Questions
Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0...

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor (1.7 hrs. @ $10.00 per hr.) 17.00 Overhead (1.7 hrs. @ $18.50 per hr.) 31.45 Total standard cost $ 68.45 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 135,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervision 226,750 Total fixed overhead costs 336,750 Total overhead costs $ 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 Ibs. @ $5.10 per lb.) $ 313,650 Direct labor (20,000 hrs. @ $10.30 per hr.) 206,000 Overhead costs Indirect materials $ 41,550 Indirect labor 176,000 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervision 226,750 628,850 Total costs $ 1,148,500 rev: 03_28_2018_QC_CS-122864 4. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

In: Accounting

Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...

Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells 25,250 units, its average costs per unit are as follows:

  

Average Cost per Unit
Direct materials $ 8.30
Direct labor $ 5.30
Variable manufacturing overhead $ 2.80
Fixed manufacturing overhead $ 6.30
Fixed selling expense $ 4.80
Fixed administrative expense $ 3.80
Sales commissions $ 2.30
Variable administrative expense $ 1.80

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,250 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 25,250 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 27,500 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 23,000 units?

In: Accounting

During 2018, HomeVideo, Inc. recorded all cash receipts and cash disbursements. However, HomeVideo, Inc.’s banker is...

During 2018, HomeVideo, Inc. recorded all cash receipts and cash disbursements. However, HomeVideo, Inc.’s banker is requiring an income statement and balance sheet prepared on an accrual basis.

The following is a recap of the cash receipts for 2018:

Collections from customers

$      356,800

Proceeds from bank loan

           75,000

Proceeds from sale of common stock

         100,000

$      531,800

The cash disbursements data is available on the attached Excel sheet. In addition, HomeVideo, Inc.’s payroll disbursements for wages totaled $105,200. The data was obtained from a separate (not provided) payroll journal.

Daniels’, a family friend, has asked for your assistance in preparing HomeVideo, Inc.’s financial statements at December 31, 2018 on an accrual basis. The following additional information is available:

  1. Customers owed the company $16,500 at year-end for credit sales. Also, HomeVideo, Inc.’s cash collections included $7,000 of amounts collected in advance from other customers for services to be performed in 2019.
  2. The firm signed a 3-year lease for a retail store with rent payments starting in January 2018. The rent is due on the 15thof every month. Additionally, a security deposit of $5,000 was paid along with the first rent payment. This deposit is likely to be returned at the end of the lease term.
  3. The equipment purchased during 2018 is depreciated on a straight-line basis assuming no salvage value. The firm uses a convention where one-half year of depreciation is taken in the year of acquisition (regardless of the actual purchase date).
  4. The insurance payment was for a 1-year policy starting on February 1, 2018.
  5. At year-end, $21,000 is owed to suppliers for merchandise purchased on credit and received.
  6. At year-end, merchandise inventory costing $53,700 and supplies totaling $6,400 remained on hand.
  7. Salaries earned, but not yet paid to employees at year-end totaled $7,300.
  8. The bank loan requires interest at 10% per year and was issued on June 1, 2018. The principal and interest are to be repaid together on May 31, 2019.

Home Video, Inc. (Cash disbursements 1/1/2018 through 3/31/2019):

Insurance (2/1/18)                     28,000
Merchandise (2018)                   202,809
Merchandise (2019)

                    68,355

Office Equipment (2018)                     55,000
Office Equipment (2019)                     21,138
Other Expenses (2018)                     12,893
Other Expenses (2019)                       4,059
Rent (2018)                     27,000
Rent (2019)                       8,000
Supplies (2018)                     32,452
Supplies (2019)                       5,721

Required:

  • Prepare an analysis that shows how cash-based income is converted to accrual-based net income for 2018.
  • Prepare an accrual-based income statement for 2018 and a balance sheet as of December 31, 2018 using good form.
  • Prepare a brief memo explaining the cash-to-accrual conversion and the results of your calculations.

In: Accounting

On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face...

On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $95 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 8%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $95,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1.
Determine the price of the bonds issued on February 1, 2018.
2-a. Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity.
2-b. Prepare amortization schedules that indicate Barnwell’s effective interest revenue for each interest period during the term to maturity.
3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell’s investment on February 1, 2018.
4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020.

(Req-3 JE's: FEB 1, 2018: Record the issuance of the bonds by Cromley. FEB 1 2018: Record the Bond investment by Barnwell.)

(Req-4(Cromley): 1 Record the payment of interest for Cromley Company. 2 Record the accrued interest for Cromley Company. 3 Record the payment of interest for Cromley Company. 4 Record the payment of interest for Cromley Company. 5 Record the accrued interest for Cromley Company. 6 Record the payment of interest for Cromley Company.)

(Req-4(Barnwell): 1 Record the receipt of interest for Barnwell Company. 2 Record the accrued interest for Barnwell Company. 3 Record the receipt of interest for Barnwell Company. 4 Record the receipt of interest for Barnwell Company. 5 Record the accrued interest for Barnwell Company. 6 Record the receipt of interest for Barnwell Company.)

In: Accounting

Budgeted Income Statement and Supporting Budgets The budget director of Jupiter Helmets Inc., with the assistance...

Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for May:

a. Estimated sales for May:

Bicycle helmet 9,500 units at $24 per unit
Motorcycle helmet 6,500 units at $195 per unit

b. Estimated inventories at May 1:

Direct materials: Finished products:
   Plastic 1,480 lbs.    Bicycle helmet 200 units at $15 per unit
   Foam lining 520 lbs.    Motorcycle helmet 100 units at $90 per unit

c. Desired inventories at May 31:

Direct materials: Finished products:
   Plastic 2,000 lbs.    Bicycle helmet 400 units at $15 per unit
   Foam lining 800 lbs.    Motorcycle helmet 300 units at $100 per unit

d. Direct materials used in production:

In manufacture of bicycle helmet:
   Plastic 0.90 lb. per unit of product
   Foam lining 0.20 lb. per unit of product
In manufacture of motorcycle helmet:
   Plastic 3.50 lbs. per unit of product
   Foam lining 1.40 lbs. per unit of product

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:

Plastic $4.40 per lb.
Foam lining $0.90 per lb.

f. Direct labor requirements:

Bicycle helmet:
   Molding Department 0.30 hr. at $15 per hr.
   Assembly Department 0.10 hr. at $14 per hr.
Motorcycle helmet:
   Molding Department 0.50 hr. at $15 per hr.
   Assembly Department 0.40 hr. at $14 per hr.

g. Estimated factory overhead costs for May:

Indirect factory wages $125,000 Power and light $23,000
Depreciation of plant and equipment 45,000 Insurance and property tax 11,000

h. Estimated operating expenses for May:

Sales salaries expense $175,000
Advertising expense 120,000
Office salaries expense 92,000
Depreciation expense—office equipment 6,000
Miscellaneous expense—selling 5,000
Utilities expense—administrative 3,000
Travel expense—selling 50,000
Office supplies expense 2,500
Miscellaneous administrative expense 1,500

i. Estimated other income and expense for May:

Interest revenue $14,560
Interest expense 3,000

j. Estimated tax rate: 25%

4. Prepare a direct labor cost budget for May.

Jupiter Helmets Inc.
Direct Labor Cost Budget
For the Month Ending May 31
Molding Department Assembly Department Total
Hours required for production:
Bicycle helmet __________ ____________
Motorcycle helmet __________ ____________
Total __________ ____________
Hourly rate $_________ $___________
Total direct labor cost $_________ $___________ $____________

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is desired to be $3,800.

Jupiter Helmets Inc.
Cost of Goods Sold Budget
For the Month Ending May 31
Finished goods inventory, May 1 $_________
Work in process inventory, May 1 $__________
Direct materials:
Direct materials inventory, May 1 $___________
Direct materials purchases ____________
Cost of direct materials available for use $___________
Less: Direct materials inventory, May 31 ____________
Cost of direct materials placed in production $___________
Direct labor ____________
Factory overhead ____________
Total manufacturing costs ___________
Total work in process during period $__________
Less: Work in process inventory, May 31 ___________
Cost of goods manufactured _________
Cost of finished goods available for sale $________
Less: Finished goods inventory, May 31 _________
Cost of goods sold $________

8. Prepare a budgeted income statement for May. If required, round your interim calculations to nearest whole value.

Jupiter Helmets Inc.
Budgeted Income Statement
For the Month Ending May 31
Revenue from sales $__________
Cost of goods sold ___________
Gross profit $__________
Operating expenses:
Selling expenses $_________
Administrative expenses __________
Total operating expenses ____________
Income from operations $___________
Other income:
Interest revenue $_________
Other expenses:
Interest expense __________ ____________
Income before income tax $___________
Income tax expense ____________
Net income $___________

In: Accounting

Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells...

Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows:

  

Average Cost per Unit
Direct materials $ 8.00
Direct labor $ 5.00
Variable manufacturing overhead $ 2.50
Fixed manufacturing overhead $ 6.00
Fixed selling expense $ 4.50
Fixed administrative expense $ 3.50
Sales commissions $ 2.00
Variable administrative expense $ 1.50

Required:

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 21,500 units?

b. What is the total indirect manufacturing cost incurred to make 21,500 units?

2. Assume the cost object is the Manufacturing Department and that its total output is 21,500 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $75,250 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 21,500 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 21,500 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

In: Accounting

MONTGOMERY INC. Comparative Balance Sheets December 31, 2014 and 2013 2014 2013   Assets   Cash $ 30,400...

MONTGOMERY INC.
Comparative Balance Sheets
December 31, 2014 and 2013
2014 2013
  Assets
  Cash $ 30,400 $ 30,550
  Accounts receivable, net 10,050 12,150
  Inventory 90,100 70,150
  Equipment 49,900 41,500
  Accum. depreciation—Equipment (22,500 ) (15,300 )
  Total assets $ 157,950 $ 139,050
  Liabilities and Equity
  Accounts payable $ 23,900 $ 25,400
  Salaries payable 500 600
  Common stock, no par value 110,000 100,000
  Retained earnings 23,550 13,050
  Total liabilities and equity $ 157,950 $ 139,050
MONTGOMERY INC.
Income Statement
For Year Ended December 31, 2014
  Sales $ 45,575
  Cost of goods sold (18,950 )
  Gross profit 26,625
  Operating expenses
    Depreciation expense $ 7,200
    Other expenses 5,550
  Total operating expense 12,750
  Income before taxes 13,875
  Income tax expense 3,375
  Net income $ 10,500
Additional Information
a. No dividends are declared or paid in 2014.
b. Issued additional stock for $10,000 cash in 2014.
c. Purchased equipment for cash in 2014; no equipment was sold in 2014.
(1)

Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

In: Accounting

This week we cover bond financing. Often times when large amount of funds are needed for...

This week we cover bond financing. Often times when large amount of funds are needed for a project or expansion, companies and governments seek financing to help pursue these projects. Define what a bond is and discuss the advantages and disadvantages of bond financing, such as those covered in your chapter. Consider discussing why a company might choose to issue a bond instead of stock, a form of equity financing.

In: Accounting

Shamrock, Inc. issues a $550,000, 10%, 10-year mortgage note on December 31, 2017, to obtain financing...

Shamrock, Inc. issues a $550,000, 10%, 10-year mortgage note on December 31, 2017, to obtain financing for a new building. The terms provide for annual installment payments of $89,510.

Prepare the entry to record the mortgage loan on December 31, 2017, and the first installment payment on December 31, 2018.

In: Accounting

Dr. Shikongo and Dr. Sauer were in a partnership and traded together for some time. On...

Dr. Shikongo and Dr. Sauer were in a partnership and traded together for some time. On 01 July

2016 Dr. Sauer decided to withdraw from the partnership to start her own practice. Their

abridged statement of financial position as at 30 June 2016 was:

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00

Transactions for July 2016:

1. Trade receivable who owed N$ 20, 050.00 settled their accounts in full.

2. The trades payable were settled in full.

3. A vehicle was sold for N$ 19, 500.00 with a carrying value of N$ 25, 000.00.

4. A vehicle was sold for N$ 15, 000.00 with a carrying value of N$ 6, 000.00.

5. The loan from Deutche Bank was repaid in full.

6. The equipment was disposed of for N$ 50, 000.00

7. Land and building was sold by public auction for N$ 70, 000.00

You are required to:

1. Do the journal entries to record Dr. Sauers’ withdrawal from the partnership. ( 12

Marks)

2. Prepare the following accounts to show the liquidation and dissolution of Dr. Shikongo

& Dr. Sauer Partnership:

a. Realisation account. ( 6 Marks)

b. Capital accounts of the partners (in a columnar form) in the general ledger. ( 8

Marks)

3. Mention and discuss three factors that may lead to the dissolution of a partnership. ( 6

Marks)

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00

In: Accounting

You are the president of Campus Sweaters, Inc. Campus Sweaters manufacturers wool pullover v-neck sweaters of...

You are the president of Campus Sweaters, Inc. Campus Sweaters manufacturers wool pullover v-neck sweaters of various sizes and colors. You are preparing the budgets for the first quarter of 2016 (January, February, and March). You have the following historical and projected sales in units:

Actual or Projected

Month

Units

Actual

November

9,000

Actual

December

8,000

Projected

January

11,000

Projected

February

10,000

Projected

March

6,000

Projected

April

7,000

Projected

May

7,000

Projected

June

7,000


It takes ten skeins of yarn to make one sweater. Each skein costs $1.30. Past experience shows you need to have enough sweaters on-hand to fill the next month and one-half of sales (approximately forty-five days). Also, you need enough yarn to manufacture the next month’s production.

You will have 12,000 sweaters in finished inventory and 80,000 skeins of yarn in raw materials inventory as of December 31, 2015. You purchased $90,000 of yarn in December that must be paid for in January. The Company incurred $7,500 of overhead cost during December 2015, and $13,500 of selling expenses in the last half of December. These also must be paid in January. The company policy is to pay prior month's charges on account on the tenth day of the following month unless otherwise designated.

Income Statements

Actual or Projected Sales

Actual

Actual

Projected

Projected

Projected

Month

November

December

January

February

March

Sales

$240,000

$270,000

$300,000

$270,000

$210,000

Cost of sales

144,000

162,000

180,000

162,000

126,000

Gross margin

96,000

108,000

120,000

108,000

84,000

Operating Expenses:

Selling

24,000

27,000

30,000

27,000

21,000

Administration

35,000

45,000

50,000

45,000

30,000

Rent

10,000

10,000

10,000

10,000

10,000

Sales salaries

20,000

20,000

20,000

20,000

20,000

Totals

89,000

102,000

110,000

102,000

81,000

Operating Income

7,000

6,000

10,000

6,000

3,000

Interest Expense

0

0

?

?

?

Net Income

$7,000

$6,000


A worker, using a knitting machine, can make five sweaters in an hour. The cost of direct labor per hour, including fringe, is $20.00. You incurred $13,000 of direct labor cost between December 16 and December 31, 2015 which will be paid on January 7, 2016. The manufacturing overhead rate is $5.00 per direct labor hour. All sweaters are sold wholesale to retail outlets at $30.00 each.

Salaries and wages are paid as follows: The pay period from the first to the fifteenth of the month is paid on the twenty-second day of each month; the pay period from the sixteenth to the thirty-first is paid on the seventh day of the following month.

Rent is paid in advance on the first day of each month. Fifty percent of the selling expenses are paid in the month incurred, and fifty percent in the following month. All manufacturing overhead and administrative costs are paid on the tenth day of the following month.

The cash in the bank on December 31, 2015 was forecast at $30,000. There were no outstanding borrowings. The company has a $500,000 line of credit at 12% per annum at the Old Rusty Bucket State Bank of Oreana. All borrowings, and any subsequent repayments must be made on the fifteenth day of the month. All loan takedowns must be repaid by December 31, 2016. Repayments can be made when extra cash is available, but are due on the fifteenth day of any month. The company has the policy to have at least $25,000 in the bank account at the end of each month even if they have to borrow it. However, more may be required depending on cash needs during the first week of the following month.

20% of the sales are collected in the month of sale. Seventy percent are collected in the next month, and five percent are collected in the third month.

>Use the information above to complete the following activities:

Step 01: Prepare a production budget for Campus Sweaters, Inc. for each of the following months: January, February, March 2016.

Step 02: Prepare a raw materials budget for each month.

Step 03: Prepare a raw materials budget in dollars for each month.

Step 04: Prepare a cost of goods manufactured schedule for each month.

Step 05: Prepare a cash budget for each month.

Partial answers provided:

The following relates to the month of January

Required production in units: 12,000

Required purchases of raw material in units 105,000

Required purchases of raw material in dollars: $136,500

Total Cost of Goods Manufactured: $216,000

Cash inflows $261,000

Cash outflows $238,000

In: Accounting

Describe the three main attributes of a close corporation (9 Marks) b. Give 5 advantages and...

Describe the three main attributes of a close corporation

b. Give 5 advantages and 5 disadvantages of a close corporation

c. Describe the three statutory requirements with regard to the accounting records and

financial reporting of a close corporation

In: Accounting

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of...

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$11 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

  January (actual)

20,000

  June (budget)

50,200

  February (actual)

26,200

  July (budget)

30,200

  March (actual)

40,200

  August (budget)

28,200

  April (budget)

65,200

  September (budget)

25,200

  May (budget)

100,200

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4.10 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month.. The company has found, however, that only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.     Monthly operating expenses for the company are given below:

  Variable:

     Sales commissions

4%

of sales

  Fixed:

     Advertising

$

210,000

     Rent

$

19,000

     Salaries

$

108,000

     Utilities

$

7,500

     Insurance

$

3,100

     Depreciation

$

15,000  

Insurance is paid on an annual basis, in November of each year.    The company plans to purchase $16,500 in new equipment during May and $41,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,750 each quarter, payable in the first month of the following quarter.  A listing of the company’s ledger accounts as of March 31 is given below:

Assets

  Cash

$

75,000

  Accounts receivable ($28,820 February sales;    $353,760 March sales)

382,580

  Inventory

106,928

  Prepaid insurance

21,500

  Property and equipment (net)

960,000

  Total assets

$

1,546,008

Liabilities and Stockholders’ Equity

  Accounts payable

$

101,000

  Dividends payable

15,750

  Common stock

820,000

  Retained earnings

609,258

  Total liabilities and stockholders’ equity

$

1,546,008

The company maintains a minimum cash balance of $51,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $51,000 in cash.

1.

Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:

a. A sales budget, by month and in total

b. A schedule of expected cash collections, by month and in total.

c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost of purchases to 1 decimal place.)

d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determining any borrowing that would be needed to maintain the minimum cash balance of $51,000

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

In: Accounting

Variable Costing, Absorption Costing During its first year of operations, Snobegon, Inc. (located in Lake Snobegon,...

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?
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In: Accounting

ACCOUNTS DEBIT £ CREDIT £ Cash in hand 3,400 Bank Balance 18,660 Stock 1st Jan 2016...

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