A Ltd specialises in the distribution of pharmaceutical products. It buys from pharmaceutical companies and re-sells to each of the three different distribution channels: (i) General supermarket chains, (ii) Drug store chains, and (iii) Individual chemist shops. The company plans to use activity-based costing for analysing the profitability of its distribution channels. The following data relates to the quarter ending March 2020. Particulars General supermarket chains Drug store chains Individual chemist shops Average sales per delivery $96,500 $32,450 $6,225 Average cost of goods sold per delivery $94,650, $31,800, $5,950 Number of deliveries 960 ,2,470, 8,570 Number of orders 1,000, 2,650, 9,500 Average number of cartons shipped per delivery 250 75 12 Average number of hours of shelf stocking per delivery 2, 0.5, 0.1 The following information is available in respect of operating costs (other than cost of goods sold) for the quarter ending March 2020. Activity areas Cost Cost driver Customer purchase order processing $591,750 Purchase orders by customers Customer store delivery $960,000 Number of deliveries Cartons dispatched to customer stores $792,135 Number of cartons dispatched to customer stores Shelf stocking at customer location $80,240 Hours of shelf stocking Required: (a) Calculate the activity cost driver rates for each of the activity areas. (b) Prepare an income statement showing details of each distribution channel for the quarter ending March 2020 using activity-based costing.

Pearl Products Limited of Shenzhen China manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, One of the company's products. The company now is planning raw materials needs for the third quarter, the quarter in which peak sales of supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:

a. The Finished goods inventrory on hand at the end of each month must equal 3,000 units of Supermix plus 20% of the next months sales. The finished goods invenroy on June 30 is budgeted to be 10,000 units.

b. The raw materials inventory on hand at the end of each month must equal one-half of the folwing months production needs for raw materials. The Raw materials inventory on June 30 is budgeted to be 54,000 cc of solvent H300.

c. The company maintains no work in process inventories. A monthly sales budget for Supermix for the third and fourth quarters of the year follows:

July- 35,000

August- 40,000

Septmeber 50,000

October 30,000

November 20,000

December 10,000

1. Prepare a productino budget for Supermix for the months July/ August/ September and October.

2. Examine the Production budget that you prepared in (1). Why will the cmopany produce more units than it sells in July and August and fewer units than it sells in September and October?

3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.

Pharma Save Ltd specialises in the distribution of pharmaceutical products. It buys from pharmaceutical companies and re-sells to each of the three different distribution channels: (i) General supermarket chains, (ii) Drug store chains, and (iii) Individual chemist shops. The company plans to use activity-based costing for analysing the profitability of its distribution channels. The following data relates to the quarter ending March 2020.

The following information is available in respect of operating costs (other than cost of goods sold) for the quarter ending March 2020.

Required:

1. Calculate the activity cost driver rates for each of the activity areas.

2. Prepare an income statement showing details of each distribution channel for the quarter ending March 2020 using activity-based costing.

The following information is available for Pioneer Company:

• Sales price per unit is $110.
• November and December, sales were budgeted at 3,040 and 3,530 units, respectively.
• Variable costs are 12 percent of sales (4 percent commission, 3 percent advertising, 5 percent shipping).
• Fixed costs per month are sales salaries, $5,300; office salaries, $2,300; depreciation, $2,400; building rent, $3,700; insurance, $1,700; and utilities, $900.

Required:

Determine Pioneer's budgeted selling and administrative expenses for November and December.

Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the Internet across the United States. To keep costs down, CGC maintains a warehouse, but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year:

1. Expected monthly sales for April, May, June, and July are $260,000, $230,000, $350,000, and $130,000, respectively.
2. Cost of goods sold is 30 percent of expected sales.
3. CGC’s desired ending inventory is 40 percent of the following month’s cost of goods sold.
4. Monthly operating expenses are estimated to be:

• Salaries: $34,000
• Delivery expense: 8 percent of monthly sales
• Rent expense on the warehouse: $6,500
• Utilities: $1,300
• Insurance: $240
• Other expenses: $340

Required:

1. Compute the budgeted cost of purchases for each month in the second quarter.

2. Complete the budgeted income statement for each month in the second quarter.

Exercise 7-10 Production and Direct Materials Budgets [LO7-3, LO7-4]

7. Using the income elasticity of demand to characterize goods

Data collected from the economy of Pokerville reveals that a 16% increase in income leads to the following changes:

Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on its income elasticity, indicate whether each good is a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.)

Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $30 per unit. A summary of purchases and sales during 2012 follows:

Required

1. Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
2. Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
3. Assume that Chen uses the weighted-average cost method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Do not round until your final answers. Round your answers to the nearest dollar.

d. Assuming that Chen’s products are perishable items, which of the three inventory costing methods would you choose to:
Assume this is during a period of rising costs.

Please answer all parts of the question.

Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $70 per unit. A summary of purchases and sales during 2012 follows:

Required

1. Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
2. Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.
3. Assume that Chen uses the weighted-average cost method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

Do not round until your final answers. Round your answers to the nearest dollar.

d. Assuming that Chen’s products are perishable items, which of the three inventory costing methods would you choose to:
Assume this is during a period of rising costs.

1.Assume you collected a quarterly sales data (in millions of dollars) over a four-year period from the first quarter 2016 to the fourth quarter 2019, and computed the seasonal index for each quarter. If the values of the actual sales and deseasonalised sales were 162 and 158.68, respectively, in the second quarter of 2016, what is the (normalised) seasonal index for the second quarter? Round your answer to two decimal places.

2.

Assume you collected data representing the number of full-time employed males ('000) without access to paid leave entitlements in Australia from 1992 to 2007, and fitted a third-order autoregressive model. What number of degrees of freedom do you use if you test the appropriateness of the fitted model.

3.

The following are prices and consumption quantities for three commodities in 2009 and 2019:

Based on the above information, calculate the Laspeyres aggregate price index for 2019 using 2009 as the base year. Round your final answer to two decimal places.