecard perspective it relates to. Label your answers using C (customer), P (internal process), I (innovation and growth), or F (financial).

1. Flight attendant training sessions attended

2. Customer complaints

3. Percentage of on time departures

4. Market value

5. Percentage of ground crew trained

6. Return on investment

7. On time flight percentage

8. Accidents or safety incidents per mile flown

9. Number of reports of mishandled or lost baggage

10. Cash flow from operations

11. Time airplane is on ground between flights

12. Airplane miles per gallon of fuel

13. Revenue per seat

14. Cost of leasing airplanes

the trailer department of soni bicycles makes bike trailers that attach to bicycles 648487

Aug 30, 2021 | Uncategorized

The Trailer department of Soni Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $100 each. Each trailer incurs $40 of variable manufacturing costs. The Trailer department has capacity for 40,000 trailers per year, and incurs fixed costs of $800,000 per year. Required

1. Assume the Assembly division of Soni Bicycles wants to buy 10,000 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price should be used on transfers between Soni Bicycle’s divisions? Explain.

2. Assume the Trailer division currently only sells 20,000 trailers to outside customers, and the Assembly division wants to buy 10,000 trailers per year from the Trailer division. What is the range of acceptable prices that could be used on transfers between Soni Bicycle’s divisions? Explain.

3. Assume transfer prices of either $40 per trailer or $70 per trailer are being considered. Comment on the preferred transfer prices from the perspectives of the Trailer division manager, the Assembly division manager, and the top management of Soni Bicycles.

l oreal reports the following for a recent year for the major divisions in its cosme 648490

Aug 30, 2021 | Uncategorized

L’Oreal reports the following for a recent year for the major divisions in its Cosmetics branch.

1. Compute profit margin for each division. State your answers as percents, rounded to two decimal places. Which L’Oreal division has the highest profit margin?

2. Compute investment turnover for each division. Round your answers to two decimal places. Which L’Oreal division has the best investment turnover?

the types and amounts of occupancy costs recorded in this account for the current pe 648491

Aug 30, 2021 | Uncategorized

City Bank has several departments that occupy both floors of a two story building. The depart mental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.

The building has 4,000 square feet on each floor. In prior periods, the accounting manager merely divided the $64,000 occupancy cost by 8,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Laura Diaz manages a first floor department that occupies 1,000 square feet, and Lauren Wright manages a second floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second floor manager questions whether using the same rate per square foot for all departments makes sense because the first floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first floor space worth $30 per square foot and second floor space worth $20 per square foot (excluding costs for heating, lighting, and maintenance). Required

1. Allocate occupancy costs to the Diaz and Wright departments using the current allocation method.

2. Allocate the depreciation, interest, and taxes occupancy costs to the Diaz and Wright departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Diaz and Wright departments in proportion to the square feet occupied (ignoring floor space market values).

3. Which allocation method would you prefer if you were a manager of a second floor department? Explain.

without providing computations would the average cost of general surgery be higher o 648492

Aug 30, 2021 | Uncategorized

We Care is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinic’s three cost centers and their cost drivers follow.

The two main surgical units and their related data follow.

Required

1. Compute the cost per cost driver for each of the three cost centers.

2. Use the results from part 1 to allocate costs from each of the three cost centers to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units.

3. Without providing computations, would the average cost of general surgery be higher or lower if all center costs were allocated based on the number of patients? Explain.

the production department in a process manufacturing system completed 191 500 units 648427

Aug 30, 2021 | Uncategorized

The production department in a process manufacturing system completed 191,500 units of product and transferred them to finished goods during a recent period. Of these units, 31,500 were in process at the beginning of the period. The other 160,000 units were started and completed during the period. At periodend, 29,500 units were in process. Compute the department’s equivalent units of production with respect to direct materials under each of three separate assumptions:

1. All direct materials are added to products when processing begins.

2. Direct materials are added to products evenly throughout the process. Beginning goods in process inventory was 40% complete, and ending goods in process inventory was 75% complete.

3. One half of direct materials is added to products when the process begins and the other half is added when the process is 75% complete as to direct labor. Beginning goods in process inventory is 40% complete as to direct labor, and ending goods in process inventory is 60% complete as to direct labor.

its production output is sent to its warehouse for shipping prepare its process cost 648428

Aug 30, 2021 | Uncategorized

The following partially completed process cost summary describes the May production activities of Raman Company. Its production output is sent to its warehouse for shipping. Prepare its process cost summary using the weighted average method.

edison company manufactures wool blankets and accounts for product costs using proce 648431

Aug 30, 2021 | Uncategorized

Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.

The following additional information describes the company’s production activities for May.

Required

1. Compute the cost of (a) products transferred from production to finished goods, and (b) goods sold.

2. Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) payroll costs, (e) direct labor costs, (f) indirect labor costs, (g) other overhead costs, (h) overhead applied, (i) goods transferred from production to finished goods, and (j) sale of finished goods.

determine the equivalent units of production with respect to a direct labor and b di 648432

Aug 30, 2021 | Uncategorized

Fairfax Company uses weighted average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During September, the company transferred 735,000 units of product to finished goods. At the end of September, the goods in process inventory consists of 207,000 units that are 90% complete with respect to labor. Beginning inventory had $244,920 of direct materials and $69,098 of direct labor cost. The direct labor cost added in September is $1,312,852, and the direct materials cost added is $1,639,080.

Required

1. Determine the equivalent units of production with respect to (a) direct labor and (b) direct materials.

2. Compute both the direct labor cost and the direct materials cost per equivalent unit.

3. Compute both direct labor cost and direct materials cost assigned to (a) units completed and transferred out, and (b) ending goods in process inventory.

4. The company sells and ships all units to customers as soon as they are completed. Assume that an error is made in determining the percentage of completion for units in ending inventory. Instead of being 90% complete with respect to labor, they are actually 65% complete. Write a one page memo to the plant manager describing how this error affects its September financial statements.

easton co produces its product through a single processing department direct materia 648434

Aug 30, 2021 | Uncategorized

Easton Co. produces its product through a single processing department. Direct materials are added at the start of production, and direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted average process cost accounting system. Its Goods in Process Inventory account follows after entries for direct materials, direct labor, and overhead costs for October.

Its beginning goods in process consisted of $60,830 of direct materials, $176,820 of direct labor, and $110,988 of factory overhead. During October, the company started 280,000 units and transferred 306,000 units to finished goods. At the end of the month, the goods in process inventory consisted of 41,200 units that were 80% complete with respect to direct labor and factory overhead.

Required

1. Prepare the company’s process cost summary for October using the weighted average method.

2. Prepare the journal entry dated October 31 to transfer the cost of the completed units to finished goods inventory.

prepare the journal entry dated october 31 to transfer the cost of completed units t 648436

Aug 30, 2021 | Uncategorized

Ogden Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted average process cost accounting. During October, the company completed and transferred 22,200 units of product to finished goods inventory. Its 3,000 units of beginning goods in process consisted of $9,900 of direct materials, $61,650 of direct labor, and $49,320 of factory overhead. It has 2,400 units (100% complete with respect to direct materials and 80% complete with respect to direct labor and overhead) in process at month end. After entries to record direct materials, direct labor, and overhead for October, the company’s Goods in Process Inventory account follows.

2. Assume that Ogden uses the FIFO method to account for its process costing system. The following additional information is available:

? Beginning goods in process consisted of 3,000 units that were 100% complete with respect to direct materials and 40% complete with respect to direct labor and overhead.

? Of the 22,200 units completed, 3,000 were from beginning goods in process. The remaining 19,200 were units started and completed during October.

Required

1. Prepare the company’s process cost summary for October using FIFO.

2. Prepare the journal entry dated October 31 to transfer the cost of completed units to finished goods inventory.

tarick toys company manufactures video game consoles and accounts for product costs 648437

Aug 30, 2021 | Uncategorized

Tarick Toys Company manufactures video game consoles and accounts for product costs using process costing. The following information is available regarding its June inventories.

The following additional information describes the company’s production activities for June.

Required

1. Compute the cost of (a) products transferred from production to finished goods, and (b) goods sold.

2. Prepare journal entries dated June 30 to record the following production activities during June: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) payroll costs, (e) direct labor costs, (f) indirect labor costs, (g) other overhead costs, (h) overhead applied, (i) goods transferred from production to finished goods, and (j) sale of finished goods.

compute both the direct labor cost and the direct materials cost per equivalent unit 648438

Aug 30, 2021 | Uncategorized

Eden Company uses process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During April, the production department transferred 40,000 units of product to finished goods. Beginning goods in process had $116,000 of direct materials and $172,800 of direct labor cost. At the end of April, the goods in process inventory consists of 4,000 units that are 25% complete with respect to labor. The direct materials cost added in April is $1,424,000, and direct labor cost added is $3,960,000.

Required

1. Determine the equivalent units of production with respect to (a) direct labor and (b) direct materials.

2. Compute both the direct labor cost and the direct materials cost per equivalent unit.

3. Compute both direct labor cost and direct materials cost assigned to (a) units completed and transferred out, and (b) ending goods in process inventory.

4. The company sells and ships all units to customers as soon as they are completed. Assume that an error is made in determining the percentage of completion for units in ending inventory. Instead of being 30% complete with respect to labor, they are actually 75% complete. Write a one page memo to the plant manager describing how this error affects its April financial statements.

ying company produces large quantities of a standardized product the following infor 648439

Aug 30, 2021 | Uncategorized

Ying Company produces large quantities of a standardized product. The following information is available for its production activities for March.

Additional information about units and costs of production activities follows.

During March, 45,000 units of finished goods are sold for $25 cash each. Cost information regarding finished goods follows.

Required

1. Prepare journal entries dated March 31 to record the following March activities: (a) purchase of raw materials, (b) direct materials usage, (c) indirect materials usage, (d) factory payroll costs, (e) direct labor costs used in production, (f) indirect labor costs, (g) other overhead costs—credit Other Accounts, (h) overhead applied, (i) goods transferred to finished goods, and (j) sale of finished goods.

2. Prepare a process cost summary report for this company, showing costs charged to production, unit cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation.

3. This company provides incentives to its department managers by paying monthly bonuses based on their success in controlling costs per equivalent unit of production. Assume that production overestimates the percentage of completion for units in ending inventory with the result that its equivalent units of production in ending inventory for March are overstated. What impact does this error have on bonuses paid to the managers of the production department? What impact, if any, does this error have on these managers’ April bonuses?

prepare the journal entry dated november 30 to transfer the cost of the completed un 648440

Aug 30, 2021 | Uncategorized

Basilex Company produces its product through a single processing department. Direct materials are added at the beginning of the process. Direct labor and overhead are added to the product evenly throughout the process. The company uses monthly reporting periods for its weighted average process cost accounting. Its Goods in Process Inventory account follows after entries for direct materials, direct labor, and overhead costs for November.

The 7,500 units of beginning goods in process consisted of $3,400 of direct materials, $2,900 of direct labor, and $4,350 of factory overhead. During November, the company finished and transferred 100,000 units of its product to finished goods. At the end of the month, the goods in process inventory consisted of 12,000 units that were 100% complete with respect to direct materials and 25% complete with respect to direct labor and factory overhead.

Required

1. Prepare the company’s process cost summary for November using the weighted average method.

2. Prepare the journal entry dated November 30 to transfer the cost of the completed units to finished goods inventory.

prepare the company s process cost summary for march using the weighted average meth 648441

Aug 30, 2021 | Uncategorized

Oakley International Co. manufactures a single product in one department. Direct labor and overhead are added evenly throughout the process. Direct materials are added as needed. The company uses monthly reporting periods for its weighted average process cost accounting. During March, Oakley completed and transferred 220,000 units of product to finished goods inventory. Its 10,000 units of beginning goods in process consisted of $16,800 of direct materials, $27,920 of direct labor, and $69,800 of factory overhead. 40,000 units (50% complete with respect to direct materials and 30% complete with respect to direct labor and overhead) are in process at month end. After entries for direct materials, direct labor, and overhead for March, the company’s Goods in Process Inventory account follows.

Required

1. Prepare the company’s process cost summary for March using the weighted average method.

2. Prepare the journal entry dated March 31 to transfer the cost of completed units to finished goods inventory.

3. The cost accounting process depends on several estimates.

a. Identify two major estimates that affect the cost per equivalent unit.

b. In what direction might you anticipate a bias from management for each estimate in part 3a (assume that management compensation is based on maintaining low inventory amounts)? Explain your answer.

prepare the company s process cost summary for march using fifo round cost per eup t 648442

Aug 30, 2021 | Uncategorized

Oakley International Co. manufactures a single product in one department. Direct labor and overhead are added evenly throughout the process. Direct materials are added as needed. The company uses monthly reporting periods for its weighted average process cost accounting. During March, Oakley completed and transferred 220,000 units of product to finished goods inventory. Its 10,000 units of beginning goods in process consisted of $16,800 of direct materials, $27,920 of direct labor, and $69,800 of factory overhead. 40,000 units (50% complete with respect to direct materials and 30% complete with respect to direct labor and overhead) are in process at month end. After entries for direct materials, direct labor, and overhead for March, the company’s Goods in Process Inventory account follows.

Assume that Oakley International uses the FIFO method to account for its process costing system. The following additional information is available.

? Beginning goods in process consists of 10,000 units that were 75% complete with respect to direct materials and 60% complete with respect to direct labor and overhead.

? Of the 220,000 units completed, 10,000 were from beginning goods in process; the remaining 210,000 were units started and completed during March.

Required

1. Prepare the company’s process cost summary for March using FIFO. Round cost per EUP to one tenth of a cent.

2. Prepare the journal entry dated March 31 to transfer the cost of completed units to finished goods inventory

what effect does this cost accounting policy for its cost of goods sold have on rese 648445

Aug 30, 2021 | Uncategorized

Research In Motion reports in notes to its financial statements that, in addition to its merchandise sold, it includes the following costs (among others) in cost of goods sold: customer shipping and handling expenses, warranty expenses, and depreciation expense on assets used in manufacturing.

Required

1. Why do you believe Research In Motion includes these costs in its cost of goods sold?

2. What effect does this cost accounting policy for its cost of goods sold have on Research In Motion’s financial statements and any analysis of these statements? Explain.

3. Access Research In Motion’s financial statements for the fiscal years after February 27, 2010, from it’s the SEC’s EDGAR. Review its footnote relating to Critical Accounting Policies and Estimates. Has Research In Motion changed its policy with respect to what costs are included in the cost of goods sold? Explain.

comment on the similarities or differences in the ratio results across both years am 648446

Aug 30, 2021 | Uncategorized

Manufacturers such as Research In Motion, Apple, and Palm usually work to maintain a high quality and low cost operation. One ratio routinely computed for this assessment is the cost of goods sold divided by total expenses. A decline in this ratio can mean that the company is spending too much on selling and administrative activities. An increase in this ratio beyond a reasonable level can mean that the company is not spending enough on selling activities. (Assume for this analysis that total expenses equal the cost of goods sold plus selling, general, and administrative expenses.)

Required

1. For Research In Motion, Apple, and Palm refer to Appendix A and compute the ratios of cost of goods sold to total expenses for their two most recent fiscal years. (Record answers as percents, rounded to one decimal.)

2. Comment on the similarities or differences in the ratio results across both years among the companies.

the memorandum should specify an industry a product and one selected process and sho 648447

Aug 30, 2021 | Uncategorized

Many accounting and accounting related professionals are skilled in financial analysis, but most are not skilled in manufacturing. This is especially the case for process manufacturing environments (for example, a bottling plant or chemical factory). To provide professional accounting and financial services, one must understand the industry, product, and processes. We have an ethical responsibility to develop this understanding before offering services to clients in these areas.

Required

Write a one page action plan, in memorandum format, discussing how you would obtain an understanding of key business processes of a company that hires you to provide financial services. The memorandum should specify an industry, a product, and one selected process and should draw on at least one reference, such as a professional journal or industry magazine.

if at any point a team member is uncertain about an answer the team member may pass 648450

Aug 30, 2021 | Uncategorized

The purpose of this team activity is to ensure that each team member understands process operations and the related accounting entries. Find the activities and flows identified in Exhibit 20.4 with numbers 1 – 10. Pick a member of the team to start by describing activity number 1 in this exhibit, then verbalizing the related journal entry, and describing how the amounts in the entry are computed. The other members of the team are to agree or disagree; discussion is to continue until all members express understanding. Rotate to the next numbered activity and next team member until all activities and entries have been discussed. If at any point a team member is uncertain about an answer, the team member may pass and get back in the rotation when he or she can contribute to the team”s discussion.

at the bottom of your list outline how overhead should be assigned to your identifie 648452

Aug 30, 2021 | Uncategorized

In process costing, the process is analyzed first and then a unit measure is computed in the form of equivalent units for direct materials, direct labor, overhead, and all three combined. The same analysis applies to both manufacturing and service processes.

Required

Visit your local U.S. Mail center. Look into the back room, and you will see several ongoing processes. Select one process, such as sorting, and list the costs associated with this process. Your list should include materials, labor, and overhead; be specific. Classify each cost as fixed or variable. At the bottom of your list, outline how overhead should be assigned to your identified process. The following format (with an example) is suggested.

nokia research in motion apple and palm are competitors in the global marketplace se 648453

Aug 30, 2021 | Uncategorized

Nokia, Research In Motion, Apple, and Palm are competitors in the global marketplace. Selected data for Nokia follow.

Required

1. Review the discussion of the importance of the cost of goods sold divided by total expenses ratio in BTN 20 2. Compute the cost of goods sold to total expenses ratio for Nokia for the two years of data provided. (Record answers as percents, rounded to one decimal.)

2. Comment on the similarities or differences in the ratio results calculated in part 1 and in BTN 20 2 across years and companies. (Record answers as percents, rounded to one decimal.)

prepare a departmental income statement reporting net income for each operating depa 648458

Aug 30, 2021 | Uncategorized

Management requests departmental income statements for Hacker’s Haven, a computer store that has five departments. Three are operating departments (hardware, software, and repairs) and two are service departments (general office and purchasing).

The departments incur several indirect expenses. To prepare departmental income statements, the indirect expenses must be allocated across the five departments. Then the expenses of the two service departments must be allocated to the three operating departments. Total cost amounts and the allocation bases for each indirect expense follow.

The following additional information is needed for indirect expense allocations.

Required

1. Prepare a departmental expense allocation spreadsheet for Hacker’s Haven.

2. Prepare a departmental income statement reporting net income for each operating department and for all operating departments combined.

in each blank next to the following terms place the identifying letter of its best d 648464

Aug 30, 2021 | Uncategorized

In each blank next to the following terms, place the identifying letter of its best description.

1. Operating department

2. Profit center

3. Responsibility accounting system

4. Cost center

5. Investment center

6. Departmental accounting system

7. Service department

A. Holds manager responsible for revenues, costs, and investments.

B. Does not directly manufacture products but contributes to profitability of the entire company.

C. Incurs costs and also generates revenues.

D. Provides information used to evaluate the performance of a department.

E. Incurs costs without directly yielding revenues.

F. Provides information used to evaluate the performance of a department manager.

G. Engages directly in manufacturing or in making sales directly to customers.

the over or underapplied overhead is closed to cost of goods sold discuss how this a 648386

Aug 30, 2021 | Uncategorized

Winfrey Co.’s March 31 inventory of raw materials is $150,000. Raw materials purchases in April are $400,000, and factory payroll cost in April is $220,000. Overhead costs incurred in April are: indirect materials, $30,000; indirect labor, $14,000; factory rent, $20,000; factory utilities, $12,000; and fac tory equipment depreciation, $30,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $380,000 cash in April. Costs of the three jobs worked on in April follow.

Required

1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

2. Prepare journal entries for the month of April to record the following.

a. Materials purchases (on credit), factory payroll (paid in cash), and actual overhead costs including indirect materials and indirect labor. (Factory rent and utilities are paid in cash.)

b. Assignment of direct materials, direct labor, and applied overhead costs to the Goods in Process Inventory.

c. Transfer of Jobs 306 and 307 to the Finished Goods Inventory.

d. Cost of goods sold for Job 306.

e. Revenue from the sale of Job 306.

f. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

3. Prepare a manufacturing statement for April (use a single line presentation for direct materials and show the details of overhead cost).

4. Compute gross profit for April. Show how to present the inventories on the April 30 balance sheet.

5. The over or underapplied overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts business decision making regarding individual jobs or batches of jobs.

thai bay s computer system generated the following trial balance on december 31 2011 648387

Aug 30, 2021 | Uncategorized

Thai Bay’s computer system generated the following trial balance on December 31, 2011. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Goods in Process Inventory but does show balances for the Factory Payroll and Factory Overhead accounts.

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Jobs 402 and 404 are the only units in process at year end. The predetermined overhead rate is 200% of direct labor cost.

Required

1. Use information on the six source documents to prepare journal entries to assign the following costs.

a. Direct materials costs to Goods in Process Inventory.

b. Direct labor costs to Goods in Process Inventory.

c. Overhead costs to Goods in Process Inventory.

d. Indirect materials costs to the Factory Overhead account.

e. Indirect labor costs to the Factory Overhead account.

2. Determine the revised balance of the Factory Overhead account after making the entries in part 1. Determine whether there is any under or overapplied overhead for the year. Prepare the adjusting entry to allocate any over or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.

3. Prepare a revised trial balance.

4. Prepare an income statement for year 2011 and a balance sheet as of December 31, 2011.

5. Assume that the $2,100 on materials requisition 21 3012 should have been direct materials charged to Job 404. Without providing specific calculations, describe the impact of this error on the income statement for 2011 and the balance sheet at December 31, 2011.

westin watercraft s predetermined overhead rate for year 2011 is 200 of direct labor 648388

Aug 30, 2021 | Uncategorized

Westin Watercraft’s predetermined overhead rate for year 2011 is 200% of direct labor. Information on the company’s production activities during May 2011 follows.

a. Purchased raw materials on credit, $125,000.

b. Paid $84,000 cash for factory wages.

c. Paid $11,000 cash to a computer consultant to reprogram factory equipment.

d. Materials requisitions record use of the following materials for the month.

e. Time tickets record use of the following labor for the month.

f. Applied overhead to Jobs 136, 138, and 139.

g. Transferred Jobs 136, 138, and 139 to Finished Goods.

h. Sold Jobs 136 and 138 on credit at a total price of $340,000.

i. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

j. Applied overhead at month end to the Goods in Process (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

Required

1. Prepare a job cost sheet for each job worked on during the month. Use the following simplified form.

2. Prepare journal entries to record the events and transactions a through j.

3. Set up T accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory; Goods in Process Inventory; Finished Goods Inventory; Factory Payroll; Factory Overhead; Cost of Goods Sold. Then post the journal entries to these T accounts and determine the balance of each account.

4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Goods in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.

assuming that any over or underapplied overhead is not material prepare the adjustin 648389

Aug 30, 2021 | Uncategorized

In December 2010, Gomez Company’s manager estimated next year’s total direct labor cost assuming 50 persons working an average of 2,000 hours each at an average wage rate of $15 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.

At the end of 2011, records show the company incurred $725,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $354,000; Job 202, $330,000; Job 203, $175,000; Job 204, $420,000; and Job 205, $184,000. In addition, Job 206 is in process at the end of 2011 and had been charged $10,000 for direct labor. No jobs were in process at the end of 2010. The company’s predetermined overhead rate is based on direct labor cost.

Required

1. Determine the following.

a. Predetermined overhead rate for year 2011.

b. Total overhead cost applied to each of the six jobs during year 2011.

c. Over or underapplied overhead at year end 2011.

2. Assuming that any over or underapplied overhead is not material, prepare the adjusting entry to allocate any over or underapplied overhead to Cost of Goods Sold at the end of year 2011.

follow the instructions in this list of activities and complete the sheets provided 648390

Aug 30, 2021 | Uncategorized

Sagrillo Company manufactures variations of its product, a technopress, in response to custom orders from its customers. On May 1, the company had no inventories of goods in process or finished goods but held the following raw materials.

On May 4, the company began working on two technopresses: Job 102 for Global Company and Job 103 for Rolf Company.

Required

Follow the instructions in this list of activities and complete the sheets provided in the working papers.

a. Purchased raw materials on credit and recorded the following information from receiving reports and invoices.

Instructions: Record these purchases with a single journal entry and post it to general ledger T accounts, using the transaction letter a to identify the entry. Enter the receiving report information on the materials ledger cards.

b. Requisitioned the following raw materials for production.

Instructions: Enter amounts for direct materials requisitions on the materials ledger cards and the job cost sheets. Enter the indirect material amount on the materials ledger card and record a debit to the Indirect Materials account in the subsidiary factory overhead ledger. Do not record a journal entry at this time.

c. Received the following employee time tickets for work in May.

Instructions: Record direct labor from the time tickets on the job cost sheets and then debit indirect labor to the Indirect Labor account in the subsidiary factory overhead ledger. Do not record a journal entry at this time.

d. Paid cash for the following items during the month: factory payroll, $84,000, and miscellaneous overhead items, $36,000.

Instructions: Record these payments with journal entries and then post them to the general ledger accounts. Also record a debit in the Miscellaneous Overhead account in the subsidiary factory overhead ledger.

e. Finished Job 102 and transferred it to the warehouse. The company assigns overhead to each job with a predetermined overhead rate equal to 70% of direct labor cost.

Instructions: Enter the allocated overhead on the cost sheet for Job 102, fill in the cost summary section of the cost sheet, and then mark the cost sheet “Finished.” Prepare a journal entry to record the job’s completion and its transfer to Finished Goods and then post it to the general ledger accounts.

f. Delivered Job 102 and accepted the customer’s promise to pay $290,000 within 30 days.

Instructions: Prepare journal entries to record the sale of Job 102 and the cost of goods sold. Post them to the general ledger accounts.

g. Applied overhead to Job 103 based on the job’s direct labor to date.

Instructions: Enter overhead on the job cost sheet but do not make a journal entry at this time.

h. Recorded the total direct and indirect materials costs as reported on all the requisitions for the month.

Instructions: Prepare a journal entry to record these costs and post it to general ledger accounts.

i. Recorded the total direct and indirect labor costs as reported on all time tickets for the month.

Instructions: Prepare a journal entry to record these costs and post it to general ledger accounts.

j. Recorded the total overhead costs applied to jobs.

Instructions: Prepare a journal entry to record the allocation of these overhead costs and post it to general ledger accounts.

metro s computer system generated the following trial balance on december 31 2011 648392

Aug 30, 2021 | Uncategorized

Metro’s computer system generated the following trial balance on December 31, 2011. The company’s manager knows that the trial balance is wrong because it does not show any balance for Goods in Process Inventory but does show balances for the Factory Payroll and Factory Overhead accounts.

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Jobs 603 and 604 are the only units in process at year end. The predetermined overhead rate is 80% of direct labor cost.

Required

1. Use information on the six source documents to prepare journal entries to assign the following costs.

a. Direct materials costs to Goods in Process Inventory.

b. Direct labor costs to Goods in Process Inventory.

c. Overhead costs to Goods in Process Inventory.

d. Indirect materials costs to the Factory Overhead account.

e. Indirect labor costs to the Factory Overhead account.

2. Determine the revised balance of the Factory Overhead account after making the entries in part 1. Determine whether there is under or overapplied overhead for the year. Prepare the adjusting entry to allocate any over or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.

3. Prepare a revised trial balance.

4. Prepare an income statement for year 2011 and a balance sheet as of December 31, 2011.

5. Assume that the $1,500 indirect materials on materials requisition 94 233 should have been direct materials charged to Job 604. Without providing specific calculations, describe the impact of this error on the income statement for 2011 and the balance sheet at December 31, 2011.

troupe company s predetermined overhead rate is 90 of direct labor information on th 648393

Aug 30, 2021 | Uncategorized

Troupe Company’s predetermined overhead rate is 90% of direct labor. Information on the company’s production activities during September 2011 follows.

a. Purchased raw materials on credit, $57,000.

b. Paid $99,750 cash for factory wages.

c. Paid $11,250 cash for miscellaneous factory overhead costs.

d. Materials requisitions record use of the following materials for the month.

e. Time tickets record use of the following labor for the month.

f. Allocated overhead to Jobs 487, 489, and 490.

g. Transferred Jobs 487, 489, and 490 to Finished Goods.

h. Sold Jobs 487 and 489 on credit for a total price of $225,000.

i. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

j. Applied overhead at month end to the Goods in Process (Jobs 488 and 491) using the predetermined overhead rate of 90% of direct labor cost.

Required

1. Prepare a job cost sheet for each job worked on in the month. Use the following simplified form.

2. Prepare journal entries to record the events and transactions a through j.

3. Set up T accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Goods in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Then post the journal entries to these T accounts and determine the balance of each account.

4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Goods in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.

the manager also estimated the following manufacturing overhead costs for year 2011 648394

Aug 30, 2021 | Uncategorized

In December 2010, Monk Company’s manager estimated next year’s total direct labor cost assuming 40 persons working an average of 1,500 hours each at an average wage rate of $50 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.