Problem 1: An incomplete subsidiary ledger of wire cable for May is as follows:
|
Received |
|
|
Issued |
|
|
|
Balance |
|
|
|
| Receiving |
|
|
|
Materials |
|
|
|
|
|
|
|
| Report |
|
Unit |
|
Requisition |
|
|
|
|
|
|
| Number |
Quantity |
Price |
|
Number |
Quantity |
Amount |
|
Date |
Quantity |
Amount |
Unit Price |
|
|
|
|
|
|
|
|
01-May |
120 |
$2,160.00 |
$18.00 |
| 23 |
190 |
$20.00 |
|
|
|
|
|
03-May |
|
|
|
|
|
|
|
104 |
250 |
|
|
05-May |
|
|
|
| 29 |
140 |
$22.00 |
|
|
|
|
|
19-May |
|
|
|
|
|
|
|
117 |
160 |
|
|
25-May |
|
|
|
a. Complete the materials issuances and balances for the wire cable subsidiary ledges under FIFO.
b. Determine the balance of wire cable at the end of May.
c. Journalize the summary entry to transfer materisl to work in process.
d. Explain how the materials ledger might be used as an aid in maintaining inventory quantities on hand.
The following information conerns production in the Finishing Department for July.
All direct materials are placed in process at the beginning of production.
Problem 2: ACCOUNT Work in Process--Finishing Department
|
|
|
|
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Balances |
|
| Date |
|
Items |
|
|
Debit |
Credit |
Debit |
Credit |
| 01-Jul |
|
Bal., 10,000 units, 3/5 completed |
|
|
67,000 |
|
| 31-Jul |
|
Direct materials, 180,000 units |
396,000 |
|
463,000 |
|
| 31-Jul |
|
Direct labor |
|
558,480 |
|
1,021,480 |
|
| 31-Jul |
|
Factory over head |
|
837,720 |
|
1,859,200 |
|
| 31-Jul |
|
Goods finished, 175,000 units |
|
1,748,200 |
111,000 |
|
| 31-Jul |
|
Bal.__units, 2/3 completed |
|
|
111,000 |
|
a. Determine the number of units in work in process inventory at the end of the month.
b. Determine the equivalent units of production for direct materials and conversion costs for July.
Problem 3:
Cajun Foods, Inc., operating at full capacity, sold 29,200 units at a price of $90 per unit during 2006. Its income statement is as follows:
| Sales |
|
|
|
|
$2,628,000 |
| Cost of Goods Sold |
|
|
|
1,600,000 |
| Gross Profit |
|
|
|
$1,028,000 |
| Operating expenses: |
|
|
|
|
|
Selling expenses |
|
$300,000 |
|
|
Administrative expenses |
400,000 |
|
|
|
Total operating expenses |
700,000 |
|
Income from operations |
|
$328,000 |
The division of costs between fixed and variable is as follows:
|
|
|
Fixed |
Variable |
| Cost of sales |
|
25% |
75% |
| Selling expenses |
|
40% |
60% |
| Administrative expenses |
80% |
20% |
Management is considering a plant expansin program that will permit an increase of $432,000 in yearly sales. The expansion will increase fixed costs by $140,000 but will not affect the relationship between sales and variable costs.
Question 1. Determine for 2006 the total fixed costs and the total variable costs.
Question 2. Determine for 2006 (a) the unit variable cost and (b) the unit contribution margin.
Question 3. Compute the break-even sales (units) for 2006.
Question 4. Compute the break-even sales (units) under the proposed program.
Question 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $328,000 for income from operatons that was earned in 2006.
Question 6. Determine the maximum income from operatons possible with the expanded plant.
Question 7. If the proposed is accepted and sales remain at the 2006 level, what will the income or loss from operations be for 2007?
Question 8. Based on the data given, would you recommend accepting the proposal? Explain.