1) Package must be submitted into Blackboard and a hard copy submitted prior to the start of class on 4/28/15. All work must be shown. Problems must be entirely correct to receive credit. Credit is 1 point apiece for every correct question. No credit will be awarded if complete work is not shown. Points will be added to the final test grade.
Honey Corporation, a merchandising company, reported the following results for January:
Cost of goods sold is a variable cost in this company.
1. Prepare a traditional format income statement for January.
2. Prepare a contribution format income statement for January.
3. Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below.
Using the least-squares regression method, what is the cost formula for this cost?
Use Excel to calculate this answer.
4. Gadola Company's quality cost report is to be based on the following data:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
5. Daane Company had only one job in process on May 1. The job had been charged with $1,000 of direct materials, $3,302 of direct labor, and $5,382 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $20.70 per direct labor-hour.
During May, the following activity was recorded:
Work in process inventory on May 30 contains $2,921 of direct labor cost. Raw materials consist solely of items that are classified as direct materials. What was the amount of direct materials cost in the May 30 work in process inventory account?
6. What was the cost of goods sold in May?
7. What would be the entry to dispose of the underapplied or overapplied manufacturing overhead cost for the month?
Entin Corporation reported the following data for the month of January:
8. What is the direct materials cost for January?
9. What is the cost of goods manufactured for January?
Alam Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 45,000 machine-hours and incur $180,000 in manufacturing overhead cost. The following transactions were recorded for the year:
a. Raw materials were purchased, $416,000.
b. Raw materials were requisitioned for use in production, $420,000 ($380,000 direct and $40,000 indirect).
c. The following employee costs were incurred: direct labor, $414,000; indirect labor, $60,000; and administrative salaries, $212,000.
d. Selling costs, $141,000.
e. Factory utility costs, $20,000.
f. Depreciation for the year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 48,000 machine-hours.
h. The cost of goods manufactured for the year was $1,004,000.
i. Sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000.
j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.
10. Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.
11. The Nichols Company uses the weighted-average method in its process costing system. The company recorded 29,500 equivalent units for conversion costs for November in a particular department. There were 6,000 units in the ending work in process inventory on November 30, 75% complete with respect to conversion costs. The November 1 work in process inventory consisted of 8,000 units, 50% complete with respect to conversion costs. A total of 25,000 units were completed and transferred out of the department during the month. What was the number of units started during November in the department?
12. The Assembly Department started the month with 14,000 units in its beginning work in process inventory. An additional 296,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 14,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?
13. Diston Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $44,820. An additional 90,000 units were started into production during the month. There were 21,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $677,970 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
14. The selling price of Bayard Corporation's only product is $230.00 per unit and its variable expense is $80.50 per unit. The company's monthly fixed expense is $792,350.
Assume the company's monthly target profit is $29,900. Determine the unit sales to attain that target profit.
15. Guagliano Corporation produces and sells a single product whose selling price is $110.00 per unit and whose variable expense is $29.70 per unit. The company's monthly fixed expense is $345,290.
a. Assume the company's monthly target profit is $16,060. Determine the unit sales to attain that target profit.
b. Assume the company's monthly target profit is $40,150. Determine the dollar sales to attain that target profit.
16. Mossor Corporation has two major business segments-Retail and Wholesale. In December, the Retail business segment had sales revenues of $510,000, variable expenses of $296,000, and traceable fixed expenses of $61,000. During the same month, the Wholesale business segment had sales revenues of $510,000, variable expenses of $240,000, and traceable fixed expenses of $82,000. Common fixed expenses totaled $191,000 and were allocated as follows: $113,000 to the Retail business segment and $78,000 to the Wholesale business segment.
Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.
17. The IT Corporation produces and markets two types of electronic calculators: Model 11 and Model 12. The following data were gathered on activities last month:
Prepare a segmented income statement in the contribution format for last month.
18. Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
Sales totaled $850,000, variable selling expenses totaled $110,000, and fixed selling and administrative expenses totaled $170,000. There were no units in beginning inventory. Assume that direct labor is a variable cost. What would the contribution margin per unit be?
19. Matis Corporation's activity-based costing system has three activity cost pools-Fabricating, Setting Up, and Other. Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The activity rate for Fabricating is $1.08 per MH; the activity rate for Setting Up is $5.20 per batch. The following table shows the machine-hours and number of batches associated with each of the company's two products:
Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
20. Hugle Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows:
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products:
Additional data concerning the company's products appears below:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
c. Determine the product margins for each product using activity-based costing.
21. Edwards Company has projected sales and production in units for the second quarter of the year as follows:
a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all paid in cash) amount to $60,000 per month. The accounts payable balance on March 31 totals $96,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Edwards Company.
b. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $255,000 $(45,000 from February's sales and the remainder from March.) Prepare a schedule for each month showing budgeted cash receipts for Edwards Company.
22. Capati Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.41 direct labor-hours. The direct labor rate is $8.50 per direct labor-hour. The production budget calls for producing 2,300 units in August and 2,200 units in September. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 960 hours in total each month even if there is not enough work to keep them busy.
Construct the direct labor budget for the next two months.
23. Ehrler Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:
In March, the company budgeted for 328 guests and 143 jeeps. The actual activity for the month was 338 guests and 147 jeeps.
Prepare the company's flexible budget for the actual level of activity in March.
24. Seard Clinic uses patient-visits as its measure of activity. The clinic has provided the following report:
Prepare the clinic's flexible budget performance report for December. Label each variance as favorable (F) or unfavorable (U).
25. Nield Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:
In July, the company budgeted for 430 guests and 210 jeeps. The actual activity for the month was 415 guests and 205 jeeps.
Prepare a report showing the company's activity variances for July. Label each variance as favorable (F) or unfavorable (U).
26. Vitko Corporation makes automotive engines. For the most recent month, budgeted production was 6,000 engines. The standard power cost is $8.80 per machine-hour. The company's standards indicate that each engine requires 6.1 machine-hours. Actual production was 6,400 engines. Actual machine-hours were 38,730 machine-hours. Actual power cost totaled $350,628.
Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.
27. Buis Corporation, which makes landing gears, has provided the following data for a recent month:
Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable.
28. Waltner Corporation's management reports that its average delivery cycle time is 20.0 days, its average throughput time is 7.5 days, its manufacturing cycle efficiency (MCE) is 0.32, its average move time is 0.2 day, and its average queue time is 4.0 days.
a. What is the wait time?
b. What is the process time?
c. What is the inspection time?
29. Durkee Corporation keeps careful track of the time required to fill orders. The times required for a particular order appear below:
a. Determine the throughput time.
b. Determine the manufacturing cycle efficiency (MCE). Show your work!
c. Determine the delivery cycle time.
30. Madrazo Corporation uses residual income to evaluate the performance of its divisions. The minimum required rate of return for performance evaluation purposes is 19%. The Games Division had average operating assets of $410,000 and net operating income of $86,000 in June.
What was the Games Division's residual income in June?