E4-8 Galavic Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin plant. The following costs are budgeted for the first quarter's operations.
Machine setup, indirect materials $ 4,000
Inspections 16,000
Tests 4,000
Insurance, plant 110,000
Engineering design 140,000
Depreciation, machinery 520,000
Machine setup, indirect labor 20,000
Property taxes 29,000
Oil, heating 19,000
Electricity, plant lighting 21,000
Engineering prototypes 60,000
Depreciation, plant 210,000
Electricity, machinery 36,000
Custodial (machine maintenance) wages 19,000
Classify the above costs of Galavic Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, maintenance. Next, identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.
Click here for the solution: Galavic Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin plant
Showing posts with label plant. Show all posts
Showing posts with label plant. Show all posts
Saturday, October 17, 2015
Monday, October 5, 2015
Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2009
P10-2 (Classification of Acquisition Costs) Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2009, had the following balances.
Land $ 300,000
Land improvements 140,000
Buildings 1,100,000
Machinery and equipment 960,000
During 2010 the following transactions occurred.
1. A tract of land was acquired for $150,000 as a potential future building site.
2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 20,000 shares of Lobo’s common stock. On the acquisition date, Lobo’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $110,000 for land and $320,000 for the building at the exchange date. Current appraised values for the land and building, respectively, are $230,000 and $690,000.
3. Items of machinery and equipment were purchased at a total cost of $400,000. Additional costs were incurred as follows.
Freight and unloading $13,000
Sales taxes 20,000
Installation 26,000
4. Expenditures totaling $95,000 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years.
5. A machine costing $80,000 on January 1, 2002, was scrapped on June 30, 2010. Double-declining balance depreciation has been recorded on the basis of a 10-year life.
6. A machine was sold for $20,000 on July 1, 2010. Original cost of the machine was $44,000 on January 1, 2007, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,000.
Instructions
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2010.
Land
Land improvements
Buildings
Machinery and equipment
(Hint: Disregard the related accumulated depreciation accounts.)
(b) List the items in the fact situation that were not used to determine the answer to (a), showing the pertinent amounts and supporting computations in good form for each item. In addition, indicate where, or if, these items should be included in Lobo’s financial statements.
(AICPA adapted)
Click here for the solution: Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2009
Land $ 300,000
Land improvements 140,000
Buildings 1,100,000
Machinery and equipment 960,000
During 2010 the following transactions occurred.
1. A tract of land was acquired for $150,000 as a potential future building site.
2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 20,000 shares of Lobo’s common stock. On the acquisition date, Lobo’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $110,000 for land and $320,000 for the building at the exchange date. Current appraised values for the land and building, respectively, are $230,000 and $690,000.
3. Items of machinery and equipment were purchased at a total cost of $400,000. Additional costs were incurred as follows.
Freight and unloading $13,000
Sales taxes 20,000
Installation 26,000
4. Expenditures totaling $95,000 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years.
5. A machine costing $80,000 on January 1, 2002, was scrapped on June 30, 2010. Double-declining balance depreciation has been recorded on the basis of a 10-year life.
6. A machine was sold for $20,000 on July 1, 2010. Original cost of the machine was $44,000 on January 1, 2007, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,000.
Instructions
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2010.
Land
Land improvements
Buildings
Machinery and equipment
(Hint: Disregard the related accumulated depreciation accounts.)
(b) List the items in the fact situation that were not used to determine the answer to (a), showing the pertinent amounts and supporting computations in good form for each item. In addition, indicate where, or if, these items should be included in Lobo’s financial statements.
(AICPA adapted)
Click here for the solution: Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2009
Sunday, September 27, 2015
At December 31, 2009, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet
P10-1 (Classification of Acquisition and Other Asset Costs) At December 31, 2009, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet had the following balances.
Land $230,000
Buildings 890,000
Leasehold improvements 660,000
Machinery and equipment 875,000
During 2010 the following transactions occurred.
1. Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000.
2. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the following costs.
Excavation fees $38,000
Architectural design fees 11,000
Building permit fee 2,500
Imputed interest on funds used during construction (stock financing) 8,500
The building was completed and occupied on September 30, 2010.
3. A third tract of land (site number 623) was acquired for $650,000 and was put on the market for resale.
4. During December 2010 costs of $89,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2012, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.)
5. A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $87,000, freight costs were $3,300, installation costs were $2,400, and royalty payments for 2010 were $17,500.
Instructions
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2010.
Land Leasehold improvements
Buildings Machinery and equipment
Disregard the related accumulated depreciation accounts.
(b) List the items in the situation that were not used to determine the answer to (a) above, and indicate where, or if, these items should be included in Reagan's financial statements.
Click here for the solution: At December 31, 2009, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet
Land $230,000
Buildings 890,000
Leasehold improvements 660,000
Machinery and equipment 875,000
During 2010 the following transactions occurred.
1. Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000.
2. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the following costs.
Excavation fees $38,000
Architectural design fees 11,000
Building permit fee 2,500
Imputed interest on funds used during construction (stock financing) 8,500
The building was completed and occupied on September 30, 2010.
3. A third tract of land (site number 623) was acquired for $650,000 and was put on the market for resale.
4. During December 2010 costs of $89,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2012, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.)
5. A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $87,000, freight costs were $3,300, installation costs were $2,400, and royalty payments for 2010 were $17,500.
Instructions
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2010.
Land Leasehold improvements
Buildings Machinery and equipment
Disregard the related accumulated depreciation accounts.
(b) List the items in the situation that were not used to determine the answer to (a) above, and indicate where, or if, these items should be included in Reagan's financial statements.
Click here for the solution: At December 31, 2009, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet
Wednesday, September 23, 2015
What are the major elements of an internal control over property, plant, and equipment?
What are the major elements of an internal control over property, plant,
and equipment? For the specific control procedures identified, indicate
their importance to the audit.
Click here for the solution: What are the major elements of an internal control over property, plant, and equipment?
Click here for the solution: What are the major elements of an internal control over property, plant, and equipment?
Sunday, September 20, 2015
The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
Problem 4.33 The number of transistors (in millions) made at a plant in Japan during the past 5 years follows:
Year Transistors
1 140
2 160
3 190
4 200
5 210
a) Forecast the number of transistors to be made next year, using linear regression.
b) Compute the mean squared error (MSE) when using linear regression.
c) Compute the mean absolute percent error (MAPE).
Click here for the solution: The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
Year Transistors
1 140
2 160
3 190
4 200
5 210
a) Forecast the number of transistors to be made next year, using linear regression.
b) Compute the mean squared error (MSE) when using linear regression.
c) Compute the mean absolute percent error (MAPE).
Click here for the solution: The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011
ACC 291 Week 2 Assignment
E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Click here for the solution: The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011
E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Click here for the solution: The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011
Sunday, September 13, 2015
Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, KS
Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, KS. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operation, the following data was collected:
Machine-hours Kilowatt-hours Total Overhead Costs
January 3,800 4,520,000 $138,000
February 3,650 4,340,000 136,800
March 3,900 4,500,000 139,200
April 3,300 4,290,000 136,800
May 3,250 4,200,000 126,000
June 3,100 4,120,000 120,000
Question 1: Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
Question 2: Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.
Question 3: For July, the company ran the machines for 3,000 hours and used 4,000,000 kilowatt-hours of power. The overhead costs totaled $114,000. Which cost driver was the best predictor for July?
Click here for the solution: Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, KS
Machine-hours Kilowatt-hours Total Overhead Costs
January 3,800 4,520,000 $138,000
February 3,650 4,340,000 136,800
March 3,900 4,500,000 139,200
April 3,300 4,290,000 136,800
May 3,250 4,200,000 126,000
June 3,100 4,120,000 120,000
Question 1: Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
Question 2: Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.
Question 3: For July, the company ran the machines for 3,000 hours and used 4,000,000 kilowatt-hours of power. The overhead costs totaled $114,000. Which cost driver was the best predictor for July?
Click here for the solution: Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, KS
Saturday, August 22, 2015
At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows
P11-2 Comprehensive problem; Chapters 10 and 11
At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:
Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2011 and other information:
AND SO ON
a. On January 6, 2011, a plant facility consisting of land and building was acquired from King Corp. in exchange for 25,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $187,500 and $562,500, respectively.
b. On March 25, 2011, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $192,000. These expenditures had an estimated useful life of 12 years.
c. The leasehold improvements were completed on December 31, 2007, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2013, was renewable for an additional four-year term. On April 29, 2011, Cord exercised the renewal option.
d. On July 1, 2011, machinery and equipment were purchased at a total invoice cost of $325,000. Additional costs of $10,000 for delivery and $50,000 for installation were incurred.
e. On August 30, 2011, Cord purchased a new automobile for $12,500.
f. On September 30, 2011, a truck with a cost of $24,000 and a carrying amount of $9,100 on date of sale was sold for $11,500. Depreciation for the nine months ended September 30, 2011, was $2,650.
g. On December 20, 2011, a machine with a cost of $17,000 and a book value of $2,975 at date of disposition was scrapped without cash recovery.
Required:
1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2011. This schedule should include columns for beginning balance, increase, decrease, and ending balance for each of the plant asset accounts. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2011. Round computations to the nearest whole dollar.
Click here for the solution: At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows
At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:
Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2011 and other information:
AND SO ON
a. On January 6, 2011, a plant facility consisting of land and building was acquired from King Corp. in exchange for 25,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $187,500 and $562,500, respectively.
b. On March 25, 2011, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $192,000. These expenditures had an estimated useful life of 12 years.
c. The leasehold improvements were completed on December 31, 2007, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2013, was renewable for an additional four-year term. On April 29, 2011, Cord exercised the renewal option.
d. On July 1, 2011, machinery and equipment were purchased at a total invoice cost of $325,000. Additional costs of $10,000 for delivery and $50,000 for installation were incurred.
e. On August 30, 2011, Cord purchased a new automobile for $12,500.
f. On September 30, 2011, a truck with a cost of $24,000 and a carrying amount of $9,100 on date of sale was sold for $11,500. Depreciation for the nine months ended September 30, 2011, was $2,650.
g. On December 20, 2011, a machine with a cost of $17,000 and a book value of $2,975 at date of disposition was scrapped without cash recovery.
Required:
1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2011. This schedule should include columns for beginning balance, increase, decrease, and ending balance for each of the plant asset accounts. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2011. Round computations to the nearest whole dollar.
Click here for the solution: At December 31, 2010, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows
Saturday, August 15, 2015
GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant. This plant uses activity–based costing to calculate product costs. The following table summarizes the plant's overhead for the year and the cost drivers
Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions Activity center of dollars)
Cost driver Amount of cost Activity cost per unit Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 Direct labor $ 90 million $0.18
----------------
Total plant overhead $ 68.5
----------------
One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor $ 121,700
Direct materials 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 155,250
Setup ; 8 13,600 108,800
Engineering 1 87,200 87, 200
Occupancy $121,70 0 $0.18 21,906
---------------------
Total cost $599,836
Number of units manufactured 12,500
---------------------
Product cost per unit $ 47.99
----------------------
Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant overhead is assigned to products using direct labor dollars.
Click here for the solution: GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions Activity center of dollars)
Cost driver Amount of cost Activity cost per unit Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 Direct labor $ 90 million $0.18
----------------
Total plant overhead $ 68.5
----------------
One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor $ 121,700
Direct materials 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 155,250
Setup ; 8 13,600 108,800
Engineering 1 87,200 87, 200
Occupancy $121,70 0 $0.18 21,906
---------------------
Total cost $599,836
Number of units manufactured 12,500
---------------------
Product cost per unit $ 47.99
----------------------
Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant overhead is assigned to products using direct labor dollars.
Click here for the solution: GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
Monday, June 29, 2015
Anna Bellatorre, Inc. manufactures five models of kitchen appliances at its Mesa plant
Anna Bellatorre, Inc. manufactures five
models of kitchen appliances at its Mesa plant. The company is
installing activity-based costing and has identified the following
activities performed at its Mesa plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Maintaining and repairing machinery and equipment.
12. Painting and packaging finished appliances.
Having analyzed its Mesa plant operations for purposes of installing activity-based costing, Anna Bellatorre, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.
Click here for the solution: Anna Bellatorre, Inc. manufactures five models of kitchen appliances at its Mesa plant
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Maintaining and repairing machinery and equipment.
12. Painting and packaging finished appliances.
Having analyzed its Mesa plant operations for purposes of installing activity-based costing, Anna Bellatorre, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.
Instructions
Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Anna Bellatorre's five products.
Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Anna Bellatorre's five products.
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