Bunyon Lumber Company incurs a cost of $490 per hundred board feet in processing certain "rough-cut" lumber

EX 9-10 Bunyon Lumber Company incurs a cost of $490 per hundred board feet in processing certain "rough-cut" lumber, which it sells for $635 per hundred board feet. An alternative is to produce a "finished cut" at a total processing cost of $565 per hundred board feet, which can be sold for $840 per hundred board feet.

What is the amount of (a) the differential revenue, (b) differential cost, and (c) differential income for processing rough-cut lumber into finished cut?

Click here for the solution: Bunyon Lumber Company incurs a cost of $490 per hundred board feet in processing certain "rough-cut" lumber

Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour

ACC 560 Week 7 Assignment

E11-6 Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.

Instructions:
a) Compute the total labor variance.
b) Compute the labor price and quantity variances.
c) Repeat the previous question, assuming the standard is 4.2 hours of direct labor at $12.25 per hour.

Click here for the solution: Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour

Cunningham Performance Auto, Inc., modifies 375 autos per year

Problems 1.11 Cunningham Performance Auto, Inc., modifies 375 autos per year. The manager, Peter Cunningham, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were: labor, 10,000 hours; 500 suspension and engine modification kits; and energy, 100,000 kilowatthours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Cunningham?


Click here for the solution: Cunningham Performance Auto, Inc., modifies 375 autos per year

On July 31, 2010, Fenton Company had a cash balance per books of $6,140

P4-3A On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.

Instructions
(a) Prepare the bank reconciliation as of July 31.
(b) Prepare the necessary adjusting entries at July 31

Check: (a) Cash bal. $6,909.00


Click here for the solution: On July 31, 2010, Fenton Company had a cash balance per books of $6,140

If a truck is driven 147,000 miles during a year, the average operating cost is 8.7 cents per mile

If a truck is driven 147,000 miles during a year, the average operating cost is 8.7 cents per mile. If a truck is driven only 98,000 miles during a year, the average operating cost increases to 9.6 cents per mile.

a. Using high/low method, estimate the variable (3 decimal places) and fixed cost (nearest dollar amount) elements of the annual cost of truck operation.
b. Express the variable and fixed costs in the form Y= a+bX
c. If a truck driven 122,000 miles during a year, what total cost would you expect to be incurred?


Click here for the solution: If a truck is driven 147,000 miles during a year, the average operating cost is 8.7 cents per mile

Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.38

Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.38.

(a) What is the break-even point per month in sales?
(b) What level of sales is needed for a monthly profit of $67,000?
(c) For the month of August, Paschal’s anticipates sales of $585,000. What is the expected level of profit?

Click here for the solution: Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.38

Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures

Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

Direct Materials-------------------------------$15.70
Direct Labor-----------------------------------$17.50
Variable Manufacturing Overhead-------$ 4.50
Fixed Manufacturing Overhead----------$14.60
----------
Unite Product Cost--------------------------$52.30
----------

An outside supplier has offered to sell the company all of these parts it needs for $51.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $219,000 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $6.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 30,000 units required each year?

Click here for the solution: Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures

Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40

Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40. If the firm chooses to pay on time but does not take the discount, assuming a 365 day-year, what is the

a. nominal interest cost for passing up (not taking) the credit

b. effective annual percentage cost of its non-free trade credit

Click here for the solution: Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40

In Paige Company, direct labor is $20 per hour

BE10-3 In Paige Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2014, direct labor totaling $204,000 in incurred in working 10,400 hours.

Prepare (a) a static budget report and (b) a flexible budget report. Evaluate the usefulness of each report.

Click here for the solution: In Paige Company, direct labor is $20 per hour

Coyote Trading uses a predetermined manufacturing overhead rate of $12 per machine hour

Coyote Trading uses a predetermined manufacturing overhead rate of $12 per machine hour. Last year the company had actual overhead of $898,000 and 75,000 machine hours.

(a) Compute the amount of manufacturing overhead applied.
(b) Compute the amount of over/underapplied overhead.
(c) What is the disposition of the over/under applied overhead?

Click here for the solution: Coyote Trading uses a predetermined manufacturing overhead rate of $12 per machine hour

Mama Leone’s Frozen Pizzas uses 50,000 units of cheese per year

E15–3 Mama Leone’s Frozen Pizzas uses 50,000 units of cheese per year. Each unit costs $2.50. The ordering cost for the cheese is $250 per order, and its carrying cost is $0.50 per unit per year. Calculate the firm’s economic order quantity (EOQ) for the cheese. Mama Leone’s operates 250 days per year and maintains a minimum inventory level of 2 days’ worth of cheese as a safety stock. If the lead time to receive orders of cheese is 3 days, calculate the reorder point.

Click here for the solution: Mama Leone’s Frozen Pizzas uses 50,000 units of cheese per year

The standard cost sheet calls for 80 pounds of zinc per batch of 70 faucets

P 12–11: Zinc Faucets

The standard cost sheet calls for 80 pounds of zinc per batch of 70 faucets. Zinc has a standard price of $5.10 per pound. One thousand pounds of zinc are purchased for $5,530. Ten batches of the faucets are produced, and 840 pounds of zinc are used. There was no beginning zinc inventory. All variances are calculated as soon as possible.

Required:
Prepare a table that decomposes the total purchase price of the zinc ($5,530) into its various components as calculated by the standard cost system.

Click here for the solution: The standard cost sheet calls for 80 pounds of zinc per batch of 70 faucets

The Great Fish Taco Corporation currently has fixed operating costs of $15,000, sells its premade tacos for $6 per box, and incurs variable operating costs of $2.50 per box

E13-2 The Great Fish Taco Corporation currently has fixed operating costs of $15,000, sells its premade tacos for $6 per box, and incurs variable operating costs of $2.50 per box. If the firm has a potential investment that would simultaneously raise its fixed costs to $16,500 and allow it to charge a per-box sale price of $6.50 due to better-textured tacos, what will the impact be on its operating breakeven point in boxes?

Click here for the solution: The Great Fish Taco Corporation currently has fixed operating costs of $15,000, sells its premade tacos for $6 per box, and incurs variable operating costs of $2.50 per box

The stock of Alpha Tool sells for $10.25 per share

The stock of Alpha Tool sells for $10.25 per share. Its current dividend rate, D0, is $1 per share. Analysts and investors expect Alpha to increase its dividends at a 10 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 8 percent for years 3 and 4 and then to settle down to 4 percent per year forever. Calculate the cost of internal equity for Alpha Tool.

Click here for the solution: The stock of Alpha Tool sells for $10.25 per share

(Break-even and other CVP relationships) Cedars Hospital has average revenue of $180 per patient day

3. Break-even and other CVP relationships

Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year.

a. How many patient days does the hospital need to break even?
b. What level of revenue is needed to earn a target income of $540,000?
c. If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?

Click here for the solution: (Break-even and other CVP relationships) Cedars Hospital has average revenue of $180 per patient day

For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct labor hour

(Predetermined Overhead Rate) For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firm’s 2013 expected annual capacity is $78,000 direct labor hours, to be incurred evenly each month. Making one unit of the company product requires 1.5 direct labor hours.

a. Determine the total overhead to be applied per unit of product in 2013.
b. Prepare journal entries to record the application of overhead to Work in process inventory and the incurrence of $128,550 of actual overhead in January 2013, when 6,390 direct labor hours were worked.
c. Given the actual direct labor hours in (b), how many units would you have expected to be produced in January.

Click here for the solution: For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct labor hour

Herschel Candy Co. produces a single product: chocolate almond bar that sells for $0.40 per bar

Herschel Candy Co. produces a single product: chocolate almond bar that sells for $0.40 per bar. Variable costs for each bar (sugar, chocolate, almonds, wrapper and labor) total $0.25. Total Mo. Fixed costs are $60,000. Last month, bar sales reached 1 million. Herschel's President wants to increase company's profitability by following options:
1) increase advertising
2) Increase quality of bar's ingredients and simultaneously increase selling price
3) Increase selling price with no change in ingredients

a) Sales mgr. is confident intensive advertising campaign will double sales volume. If co.'s president goal is to increase this month's profits by 50% over last month's, what is max. amt. that can be spent on advertising that doubles sales volume?
b) Assume company increases quality of ingredients, thus increasing variable costs to $.30 per bar. By how much must selling price per unit be increased to maintain same breakeven point in units?
c) Assume next that company has decided to increase its selling price to $0.50 per bar with no change in advertising or ingredients. Compute sales volume in units that would be needed at new price for company to earn same profit as it earned last month.

Click here for the solution: Herschel Candy Co. produces a single product: chocolate almond bar that sells for $0.40 per bar