The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit

ACC 560 Week 7 Assignment

E11-5 The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of $4.70 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.

Instructions:
a) Compute the total materials variance and the price and quantity variances.

b) Repeat the question above, assuming the purchase price is $5.20 and the quantity purchased and used is 26,200 units.

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Shynee Minerals processes materials extracted from mines

Exercise 6-7 (E6-7) Determine whether to sell or process further, joint products.

Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is , or it can be processed further and sold for a higher price. The company incurs joint costs of $180,000 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product.

Sales Value at Split-off Point Allocated Joint Costs Cost to Process Further Sales Value of Processed Product
Sarco $200,000 $40,000 $120,000 $300,000
Barco 300,000 60,000 89,000 400,000
Larco 400,000 80,000 250,000 800,000

Instructions
Determine whether each of the three joint products should be sold as is, or processed further.


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Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department

PR 20-3A Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling Departments, emerging as finished chemicals. The balance in the account Work in Process - Filling was as follows on December 1, 2010:

AND SO ON

INSTRUCTIONS:
1. Prepare a cost of production report for the Filling department for December.
2. Journalize the entries for costs transferred from Reaction to Filling and the cost transferred from filling to finished goods.
3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs.
4. Discuss the uses of the cost of production report and the results of part (3).


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Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead

Problem 13-44 Cost-Based Pricing Decision

Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year’s income statement is as follows:

Sales $130,000
Cost of Goods Sold $48,100
Gross Margin $81,900
Selling and Admin Expense $46,300
Operating Income $35,600

1. Calculate the markup that Jeremy will use.
2. What is Jeremy's initial bid price?

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Perine Company has 2,000 pounds of raw materials in its December 31, 2013, ending inventory

BE9-4 Perine Company has 2,000 pounds of raw materials in its December 31, 2013, ending inventory. Required production for January and February of 2014 are 4,000 and 5,000 units, respectively. Two pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 25% of next month’s materials requirements. Prepare the direct materials budget for January.

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Modern Building Supply sells various building materials to retail outlets

Common-Size Statements and Financial Ratios for Creditors

Modern Building Supply sells various building materials to retail outlets. The company has just approached Linden Bank requesting a $300,000 loan to strengthen the Cash account and to pay certain pressing short-term obligations. The company’s financial statements for the most recent two years follow

MODERN BUILDING SUPPLY
Comparative Balance Sheet
Assets This Year Last Year
Current assets:
Cash . . . . . . . . . . . . . . . . .. $ 90,000 $ 200,000
Marketable securities . . . . . . . . . . –0– 50,000
Accounts receivable, net . . . .. . . . . 650,000 400,000
Inventory . . . . . . . . . . . . . . . 1,300,000 800,000
Prepaid expenses . . . . . . . . . . . 20,000 20,000
Total current assets . . . . . . . . . 2,060,000 1,470,000
Plant and equipment, net . . . . . . . 1,940,000 1,830,000
Total assets . . . . . . . . .. . . . . $4,000,000 $3,300,000

AND SO ON

Assume that the following ratios are typical of firms in the building supply industry:
Current ratio . . . . . . . . . . . . . . 2.5 to 1
Acid-test ratio . . . . . . . . . . . . . 1.2 to 1
Average age of receivables . . . . . 18 days
Inventory turnover in days . . . . . .. . 50 days
Debt-to-equity ratio . . . . . . . .. . . . 0.75 to 1
Times interest earned . . . . . .. . . . 6.0 times
Return on total assets . . . . . . . . . . 10%
Price-earnings ratio . . . . . . . . . . 9
Net income as a percentage of sales . . . . . 4%

Required:
1. Linden Bank is uncertain whether the loan should be made. To assist it in making a decision, you have been asked to compute the following ratios for both this year and last year:
a. The amount of working capital.
b. The current ratio.
c. The acid-test ratio.
d. The average age of receivables. (The accounts receivable at the beginning of last year totalled $350,000.)
e. The inventory turnover in days. (The inventory at the beginning of last year totalled $720,000.)
f. The debt-to-equity ratio.
g. The number of times interest was earned.
2. For both this year and last year (carry computations to one decimal place):
a. Present the balance sheet in common-size form.
b. Present the income statement in common-size form down through net income.
3. From your analysis in (1) and (2) above, what problems or strengths do you see existing in Modern Building Supply? Make a recommendation as to whether the loan should be approved.

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