Question

QUESTIONS IS 3 PARTS. PLZ ANSWER

14A. On January 4, Year 1, Barber Company purchased 6,400 shares of Convell Company for $73,500 plus a broker's fee of $1,280. Convell Company has a total of 32,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $86,000 and $81,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2?

14B. Memphis Company anticipates total sales for April, May, and June of $1,000,000, $1,100,000, and $1,150,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales during the month of June.

14C. Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $5.00 (2 hrs. per unit @ $2.50/hr.). Actual data for the month show variable overhead costs of $123,000, and 23,500 units produced. The total variable overhead variance is:

Answer 1

Solution 14A:

Computation of book value of Barber investment at end of year 2
Particulars	Amount
Cost of investment ($73,500 + $1,280)	$74,780.00
Add: Share of income (Year 1)	$17,200.00
Less: Dividend received in year 1	$5,440.00
Add: Share of income (Year 2)	$16,200.00
Less: Dividend received in year 2	$5,440.00
Book value of Barber's investment in Convell at the end of Year 2	$97,300.00

Solution 14B:

Computation of expected cash collection - June
Particulars	Amount
Cash Sales ($1,150,000*25%)	$287,500.00
Collection for may credit sales ($1,100,000*75%*55%)	$453,750.00
Collection for June credit sales ($1,150,000*75%*40%)	$345,000.00
Expected cash collection for june	$1,086,250.00

Solution 14C:

Standard variable overhead cost = 23500*2*$2.50 = $117,500

Actual variable overhead cost = $123,000

Total variable overhead variance = Standard cost - Actual cost = $117,500 - $123,000 = $5,500 U