E8-9 (Periodic versus Perpetual Entries) Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.
Jan 2 Inventory 100 units at $5 each
4 Sale 80 units at $8 each
11 Purchase 150 units at $6 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Instructions
a.) Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end of month closing entry to record cost of goods sol. A physical count indicates that ending inventory for January is 110 units.
b.) Compute gross profit using the periodic system.
c.) Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.
d.) Compute gross profit using the perpetual system.
Click here for the solution: Fong Sai-Yuk Company sells one product
Showing posts with label product. Show all posts
Showing posts with label product. Show all posts
Monday, March 21, 2016
Wednesday, November 11, 2015
Harmony Audio Inc. manufactures two products: receivers and CD players
Harmony Audio Inc. manufactures two products: receivers and CD players. The factory overhead incurred is as follows
Indirect labor $210,000
Subassembly Dept 145,000
Final Assembly Dept 95,000
Total $450,000
The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:
Activity Activity Cost Activity Base
Setup $90,000 Number of setups
Quality control 120,000 Number of inspections
Total $210,000
The activity-base usage quantities and units produced for the two products are shown below.
# of # of Direct Labor Direct Labor Units
Setups Inspections Hours-- Hours-- produce
Subassembly Final Assembly
Receivers 200 1,000 600 400 5.000
CD players 40 250 400 600 5,000
Total 240 1250 1,000 1,000 10,000
1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $250,000 and $200,000 for the Subassembly and Final Assembly departments, respectively.
Department Production department rate
Subassembly Dept $__________ per dlh
Final Assembly Dept $__________ per dlh
2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1).
Product Total factory overhead Factory overhead per unit
Receivers: $______________ $___________
Cd Player: $______________ $___________
3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments.
Activity Activity rate
Setup $____________ per setup
Quality Control $____________ per insp.
Subassembly Dept $____________ per dhl
Final Assembly Dept $____________ per dhl
4. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent.
Product Total Activity Cost Activity Cost per Unit
Receivers $___________ $_____________
CD Players $___________ $______________
5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate method and activity-based costing method. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Click here for the solution: Harmony Audio Inc. manufactures two products: receivers and CD players
Indirect labor $210,000
Subassembly Dept 145,000
Final Assembly Dept 95,000
Total $450,000
The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:
Activity Activity Cost Activity Base
Setup $90,000 Number of setups
Quality control 120,000 Number of inspections
Total $210,000
The activity-base usage quantities and units produced for the two products are shown below.
# of # of Direct Labor Direct Labor Units
Setups Inspections Hours-- Hours-- produce
Subassembly Final Assembly
Receivers 200 1,000 600 400 5.000
CD players 40 250 400 600 5,000
Total 240 1250 1,000 1,000 10,000
1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $250,000 and $200,000 for the Subassembly and Final Assembly departments, respectively.
Department Production department rate
Subassembly Dept $__________ per dlh
Final Assembly Dept $__________ per dlh
2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1).
Product Total factory overhead Factory overhead per unit
Receivers: $______________ $___________
Cd Player: $______________ $___________
3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments.
Activity Activity rate
Setup $____________ per setup
Quality Control $____________ per insp.
Subassembly Dept $____________ per dhl
Final Assembly Dept $____________ per dhl
4. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent.
Product Total Activity Cost Activity Cost per Unit
Receivers $___________ $_____________
CD Players $___________ $______________
5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate method and activity-based costing method. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Click here for the solution: Harmony Audio Inc. manufactures two products: receivers and CD players
Monday, October 26, 2015
Ferris Company began 2011 with 6,000 units of its principal product
P 8-5 Various inventory costing methods
Ferris Company began 2011 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases______________________
Date of Purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 9 $ 45,000
Jan. 19 6,000 10 60,000
Totals 11,000 $105,000
*Includes purchase price and cost of freight.
Sales_____________
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
8,000 units were on hand at the end of the month.
Calculate January’s ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO, periodic system
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Click here for the solution: Ferris Company began 2011 with 6,000 units of its principal product
Ferris Company began 2011 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases______________________
Date of Purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 9 $ 45,000
Jan. 19 6,000 10 60,000
Totals 11,000 $105,000
*Includes purchase price and cost of freight.
Sales_____________
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
8,000 units were on hand at the end of the month.
Calculate January’s ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO, periodic system
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Click here for the solution: Ferris Company began 2011 with 6,000 units of its principal product
Wednesday, October 14, 2015
Kozy Enterprises is considering manufacturing a new product
ACC 560 Week 4 Assignment
E5-2 Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units Rent Expense Direct Materials
1,000 $5,000 $4,000
2,000 5,000 6,000
3,000 5,000 7,800
4,000 7,000 8,000
5,000 7,000 10,000
6,000 7,000 12,000
7,000 7,000 14,000
8,000 7,000 16,000
9,000 7,000 18,000
10,000 10,000 23,000
11,000 10,000 28,000
12,000 10,000 36,000
Instructions
(a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units.
(b) Determine the relevant range of activity for this product.
(c) Calculate the variable cost per unit within the relevant range.
(d) Indicate the fixed cost within the relevant range.
Click here for the solution: Kozy Enterprises is considering manufacturing a new product
E5-2 Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units Rent Expense Direct Materials
1,000 $5,000 $4,000
2,000 5,000 6,000
3,000 5,000 7,800
4,000 7,000 8,000
5,000 7,000 10,000
6,000 7,000 12,000
7,000 7,000 14,000
8,000 7,000 16,000
9,000 7,000 18,000
10,000 10,000 23,000
11,000 10,000 28,000
12,000 10,000 36,000
Instructions
(a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units.
(b) Determine the relevant range of activity for this product.
(c) Calculate the variable cost per unit within the relevant range.
(d) Indicate the fixed cost within the relevant range.
Click here for the solution: Kozy Enterprises is considering manufacturing a new product
Mozena Corporation manufactures a single product (ACC 560 Week 4)
ACC 560 Week 4 Assignment
E5-6 Mozena Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units. The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively.
Production in Units 3,000
Production Costs
Direct Materials $7,500
Direct labor 15,000
Utilities 1,800
Property taxes 1,000
Indirect labor 4,500
Supervisory salaries 1,800
Maintenance 1,100
Depreciation 2,400
Instructions
(a) Identify the above costs as variable, fixed, or mixed.
(b) Calculate the expected costs when production is 5,000 units.
Click here for the solution: Mozena Corporation manufactures a single product (ACC 560 Week 4)
E5-6 Mozena Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units. The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively.
Production in Units 3,000
Production Costs
Direct Materials $7,500
Direct labor 15,000
Utilities 1,800
Property taxes 1,000
Indirect labor 4,500
Supervisory salaries 1,800
Maintenance 1,100
Depreciation 2,400
Instructions
(a) Identify the above costs as variable, fixed, or mixed.
(b) Calculate the expected costs when production is 5,000 units.
Click here for the solution: Mozena Corporation manufactures a single product (ACC 560 Week 4)
Baucom Industries Inc. manufactures only one product
Baucom Industries Inc. manufactures only one product. For the year ended December 31, 2010, the contribution margin increased by 36,000 from the planned level of 720,000. The president of Baucom Industries Inc. has expressed some concern about such a small increase and has requested a follow-up report. The following data have been gathered from the accounting records for the year ended December 31, 2010.
Sales: Actual: 1,470,000 Planned: 1,440,000 Difference-Increase (Decrease): 30,000
Less: Variable cost of goods sold: Actual 560,000 Planned 592,000 Difference-Increase (Decrease): (32,000)
Variable selling and administrative expenses: Actual 154,000 Planned: 128,000 Difference-Increase (Decrease): 26,000
Total: Actual 714,000 Planned: 720,000
Difference-Increase (Decrease): (6,000)
Contribution Margin Actual 756,000 Planned 720,000 Difference-Increase (Decrease): 36,000
Number of units sold: Actual 14,000 Planned 16,000
Per unit:
Sales price: Actual 105.00 Planned 90.00
Variable cost of goods sold: Actual 40.00 Planned 37.00
Variable selling and administrative expenses: Actual 11.00 Planned 8.00
Instructions:
1. Prepare a contribution margin analysis report for the year ended Dec 31, 2010.
2. At a meeting of the board of directors on Jan 30, 2011, the president, after reviewing the contribution margin analysis report, made the following comment:
It looks as if the price increase of 15.00 had the effect of decreasing sales volume. However, this was a favorable trade off. The variable cost of goods sold was less than planned. Apparently, we are efficiently managing our variable cost of goods sold. However, the variable selling and administrative expenses appear out of control. Let’s look into these expenses and get them under control. Also, let’s consider increasing the sales price to 120 and continue this favorable tradeoff between higher price and lower volume.
Do you agree with the President's comment? Explain.
Click here for the solution: Baucom Industries Inc. manufactures only one product
Sales: Actual: 1,470,000 Planned: 1,440,000 Difference-Increase (Decrease): 30,000
Less: Variable cost of goods sold: Actual 560,000 Planned 592,000 Difference-Increase (Decrease): (32,000)
Variable selling and administrative expenses: Actual 154,000 Planned: 128,000 Difference-Increase (Decrease): 26,000
Total: Actual 714,000 Planned: 720,000
Difference-Increase (Decrease): (6,000)
Contribution Margin Actual 756,000 Planned 720,000 Difference-Increase (Decrease): 36,000
Number of units sold: Actual 14,000 Planned 16,000
Per unit:
Sales price: Actual 105.00 Planned 90.00
Variable cost of goods sold: Actual 40.00 Planned 37.00
Variable selling and administrative expenses: Actual 11.00 Planned 8.00
Instructions:
1. Prepare a contribution margin analysis report for the year ended Dec 31, 2010.
2. At a meeting of the board of directors on Jan 30, 2011, the president, after reviewing the contribution margin analysis report, made the following comment:
It looks as if the price increase of 15.00 had the effect of decreasing sales volume. However, this was a favorable trade off. The variable cost of goods sold was less than planned. Apparently, we are efficiently managing our variable cost of goods sold. However, the variable selling and administrative expenses appear out of control. Let’s look into these expenses and get them under control. Also, let’s consider increasing the sales price to 120 and continue this favorable tradeoff between higher price and lower volume.
Do you agree with the President's comment? Explain.
Click here for the solution: Baucom Industries Inc. manufactures only one product
Sunday, September 27, 2015
A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year
EX 9-2 A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year:
Sales $254,000
Cost of the goods sold $122,000
Gross profit $132,000
Operating expenses $156,000
Loss from operations ($24,000)
It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 20% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
a. Prepare a differential analysis report, dated March 3, 2010, for the proposed discontinuance of Royal Cola.
b. Should Royal Cola be retained?
Click here for the solution: A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year
Sales $254,000
Cost of the goods sold $122,000
Gross profit $132,000
Operating expenses $156,000
Loss from operations ($24,000)
It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 20% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
a. Prepare a differential analysis report, dated March 3, 2010, for the proposed discontinuance of Royal Cola.
b. Should Royal Cola be retained?
Click here for the solution: A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year
Friday, September 25, 2015
Optix International is considering a significant expansion to its product line
E9-9 Optix International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company’s current offerings, but offer a complementary fit to its existing product line. Frank Renolds, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Carol Fischer, the company’s CFO, has provided the following projections based on results with and without the new products.
Without New Products With New Products
Sales $10,000,000 $18,000,000
Net income $800,000 $1,800,000
Average total assets $5,000,000 $15,000,000
Instructions
(a) Compute the company’s return on assets ratio, profit margin ratio, and asset turnover ratio, both with and without the new product line.
(b) Discuss the implications that your findings in part (a) have for the company’s decision.
Click here for the solution: Optix International is considering a significant expansion to its product line
Without New Products With New Products
Sales $10,000,000 $18,000,000
Net income $800,000 $1,800,000
Average total assets $5,000,000 $15,000,000
Instructions
(a) Compute the company’s return on assets ratio, profit margin ratio, and asset turnover ratio, both with and without the new product line.
(b) Discuss the implications that your findings in part (a) have for the company’s decision.
Click here for the solution: Optix International is considering a significant expansion to its product line
Jay Levitt Company produces one product, a putter called GO-Putter
E11-11 Jay Levitt Company produces one product, a putter called GO-Putter. Levitt uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $800,000 comprised of $200,000 of variable costs and $600,000 of fixed costs. Levitt applies overhead on the basis of direct labor hours.
During the current year, Levitt produced 90,000 putters, worked 94,000 direct labor hours, and incurred variable overhead costs of $186,000 and fixed overhead costs of $600,000.
Instructions:
a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
b) Compute the applied overhead for Levitt for the year.
c) Compute the total overhead variance.
Click here for the solution: Jay Levitt Company produces one product, a putter called GO-Putter
During the current year, Levitt produced 90,000 putters, worked 94,000 direct labor hours, and incurred variable overhead costs of $186,000 and fixed overhead costs of $600,000.
Instructions:
a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
b) Compute the applied overhead for Levitt for the year.
c) Compute the total overhead variance.
Click here for the solution: Jay Levitt Company produces one product, a putter called GO-Putter
Putnam Corporation manufactures a single product
P11-1A Putnam Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials-1 pound plastic at $7.00 per pound $ 7.00
Direct labor-1.5 hours at $12.00 per hour 18.00
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 3.75
Total standard cost per unit $40.00
The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
Direct materials (5,100 pounds) $ 37,230
Direct labor (7,000 hours) 87,500
Variable overhead 56,170
Fixed overhead 19,680
Total manufacturing costs $200,580
Direct materials-1 pound plastic at $7.00 per pound $ 7.00
Direct labor-1.5 hours at $12.00 per hour 18.00
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 3.75
Total standard cost per unit $40.00
The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
Direct materials (5,100 pounds) $ 37,230
Direct labor (7,000 hours) 87,500
Variable overhead 56,170
Fixed overhead 19,680
Total manufacturing costs $200,580
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Instructions:
a) Compute all of the materials and labor variances.
b) Compute the total overhead variance.
Instructions:
a) Compute all of the materials and labor variances.
b) Compute the total overhead variance.
Click here for the solution: Putnam Corporation manufactures a single product
Friday, September 11, 2015
Topple Company produces a single product
Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:
Units in beginning inventory 2,000
Units produced 9,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Cost of goods sold 60,000
Gross margin 40,000
Less selling & admin. expenses 28,000
Net operating income $12,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
Click here for the solution: Topple Company produces a single product
Units in beginning inventory 2,000
Units produced 9,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Cost of goods sold 60,000
Gross margin 40,000
Less selling & admin. expenses 28,000
Net operating income $12,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
Click here for the solution: Topple Company produces a single product
Tuesday, September 8, 2015
On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note
On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note having a maturity value of $900,000 (interest payable annually on December 31). Berry Corporation pays 6% for its borrowed funds. Flynn Company, however, pays 8% for its borrowed funds. The product sold is carried on the books of Berry at a manufactured cost of $570,000. Assume Berry uses a perpetual inventory system.
Instructions
(a) Prepare the journal entries to record the transaction on the books of Berry Corporation at December 31, 2009. (Assume that the simple interest method is used.)
(b) Make all appropriate entries for 2010 on the books of Berry Corporation.
(c) Make all appropriate entries for 2011 on the books of Berry Corporation.
Click here for the solution: On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note
Instructions
(a) Prepare the journal entries to record the transaction on the books of Berry Corporation at December 31, 2009. (Assume that the simple interest method is used.)
(b) Make all appropriate entries for 2010 on the books of Berry Corporation.
(c) Make all appropriate entries for 2011 on the books of Berry Corporation.
Click here for the solution: On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note
The Assembly Department produced 2,000 units of product during June
The Assembly Department produced 2,000 units of product during June. Each unit required 1.5 standard direct labor hours. There were 3,200 actual hours used in the Assembly Department during June at an actual rate of $14.00 per hour. The standard direct labor rate is $15 per hour. Assuming direct labor for a month is paid on the fifth day of the following month, journalize the direct labor in the Assembly Department on June 30.
Click here for the solution: The Assembly Department produced 2,000 units of product during June
Click here for the solution: The Assembly Department produced 2,000 units of product during June
Sunday, August 23, 2015
Chippewas Company sells one product
(Periodic versus Perpetual Entries) Chippewas Company sells one product. Presented below is information for January for Chippewas Company.
Jan. 1 Inventory 100 units at $6 each
4 Sale 80 units at $8 each
11 Purchase 150 units at $6.50 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.
(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
(b) Compute gross profit using the periodic system.
(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.
(d) Compute gross profit using the perpetual system.
Click here for the solution: Chippewas Company sells one product
Jan. 1 Inventory 100 units at $6 each
4 Sale 80 units at $8 each
11 Purchase 150 units at $6.50 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.
(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
(b) Compute gross profit using the periodic system.
(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.
(d) Compute gross profit using the perpetual system.
Click here for the solution: Chippewas Company sells one product
A customer has asked Clougherty Corporation to supply 4,000 units of product M97, with some modifications, for $40.10 each
A customer has asked Clougherty Corporation to supply 4,000 units of product M97, with some modifications, for $40.10 each. The normal selling price of this product is $48.00 each. The normal unit product cost of product M97 is computed as follows:
Direct Materials..............$18.50
Direct Labor......................$1.20
Variable Manufacturing Overhead.......$8.40
Unit Product Cost= $32.00
Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product M97 that would increase the variable costs by $5.70 per unit and that would require a one-time investment of $31,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.
Required:
Determine the effect on the company's total net operating income of accepting the special order.
Click here for the solution: A customer has asked Clougherty Corporation to supply 4,000 units of product M97, with some modifications, for $40.10 each
Direct Materials..............$18.50
Direct Labor......................$1.20
Variable Manufacturing Overhead.......$8.40
Unit Product Cost= $32.00
Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product M97 that would increase the variable costs by $5.70 per unit and that would require a one-time investment of $31,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.
Required:
Determine the effect on the company's total net operating income of accepting the special order.
Click here for the solution: A customer has asked Clougherty Corporation to supply 4,000 units of product M97, with some modifications, for $40.10 each
Friday, August 21, 2015
Assume that a company wants to hire a sales engineer-that is, fill a position where the major emphasis is on technical product knowledge
Assume that a company wants to hire a sales engineer-that is, fill a position where the major emphasis is on technical product knowledge. Should this firm recruit engineers and train them to sell or recruit sales reps and teach then the necessary technical information and abilities?
Click here for the solution: Assume that a company wants to hire a sales engineer-that is, fill a position where the major emphasis is on technical product knowledge
Click here for the solution: Assume that a company wants to hire a sales engineer-that is, fill a position where the major emphasis is on technical product knowledge
Tuesday, August 18, 2015
Hannon Company expects to produce 1,200,000 units of Product XX in 2010
Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. Prepare a flexible manufacturing budget for the relevant range value using 20,000 unit increments.
Click here for the solution: Hannon Company expects to produce 1,200,000 units of Product XX in 2010
Click here for the solution: Hannon Company expects to produce 1,200,000 units of Product XX in 2010
Monday, August 17, 2015
Lobster Company had a beginning inventory on January 1 of 150 units of Product BU-54 at a cost of $20 per unit
P6-3B Lobster Company had a beginning inventory on January 1 of 150 units of Product BU-54 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15, 400 units at $23 Sept. 4, 350 units at $26 July 20, 250 units at $24 Dec. 2, 100 units at $29 1,000 units were sold. Lobster Company uses a periodic inventory system.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?
Click here for the solution: Lobster Company had a beginning inventory on January 1 of 150 units of Product BU-54 at a cost of $20 per unit
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?
Click here for the solution: Lobster Company had a beginning inventory on January 1 of 150 units of Product BU-54 at a cost of $20 per unit
Saturday, August 15, 2015
Leekee Shipyards has a new barnacle removing product for ocean going vessels
Leekee Shipyards has a new barnacle removing product for ocean going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product.
Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information:
Per Unit Total
Direct Materials $ 2.00
Direct Labor $ 1.50
Variable Manufacturing Overhead $ 1.00
Fixed Manufacturing Overhead $ 100,000
Variable Selling and Administrative Expense $ 0.10
Fixed Selling and Administrative Expense $ 100,000
Click here for the solution: Leekee Shipyards has a new barnacle removing product for ocean going vessels
Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information:
Per Unit Total
Direct Materials $ 2.00
Direct Labor $ 1.50
Variable Manufacturing Overhead $ 1.00
Fixed Manufacturing Overhead $ 100,000
Variable Selling and Administrative Expense $ 0.10
Fixed Selling and Administrative Expense $ 100,000
Click here for the solution: Leekee Shipyards has a new barnacle removing product for ocean going vessels
Monday, August 3, 2015
The Franc Zeppo Venture manufactures a product that goes through two processing departments
The Franc Zeppo Venture manufactures a product that goes through two processing departments. Information relating to the activity in the first department during April is given below :
Work in process, April 1: 50,000 units (80% completed for materials and 60% completed for conversion.
Work in process, April 30: 45,000 units (70% completed for materials and 60% completed for conversion.
The department started 380,000 units into production during the month and transferred 385,000 completed units to the next department.
Compute and calculate the equivalent units of production for the first department for April, assuming the company uses the weighted-average method of accounting for units and costs.
Click here for the solution: The Franc Zeppo Venture manufactures a product that goes through two processing departments
Work in process, April 1: 50,000 units (80% completed for materials and 60% completed for conversion.
Work in process, April 30: 45,000 units (70% completed for materials and 60% completed for conversion.
The department started 380,000 units into production during the month and transferred 385,000 completed units to the next department.
Compute and calculate the equivalent units of production for the first department for April, assuming the company uses the weighted-average method of accounting for units and costs.
Click here for the solution: The Franc Zeppo Venture manufactures a product that goes through two processing departments
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