CASE 13–30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc. sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,000 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding time, annual production is limited to 5,000 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums:
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense. . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
AND SO ON
ALL 5 REQUIREMENTS ANSWERED.
Click here for the solution: TufStuff, Inc. sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry
Showing posts with label range. Show all posts
Showing posts with label range. Show all posts
Monday, April 18, 2016
Wednesday, September 23, 2015
Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars
Eskimo Pie Corporation markets a broad range of frozen treats, including
its famous Eskimo Pie ice cream bars. The following items were taken
from a recent income statement and balance sheet. In each case identify
whether the item would appear on the balance sheet (BS) or income
statement (IS).
a) Income tax expense
b) Inventories
c) Amount payable
d) Retained earnings
e) Property, plant and equipment
f ) Net sales
g) Cost of goods sold
h) Common stock
i) Receivables
j) Interest expense
Click here for the solution: Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars
a) Income tax expense
b) Inventories
c) Amount payable
d) Retained earnings
e) Property, plant and equipment
f ) Net sales
g) Cost of goods sold
h) Common stock
i) Receivables
j) Interest expense
Click here for the solution: Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars
Friday, July 31, 2015
Highline Hospital provides a wide range of health services in its community
7-44 Cash Budgeting for a Hospital
Highline Hospital provides a wide range of health services in its community. Highline’s board of directors has authorized the following capital expenditures:
Intra-aortic balloon pump $1,400,000
Computed tomographic scanner 850,000
X-ray equipment 550,000
Laboratory equipment 1,200,000
Total $4,000,000
The expenditures are planned for October 1, 20X7, and the board wishes to know the amount of borrowing, if any, necessary on that date. Rebecca Singer, hospital controller, has gathered the following information to be used in preparing an analysis of future cash flows. Billings, made in the month of service, for 20X7 are shown below, with actual amounts for January through June and estimated amounts for July through December:
Month Actual Amount
January $5,300,000
February 5,300,000
March 5,400,000
April 5,400,000
May 6,000,000
June 6,000,000
July (estimated) 5,800,000
August (estimated) 6,000,000
September (estimated) 6,600,000
October (estimated) 6,800,000
November (estimated) 7,000,000
December (estimated) 6,600,000
Ninety percent of Highline billings are made to third parties, such as BlueCross, federal or state governments, and private insurance companies. The remaining 10% of the billings are made directly to patients. Historical patterns of billing collections are
Third-Party Billings Direct-Patient Billings
Month of service 20% 10%
Month following service 50 40
Second month following service 20 40
Uncollectible 10 10
Singer expects the same billing and collection patterns that have been experienced during the first six months of 20X7 to continue during the last six months of the year. The following schedule presents the purchases that have been made during the past three months and the planned purchases for the last six months of 20X7.
Month Amount
April $1,300,000
May 1,450,000
June 1,450,000
July 1,500,000
August 1,800,000
September 2,200,000
October 2,350,000
November 2,700,000
December 2,100,000
All purchases are made on account, and accounts payable are remitted in the month following the purchase.
• Salaries for each month during the remainder of 20X7 are expected to be $1,800,000 per month plus 20% of that month’s billings. Salaries are paid in the month of service.
• Highline’s monthly depreciation charges are $150,000.
• Highline incurs interest expenses of $180,000 per month and makes interest payments of $540,000 on the last day of each calendar quarter.
• Endowment fund income is expected to continue to total $210,000 per month.
• Highline has a cash balance of $350,000 on July 1, 20X7, and has a policy of maintaining a minimum end-of-month cash balance of 10% of the current month’s purchases.
• Highline Hospital employs a calendar-year reporting period.
1. Prepare a schedule of budgeted cash receipts by month for the third quarter of 20X7.
2. Prepare a schedule of budgeted cash disbursements by month for the third quarter of 20X7.
3. Determine the amount of borrowing, if any, necessary on October 1, 20X7, to acquire the capital items totaling $4,000,000.
Click here for the solution: Highline Hospital provides a wide range of health services in its community
Highline Hospital provides a wide range of health services in its community. Highline’s board of directors has authorized the following capital expenditures:
Intra-aortic balloon pump $1,400,000
Computed tomographic scanner 850,000
X-ray equipment 550,000
Laboratory equipment 1,200,000
Total $4,000,000
The expenditures are planned for October 1, 20X7, and the board wishes to know the amount of borrowing, if any, necessary on that date. Rebecca Singer, hospital controller, has gathered the following information to be used in preparing an analysis of future cash flows. Billings, made in the month of service, for 20X7 are shown below, with actual amounts for January through June and estimated amounts for July through December:
Month Actual Amount
January $5,300,000
February 5,300,000
March 5,400,000
April 5,400,000
May 6,000,000
June 6,000,000
July (estimated) 5,800,000
August (estimated) 6,000,000
September (estimated) 6,600,000
October (estimated) 6,800,000
November (estimated) 7,000,000
December (estimated) 6,600,000
Ninety percent of Highline billings are made to third parties, such as BlueCross, federal or state governments, and private insurance companies. The remaining 10% of the billings are made directly to patients. Historical patterns of billing collections are
Third-Party Billings Direct-Patient Billings
Month of service 20% 10%
Month following service 50 40
Second month following service 20 40
Uncollectible 10 10
Singer expects the same billing and collection patterns that have been experienced during the first six months of 20X7 to continue during the last six months of the year. The following schedule presents the purchases that have been made during the past three months and the planned purchases for the last six months of 20X7.
Month Amount
April $1,300,000
May 1,450,000
June 1,450,000
July 1,500,000
August 1,800,000
September 2,200,000
October 2,350,000
November 2,700,000
December 2,100,000
All purchases are made on account, and accounts payable are remitted in the month following the purchase.
• Salaries for each month during the remainder of 20X7 are expected to be $1,800,000 per month plus 20% of that month’s billings. Salaries are paid in the month of service.
• Highline’s monthly depreciation charges are $150,000.
• Highline incurs interest expenses of $180,000 per month and makes interest payments of $540,000 on the last day of each calendar quarter.
• Endowment fund income is expected to continue to total $210,000 per month.
• Highline has a cash balance of $350,000 on July 1, 20X7, and has a policy of maintaining a minimum end-of-month cash balance of 10% of the current month’s purchases.
• Highline Hospital employs a calendar-year reporting period.
1. Prepare a schedule of budgeted cash receipts by month for the third quarter of 20X7.
2. Prepare a schedule of budgeted cash disbursements by month for the third quarter of 20X7.
3. Determine the amount of borrowing, if any, necessary on October 1, 20X7, to acquire the capital items totaling $4,000,000.
Click here for the solution: Highline Hospital provides a wide range of health services in its community
Wednesday, July 15, 2015
For Lobes Company, the relevant range of production is 40-80% of capacity
BE5-2 For Lobes Company, the relevant range of production is 40-80% of
capacity. At 40% of capacity, a variable cost is $4,000 and fixed cost
is 6,000. Diagram the behavior of each cost within the relevant range
assuming the behavior is linear.
Click here for the solution: For Lobes Company, the relevant range of production is 40-80% of capacity
Click here for the solution: For Lobes Company, the relevant range of production is 40-80% of capacity
Saturday, June 27, 2015
(ACC 349 Week 3) Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges
ACC 349 Week 3
Exercise 4-11 (E4-11) Compute overhead rates and assign overhead using ABC.
Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
Activities Cost Drivers Total Cost
1. Materials handling Number of requisitions $35,000
2. Machine setups Number of setups 27,500
3. Quality inspections Number of inspections 27,000
The cost driver volume for each product was as follows.
Cost Drivers Instruments Gauges Total
Number of requisitions 400 600 1,000
Number of setups 200 300 500
Number of inspections 200 400 600
Instructions
1. Determine the overhead rate for each activity.
2. Assign the manufacturing overhead costs for April to the two products using activity-based costing.
3. Write a memorandum to the president of Fontillas Instrument explaining the benefits of activity-based costing.
Click here for the solution: (ACC 349 Week 3) Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges
Exercise 4-11 (E4-11) Compute overhead rates and assign overhead using ABC.
Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
Activities Cost Drivers Total Cost
1. Materials handling Number of requisitions $35,000
2. Machine setups Number of setups 27,500
3. Quality inspections Number of inspections 27,000
The cost driver volume for each product was as follows.
Cost Drivers Instruments Gauges Total
Number of requisitions 400 600 1,000
Number of setups 200 300 500
Number of inspections 200 400 600
Instructions
1. Determine the overhead rate for each activity.
2. Assign the manufacturing overhead costs for April to the two products using activity-based costing.
3. Write a memorandum to the president of Fontillas Instrument explaining the benefits of activity-based costing.
Click here for the solution: (ACC 349 Week 3) Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges
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