Valley View Trailmasters makes two types of tents for mountain camping, the Explorer and the Climber. Data concerning the two product lines is presented in the table below:

The company has always employed a tradition costing system in which manufacturing overhead is applied to units based on machine hours. Estimated data concerning manufacturing overhead and direct labor hours for the upcoming year appear below:

            Estimated total manufacturing overhead        $484,746

            Estimated total machine hours                          1,000

The company is considering replacing its traditional costing system with an activity based costing system that would assign its indirect product costs to four activity cost pools. Information about the amount assigned to these cost pools, the identified cost driver for each and usage of the cost drivers by the two product lines is presented in the following table:

INSTRUCTIONS: Use EXCEL FROMULAS (Show them to next the value) to calculate the following amounts in the spaces provided on your template.

1. Calculate the predetermined overhead rate using the traditional volume-based costing system.

2. Calculate the total amount of overhead cost that would be assigned to each product line under the company’s traditional costing system.

3. Calculate the gross margin per unit for each product line using traditional volume-based costing.

4. Calculate the activity rate for each cost pool using activity-based costing.

5. Calculate the total amount of overhead cost that would be assigned to each product line using activity-based costing.

6. Calculate the gross margin per unit for each product line under the proposed activity based costing system.

Here is the attached template:

Show formulas as well as the values.

Valley View Trailmasters makes two types of tents for mountain camping, the Explorer and the Climber. Data concerning the two product lines is presented in the table below:

The company has always employed a tradition costing system in which manufacturing overhead is applied to units based on machine hours. Estimated data concerning manufacturing overhead and direct labor hours for the upcoming year appear below:

            Estimated total manufacturing overhead        $484,746

            Estimated total machine hours                          1,000

The company is considering replacing its traditional costing system with an activity based costing system that would assign its indirect product costs to four activity cost pools. Information about the amount assigned to these cost pools, the identified cost driver for each and usage of the cost drivers by the two product lines is presented in the following table:

INSTRUCTIONS: Use EXCEL FROMULAS (Show them next to the value) to calculate the following amounts in the spaces provided on your template.

1. Calculate the predetermined overhead rate using the traditional volume-based costing system.

2. Calculate the total amount of overhead cost that would be assigned to each product line under the company’s traditional costing system.

3. Calculate the gross margin per unit for each product line using traditional volume-based costing.

4. Calculate the activity rate for each cost pool using activity-based costing.

5. Calculate the total amount of overhead cost that would be assigned to each product line using activity-based costing.

6. Calculate the gross margin per unit for each product line under the proposed activity based costing system.

Here is the attached template:

Show formulas next to the values.

11a) If 11,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production?

11b) If 11,000 units are produced, what is the total amount of manufacturing overhead cost expressed on a per unit basis? (Round your answer to 2 decimal places.)

12a) If 15,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production?

12b) If 15,500 units are produced, what is the total amount of manufacturing overhead cost expressed on a per unit basis? (Round your answer to 2 decimal places.)

13) If the selling price is $21.30 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

14a) If 11,000 units are produced, what are the total amount of direct manufacturing costs incurred to support this level of production?

14b) If 11,000 units are produced, what are the total amount of indirect manufacturing costs incurred to support this level of production?

15) What total incremental cost will Martinez incur if it increases production from 13,000 to 13,001 units? (Round your answer to 2 decimal places.)

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2018 year-end inventory is as follows:

Required:
1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.
2. Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss.

Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.

Assuming that the company reports an inventory write-down as a line item in the income statement, for each of the LCNRV applications determine the amount of the loss.

Question 1 Consider the production function:F(L,K) = L^1/3 K^1/3 .

Suppose the wage rate (price per unit of labour), w, is 2 and the capital rental rate (price per unit of capital), r, is 1.

1. (a) Does this production function exhibit increasing, decreasing or constant returns to scale? Explain.

2. (b) (If you would like to, you can do part (c) first and use your answer to (c) to answer this question.) Find the total cost of producing 32 units of output.

3. (c) Find the total cost, average cost and marginal cost of producing y units of output. Is the average cost increasing or decreasing in y? Is the marginal cost higher or lower than the average cost?

Now consider the production function
F(L,K) = L^2/3 K^1/3 .

4. (d) Does this production function exhibit increasing, decreasing or constant returns to scale? Explain.

5. (e) Find the total cost, average cost and marginal cost of producing y units of output. Is the average cost increasing or decreasing in y? Is the marginal cost higher or lower than the average cost? (You can leave your answers in indices. The expression is more important than the value.)

Chapter 7 Homework Assignment (part 1)

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Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

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Job Order Cost Sheet

Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $2,652 to carpet the consulting firm’s newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation were completed on October 10.

The related materials requisitions and time tickets are summarized as follows:

Required:

Enter amounts as positive numbers.

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. Record the costs incurred, and complete the job order cost sheet.

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.

Exercise 2-15 Part 2

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?

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

Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.)

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? (Round your intermediate calculations to 2 decimal places.)

hat is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

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.

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

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

Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.)

c. If Delph establishes bid prices that are 140% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200?

If Delph establishes bid prices that are 140% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200? (Round your intermediate calculations to 2 decimal places.)

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

What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Job Order Cost Sheet

Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $9,450 to carpet the consulting firm’s newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation was completed on October 10.

The related materials requisitions and time tickets are summarized as follows:

Required:

Enter amounts as positive numbers.

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. Record the costs incurred and complete the job order cost sheet.