Computer Boutique sells computer equipment and home office furniture. Currently, the furniture product line takes up approximately 50% of the company's retail floor space. The president of Computer Boutique is trying to decide whether the company should continue offering furniture or just concentrate on computer equipment. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13%. Allocated fixed costs are assigned based on relative sales.
Computer Home
Office Equipment Furniture Total
Sales $1,200,000 $800,000 $2,000,000
Less cost of goods sold 700,000 500,000 1,200,000
Contribution margin 500,000 300,000 800,000
Less direct fixed costs:
Salaries 175,000 175,000 350,000
Other 60,000 60,000 120,000
Less allocated fixed costs:
Rent 14,118 9,882 24,000
Insurance 3,529 2,471 6,000
Cleaning 4,117 2,883 7,000
President's salary 76,470 53,350 130,000
Other 7,058 4,942 12,000
Total costs 340,292 380,708 649,000
Net Income $159,708 ($ 8,708) $151,000
Prepare an incremental analysis to determine the incremental effect on profit of discontinuing the furniture line.
Click here for the solution: Computer Boutique sells computer equipment and home office furniture
Showing posts with label furniture. Show all posts
Showing posts with label furniture. Show all posts
Friday, April 15, 2016
Monday, October 26, 2015
Ortega Industries Inc. manufactures in separate processes furniture for homes
ACC 560 Week 2 Assignment
P3-2A Ortega Industries Inc. manufactures in separate processes furniture for homes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.
Cutting Department
Plant 1 Plant 2
Production Data-July T12-Tables C10-Chairs
Work in process units, July 1 -0- -0-
Units started into production 20,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80
Cost Data-July
Work in process, July 1 $ -0- $ -0-
Materials 380,000 288,000
Labor 234,400 125,900
Overhead 104,000 96,700
Total $718,400 $510,600
a) For each plant:
1. Compute the physical units of production
2. Compute equivalent units of production for materials and for conversion costs.
3. Determine the unit costs of production.
4. Show the assignment of costs to units transferred out and in process.
b) Prepare the production cost report for Plant 1 for July 2008
Click here for the solution: Ortega Industries Inc. manufactures in separate processes furniture for homes
P3-2A Ortega Industries Inc. manufactures in separate processes furniture for homes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.
Cutting Department
Plant 1 Plant 2
Production Data-July T12-Tables C10-Chairs
Work in process units, July 1 -0- -0-
Units started into production 20,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80
Cost Data-July
Work in process, July 1 $ -0- $ -0-
Materials 380,000 288,000
Labor 234,400 125,900
Overhead 104,000 96,700
Total $718,400 $510,600
a) For each plant:
1. Compute the physical units of production
2. Compute equivalent units of production for materials and for conversion costs.
3. Determine the unit costs of production.
4. Show the assignment of costs to units transferred out and in process.
b) Prepare the production cost report for Plant 1 for July 2008
Click here for the solution: Ortega Industries Inc. manufactures in separate processes furniture for homes
Thursday, September 10, 2015
Lynch Furniture Company refinishes and reupholsters furniture
PR 19-3A Lynch Furniture Company refinishes and reupholsters furniture. Lynch uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On May 10, 2010, an estimate of $1,530.00 for reupholstering a chair and couch was given to Queen Mercury. The estimate was based on the following data:
Estimated direct materials:
40 meters at $12 per meter………………………………………… $ 480.00
Estimated direct labor:
24 hours at $15 per hour…………………………………………….. 360.00
Estimated factory overhead (50% of direct labor cost)……………... 180.00
Total estimated costs…………………………………………….. $1,020.00
Markup (50% of production costs)…………………………………. 510.00
Total estimate……………………………………………………. $1,530.00
On May 16, the chair and couch were picked up from the residence of Queen Mercury, 10 Rhapsody Lane, Lake Forest, with a commitment to return them on June 12. The job was completed on June 8. The related materials requisitions and time tickets are summarized as follows:
Instructions
1. Prepare a job order cost sheet showing the estimate given to the customer. Use the format shown below.
2. Assign number 10-206 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that five meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.
Click here for the solution: Lynch Furniture Company refinishes and reupholsters furniture
Estimated direct materials:
40 meters at $12 per meter………………………………………… $ 480.00
Estimated direct labor:
24 hours at $15 per hour…………………………………………….. 360.00
Estimated factory overhead (50% of direct labor cost)……………... 180.00
Total estimated costs…………………………………………….. $1,020.00
Markup (50% of production costs)…………………………………. 510.00
Total estimate……………………………………………………. $1,530.00
On May 16, the chair and couch were picked up from the residence of Queen Mercury, 10 Rhapsody Lane, Lake Forest, with a commitment to return them on June 12. The job was completed on June 8. The related materials requisitions and time tickets are summarized as follows:
Instructions
1. Prepare a job order cost sheet showing the estimate given to the customer. Use the format shown below.
2. Assign number 10-206 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that five meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.
Click here for the solution: Lynch Furniture Company refinishes and reupholsters furniture
Saturday, August 22, 2015
Hickory Home Company manufactures and sells two lines of furniture, case goods and upholstery
MULTIPLE CHOICE
1. Which of the following statements is true? (Points : 2)
2. Which of the following is not a possible commonly used term for costs that can be eliminated by taking a specified course of action? (Points : 2)
3. Hickory Home Company manufactures and sells two lines of furniture, case goods and upholstery. During the most recent accounting period, the Case Goods and Upholstery Divisions sold 15,000 and 2,000 units, respectively. The company's most recent financial statements are shown below:
Case Goods Division Upholstery Division
Sales $800,000 $200,000
Less: cost of goods sold:
Unit-level production cost 620,000 150,000
Gross margin 180,000 50,000
Less: operating expenses:
Unit-level selling and admin.expense 30,000 25,000
Corporate-level facility exp. (fixed) 26,000 26,000
Net income (loss) $124,000 $ (1,000)
If unit sales for both divisions increased 10%, the company would report which of the following? (Points : 2)
4. Select the correct statement regarding relevant costs and revenues. (Points : 2)
5. Home Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for $12 each. The company is considering making the switches internally and has conducted a study to determine what the cost would be. Below are projected annual costs:
Unit-level costs $ 8
Batch-level costs per year $15,000
Product-level costs per year $10,000
Allocated facility-level costs $20,000
The company needs 10,000 of the switches each year. If Home Safety decides to make the parts under these conditions, the relevant cost per unit will be: (Points : 2)
6. Centennial Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below:
Tour A Tour B
Projected revenue $7,000 $11,000
Variable costs 1,000 6,000
Fixed costs 3,000 3,000
Profit $3,000 $1,000
What are the incremental (differential) costs of Tour B? (Points : 2)
7. For purposes of decision making, avoidable costs are costs that: (Points : 2)
8. Expected future revenues that differ among the alternatives under consideration are referred to as: (Points : 2)
9. Which of the following costs generally is an example of a product-level cost? (Points : 2)
10. Brannon Company plans to add a new item to its product line. Two possible products are under consideration. Each unit of Product A costs $12 to produce and has a contribution margin of $6, while each unit of Product B costs twice as much and has a contribution margin of $8. What is the differential revenue for this decision? (Points : 2)
11. Planning concerned with long-range decisions such as defining the scope of the business is referred to as: (Points : 2)
12. Expressing plans for a business in financial terms is commonly called: (Points : 2)
13. Select the incorrect statement about budgeting and human behavior. (Points : 2)
14. Which of the following budgets or schedules uses data contained in the selling and administrative expense budget? (Points : 2)
15. Which of the following is not a budgeted financial statement? (Points : 2)
16. Which of the following items will not appear on a cash budget? (Points : 2)
17. Select the incorrect statement. (Points : 2)
18. Maddon Company estimated that its inventory purchases for January and February 2010 would be $300,000 and $370,000, respectively. The company generally pays for 60% of its inventory purchases in the month of purchase because it receives a 2% discount for timely payment. The remaining 40% of purchases are paid for in the following month, and there is no discount for these payments. What will be the amount of cash payments for inventory in February 2010? (Points : 2)
19. The budgeting process that involves adding a month to the end of the budget period at the end of each month, thus maintaining a twelve-month planning horizon, is referred to as: (Points : 2)
20. Select the correct equation format for the purchases budget. (Points : 2)
Click here for the solution: Hickory Home Company manufactures and sells two lines of furniture, case goods and upholstery
1. Which of the following statements is true? (Points : 2)
2. Which of the following is not a possible commonly used term for costs that can be eliminated by taking a specified course of action? (Points : 2)
3. Hickory Home Company manufactures and sells two lines of furniture, case goods and upholstery. During the most recent accounting period, the Case Goods and Upholstery Divisions sold 15,000 and 2,000 units, respectively. The company's most recent financial statements are shown below:
Case Goods Division Upholstery Division
Sales $800,000 $200,000
Less: cost of goods sold:
Unit-level production cost 620,000 150,000
Gross margin 180,000 50,000
Less: operating expenses:
Unit-level selling and admin.expense 30,000 25,000
Corporate-level facility exp. (fixed) 26,000 26,000
Net income (loss) $124,000 $ (1,000)
If unit sales for both divisions increased 10%, the company would report which of the following? (Points : 2)
4. Select the correct statement regarding relevant costs and revenues. (Points : 2)
5. Home Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for $12 each. The company is considering making the switches internally and has conducted a study to determine what the cost would be. Below are projected annual costs:
Unit-level costs $ 8
Batch-level costs per year $15,000
Product-level costs per year $10,000
Allocated facility-level costs $20,000
The company needs 10,000 of the switches each year. If Home Safety decides to make the parts under these conditions, the relevant cost per unit will be: (Points : 2)
6. Centennial Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below:
Tour A Tour B
Projected revenue $7,000 $11,000
Variable costs 1,000 6,000
Fixed costs 3,000 3,000
Profit $3,000 $1,000
What are the incremental (differential) costs of Tour B? (Points : 2)
7. For purposes of decision making, avoidable costs are costs that: (Points : 2)
8. Expected future revenues that differ among the alternatives under consideration are referred to as: (Points : 2)
9. Which of the following costs generally is an example of a product-level cost? (Points : 2)
10. Brannon Company plans to add a new item to its product line. Two possible products are under consideration. Each unit of Product A costs $12 to produce and has a contribution margin of $6, while each unit of Product B costs twice as much and has a contribution margin of $8. What is the differential revenue for this decision? (Points : 2)
11. Planning concerned with long-range decisions such as defining the scope of the business is referred to as: (Points : 2)
12. Expressing plans for a business in financial terms is commonly called: (Points : 2)
13. Select the incorrect statement about budgeting and human behavior. (Points : 2)
14. Which of the following budgets or schedules uses data contained in the selling and administrative expense budget? (Points : 2)
15. Which of the following is not a budgeted financial statement? (Points : 2)
16. Which of the following items will not appear on a cash budget? (Points : 2)
17. Select the incorrect statement. (Points : 2)
18. Maddon Company estimated that its inventory purchases for January and February 2010 would be $300,000 and $370,000, respectively. The company generally pays for 60% of its inventory purchases in the month of purchase because it receives a 2% discount for timely payment. The remaining 40% of purchases are paid for in the following month, and there is no discount for these payments. What will be the amount of cash payments for inventory in February 2010? (Points : 2)
19. The budgeting process that involves adding a month to the end of the budget period at the end of each month, thus maintaining a twelve-month planning horizon, is referred to as: (Points : 2)
20. Select the correct equation format for the purchases budget. (Points : 2)
Click here for the solution: Hickory Home Company manufactures and sells two lines of furniture, case goods and upholstery
Monday, August 17, 2015
WoodGrain Technology makes home office furniture from fine hardwoods
WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine-hours, and the rate in the Fabrication Department is based on direct materials cost. At the beginning of the year, the company’s management made the following estimates for the year:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 80,000 21,000
Direct labour-hours. . . . . . . . . . . . . . 35,000 65,000
Direct materials cost. . . . . . . . . . . . . $190,000 $400,000
Direct labour cost . . . . . . . . . . . . . . . 280,000 530,000
Manufacturing overhead cost . . . . . . 416,000 720,000
Job 127 was started on April 1 and completed on May 12. The company’s cost records show the following information on the job:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 350 70
Direct labour-hours. . . . . . . . . . . . . . 80 130
Direct materials cost. . . . . . . . . . . . . $940 $1,200
Direct labour cost . . . . . . . . . . . . . . . 710 980
Required:
1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department.
2. Compute the total overhead cost applied to job 127.
3. What would be the total cost recorded for job 127? If the job contained 25 units, what would be the unit product cost?
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 73,000 24,000
Direct labour-hours. . . . . . . . . . . . . . 30,000 68,000
Direct materials cost. . . . . . . . . . . . . $165,000 $420,000
Manufacturing overhead cost . . . . . . 390,000 740,000
What was the amount of underapplied or overapplied overhead in each department at the end of the year?
Click here for the solution: WoodGrain Technology makes home office furniture from fine hardwoods
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 80,000 21,000
Direct labour-hours. . . . . . . . . . . . . . 35,000 65,000
Direct materials cost. . . . . . . . . . . . . $190,000 $400,000
Direct labour cost . . . . . . . . . . . . . . . 280,000 530,000
Manufacturing overhead cost . . . . . . 416,000 720,000
Job 127 was started on April 1 and completed on May 12. The company’s cost records show the following information on the job:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 350 70
Direct labour-hours. . . . . . . . . . . . . . 80 130
Direct materials cost. . . . . . . . . . . . . $940 $1,200
Direct labour cost . . . . . . . . . . . . . . . 710 980
Required:
1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department.
2. Compute the total overhead cost applied to job 127.
3. What would be the total cost recorded for job 127? If the job contained 25 units, what would be the unit product cost?
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 73,000 24,000
Direct labour-hours. . . . . . . . . . . . . . 30,000 68,000
Direct materials cost. . . . . . . . . . . . . $165,000 $420,000
Manufacturing overhead cost . . . . . . 390,000 740,000
What was the amount of underapplied or overapplied overhead in each department at the end of the year?
Click here for the solution: WoodGrain Technology makes home office furniture from fine hardwoods
Wednesday, July 15, 2015
Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains
P 12–15: Great Southern Furniture
Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains. Hotels purchase furniture (beds, night stands, and chests of drawers) from manufacturers who ship the furniture to the hotels unassembled. Koehler sends a site supervisor and a small crew of employees to the hotel. The site supervisor first hires additional local employees to help assemble the furniture and then trains them. The locally hired employees along with the small crew of Great Southern employees assemble the furniture at the hotel. This significantly reduces the shipping charges and damage to the furniture. Before sending a crew to the site, Koehler has a crew in his office assemble several sets to make sure there are no problems and also to estimate the expected time required to assemble the particular furniture. The 500-room Hyatt opens in Tampa and Koehler sends a crew to assemble the 500 bedroom sets. He establishes that 4.5 hours are required to assemble one complete room and the estimated cost per hour is $22. Upon completing the job, the crew reports they had total wages of $49,693 for 2,170 hours worked.
Required:
Write a report evaluating the performance of the crew at the Hyatt in Tampa.
Click here for the solution: Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains
Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains. Hotels purchase furniture (beds, night stands, and chests of drawers) from manufacturers who ship the furniture to the hotels unassembled. Koehler sends a site supervisor and a small crew of employees to the hotel. The site supervisor first hires additional local employees to help assemble the furniture and then trains them. The locally hired employees along with the small crew of Great Southern employees assemble the furniture at the hotel. This significantly reduces the shipping charges and damage to the furniture. Before sending a crew to the site, Koehler has a crew in his office assemble several sets to make sure there are no problems and also to estimate the expected time required to assemble the particular furniture. The 500-room Hyatt opens in Tampa and Koehler sends a crew to assemble the 500 bedroom sets. He establishes that 4.5 hours are required to assemble one complete room and the estimated cost per hour is $22. Upon completing the job, the crew reports they had total wages of $49,693 for 2,170 hours worked.
Required:
Write a report evaluating the performance of the crew at the Hyatt in Tampa.
Click here for the solution: Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains
Tuesday, June 23, 2015
Ortega Industries Inc. manufactures in separate processes furniture for homes
Problem 3-2A (P3-2A) Ortega Industries Inc. manufactures in separate
processes furniture for homes. In each process, materials are entered at
the beginning, and conversion costs are incurred uniformly. Production
and cost data for the first process in making two products in two
different manufacturing plants are as follows.
Cutting Department
Plant 1 Plant 2
Production Data—July T12-Tables C10-Chairs
Work in process units, July 1 –0– –0–
Units started into production 20,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80
Cost Data—July
Work in process, July 1 $ –0– $ –0–
Materials 380,000 288,000
Labor 234,400 125,900
Overhead 104,000 96,700
Total $718,400 $510,600
Hint:
Complete four steps necessary to prepare a production cost report.
Instructions
(a) For each plant:
1. Compute the physical units of production.
2. Compute equivalent units of production for materials and for conversion costs.
3. Determine the unit costs of production.
4. Show the assignment of costs to units transferred out and in process.
Check:
(a) (1) T12: Transferred out 17,000 units; WIP 3,000 units
(2) T12: Materials 20,000 e.u.; CC 18,800 e.u.
(3) T12: Materials $19; CC $18
(4) T12: Transferred out $629,000; WIP $89,400
Click here for the solution: Ortega Industries Inc. manufactures in separate processes furniture for homes
Cutting Department
Plant 1 Plant 2
Production Data—July T12-Tables C10-Chairs
Work in process units, July 1 –0– –0–
Units started into production 20,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80
Cost Data—July
Work in process, July 1 $ –0– $ –0–
Materials 380,000 288,000
Labor 234,400 125,900
Overhead 104,000 96,700
Total $718,400 $510,600
Hint:
Complete four steps necessary to prepare a production cost report.
Instructions
(a) For each plant:
1. Compute the physical units of production.
2. Compute equivalent units of production for materials and for conversion costs.
3. Determine the unit costs of production.
4. Show the assignment of costs to units transferred out and in process.
Check:
(a) (1) T12: Transferred out 17,000 units; WIP 3,000 units
(2) T12: Materials 20,000 e.u.; CC 18,800 e.u.
(3) T12: Materials $19; CC $18
(4) T12: Transferred out $629,000; WIP $89,400
Click here for the solution: Ortega Industries Inc. manufactures in separate processes furniture for homes
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