Direct Materials Variances

Bellingham Company produces a product that requires 5 standard pounds per unit. The standard price is $6.5 per pound. If 5,900 units required 30,700 pounds, which were purchased at $6.17 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

1. Dr. Williams decides to open a real estate company which he names, Comfort Realty, Inc. The following transactions were made over the period:

1. On September 1, 2018, Dr. Godwin invested $17,000 cash in the business
2. On September 3, 2018, Comfort Realty purchases computer equipment for $8,000 cash.
3. On September 4, 2018, Comfort realty purchases for $1,600 from ACME supply company computer paper and other supplies exacted to last several months. ACME agrees to allow Comfort Realty to pay this bill in October
4. On September 10, 2018, Comfort realty receives $3,200 cash from customers for rental services it has provided
5. September 11, 2018, Comfort realty receives a bill for $250 from the daily News for advertising but postpones payment until a later date
6. September 12, 2018, Comfort realty provides $3,500 real estate services for customers. The company receives cash of $1,500 from customers, and it bills the balance of $2,000 on account
7. September 23, 2018, Comfort realty pays its $850 Daily News bill in cash
8. September 28, Comfort realty receives $600 in cash from customers who had been billed for services (item vi)
9. September 29, 2018, Dr. Godwin withdrawals $1,600 in cash from the business for a friend.
10. On September 30, 2018, Comfort Realty pays the following expenses in cash for September: store rent $900, salaries of employees $900, and utilities $900

            As the accountant of the company, you have been asked to do the following:

1. Prepare a summary of transaction. You are to show their effects on the three components of the basic balance sheet accounting equation and specific items within each component
2. Present the income statement, owners’ equity statement, and the balance sheet for the month ended September 30, 2018

on the following question please show the formula for the steps and from were you get the numbers)

Cost-volume-profit analysis
Di & Co. has the following budgeted information for a contract: -
Fixed costs $ 270,000
Variable cost per unit $         20
Selling price per unit   $         40

Budgeted output / sales units          15,000
Required:
(a) Compute the number of units that must be sold to breakeven.                             

(b) How many units must be sold to earn $80,000 target profit?                                    

(c) What selling price would have to be charged to give a profit of $80,000?
                                                                                                                           

(d) How many additional units must be sold to cover an extra fixed cost of $12,000? (assuming selling price and variable cost per unit are constant)
                                                                               
(e) What is the profit-volume ratio?                                                                          
(f) Referring to part (e) above, if total sales revenue is $550,000, what is the total contribution and hence what is the net profit?                                                      

(g) Referring to part (a), what is the margin of safety?                                             
(h) What does the term relevant range mean?      

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 26,800 yards of fabric costing $3.05 per yard and incurring direct labor costs of $18,639 for 3,270 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour. a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May. b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May. (For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.) Loading...

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 26,800 yards of fabric costing $3.05 per yard and incurring direct labor costs of $18,639 for 3,270 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.

a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May.

b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.

(For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

Use the following information of Alfred Industries. Standard manufacturing overhead based on normal monthly volume: Fixed ($304,500 ÷ 20,000 units) $ 15.23 Variable ($100,000 ÷ 20,000 units) 5.00 $ 20.23 Units actually produced in current month 18,000 units Actual overhead costs incurred (including $300,000 fixed) $ 383,800 Compute the overhead spending variance and the volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Loading...

Use the following information of Alfred Industries.

Compute the overhead spending variance and the volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

G, age 68, received pension income from the following sources in the current year: Old-age security pension $7,100; Canada Pension Plan $9,000; and Pension income from former employer’s pension plan $34,000. What is the maximum elected split-pension amount that can be reported on the tax return of G’s spouse?

Required information [The following information applies to the questions displayed below.] The November production of MVP’s Minnesota Division consisted of batch P25 (3,400 professional basketballs) and batch S33 (6,000 scholastic basketballs). Each batch was started and finished during November, and there was no beginning or ending work in process. Costs incurred were as follows: Direct Material: Batch P25, $102,000, including $8,000 for packaging material; batch S33, $88,500. Conversion Costs: Preparation Department, predetermined rate of $6.50 per unit; Finishing Department, predetermined rate of $5.00 per unit; Packaging Department, predetermined rate of $0.70 per unit. (Only the professional balls are packaged.) 2. Compute the November product cost for each type of basketball. (Round your intermediate and final answers to 2 decimal places.)

The core business of Green Apple Ltd involves the sale of anti-virus software. The following took place during the financial year ended 30 June. The company earned $25 000 000 from the sale of software; $3 000 000 from update downloads; and $50 000 in interest from investing on the short-term money market. The company also received a $2000 discount arising out of the early settlement of a liability; and issued shares in exchange for $500 000 cash during the year. Page 3 of 7 HC1010 Accounting for Business Discuss whether the foregoing five financial items would meet the definition of income to the company during the year? Give reasons for your answer. Which, if any, of the items would meet the definition of revenue to the company for the year? Give reasons for your answer.

19-23 Quality improvement, relevant costs, relevant revenues. AquaPro produces water purifiers for the household. Business is good but Derek, the manager, has noticed that customers complain because they find leakages in the plastic nozzles used. AquaPro provides a warranty for each machine and charges $115 for each of them. AquaPro installed 5,000 machines last month and 20% of them have experienced this leakage problem. Each repair costs $35 for the company. Derek believes that the problem can be eliminated by adding an extra check valve (costing $2.5/ma- chine). This will reduce the number of purifiers produced every month by a 100 (in order to accommodate the price of the extra check value), but will lower the number of the machines experiencing a leakage from 20% to 5%. 1. Do you think that AquaPro should implement Derek’s idea? Answer with calculations. 2. What are the nonfinancial and qualitative factors that AquaPro may consider in deciding whether to implement the new design?

Question) On 1 July 2020, Tierny issues 5,000 convertible notes to enable construction of a facility to train security guards. The notes have a three year term and are issued at par with a FV of $10,000 per note, giving total proceeds at the date of issue of $50 million. The notes pay a coupon of 6% p.a. annually in arrears (payable 30/6). The holder of each note has the option to convert the note into 5,000 ordinary shares of Tierney Ltd at the end of 3 years.

When the notes are issued, the market interest rate for similar debt (similar term, similar credit status of issuer and similar cash flows) without conversion options is 9% p.a.

Required:

Prepare the journal entries for Tierney to record this transaction on:

1) 1 July 2020 when the convertible note is issued

2) 30 June 2021 when the first coupon is payable.

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2018:

Required:

1 & 2. Prepare journal entries for each of the above transactions and additional year-end adjusting entries indicated. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Analyzing Manufacturing Cost Accounts

Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May:

In addition, the following information is available:

1. Materials and direct labor were applied to the following jobs in May:
   

   Job No.		Style	Quantity		Direct Materials				Direct Labor
   101		AF1	220			$20,540				$17,000
   102		AF3	380			30,120				24,000
   103		AF2	230			16,410				9,000
   104		VY1	260			29,380				26,000
   105		VY2	190			21,360				17,000
   106		AF4	140			8,240				4,000
   		Total	1,420			$126,050				$97,000

2. Factory overhead is applied to each job at a rate of 170% of direct labor cost.
3. The May 1 Work in Process balance consisted of two jobs, as follows:
   

   Job No.	Style	Work in Process, May 1
   101	AF1	$6,600
   102	AF3	14,900
   Total		$21,500

4. Customer jobs completed and units sold in May were as follows:
   

   Job No.	Style	Completed in May	Units Sold in May
   101	AF1	X	176
   102	AF3	X	304
   103	AF2		0
   104	VY1	X	218
   105	VY2	X	158
   106	AF4		0

Required:

1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.

a. Materials Requisitions $ ?

b. Work in Process Beginning Balance $ ?

c. Direct Materials $ ?

d. Direct Labor $ ?

e. Factory overhead applied $?

f. Completed jobs $?

g. Cost of goods sold $ ?

h. Indirect labor $ ?

2. Determine the May 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.

Presented here are summarized data from the balance sheets and income statements of Wiper, Inc.:

Required:

a. Calculate return on investment, based on net income and average total assets, for 2017 and 2016. (Do not round intermediate calculations. Round your answers to 1 decimal place.)

b. Calculate return on equity for 2017 and 2016. (Round your answers to 1 decimal place.)

c. Calculate working capital and the current ratio for each of the past three years. (Enter your answers in millions (i.e., 5,000,000 should be entered as 5). Round "Current ratio" to 1 decimal place.)

d. Calculate earnings per share for 2017 and 2016. (Round your answers to 2 decimal places.)

i. Calculate Wiper's debt ratio and debt/equity ratio at December 31, 2017 and 2016. (Round "Debt ratio" to 1 decimal place and "Debt/equity ratio" to the nearest whole percent.)

On January 1, 2018, Rick’s Pawn Shop leased a truck from Chumley Motors for a five-year period with an option to extend the lease for three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $15,500 due on December 31 of each year, calculated by the lessor using a 5% interest rate. The agreement is considered an operating lease. (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. Prepare Rick’s journal entry to record for the right-of-use asset and lease liability at January 1, 2018.
2. Prepare the journal entries to record interest and amortization at December 31, 2018.

• Required 1
• Required 2

Prepare Rick’s journal entry to record for the right-of-use asset and lease liability at January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Journal entry worksheet

• Record the beginning of the lease for Rick's.

Note: Enter debits before credits.

• Required 2

Prepare the journal entries to record interest and amortization at December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Journal entry worksheet

• Record the lease and interest payment for Rick's.

Note: Enter debits before credits.

• Record the amortization of right-to-use asset for Rick's.

Note: Enter debits before credits.

The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company.

Required:

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost.

1. The cost of a hard drive installed in a computer.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

2. The cost of advertising in the Puget Sound Computer User newspaper.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

3. The wages of employees who assemble computers from components.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

4. Sales commissions paid to the company’s salespeople.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

5. The salary of the assembly shop’s supervisor.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

6. The salary of the company’s accountant.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

7. Depreciation on equipment used to test assembled computers before release to customers.

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost