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 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 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:
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:
In: Accounting
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 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 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 | $ | 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 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 for a new building. The
terms provide for annual installment payments of $89,510.
Prepare the entry to record the mortgage loan on December 31, 2017,
and the first installment payment on December 31, 2018.
In: Accounting
Dr. Shikongo and Dr. Sauer were in a partnership and traded together for some time. On 01 July
2016 Dr. Sauer decided to withdraw from the partnership to start her own practice. Their
abridged statement of financial position as at 30 June 2016 was:
ASSETS N$ 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 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
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 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, 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 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