In a page, explain the similarities and differences between job costing and process costing methods in a manufacturing environment, and construct and use operational budgets for a manufacturing company.
In: Accounting
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Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: |
| Budgeted | Actual | |||
| Sales (5,000 pools) | $ | 235,000 | $ | 235,000 |
| Variable expenses: | ||||
| Variable cost of goods sold* | 71,350 | 86,370 | ||
| Variable selling expenses | 13,000 | 13,000 | ||
| Total variable expenses | 84,350 | 99,370 | ||
| Contribution margin | 150,650 | 135,630 | ||
| Fixed expenses: | ||||
| Manufacturing overhead | 62,000 | 62,000 | ||
| Selling and administrative | 77,000 | 77,000 | ||
| Total fixed expenses | 139,000 | 139,000 | ||
| Net operating income (loss) | $ | 11,650 | $ | (3,370) |
| *Contains direct materials, direct labor, and variable manufacturing overhead. |
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Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: |
| Standard Quantity or Hours | Standard Price or Rate |
Standard Cost | |||
| Direct materials | 3.8 pounds | $ | 2.20 per pound | $ | 8.36 |
| Direct labor | 0.7 hours | $ | 6.80 per hour | 4.76 | |
| Variable manufacturing overhead | 0.5 hours* | $ | 2.30 per hour | 1.15 | |
| Total standard cost | $ | 14.27 | |||
| *Based on machine-hours. |
| During June the plant produced 5,000 pools and incurred the following costs: |
| a. |
Purchased 24,000 pounds of materials at a cost of $2.65 per pound. |
| b. |
Used 18,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) |
| c. | Worked 4,100 direct labor-hours at a cost of $6.50 per hour. |
| d. |
Incurred variable manufacturing overhead cost totaling $7,560 for the month. A total of 2,800 machine-hours was recorded. |
| It is the company’s policy to close all variances to cost of goods sold on a monthly basis. |
| Required: |
| 1. | Compute the following variances for June: |
| a. |
Materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) |
| b. |
Labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) |
| c. |
Variable overhead rate and efficiency variances. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) |
| 2. |
Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Input all values as positive amounts. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) |
| 3. |
Pick out the two most significant variances that you computed in (1) above. (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) |
In: Accounting
Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 Daks each year at a selling price of $54 per unit. The company’s unit costs at this level of activity are given below:
| Direct materials | $ | 7.50 | |
| Direct labor | 9.00 | ||
| Variable manufacturing overhead | 2.90 | ||
| Fixed manufacturing overhead | 10.00 | ($900,000 total) | |
| Variable selling expenses | 4.70 | ||
| Fixed selling expenses | 2.50 | ($225,000 total) | |
| Total cost per unit | $ | 36.60 | |
A number of questions relating to the production and sale of Daks follow. Each question is independent.
Required:
1-a. Assume that Andretti Company has sufficient capacity to produce 112,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 90,000 units each year if it were willing to increase the fixed selling expenses by $100,000. What is the financial advantage (disadvantage) of investing an additional $100,000 in fixed selling expenses?
1-b. Would the additional investment be justified?
2. Assume again that Andretti Company has sufficient capacity to produce 112,500 Daks each year. A customer in a foreign market wants to purchase 22,500 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $15,750 for permits and licenses. The only selling costs that would be associated with the order would be $2.60 per unit shipping cost. What is the break-even price per unit on this order?
3. The company has 900 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price?
4. Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 30% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period.
a. How much total contribution margin will Andretti forgo if it closes the plant for two months?
b. How much total fixed cost will the company avoid if it closes the plant for two months?
c. What is the financial advantage (disadvantage) of closing the plant for the two-month period?
d. Should Andretti close the plant for two months?
5. An outside manufacturer has offered to produce 90,000 Daks and ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. What is Andretti’s avoidable cost per unit that it should compare to the price quoted by the outside manufacturer?
In: Accounting
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In: Accounting
Starfish Corporation, in preparation of its December 31, 2020, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. 1. As a result of uninsured accidents during the year, personal injury suits for $261,000 and $697,000 have been filed against the company. It is the judgment of Starfish‘s legal counsel that an unfavorable outcome is unlikely in the $261,000 case but that an unfavorable verdict approximating $410,000 will probably result in the $697,000 case. 2. Starfish‘s deep sea exploration division consisting of operations in the Marina Trench is uninsurable because of the special risk of injury to employees and losses due to high pressure. The year 2020 is considered one of tinesafest (luckiest) in the division’s history because no loss due to injury or casualty was suffered. Having suffered an average of two casualties a year during the rest of the past decade (ranging from $25,000 to $1,000,000), management is certain that next year the company will probably not be so fortunate. 3. Starfish Corporation owns a subsidiary in a foreign country that has a book value of $21,600,000 and an estimated fair value of $30,890,000. The foreign government has communicated to Starfish its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, Starfish expects to receive 60% of the fair value of its properties as final settlement.
| 1. What is the amount of legal expense recorded with respect to uninsured accidents? |
| 2. Does Situation 1 warrant a footnote to the financial statements? 1=Yes, 0=No |
| (assume materiality) |
| Situation 2 |
| 3. What is amount of legal expense recorded with respect to special risk of injury to employees? |
| 4. Does Situation 2 warrant a footnote to the financial statements? 1=Yes, 0=No |
| (assume materiality) |
| Situation 3 |
| 5. What is the amount of loss to record with respect to the expropriation of the foreign sub's assets? |
| 6. Does Situation 3 warrant a footnote to the financial statements? 1=Yes, 0=No |
| (assume materiality) |
In: Accounting
Exercise 5-10 Lower of cost or market LO P2
Martinez Company's ending inventory includes the following
items.
| Product | Units | Cost per Unit | Market per Unit | ||||||
| Helmets | 37 | $ | 59 | $ | 55 | ||||
| Bats | 30 | 77 | 83 | ||||||
| Shoes | 51 | 96 | 100 | ||||||
| Uniforms | 55 | 41 | 41 | ||||||
Compute the lower of cost or market for ending inventory applied
separately to each product.
In: Accounting
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Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 995 hours each month to produce 1,990 sets of covers. The standard costs associated with this level of production are: |
| Total | Per Set of Covers |
||||
| Direct materials | $ | 47,362 | $ | 23.80 | |
| Direct labor | $ | 8,955 | 4.50 | ||
| Variable manufacturing overhead (based on direct labor-hours) |
$ | 2,388 | 1.20 | ||
| $ | 29.50 | ||||
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During August, the factory worked only 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were recorded during the month: |
| Total | Per Set of Covers |
||||
| Direct materials (8,800 yards) | $ | 50,600 | $ | 22.00 | |
| Direct labor | $ | 10,580 | 4.60 | ||
| Variable manufacturing overhead | $ | 4,600 | 2.00 | ||
| $ | 28.60 | ||||
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At standard, each set of covers should require 3.50 yards of material. All of the materials purchased during the month were used in production. |
| Required: |
| 1. |
Compute the materials price and quantity variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) |
| 2. |
Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) |
| 3. |
Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) |
In: Accounting
Required information
Use the following information for the Exercises below.
[The following information applies to the questions
displayed below.]
Hemming Co. reported the following current-year purchases and sales
for its only product.
| Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||||||
| Jan. | 1 | Beginning inventory | 260 | units | @ $12.40 | = | $ | 3,224 | ||||||||
| Jan. | 10 | Sales | 215 | units | @ $42.40 | |||||||||||
| Mar. | 14 | Purchase | 420 | units | @ $17.40 | = | 7,308 | |||||||||
| Mar. | 15 | Sales | 380 | units | @ $42.40 | |||||||||||
| July | 30 | Purchase | 460 | units | @ $22.40 | = | 10,304 | |||||||||
| Oct. | 5 | Sales | 425 | units | @ $42.40 | |||||||||||
| Oct. | 26 | Purchase | 160 | units | @ $27.40 | = | 4,384 | |||||||||
| Totals | 1,300 | units | $ | 25,220 | 1,020 | units | ||||||||||
Exercise 5-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1
Required:
Hemming uses a perpetual inventory system.
1. Determine the costs assigned to ending
inventory and to cost of goods sold using FIFO.
2. Determine the costs assigned to ending
inventory and to cost of goods sold using LIFO.
3. Compute the gross margin for FIFO method and
LIFO method.
In: Accounting
Required information
Use the following information for the Exercises below.
[The following information applies to the questions
displayed below.]
Laker Company reported the following January purchases and sales
data for its only product.
| Date | Activities | Units Acquired at Cost | Units sold at Retail | |||||||||||||||
| Jan. | 1 | Beginning inventory | 155 | units | @ | $ | 8.00 | = | $ | 1,240 | ||||||||
| Jan. | 10 | Sales | 115 | units | @ | $ | 17.00 | |||||||||||
| Jan. | 20 | Purchase | 90 | units | @ | $ | 7.00 | = | 630 | |||||||||
| Jan. | 25 | Sales | 95 | units | @ | $ | 17.00 | |||||||||||
| Jan. | 30 | Purchase | 210 | units | @ | $ | 6.50 | = | 1,365 | |||||||||
| Totals | 455 | units | $ | 3,235 | 210 | units | ||||||||||||
The Company uses a perpetual inventory system. For specific
identification, ending inventory consists of 245 units, where 210
are from the January 30 purchase, 5 are from the January 20
purchase, and 30 are from beginning inventory.
Exercise 5-4 Perpetual: Income effects of inventory methods LO A1
Required:
1. Complete comparative income statements for the month of
January for Laker Company for the four inventory methods. Assume
expenses are $1,400 and that the applicable income tax rate is 40%.
(Round your Intermediate calculations to 2 decimal
places.)
In: Accounting
8) Our company did a stock dividend. Dave says there is no effect on our comprehensive stockholders' equity at all. Barbara disagrees and says it does have an effect on equity but isn't sure exactly what. She just knows there is an impact. Verna has absolutely no clue on this one. So she just cannot decide who's right and is completely lost.
In: Accounting
Worldcom accounting fraud case. Identify how each element of the fraud triangle was present in the fraud. In addition, discuss internal controls that could have been in place to prevent the fraud from occurring.
In: Accounting
ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 number of copies made Accounting 500,000 number of invoices processed Personnel 400,000 number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The support department allocation rate for the Accounting Department is a.$714 b.$250 c.$625 d.$0.004
ABC Corporation has three support departments with the following costs and cost drivers:
| Support Department | Cost | Cost Driver |
| Graphics Production | $200,000 | number of copies made |
| Accounting | 500,000 | number of invoices processed |
| Personnel | 400,000 | number of employees |
ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows:
| Micro | Macro | Super | |
| Revenues | $700,000 | $850,000 | $650,000 |
| Direct operating expenses | 50,000 | 70,000 | 100,000 |
| Number of copies made | 20,000 | 30,000 | 50,000 |
| Number of invoices processed | 700 | 800 | 500 |
| Number of employees | 130 | 145 | 125 |
The support department allocation rate for the Personnel Department is
a.$2,758
b.$1,000
c.$3,200
d.$3,077
ABC Corporation has three support departments with the following costs and cost drivers:
| Support Department | Cost | Cost Driver |
| Graphics Production | $200,000 | number of copies made |
| Accounting | 500,000 | number of invoices processed |
| Personnel | 400,000 | number of employees |
ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows:
| Micro | Macro | Super | |
| Revenues | $700,000 | $850,000 | $650,000 |
| Direct operating expenses | 50,000 | 70,000 | 100,000 |
| Number of copies made | 20,000 | 30,000 | 50,000 |
| Number of invoices processed | 700 | 800 | 500 |
| Number of employees | 130 | 145 | 125 |
The support department cost that will be allocated to the Micro Division is
a.$145,000
b.$345,000
c.$60,000
d.$200,000
ABC Corporation has three support departments with the following costs and cost drivers:
| Support Department | Cost | Cost Driver |
| Graphics Production | $200,000 | number of copies made |
| Accounting | 500,000 | number of invoices processed |
| Personnel | 400,000 | number of employees |
ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows:
| Micro | Macro | Super | |
| Revenues | $700,000 | $850,000 | $650,000 |
| Direct operating expenses | 50,000 | 70,000 | 100,000 |
| Number of copies made | 20,000 | 30,000 | 50,000 |
| Number of invoices processed | 700 | 800 | 500 |
| Number of employees | 130 | 145 | 125 |
The support department cost that will be allocated to the Macro Division is
a.$305,000
b.$405,000
c.$130,000
d.$175,000
In: Accounting
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Item 1
Item 1 Part 1 of 2 1.66 points
Required information
Use the following information for the Exercises below.
[The following information applies to the questions
displayed below.]
Laker Company reported the following January purchases and sales
data for its only product.
| Date | Activities | Units Acquired at Cost | Units sold at Retail | |||||||||||||||
| Jan. | 1 | Beginning inventory | 155 | units | @ | $ | 8.00 | = | $ | 1,240 | ||||||||
| Jan. | 10 | Sales | 115 | units | @ | $ | 17.00 | |||||||||||
| Jan. | 20 | Purchase | 90 | units | @ | $ | 7.00 | = | 630 | |||||||||
| Jan. | 25 | Sales | 95 | units | @ | $ | 17.00 | |||||||||||
| Jan. | 30 | Purchase | 210 | units | @ | $ | 6.50 | = | 1,365 | |||||||||
| Totals | 455 | units | $ | 3,235 | 210 | units | ||||||||||||
The Company uses a perpetual inventory system. For specific
identification, ending inventory consists of 245 units, where 210
are from the January 30 purchase, 5 are from the January 20
purchase, and 30 are from beginning inventory.
Exercise 5-3 Perpetual: Inventory costing methods LO P1
Required:
1. Complete the table to determine the cost
assigned to ending inventory and cost of goods sold using specific
identification.
2. Determine the cost assigned to ending inventory
and to cost of goods sold using a weighted average.
3. Determine the cost assigned to ending inventory
and to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventory
and to cost of goods sold using LIFO.
In: Accounting
imagine you are a business consultant to ExxonMobil
and you have been asked to analyze, advise,and create
recommendations on how the firm can ensure its future success in
it's current market.
prepare a minimum of 1050 word analysis of economic data and
business data to explain how the core economic principles impact
the sustainability of the firm and what actions the firm can take
to ensure success. address the following:
•identify the market structure of ExxonMobil operates in, analyze
its market share, and identify the firms local and global
competitors. Analyze the barriers to entry in this market to
illustrate the potential for new competition and its impact on
ExxonMobil future in the market.
•identify and explain trends in current macroeconomic indicators
for last three years including:
1. current stage of business cycle
2. real gross domestic product
3. inflation as measured by the consumer price index
4. unemployment rate
5. federal funds rate
6. current rate for borrowing funds such as the so called prime
rate.
7. evaluate trend in demand over last three years and explain their
impacts on industry and the firm.include quarterly (last two
quarters) and annual sales (last three years) figures for the
product that ExxonMobil sells. create business strategies by
analyzing information and data related to the demand for supply of
ExxonMobil products to support your recommendation for the firms
actions. include graphical representation of the data and
information.
8. examine available current data and information such as pricing
and the available of substitutes and explain how you can determine
the price of elasticity of demand for ExxonMobil products. assess
how the price of elasticity of demand impacts ExxonMobil pricing
decisions and revenue growth.
9. apply the concepts of variable and fixed costs to ExxonMobil for
informing its output decisions, for instance analyze how different
kinds costs,( labor, research and development, raw materials)
affect the firms level of output.
10. based on the data gathered and analysis performed for this
report write a conclusion in which you:
• create business strategies includingprice and non price
strategies based on your market structure to ensure the market
share and potential market expansions and explore global
opportunities for your business in dynamic business environment and
provide reccomendations.
•develop a recommendation for how ExxonMobil can manage its future
by synthesizing the macroeconomic and microeconomic data
presented.
•propose how the firms position within the market and among its
competitors will allow it to take your recommended action.
•reccomend strategies for ExxonMobil to sustain its success going
forward by evaluating the findings from demand trends,price
elasticity,current stage of business cycle, and government
policies.
cited three peer reviewed references and a minimum of
two government economic data sources/references
In: Accounting
What are the five subsidiary objectives from accounting information system?
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