Golden Ring Company produces two types of product: Large and Larger. Two work orders for two batches of the products are shown below, along with some additional cost information:

In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year were $50,000 for labor and $125,000 for overhead. Budgeted direct labor hours were 2,500. It takes three minutes to mix the ingredients needed for each bottle.

Large (Work Order 10) and Larger (Work Order 11) flow through the Mixing Department first, then through the Cooking and Bottling departments.

What is Golden Ring Company's journal entry to apply conversion costs in the Mixing Department for Work Order 10?

a.

Work in Process-Mixing45,000

Materials45,000

b.

Work in Process-Mixing17,500

Conversion Costs Control17,500

c.

Conversion Costs Control17,500

Work in Process-Mixing17,500

d.

Materials45,000

Work in Process-Mixing45,000

Hanks Corporation produces a single product. Operating data for the company and its absorption costing income statements for the last two years are presented below:

Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead was $18,000 in each year. This fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.

Required:

a. Compute the unit product cost in each year under variable costing.

b. Prepare new income statements for each year using variable costing.

c. Reconcile the absorption costing and variable costing net operating income for each year.

Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours × (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,569,238. Thus, the predetermined overhead rate is $ 16.30 or ($ 1,569,238 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models.

The company’s managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows.

(a)

Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.)

2.)Under ABC, complete the schedule showing the computations of the activity-based overhead rates (per cost driver). (Round your answers to 2 decimal places, e.g. 2.25.)

3.)Complete the schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Use rates from part b above and round cost assigned to 0 decimal places, e.g. 12,250. Round overhead per unit to 2 decimal places, e.g. 2.25. Note that due to rounding your total cost assigned will be slightly different than calculated above.)
Cost Driver Home Model
Commercial Model
Cost Assigned

4.) Compute the total cost per unit for each product under ABC. (Round your answers to 2 decimal places, e.g. 12.25.)
Home Model $
Commercial Model $

5.)Classify each of the activities as a value-added activity or a non-value-added activity.
Activity
Receiving value-addednon-value-added
Forming non-value-addedvalue-added
Assembling value-addednon-value-added
Testing value-addednon-value-added
Painting non-value-addedvalue-added
Packing and shipping value-addednon-value-added

Borunda Corporation has provided the following data for its two most recent years of operation:

Required:

a. Assume the company uses absorption costing. Prepare an income statement for each year.

b. Assume the company uses variable costing. Prepare an income statement for each year.

c. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December:

Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".

MSI’s educational products are currently sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI’s two options follows:

  
Required:
1. Based on the given data, Compute the increase or decrease in profit that would result if instructional materials were added to the CDs.



2. Should MSI add the instructional materials or sell the CDs without them?

  
3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on Requirement 1 and 2 data.



3-b. Should MSI add the instructional materials or sell the CDs without them?

MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes “tours” of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production.

MSI’s information related to the ToddleTown Tours collection follows:

      
*Allocated based on total sales dollars.

MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products.

Required:
1. Calculate the incremental effect on profit if the POP product is eliminated.



2. Should MSI drop the POP product?

3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,200 of the common fixed costs could be avoided if the POP product line were eliminated.



3-b. Should MSI drop the POP product?

NO PHOTO OR HANDWRITING CLEAR SCHEDULE

YOU CAN PUT ANY FIGURE ITS ASSUMPTIONS

1. Akbar Company is producing two types of products i.e. Product A and Product B. You are required to show quantitative analysis of one constrained resource i.e. total available machine hours. The following is a contribution income format of the company.                                                                                                  

(use your own figures in the following table)

            Assume a figure for total available machine hours as a constrained resource.

            Determine the following:

1. What is the total contribution margin if only Product A is produced?
2. What is the total contribution margin if only Product B is produced?

Solution: The answers of all the students will differ.

2. Prepare a cash flow statement from the following information under indirect method.

(Assume your own figure)                                                                              

Solution: There will be different answers for all students.

3-You are required to allot the support department cost to operations department by taking any Saudi based operating company.

Solution: There will be different answers for all students.

Cintra is the Management Accountant of Fine pens Ltd. The company manufactures various types of pens ranging from cheap disposable units to expensive units which are intended to be reusable. Both ball point pens and fountain pens are produced. The current cost allocation system in use is Absorption costing.and Cintra is very comfortable with the use and application of this costing method.

Ram has recently joined the company in a senior capacity. Both Cintra and Ram were recently discussing the current costing method and another method, namely Activity based costing. Ram suggested a switch to Activity based costing as the method of cost allocation .

Required:

a) Briefly state why Ram may have suggested such a switch . Relate to the scenario described above.                                                                      

b) List and briefly describe 3 advantages of Activity based costing over Absorption costing.                                                                                        ( 3 marks)

Cesar's Bottlers bottles soft drinks in a factory that can operate one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $4 per case bottled and the variable cost of $2.90 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices. Daily Volume Range (Number of Cases Bottled)   Total Fixed Costs per Day 1 Shift   0–2,000   $   1,950   2 Shifts   2,001–3,600       3,710   3 Shifts   3,601–5,000       5,090   Required:

a. Calculate the break-even point(s).

b-1. Calculate the profit (or loss) for each alternative, assuming Cesar’s Bottlers can sell all the units it can produce.

b-2. Should Cesar's Bottlers operate at one, two, or three shifts?

On January 1, 2017, Panther, Inc., issued securities with a total fair value of $557,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with production scheduling and product development with this combination.

Although Stark's book value at the acquisition date was $315,000, the fair value of its trademarks was assessed to be $55,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $187,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.

In 2017, Stark sold Panther inventory costing $80,000 for $160,000. As of December 31, 2017, Panther had resold 62 percent of this inventory. In 2018, Panther bought from Stark $156,000 of inventory that had an original cost of $78,000. At the end of 2018, Panther held $42,200 (transfer price) of inventory acquired from Stark, all from its 2018 purchases.

During 2018, Panther sold Stark a parcel of land for $98,000 and recorded a gain of $17,600 on the sale. Stark still owes Panther $68,400 (current liability) related to the land sale.

At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation.

1. Show how Panther computed its $61,225 equity in Stark's earnings balance.

2. Prepare a 2018 consolidated worksheet for Panther and Stark.

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:

During January the company completed the following transactions:

1. Purchased raw materials on account, $92,400.
2. Raw materials used in production, $99,000 ($81,200 was direct materials and $17,800 was indirect materials).
3. Paid $196,950 of salaries and wages in cash ($112,200 was direct labor, $39,150 was indirect labor, and $45,600 was related to employees responsible for selling and administration).
4. Various manufacturing overhead costs incurred (on account) to support production, $40,200.
5. Depreciation recorded on property, plant, and equipment, $70,000 (70% related to manufacturing equipment and 30% related to assets that support selling and administration).
6. Various selling expenses paid in cash, $35,600.
7. Prepaid insurance expired during the month, $2,000 (80% related to production, and 20% related to selling and administration).
8. Manufacturing overhead applied to production, $139,200.
9. Cost of goods manufactured, $303,000.
10. Cash sales to customers, $413,760.
11. Cost of goods sold (unadjusted), $298,400.
12. Cash payments to creditors, $62,400.
13. Underapplied or overapplied overhead  $?  .

Required:

1. Calculate the ending balances that would be reported on the company's balance sheet on January 31^st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.)

2. What is Morrison Company’s net operating income for the month of January?

Cost of Production Report: Average Cost Method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Required:

Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to two decimal places.

Thank you!!

Menlo Company distributes a single product. The company’s sales and expenses for last month follow:

Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

2. Without resorting to computations, what is the total contribution margin at the break-even point?

3-a. How many units would have to be sold each month to attain a target profit of $56,400?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

5. What is the company’s CM ratio? If sales increase by $60,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $230,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $230,000 and a tax basis of $157,500 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at §351 and §721.] (Leave no answer blank. Enter zero if applicable.)

a. MMT is formed as a C corporation.

b. MMT is formed as an S corporation.

c. MMT is formed as an LLC.