Questions
Weller Company's budgeted unit sales for the upcoming fiscal year are provided below: 1st Quarter 2nd...

Weller Company's budgeted unit sales for the upcoming fiscal year are provided below:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit sales 16,000 18,000 15,000 14,000

The company’s variable selling and administrative expense per unit is $1.50. Fixed selling and administrative expenses include advertising expenses of $9,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $15,000 per quarter. In addition, the company will make insurance payments of $4,000 in the first quarter and $4,000 in the third quarter. Finally, property taxes of $6,000 will be paid in the second quarter.

Required:

Prepare the company’s selling and administrative expense budget for the upcoming fiscal year. (Round "Per Unit" answers to 2 decimal places.)

In: Accounting

Direct Materials Variances Bellingham Company produces a product that requires six standard pounds per unit. The...

Direct Materials Variances

Bellingham Company produces a product that requires six standard pounds per unit. The standard price is $10.5 per pound. If 6,200 units used 37,900 pounds, which were purchased at $10.08 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance $
b. Direct materials quantity variance $
c. Direct materials cost variance $

Direct Labor Variances

Bellingham Company produces a product that requires 10 standard direct labor hours per unit at a standard hourly rate of $19.00 per hour. If 6,400 units used 65,300 hours at an hourly rate of $18.05 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance $
b. Direct labor time variance $
c. Direct labor cost variance $

In: Accounting

Discuss the following two statements: 1- the corporate charter and the bylaws of a company are...

Discuss the following two statements:

1- the corporate charter and the bylaws of a company are legal documents; therefore, they should not be examined by the auditors. If the auditor wants information about these documents, an attorney should be consulted.

2- the most important audit procedure to verify dividends for the year is a comparison of a random sample of cancelled dividends checks with a dividend list that has been prepared by management as of the dividend record date.

In: Accounting

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances...

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

Raw materials $ 63,000
Work in process $ 22,200
Finished goods $ 52,500

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $11.50 per direct labor-hour was based on a cost formula that estimated $460,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

  1. Raw materials were purchased on account, $618,000.
  2. Raw materials used in production, $569,400. All of of the raw materials were used as direct materials.
  3. The following costs were accrued for employee services: direct labor, $410,000; indirect labor, $150,000; selling and administrative salaries, $338,000.
  4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $382,000.
  5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $310,000.
  6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
  7. Jobs costing $1,372,600 to manufacture according to their job cost sheets were completed during the year.
  8. Jobs were sold on account to customers during the year for a total of $3,202,500. The jobs cost $1,382,600 to manufacture according to their job cost sheets.

4. What is the total amount of manufacturing overhead applied to production during the year?

5. What is the total manufacturing cost added to Work in Process during the year?

6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?

7. What is the ending balance in Work in Process?

In: Accounting

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories....

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments—Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

Molding Fabrication Total
Estimated total machine-hours used 2,500 1,500 4,000
Estimated total fixed manufacturing overhead $ 13,500 $ 17,100 $ 30,600
Estimated variable manufacturing overhead per machine-hour $ 2.80 $ 3.60
Job P Job Q
Direct materials $ 27,000 $ 15,000
Direct labor cost $ 32,200 $ 13,100
Actual machine-hours used:
Molding 3,100 2,200
Fabrication 2,000 2,300
Total 5,100 4,500

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q?

12. If Job P included 20 units, what was its unit product cost?

13. If Job Q included 30 units, what was its unit product cost?

14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q?

15. What was Sweeten Company’s cost of goods sold for March?

In: Accounting

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used...

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 machine 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

Management believes 6,000 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an alternative to adding another welding machine, management has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier of quality products, would be able to provide up to 4,000 WVD-type drums per year at a price of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate relabeling.

Megan Flores, TufStuff’s production manager, has suggested the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.5 hours of welding machine time per frame and yet sell for far more than the drums. Megan believes that TufStuff could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting department has provided the following data concerning the proposed new product:

Bike Frames
Selling price per frame $ 239.00
Cost per frame:
Direct materials $99.40
Direct labor ($18 per hour) 28.80
Manufacturing overhead 36.00
Selling and administrative expense 47.80 212.00
Margin per frame $ 27.00

The bike frames could be produced with existing equipment and personnel. Manufacturing overhead is allocated to products on the basis of direct labor-hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building, but some of it is variable. The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90 per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier.

Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $0.75 per WVD drum whether made or purchased and would be $1.30 per bike frame.

All of the company’s employees—direct and indirect—are paid for full 40-hour work weeks and the company has a policy of laying off workers only in major recessions.

As soon as your analysis was shown to the top management team at TufStuff, several managers got into an argument concerning how direct labor costs should be treated when making this decision. One manager argued that direct labor is always treated as a variable cost in textbooks and in practice and has always been considered a variable cost at TufStuff. After all, “direct” means you can directly trace the cost to products. “If direct labor is not a variable cost, what is?” Another manager argued just as strenuously that direct labor should be considered a fixed cost at TufStuff. No one had been laid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40-hour workweek and overtime has not been necessary since the company adopted Lean Production techniques. Whether the welding machine is used to make drums or frames, the total payroll would be exactly the same. There is enough slack, in the form of idle time, to accommodate any increase in total direct labor time that the bike frames would require.

Required:

1. Would you be comfortable relying on the financial data provided by the accounting department for making decisions related to the WVD drums and bike frames?

2. Compute the contribution margin per unit for [assume direct labor is a fixed cost]

3. Compute the contribution margin per welding hour for [assume direct labor is a fixed cost]

4. Assuming direct labor is a fixed cost:

a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured.

b. What is the increase (decrease) in net operating income that would result from this plan over current operations?

In: Accounting

X Corporation purchased a 45% interest in the common stock of Y Company for $3,500,000 on...

X Corporation purchased a 45% interest in the common stock of Y Company for $3,500,000 on January 1, 2016, when the book value of Ivy's net stockholder's equity was $7,000,000. Y's book values equaled their fair values except for the following items:

                                                    Book                      Fair

                                                   Value                   Value               Difference

Inventories                         $450,000               $600,000                $ 150,000

Land                                      100,000                 450,000                 350,000

Building-net                        400,000                 200,000              (200,000)

Equipment-net                    350,000                 400,000                   50,000

Required:

Calculate the FMV of the assets at the time of purchase and goodwill, then prepare a schedule to allocate any excess purchase cost to identifiable assets and goodwill.

In: Accounting

Using Weighted Average, FIFO and LIFO inventory cost flow methods calculate inventory. Be sure to show...

Using Weighted Average, FIFO and LIFO inventory cost flow
methods calculate inventory. Be sure to show all work!!!
Beginning Inventory 600 units @$6
February purchase 400 units @$7
April Purchase 700 units @$8
June purchase 300 units @$9
sold 500 units
Weighted Average
FIFO
LIFO

In: Accounting

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand....

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:

Quarter
   First Second Third Fourth
Direct materials $ 200,000 $ 100,000 $ 50,000 $ 150,000
Direct labor 160,000 80,000 40,000 120,000
Manufacturing overhead 220,000 196,000 184,000 ?
Total manufacturing costs (a) $ 580,000 $ 376,000 $ 274,000 $ ?
Number of units to be produced (b) 160,000 80,000 40,000 120,000
Estimated unit product cost (a) ÷ (b) $ 3.63 $ 4.70 $ 6.85 $ ?

Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.

Required:

1. Assuming the estimated variable manufacturing overhead cost per unit is $0.30, what must be the estimated total fixed manufacturing overhead cost per quarter?

2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter?

3. What is causing the estimated unit product cost to fluctuate from one quarter to the next?

4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.

In: Accounting

I need a simple and easy to understand definition for Inductive Reasoning?

I need a simple and easy to understand definition for Inductive Reasoning?

In: Accounting

Explain the factors that determine the classification of redeemable preference shares as either an equity or...

Explain the factors that determine the classification of redeemable preference shares as either an equity or liability

In: Accounting

Prepare a Statement of cash flow using the DIRECT method. Not all information listed may be...

Prepare a Statement of cash flow using the DIRECT method.
Not all information listed may be used in solving this problem
Collect ted $500,000
paid suppliers $10,000
Increased in Market Securities $11,000
paid mortgage principal $13,000
Paid employees $65,000
Sold fixed assets $32,000
Transferred to parent $18,000
Insurance payments $17,000
Purchased new equipment $55,000
Additional long term debt $2,500
Interest payments $7,000
Unrestricted contributions $60,000

In: Accounting

The production department of Zan Corporation has submitted the following forecast of units to be produced...

The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 17,000 20,000 19,000 18,000

In addition, 21,250 grams of raw materials inventory is on hand at the start of the 1st Quarter and the beginning accounts payable for the 1st Quarter is $7,200.

Each unit requires 5 grams of raw material that costs $1.20 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 8,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid $13.50 per hour.

Required:

1.&2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole.

3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole.

4. Calculate the estimated direct labor cost for each quarter and for the year as a whole. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced.

In: Accounting

For small-business owners, it’s not worth the time or effort to secure intellectual property rights (Canadian...

For small-business owners, it’s not worth the time or effort to secure intellectual property rights (Canadian and International).

Explain why you agree or disagree with this statement using supporting facts, information and examples from several sources to support your position.

In: Accounting

On January 1, 2008, Dryft granted 1,000 employee share options that vest after a four-year service...

On January 1, 2008, Dryft granted 1,000 employee share options that vest after a four-year service period, with an exercise price of $30 per share. Using the Black-Scholes pricing model, it was determined that the grant-date-fair-value-based measure of each option was $15. On the grant date, Dryft’s stock was trading at $30 per share.

On January 1, 2010, Dryft decided to change the terms of the incentives for the third and fourth years of service of the 2008 annual grant by modifying the exercise price to $20 per share. Using the Black-Scholes pricing model, management determined that the fair-value-based measure of the awards as of January 1, 2010 was $9 before the terms of the award were modified and $12 immediately after modification. The modification did not affect any of the other terms or conditions of the awards. (No forfeitures are assumed)

a- How much compensation cost should Dryft recognize in each year of the award’s service period?

b- How would the accounting for the awards change if the modification to the terms of the award was made on January 1, 2014, after the awards have become fully vested?

Please show detailed answers, use journal entries and explain.

In: Accounting