Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow.

Required:

a. If the number of hours of labor per 1,000 gallons is 60 for strawberry, 70 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation.

b. Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of-the-art machines. After she requested that overhead costs be broken down by department, the following information was discovered:

Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each.

c. Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation rates computed in requirement (b) if the number of machine-hours for 1,000 gallons of each of the three flavors of ice cream are as follows: strawberry, 60; vanilla, 70; and chocolate, 168. Direct labor-hours by product remain the same as in requirement (a).

Complete this question by entering your answers in the tabs below.

• Required A
• Required B
• Required C

If the number of hours of labor per 1,000 gallons is 60 for strawberry, 70 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation.

Swathmore Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.

At the end of 2017, accounts receivable were $590,000 and the allowance account had a credit balance of $54,000. Accounts receivable activity for 2018 was as follows:

The company’s controller prepared the following aging summary of year-end accounts receivable:

Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record a summary entry to record the monthly bad debt accrual.
2. Prepare the necessary year-end adjusting entry for bad debt expense. Record the year-end adjusting entry for bad debt expense.
3-a. What is total bad debt expense for 2018?

3-b. How would accounts receivable appear in the 2018 balance sheet?

How the Australian Government and the Australian Taxation Office assisted both businesses and taxpayers during the Covid-19 crisis.

In your essay, you should address questions such as:

1. What type of assistance was given to the taxpayers?
2. In your opinion, did the Government act swiftly enough?
3. In your opinions, was the assistance enough or could the Government have provided more?
4. Who benefited the most from the assistance provided and who missed out?
5. Overall do you think the assistance was effective?

1. Activity-Based Customer-Driven Costs

   Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter:

   	JIT Distributors		Non-JIT Distributors
   Sales orders	1,100		110
   Sales calls	70		70
   Service calls	350		175
   Average order size	850		8,500
   Manufacturing cost/unit	$125		$125
   Customer costs:
   Processing sales orders	$3,130,000
   Selling goods	1,120,000
   Servicing goods	1,050,000
   Total	$5,300,000

   Required:

   1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar.

   	JIT		Non-JIT
   Sales (in units)
   Sales	$		$
   Allocation	$		$

   2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar.

   	JIT		Non-JIT
   Ordering costs	$		$
   Selling costs	$		$
   Service costs	$		$
   Total	$		$

   For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent.

   $ per unit

   3. Assume that the JIT distributors are simply imposing the frequent orders on Stillwater Designs. No formal discussion has taken place between JIT customers and Stillwater Designs regarding the supply of goods on a JIT basis. The sales pattern has evolved over time. As an independent consultant, what would you suggest to Stillwater Designs' management?

   It sounds like the JIT buyers are switching their inventory carrying costs to Stillwater Designs without any significant benefit to Stillwater Designs. Stillwater Designs needs to   prices to reflect the additional demands on customer support activities. Furthermore, additional   may be needed to reflect the increased number of setups, purchases, and so on, that are likely occurring inside the plant. Stillwater Designs should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as   contracts. The benefits of   contracting may offset most or all of the increased costs from the additional demands made on other activities.

How may I increase the net profit by $350,000 while factoring in both revenues and expenses?

Daube Industries’ operations for the month of October are summarized as follows: Provided $5,800 of services on account. Received $3,900 cash for services provided in October. Received $1,600 cash for services to be provided in November. Received $2,700 cash on account for service provided in September. Paid September’s warehouse rental bill on account in the amount of $1,400. Received October’s rental bill of $1,300; set it aside. Required: Prepare journal entries to record the transactions identified among activities (A) through (F). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

A total of 500,000 pounds of salmon were started into processing during July. All materials are added at the beginning of processing in the Cleaning Department.

Required:

Compute the Cleaning Department's equivalent units of production for materials and for labor and overhead in the month of July.

In year 0, Longworth Partnership purchased a machine for $58,500 to use in its business. In year 3, Longworth sold the machine for $36,600. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $26,000. a.What is the amount and character of the gain Longworth will recognize on the sale? b.What is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds were increased to $59,750? c. What is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds were decreased to $19,200 (before the §1231 netting process, if applicable)?

2 a) A production manager concerned about the relationship of machine hours and indirect labour cost. Estimate the following data to help manager the unit properly in future. The results are as shown below.

            Required: Using least square method;

1. Establish the regression function for the manager.  
2. Using the functions determine the indirect labour cost at 35 units and 90 units of machine hours.                            

Sales Territory and Salesperson Profitability Analysis

Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson:

a. 1. Prepare a contribution margin by salesperson report. Calculate the contribution margin ratio for each salesperson.

a. 2. Interpret the report.

Paul earns the highest  contribution margin and has the highest  contribution margin ratio. This is because he sells the most  units, has a low  commission rate, and sells a product mix with a high  manufacturing margin. Steve also sells products with a high  average manufacturing margin but at a high  commission rate. Colleen has the poorest  contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a low  average sales price per unit, she has the second highest  total contribution margin.

b. 1. Prepare a contribution margin by territory report. Calculate the contribution margin for each territory as a percent, rounded to one decimal place.

b. 2. Interpret the report.

The Southwest Region has $ more sales and $ more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the highest  contribution margin ratio. The Southwest Region has the highest  performance, even though it also has the salesperson with the lowest  contribution margin and contribution margin ratio. The Northeast Region contribution margin is less  than the Southwest Region because of the outstanding performance of Paul .

Scribners Corporation produces fine papers in three production departments—Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department follow:

No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of dried paper that is passed on to the Finishing Department.

Required:

1. Compute the Drying Department's equivalent units of production for pulping and conversion in March.

2. Compute the Drying Department's cost per equivalent unit for pulping and conversion in March.

3. Compute the Drying Department's cost of ending work in process inventory for pulping, conversion, and in total for March.

4. Compute the Drying Department's cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March.

5. Prepare a cost reconciliation report for the Drying Department for March.

C. Eastwood, A. North, and M. West are manufacturers’ representatives in the architecture business. Their capital accounts in the ENW partnership for 20X1 were as follows:

Required:
For each of the following independent income-sharing agreements, prepare an income distribution schedule.

a. Salaries are $15,600 to Eastwood, $20,900 to North, and $18,700 to West. Eastwood receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Eastwood, North, and West divide any remainder in a 3:3:4 ratio, respectively. Net income was $78,330. (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

b. Interest is 10 percent of weighted-average capital balances. Salaries are $24,900 to Eastwood, $22,400 to North, and $26,100 to West. North receives a bonus of 10 percent of net income after deducting the bonus and her salary. Any remainder is divided equally. Net income was $70,030. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

c. West receives a bonus of 20 percent of net income after deducting the bonus and the salaries. Salaries are $21,600 to Eastwood, $18,600 to North, and $16,000 to West. Interest is 10 percent of beginning capital balances. Eastwood, North, and West divide any remainder in an 8:7:5 ratio, respectively. Net income was $95,620. (Do not round intermediate calculations. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

The beginning work in process inventory was 80% complete with respect to materials and 65% complete with respect to labor and overhead. The ending work in process inventory was 60% complete with respect to materials and 50% complete with respect to labor and overhead.

Required:

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month

1. a) Mulwa Ltd a manufacturing company produced 10,000 units of 2kg unga product during the first quarter of 2013. The following additional information is also provided

• Direct material – ksh 8
• Direct labour - ksh 4
• Variable manufactury – 2
• Fixed manufacturing cost – ksh 36,000
• Selling and administration cost – ksh 5,000
• Selling price – ksh 20 per cent
• Closing stock at the end of the period = 1000 units.

Required:

1. Determine the unit production cost of the product using marginal and absorption costing methods                                                     
2. Prepare an income statement for the period using absorption and marginal cost techniques.                                                              

1. Jen Psaki, an auditor with Martinez CPAs, is performing a review of Sergei Company's inventory account. Sergei's did not have a good year and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $835,000. However, the following information was not considered when determining that amount.

• Included in the company's count were goods with a cost of $200,000 that the company is holding on consignment. The goods belong to Bosnia Corporation.
• The physical count did not include goods purchased by Sergei with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Sergei's warehouse until January 3.
• Included in the inventory account was $15,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.
• The company received an order on December 28 that was boxed and was sitting on the loading dock awaiting pick-up on December 31. The shipper picked up the goods on January 1 and delivered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $40,000 and a cost of $30,000. The goods were not included in the count because they were sitting on the dock.
• On December 29, Sergei shipped goods with a selling price of $100,000 and a cost of $80,000 to Oman Sales Corporation FOB shipping point. The goods arrived on January 3. Oman Sales had only ordered goods with a selling price of $10,000 and a cost of $8,000. However, a Sergei's sales manager had authorized the shipment and said that if Oman wanted to ship the goods back next week, it could.
• Included in the count was $30,000 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Sergei's products, it was unlikely that these obsolete parts had any other use. However, management would prefer to keep them on the books at cost, “since that is what we paid for them, after all.”

INSTRUCTIONS: Prepare a schedule to determine the correct inventory amount. Provide explanations for each item above, saying why you did or did not make an adjustment for each item.