XYZ has been experiencing losses on its Widget line for several years. Here is the most recent contribution margin statement:

The general factory overhead is a common cost allocated on the basis of machine hours

The Purchasing department is a common cost allocated on the basis of sales dollars.

What is the total relevant costs in the decision to drop this line?

The budget director for Campbell Cleaning Services prepared the following list of expected selling and administrative expenses. All expenses requiring cash payments are paid for in the month incurred except salary expense and insurance. Salary is paid in the month following the month in which it is incurred. The insurance premium for six months is paid on October 1. October is the first month of operations; accordingly, there are no beginning account balances.

Required

1. Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.

2. Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.

3. Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.

4.

Statement of Cost of Goods Manufactured for a Manufacturing Company

Cost data for Disksan Manufacturing Company for the month ended January 31 are as follows:

a. Prepare a cost of goods manufactured statement for January.

b. Determine the cost of goods sold for January.
$

When using monetary-unit sampling, the upper misstatement limit was $11,200 and the risk of incorrect acceptance was 5%. This means that

A. Tolerable misstatement is $11,200.

B. There is a 95% chance that the actual misstatement in the account is $11,200 or more.

C. There is a 95% chance that the actual misstatement in the account is $11,200.

D. There is a 95% chance that the actual misstatement in the account is $11,200 or less.

Zion Electronics Company produces two products, Resistors and Transistors in a small manufacturing plant which had total manufacturing overhead of $21,000 in June. The factory has two departments, Design, which incurred $10,000 of manufacturing overhead, and Production which incurred $11,000 of manufacturing overhead. Design used 250 hours of direct labor and Production used 80 machine hours.

Assume that Resistors used 100 direct labor hours to make 100 units and Transistors used 150 direct labor hours to make 100 units in the Design Department. Also, assume that Resistors used 50 machine hours and Transistors used 30 machine hours in the Production Department.

The overhead costs assigned to each unit of Resistors and Transistors using department overhead rate were:

Prepare a balance sheet for Freedom Non-Profit Organization as follows:

The budget director of Heather’s Florist has prepared the following sales budget. The company had $290,000 in accounts receivable on July 1. Heather’s Florist normally collects 100 percent of accounts receivable in the month following the month of sale.

Required

1. Complete the schedule of cash receipts by filling in the missing amounts.

2. Determine the amount of accounts receivable the company will report on its third quarter pro forma balance sheet.

Question 2 – Cost Allocation: Joint Products and Byproducts

Tivoli Labs produces a drug used for the treatment of hypertension. The drug is produced in batches. Chemicals costing $60,000 are mixed and heated, creating a reaction; a unique separation process then extracts the drug from the mixture. A batch yields a total of 2,500 gallons of the chemicals. The first 2,000 gallons are sold for human use while the last 500 gallons, which contain impurities, are sold to veterinarians.

The costs of mixing, heating, and extracting the drug amount to $90,000 per batch. The output sold for human use is pasteurized at a total cost of $120,000 and is sold for $585 per gallon. The product sold to veterinarians is irradiated at a cost of $10 per gallon and is sold for $410 per gallon.

In March, Tivoli, which had no opening inventory, processed one batch of chemicals. It sold 1,700 gallons of product for human use and 300 gallons of the veterinarian product. Tivoli uses the net realizable value method for allocating joint production costs.

Required:

1.   How much in joint costs does Tivoli allocate to each product?

2.   Compute the cost of ending inventory for each of Tivoli’s products.

3.   If Tivoli were to use the constant gross-margin percentage NRV method instead, how would it allocate its joint costs?

4.   Calculate the gross margin on the sale of the product for human use in March under the constant gross-margin percentage NRV method.

5.   Suppose that the separation process also yields 300 pints of a toxic byproduct. Tivoli currently pays a hauling company $5,000 to dispose of this byproduct. Tivoli is contacted by a firm interested in purchasing a modified form of this byproduct for a total price of $6,000. Tivoli estimates that it will cost about $30 per pint to do the required modification. Should Tivoli accept the offer?

PT corp makes 300 units of A per year. At this level, the cost per unit includes $360 in direct materials, $1,000 in direct labor, $240 in variable overhead, and $900 in fixed overhead. An outside supplier has offered to make all 300 units for $2,100 per unit. If PT accepts this offer, two thirds of the fixed overhead would persist, but would be defrayed by renting out the floor space for $83,000 per year.

What are the relevant costs (in total) for continuing to make this product?

The following events apply to Gulf Seafood for the 2016 fiscal year:

1. The company started when it acquired $34,000 cash by issuing common stock.

2. Purchased a new cooktop that cost $13,600 cash

3. Earned $20,600 in cash revenue.

4. Paid $12,100 cash for salaries expense.

5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2016, the cooktop has an expected useful life of five years and an estimated salvage value of $3,200. Use straight-line depreciation. The adjusting entry was made as of December 31, 2016.

a) Record the events in general journal format AND post to T-accounts.

cash, equipment, accumulated depreciation, common stock, sales revenue, salaries expense, depreciation expense

Required information

[The following information applies to the questions displayed below.]

Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-70 and Job C-200. It provided the following information related to those two jobs:

Delph had no underapplied or overapplied manufacturing overhead during the year.

2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.

a. Compute the departmental predetermined overhead rates.

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

c. If Delph establishes bid prices that are 150% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200?

d. What is Delph’s cost of goods sold for the year?

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

• Required 2A
• Required 2B
• Required 2C
• Required 2D

Compute the departmental predetermined overhead rates. (Round the final answers to 2 decimal places.)

Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded:

Required:

Allocate the service department costs to the two operating departments using the reciprocal method.