Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:
| Cost Formulas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct labor | $16.20q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indirect labor | $4,000 + $2.00q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utilities | $5,500 + $0.30q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplies | $1,600 + $0.20q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equipment depreciation | $18,300 + $2.90q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Factory rent | $8,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property taxes | $2,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Factory administration | $13,500 + $0.50q | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The Production Department planned to work 4,200 labor-hours in March; however, it actually worked 4,000 labor-hours during the month. Its actual costs incurred in March are listed below:
Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.(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.)
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In: Accounting
Trecek Corporation incurs research and development costs of $685,000 in 2017, 30 percent of which relate to development activities subsequent to IAS 38 criteria having been met that indicate an intangible asset has been created. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for 10 years.
Assume that a U.S.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.
Required:
Prepare journal entries for research and development costs for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.
Prepare the entry(ies) that Trecek would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS.
In: Accounting
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:
| Product | Selling Price | Quarterly Output |
||||
| A | $ | 13.00 | per pound | 11,600 | pounds | |
| B | $ | 7.00 | per pound | 18,200 | pounds | |
| C | $ | 19.00 | per gallon | 2,800 | gallons | |
Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:
| Product | Additional Processing Costs |
Selling Price |
|||
| A | $ | 54,640 | $ | 17.40 | per pound |
| B | $ | 77,580 | $ | 12.40 | per pound |
| C | $ | 29,360 | $ | 26.40 | per gallon |
Required:
1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?
2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further?
In: Accounting
he Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:
| Total | Dirt Bikes |
Mountain Bikes | Racing Bikes |
|||||||||
| Sales | $ | 921,000 | $ | 261,000 | $ | 402,000 | $ | 258,000 | ||||
| Variable manufacturing and selling expenses | 477,000 | 118,000 | 208,000 | 151,000 | ||||||||
| Contribution margin | 444,000 | 143,000 | 194,000 | 107,000 | ||||||||
| Fixed expenses: | ||||||||||||
| Advertising, traceable | 69,200 | 8,300 | 40,400 | 20,500 | ||||||||
| Depreciation of special equipment | 43,100 | 20,200 | 7,200 | 15,700 | ||||||||
| Salaries of product-line managers | 114,300 | 40,100 | 38,200 | 36,000 | ||||||||
| Allocated common fixed expenses* | 184,200 | 52,200 | 80,400 | 51,600 | ||||||||
| Total fixed expenses | 410,800 | 120,800 | 166,200 | 123,800 | ||||||||
| Net operating income (loss) | $ | 33,200 | $ | 22,200 | $ | 27,800 | $ | (16,800) | ||||
*Allocated on the basis of sales dollars.
Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.
Required:
1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?
2. Should the production and sale of racing bikes be discontinued?
3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.
In: Accounting
direct materials: 8 microns per toy at .32
direct labor 1.2 hours per toy at 6.80 per hour
during July the company produced 5200 maze toys
direct material 80,000 microns were purchased at a cost of .29 per micro . 28000 of these microns were still in inventory at the end of the month.
direct labor 6740 direct labor hours were worked at a cost of 48528. compute the following variance for July
a. the material price and quantity variance
b. the labor rate and efficiency variances
In: Accounting
| Garcon | Pepper | |
| Beginning finished goods inventory | 14,800 | 19,750 |
| Beginning work in process inventory | 15,600 | 19,650 |
| Beginning raw materials inventory | 7,800 | 14,400 |
| Rental cost on factory equipment | 31,000 | 24,100 |
| Direct labor | 23,800 | 44,600 |
| Ending finished goods inventory | 18,500 | 16,500 |
| Ending work in process inventory | 26,500 | 17,800 |
| Ending raw materials inventory | 6,800 | 9,800 |
| Factory utilities | 13,500 | 12,250 |
| Factory supplies used | 12,400 | 4,900 |
| General and administrative expenses | 33,000 | 45,000 |
| Indirect labor | 2,150 | 7,660 |
| Repairs—Factory equipment | 6,260 | 2,450 |
| Raw materials purchases | 41,000 | 57,500 |
| Selling expenses | 52,400 | 51,700 |
| Sales | 222,030 | 342,510 |
| Cash | 29,000 | 19,700 |
| Factory equipment, net | 267,500 | 145,825 |
| Accounts receivable, net | 14,800 | 20,950 |
| Please calculate cost of goods sold, also indicate all the necessary steps clearly. Thanks | ||
In: Accounting
During the month of January 2015 the following transactions took place:
Jan. 20 Michael McBryan and family invested $80,000 cash in exchange for capital stock.
Jan. 21 On January 21, Overnight Auto Service (Michael McBryan) purchased the land from the city for $52,000 cash.
Jan. 22 Overnight completed the acquisition of its business location by purchasing the abandoned building from the MTA. The purchase price was $36,000; Overnight made a $6,000 cash down payment and issued a 90-day, non-interest-bearing note payable for the remaining $30,000.
Jan. 23 Overnight purchased tools and equipment on account from Snappy Tools. The purchase price was $13,800, due in 60 days.
Jan. 24 Overnight found that it had purchased more tools than it needed. On January 24, it sold the excess tools on account to Ace Towing at a price of $1,800. The tools were sold at a price equal to their cost, so there was no gain or loss on this transaction.
Jan. 26 Overnight received $600 in partial collection of the account receivable from Ace Towing.
Jan. 27 Overnight made a $6,800 partial payment of its account payable to Snappy Tools.
Prepare the journal entries, the general ledger and the balance sheet of Overnight as of January 31, 2015.
In: Accounting
Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials):
| Selling expenses | $ | 216,000 |
| Purchases of raw materials | $ | 260,000 |
| Direct labor | ? | |
| Administrative expenses | $ | 150,000 |
| Manufacturing overhead applied to work in process | $ | 372,000 |
| Total actual manufacturing overhead costs | $ | 359,000 |
| Inventory balances at the beginning and end of the year were as follows: |
| Beginning of Year | End of Year | |||||
| Raw materials | $ | 59,000 | $ | 40,000 | ||
| Work in process | ? | $ | 32,000 | |||
| Finished goods | $ | 31,000 | ? | |||
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The total manufacturing costs for the year were $690,000; the cost of goods available for sale totaled $720,000; the unadjusted cost of goods sold totaled $664,000; and the net operating income was $40,000. The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold. |
| Required: |
| a. | Prepare a schedule of cost of goods manufactured. |
| b. |
Prepare a schedule of cost of goods sold. |
| c. |
Prepare an income statement for the year. |
In: Accounting
|
Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a selling price of $60 per unit. The company’s unit costs at this level of activity are given below: |
|
Direct materials |
$ |
9.50 |
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Direct labor |
10.00 |
||
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Variable manufacturing overhead |
3.50 |
||
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Fixed manufacturing overhead |
7.00 |
($623,000 total) |
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Variable selling expenses |
2.70 |
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Fixed selling expenses |
4.00 |
($356,000 total) |
|
|
Total cost per unit |
$ |
36.70 |
|
| Required: | |
| 1-a. |
Assume that Andretti Company has sufficient capacity to produce 111,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $110,000. What is the financial advantage (disadvantage) of investing an additional $110,000 in fixed selling expenses?. (Round all dollar amounts to 2 decimal places.) |
| A number of questions relating to the production and sale of Daks follow. Each question is independent. |
| 1-b. | Would the increased fixed selling expenses be justified? | ||||
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| 2. |
Assume again that Andretti Company has sufficient capacity to produce 111,250 Daks each year. A customer in a foreign market wants to purchase 22,250 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $17,800 for permits and licenses. The only selling costs that would be associated with the order would be $1.50 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.) |
| 3. |
The company has 500 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) |
| 4. |
Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 40% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20%. a. How much total contribution margin will Andretti forgo if it closes the plant for two months? b. How much total fixed cost will the company avoid if it closes the plant for two months? c. What is the financial advantage (disadvantage) of closing the plant for the two-month period? d. Should Andretti close the plant for two months? (Enter losses/reductions with a minus sign. Round all calculations (intermediate and final) to whole numbers. Round unit calculations to whole numbers.) |
| 5. |
An outside manufacturer has offered to produce 89,000 Daks and ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. What is Andretti’s avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
In: Accounting
During December of the current year, Teletex Systems, Inc., a company based in Seattle, Washington, entered into the following transactions:
Dec. 10 Sold seven office computers to a company located in Colombia for 8,778,000 pesos. On this date, the spot rate was 380 pesos per U.S. dollar.
Dec. 12 Purchased computer chips from a company domiciled in Taiwan. The contract was denominated in 510,000 Taiwan dollars.
The direct exchange spot rate on this date was $0.039.
Prepare journal entries necessary to adjust the accounts as of December 31. Assume that on December 31 the direct exchange rates were as follows:
| Colombia peso | $0.00259 | |
| Taiwan dollar | $0.0350 |
In: Accounting
Two independent companies, Bayer and Monsanto are in the chemical and pharmaceutical industries. Each owns a piece of laboratory equipment used in research and development of new products, but each would like the other firm’s equipment. They agree to exchange the equipment. An appraiser was hired, and from her report and the companies' records, the following information was obtained: Bayer’s Equipment Monsanto's Equipment Cost $826,000 $460,000 Accumulated depreciation $250,000 $100,000 Fair value based upon appraisal $720,000 $630,000 The exchange was made and based on the difference in appraised fair values. Monsanto paid $90,000 to Bayer.
1 a Prepare the entries on both companies' books assuming the exchange had no commercial substance.
1 b Also prepare the journal entries on both companies’ books assuming the exchange had commercial substance.
In: Accounting
Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information:
| Cost | Retail | |||||
| Merchandise inventory, January 1, 2018 | $ | 192,000 | $ | 320,000 | ||
| Net purchases | 371,200 | 575,000 | ||||
| Net markups | 14,000 | |||||
| Net markdowns | 9,000 | |||||
| Net sales | 460,000 | |||||
Related retail price indexes are as follows:
| January 1, 2018 | 1.00 |
| December 31, 2018 | 1.10 |
Required:
Ending inventory at retail:____
Ending inventory at cost:____
Cost of Goods sold:____
In: Accounting
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3.0% service charge for sales on its credit card. Access deducts a 2.0% service charge for sales on its card. Mayfair completes the following transactions in June.
| June | 4 | Sold $600 of merchandise on credit (that had cost $300) to Natara Morris terms n/30. | ||
| 5 | Sold $6,200 of merchandise (that had cost $3,100) to customers who used their Zisa cards. | |||
| 6 | Sold $5,786 of merchandise (that had cost $2,893) to customers who used their Access cards. | |||
| 8 | Sold $4,930 of merchandise (that had cost $2,465) to customers who used their Access cards. | |||
| 13 | Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $549 balance in McKee’s account stemmed from a credit sale in October of last year. | |||
| 18 | Received Morris’s check in full payment for the purchase of June 4. |
Required:
Prepare journal entries to record the preceding transactions and
events. (The company uses the perpetual inventory system.)
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Round your
final answers to the nearest whole dollar.)
| No | Date | General Journal | Debit | Credit |
|---|---|---|---|---|
In: Accounting
Kansas Instruments manufactures two models of pocket calculators. Per unit of the Basic model sells for $5.50, has direct material cost of $1.25 and requires 0.25 hours of labour to produce. Each calculator of the Scientist model sells for $7.50, has direct material cost of $1.63 and takes 0.375 hours to produce.
Each labour hour costs Kansas Instruments $6 and labour is currently very scarce, even though the demand for the company’s calculators is very high. The company is currently producing 8,000 Basic calculators and 4,000 Scientist calculators each month. Fixed costs per month amount to $24,000.
Kansas Instruments has received a request from an overseas potential customer to manufacture a batch of calculators made to specific requirements. The overseas customer is offering the company a contract worth $35,000 for this order. The production manager has estimated the following facts with respect to this special order:
• The labour time required for this contract would be 1,200
hours.
• The material cost would be $9,000 (excluding the cost of a
special component not normally used by the company for
manufacturing its regular calculators).
• The special components could either be purchased from a supplier
for $2,500 or produced internally using materials that would cost
$1,000 and additional labour time of 150 hours.
Required:
Advise the management of Kansas Instruments on the appropriate course of action.
In: Accounting
Holl Corporation has provided the following data for November. Denominator level of activity 5,500 machine-hours Budgeted fixed manufacturing overhead costs $ 68,750 Standard machine-hours allowed for the actual output 5,800 machine-hours Actual fixed manufacturing overhead costs $ 67,650 Required: a. Compute the budget variance for November. b. Compute the volume variance for November. (Input all amounts as positive values.)
Budget Variance: ______ ______
Volume Variance: _______ _______
In: Accounting