Variable Costing, Absorption Costing
During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,500 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 39,000 scoops. Fixed overhead was applied at $0.70 per unit produced. Fixed overhead was underapplied by $2,800. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year’s operations are as follows (on an absorption-costing basis):
| Sales (39,000 units @ $20) | $780,000 |
| Less: Cost of goods sold | 546,360 |
| Gross margin | $233,640 |
| Less: Selling and administrative expenses (all fixed) | 185,500 |
| Operating income | $ 48,140 |
Required:
1. Calculate the cost of the firm’s ending
inventory under absorption costing. Round unit cost to five decimal
places. Round your final answer to the nearest dollar.
$ ????
Feedback
What is the cost of the ending inventory under variable costing?
Round unit cost to five decimal places. Round your final answer to
the nearest dollar.
$ ????
Feedback
2. Prepare a variable-costing income statement. Round the unit cost to five decimal places, when required. Round your final answers to the nearest dollar. Use the rounded values in subsequent computations.
| Snobegon, Inc. | |
| Variable-Costing Income Statement | |
| For the First Year of Operations | |
| Sales |
???? |
| Less: Variable cost of goods sold | ???? |
| Contribution margin | ???? |
| Less: | |
| Fixed overhead | ???? |
| Fixed selling and administrative expenses | ???? |
| Operating income | ?????? |
Feedback
Use a contribution margin format income statement that groups costs according to behavior (variable and fixed)
What is the difference between the two income figures?
??????
In: Accounting
ACCOUNTS DEBIT £ CREDIT £ Cash in hand 3,400 Bank Balance 18,660 Stock 1st Jan 2016 46,000 Purchase 150,200 purchase returns 600 Freehold premises 38,600 Incidental trade expenses 840 Insurance 1,640 Audit fees 280 Commission received 3,300 Bank overdraft 4,000 Interest on Bank Overdraft 200 Trade Debtors 36,000 Trade Creditors 34,670 Wages 25,000 Salaries 14,000 Capital 114,000 Drawings 5,000 Income tax 1,600 Investments 4,000 Discount allowed 6,300 Discount received 4600 Sales return 550 sales 201350 Bills receivable 3,200 Office furniture 3,050 Rent 4,000 362,520 362,520 Adjustments: a) Stock at 31 December 2017 is £ 52,000 b) Write off 5% depreciation on freehold premises and 10% on office furniture c) Unpaid wages are £ 4,200 d) Insurance to the extent of £ 200 relates to the year 2017 – 2018 e) Charge interest on capital @ 5% and 300 on drawings. f) Rent is payable at the rate of £ 400 per month. Required: 1) Prepare Trading & Profit and Loss account for the year ended 31 December 2017 2) Prepare Balance Sheet as on 31 December 2017
In: Accounting
Investment Outlay
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $19 million, and production and sales will require an initial $4 million investment in net operating working capital. The company's tax rate is 30%.
In: Accounting
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:
| Fixed Cost per Month |
Cost per Car Washed |
||||||
| Cleaning supplies | $ | 0.70 | |||||
| Electricity | $ | 1,300 | $ | 0.09 | |||
| Maintenance | $ | 0.30 | |||||
| Wages and salaries | $ | 4,900 | $ | 0.20 | |||
| Depreciation | $ | 8,300 | |||||
| Rent | $ | 2,000 | |||||
| Administrative expenses | $ | 1,800 | $ | 0.02 | |||
For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.40 per car washed.
| Lavage Rapide | ||
| Income Statement | ||
| For the Month Ended August 31 | ||
| Actual cars washed | 8,300 | |
| Revenue | $ | 54,580 |
| Expenses: | ||
| Cleaning supplies | 6,240 | |
| Electricity | 2,008 | |
| Maintenance | 2,700 | |
| Wages and salaries | 6,900 | |
| Depreciation | 8,300 | |
| Rent | 2,200 | |
| Administrative expenses | 1,864 | |
| Total expense | 30,212 | |
| Net operating income | $ | 24,368 |
Required:
Calculate the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
Incentive Structure (25 pt)
On 1/1/2019, Firm XYZ signs a debt contract. According to the debt contract, Firm XYZ raises $100,000 from an investor and promises to pay the investor $100,000 on 1/1/2020 (i.e., the interest rate is zero). On 1/2/2019, Firm XYZ finds that there are two investment opportunities, and each project costs the firm $100,000:
Project 1: $400,000 with probability 0.4 and $0 with probability 0.6
Project 2: $200,000 with probability 1.
i) Which project exhibits a higher NPV? (4 pt)
ii) Which project does the firm prefer? (7 pt) Firm prefers project 1 because
iii) How about debtholders? (7 pt) Debtholders would prefer project 2 because
iv) Suppose that, on 1/1/2019, the investor knows that the firm will choose a project between project 1 and 2. Would the investor choose to sign the debt contract? (7 pt)
In: Accounting
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows:
| Year 1 | Year 2 | ||||
| Sales (@ $61 per unit) | $ | 976,000 | $ | 1,586,000 | |
| Cost of goods sold (@ $39 per unit) | 624,000 | 1,014,000 | |||
| Gross margin | 352,000 | 572,000 | |||
| Selling and administrative expenses* | 302,000 | 332,000 | |||
| Net operating income | $ | \50,000\ | $ | 240,000 | |
* $3 per unit variable; $254,000 fixed each year.
The company’s $39 unit product cost is computed as follows:
| Direct materials | $ | 5 |
| Direct labor | 11 | |
| Variable manufacturing overhead | 4 | |
| Fixed manufacturing overhead ($399,000 ÷ 21,000 units) | 19 | |
| Absorption costing unit product cost | $ | 39 |
Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings.
Production and cost data for the first two years of operations are:
| Year 1 | Year 2 | |
| Units produced | 21,000 | 21,000 |
| Units sold | 16,000 | 26,000 |
Required:
1. Using variable costing, what is the unit product cost for both years?
2. What is the variable costing net operating income in Year 1 and in Year 2?
3. Reconcile the absorption costing and the variable costing net operating income figures for each year.
In: Accounting
i need a research paper talk about how important for the accounting student to study Computrized Accounting Course OR the importance of Compurtized Accounting course .
Please provide the link of the research paper, i would write the wording in my own i just need a help thank you for the help..
In: Accounting
Camden Biotechnology began operations in September 2018. The
following selected transactions relate to liabilities of the
company for September 2018 through March 2019. Camden’s fiscal year
ends on December 31. Its financial statements are issued in
April.
2018
2019
Required:
2. Prepare the current and long-term liability
sections of the December 31, 2018, balance sheet. Trade accounts
payable on that date were $347,000.
Complete this question by entering your answers in the tabs below.
Prepare the current and long-term liability sections of the December 31, 2018, balance sheet. Trade accounts payable on that date were $347,000. (Enter your answers in whole dollars.)
|
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In: Accounting
Taxpayer places in service new equipment for $800,000 (7 year property) on August 15, and elects immediate expensing of the maximum amount:
2016 2018
Cost of equipment
179 deduction
additional first year depreciation
amount subject to MACRS (MACRS rate .1429)
Total cost recovery allowed in 2016
What is same facts but under 2018 law?
In: Accounting
| COSTS OF QUALITY ANALYSIS. SafeT produces car seats for children from newborn to 2 years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Safe Travel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is $5.00 per car seat, and the repair cost is $1.00 per car seat. All 200,000 car seats were inspected last year, and 5% were found to have problems with the stitching in the straps during the internal inspection. Another 1% of the 200,000 car seats had problems with the stitching, but the internal inspection did not discover them. Defective units that were sold and shipped to customers needed to be shipped back to Safe Travel and repaired. Shipping costs are $8.00 per car seat, and repair costs are $1.00 per car seat. However, the out-of-pocket costs (shipping and repair) are not the only costs of defects not discovered in the internal inspection. Negative publicity will result in a loss of future contribution margin of $100 for each external failure. | ||||||||
| Calculate appraisal cost. | ||||||||
| Calculate internal failure cost. | ||||||||
| Calculate out-of-pocket external failure cost. | ||||||||
| Determine the opportunity cost associated with the external failures. | ||||||||
| What are the total costs of quality? | ||||||||
| What factors other than cost should SafeT consider, if it wished to change its inspection process? | ||||||||
In: Accounting
Create a simple Chart of Accounts for an owner/ operator business such as a lawn mowing round and also mention how the opening balance for each cost centre/ account can be established? Discuss in 80–100 words.
In: Accounting
The Stryker Baseball Bat Company manufactures wooden and
aluminum baseball bats at its plant in New England. Wooden bats
produced for the mass market are turned on a lathe, where a piece
of wood is shaped into a bat with a handle and barrel. The bat is
cut to its specified length and then finished in subsequent
processes. A specific style of wooden bat is supposed to have a mean
barrel circumference of 9 inches with ±0.5 inches tolerance at its
thickest point.
The company is trying to buy a new machine to cut the bats due to a projected increase in sales. There are three different candidate machines that the company is trying to buy at different costs. The following table summarizes the process average, process standard deviation (SD), and purchase cost of each machine. Which machine, if any, should the company purchase (they are trying to buy the cheapest machine that can get the job done)?
|
Machine |
Average |
SD |
Purchase Cost |
|
1 |
9.35 |
0.14 |
$20,000 |
|
2 |
8.93 |
0.16 |
$18,000 |
|
3 |
9.00 |
0.18 |
$15,000 |
In: Accounting
WRITE A RESPONSE TO THE FOLLOWING !
The primary objective of financial accounting is to provide accurate financial information. Accounting supplies managers and owners with significant financial data that is useful for decision making. The accounting professional must take the time to carefully access and balance the company or enterprise financial aspects. They must be willing to learn about the resources available while understanding ways to grow based off of past company performance. Internal users: are individuals who use accounting information from within an Organization. An example of an internal user is a store manager. Some of the ways internal users employ accounting information include: Assessing how management has discharged its responsibility for protecting and managing the company’s resources · Shaping decisions about when to borrow or invest company resources · Shaping decisions about expansion or downsizing External users: are individuals that have a financial interest in the reporting aspect of the business. However, they are not involved in the day to day operations. An example of an external user is a supplier or a customer. The external users of accounting information fall into six groups: Owners and prospective owners Creditors and lenders : banks and lending institutions Employees and their unions. Governmental units: tax returns, and other documents General public The integrity of financial reporting is the most important trait to have as a professional in any field. There is heavy reliance on integrity by the people who want to be sure that their information and finances will be handled with confidentially. There are a few Christian valuesthat promote integrity in internal financial reporting: Proverbs 16:8 “Better is a little with righteous than great revenues with injustice." Exodus 20:15 You shall not steal."
In: Accounting
What are two reports that can be used to reconcile a cash register? Explain (50–80 words) the distinguishing features of each.
In: Accounting
3) Training Programs, Revisited As part of a quality improvement initiative, Consolidated Elec- tronics employees complete a three-day training program on teaming and a two-day training program on problem solving. The manager of quality improvement requested that at least 10 training programs on teaming and at least 10 training programs on problem solving be offered during the next six months. In addition, senior-level management specified that at least a total of 25 training programs must be offered during this period. Consolidated Electronics uses a consultant to teach the training programs. During the next six months, the consultant has 64 days of training time available. Each training program on teaming costs $12,000 and each training program on problem solving costs $6,000.
(a) How many training programs of each type should be offered? What would be the total cost of this? (3 points)
(b) Would the optimal number of training programs for each type change if the cost of problem solving trainings went up by $5000? Why or why not? (2 points).
(c) If management decided to relax the total number of trainings necessary by 3 to only 22 total trainings, what would you expect the reduction in cost to be? (2 points)
In: Accounting