Cost of Production Report: Weighted average 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:

ACCOUNT Work in Process-Roasting DepartmentACCOUNT NO.

DateItemDebitCreditBalance

DebitCredit

Dec.1Bal., 15,200 units, 80% completed   28,120  

31Direct materials, 263,000 units276,150  304,270  

31Direct labor151,077  455,347  

31Factory overhead217,403  672,750  

31Goods transferred, 265,200 units  ??  

31Bal., ? units, 30% completed   ?  

Required:

Prepare a cost of production report, using the weighted average method, and identify the missing amounts for Work in Process—Roasting Department. Assume that direct materials are placed in process during production. If required, round your cost per equivalent unit answer to two decimal places.

Sunrise Coffee Company

Cost of Production Report-Roasting Department

For the Month Ended December 31

Unit Information

Units charged to production:

Inventory in process, December 1

Received from materials storeroom

Total units accounted for by the Roasting Department

Units to be assigned costs:

Whole UnitsEquivalent Units of Production

Transferred to Packing Department in December

Inventory in process, December 31

Total units to be assigned costs

Cost Information

Cost per equivalent unit:

Costs

Total costs for December in Roasting Department$

Total equivalent units

Cost per equivalent unit$

Costs assigned to production:

Inventory in process, December 1$

Costs incurred in December

Total costs accounted for by the Roasting Department$

Costs allocated to completed and partially completed units:

Transferred to Packing Department in December$

Inventory in process, December 31

Total costs assigned by the Roasting Department$

Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage

Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

It is expected that 11,480 units will be sold at a price of $264 a unit. Maximum sales within the relevant range are 14,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

2. What is the expected contribution margin ratio? Round to the nearest whole percent.
%

3. Determine the break-even sales in units and dollars.

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$

5. What is the expected margin of safety in dollars and as a percentage of sales?

6. Determine the operating leverage. Round to one decimal place.

Ch 17#14

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.

Crimson Tide Company uses a job-order costing system. At Crimson Tide, overhead costs are applied to jobs on the basis of machine-hours.

For the current year, Crimson Tide estimated that its machines would work for a total of 26,000 machine-hours. Tide also estimated for the current year that it would incur $124,800 in manufacturing overhead cost.

The following transactions occurred during the year:

a. Raw materials requisitioned for use in production, $300,000 (80% direct and 20% indirect).

b. The following costs were incurred for employee services:

c. Total insurance costs were $21,000 Note: Of the total insurance cost, 90% relates to factory operations, and 10% relates to selling and administrative activities.

d. In the factory only, heat, power, and water costs incurred in the factory totalled $60,000.

e. Total depreciation recorded for the year was  $71,000 Note: Of the total depreciation recorded 85% relates to factory operations, and 15% relates to selling and administrative activities.

f. Advertising costs incurred was $61,000.

g. According to their job cost sheets, goods that cost $491,000 to manufacture were transferred to the finished goods warehouse.

h. Sales for the year totaled $722,000. The total cost to manufacture these goods according to their job cost sheets was $486,000.

i. The company actually used 51,000 machine-hours during the year.

Required:

1. Determine the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.).

2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.) (Round predetermined overhead rate to 2 decimal places.)

Crimson Tide Company uses a job-order costing system. At Crimson Tide, overhead costs are applied to jobs on the basis of machine-hours. For the current year, Crimson Tide estimated that its machines would work for a total of 34,000 machine-hours. Tide also estimated for the current year that it would incur $176,800 in manufacturing overhead cost. The following transactions occurred during the year: a. Raw materials requisitioned for use in production, $308,000 (80% direct and 20% indirect). b. The following costs were incurred for employee services: Direct labor $ 179,000 Indirect labor $ 37,000 Sales commissions $ 29,000 Administrative salaries $ 44,000 c. Total insurance costs were $29,000 Note: Of the total insurance cost, 90% relates to factory operations, and 10% relates to selling and administrative activities. d. In the factory only, heat, power, and water costs incurred in the factory totalled $75,000. e. Total depreciation recorded for the year was $79,000 Note: Of the total depreciation recorded 85% relates to factory operations, and 15% relates to selling and administrative activities. f. Advertising costs incurred was $69,000. g. According to their job cost sheets, goods that cost $499,000 to manufacture were transferred to the finished goods warehouse. h. Sales for the year totaled $738,000. The total cost to manufacture these goods according to their job cost sheets was $494,000. i. The company actually used 59,000 machine-hours during the year. Required: 1. Determine the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.). 2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.) (Round predetermined overhead rate to 2 decimal places.)

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.

Crimson Tide Company uses a job-order costing system. At Crimson Tide, overhead costs are applied to jobs on the basis of machine-hours.

For the current year, Crimson Tide estimated that its machines would work for a total of 26,000 machine-hours. Tide also estimated for the current year that it would incur $124,800 in manufacturing overhead cost.

The following transactions occurred during the year:

a. Raw materials requisitioned for use in production, $300,000 (80% direct and 20% indirect).

b. The following costs were incurred for employee services:

c. Total insurance costs were $21,000 Note: Of the total insurance cost, 90% relates to factory operations, and 10% relates to selling and administrative activities.

d. In the factory only, heat, power, and water costs incurred in the factory totalled $60,000.

e. Total depreciation recorded for the year was  $71,000 Note: Of the total depreciation recorded 85% relates to factory operations, and 15% relates to selling and administrative activities.

f. Advertising costs incurred was $61,000.

g. According to their job cost sheets, goods that cost $491,000 to manufacture were transferred to the finished goods warehouse.

h. Sales for the year totaled $722,000. The total cost to manufacture these goods according to their job cost sheets was $486,000.

i. The company actually used 51,000 machine-hours during the year.

Required:

1. Determine the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.).

2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.) (Round predetermined overhead rate to 2 decimal places.)

Question 3: (22 points)

Suppose you are given the following information about a particular industry:

Q^d= 1600 – 150P                   Market demand

Q^s= 250P                               Short run market Supply

The Firm total cost function consists of a Fixed Cost of 45 and a Variable Cost of (q^2)/5

Assume that all firms are identical in a market that is perfectly competitive.

1. (1 point) Correctly write the Firm total cost function
2. (4 point) Using the demand and supply curves for this industry, find the short run equilibrium price and quantity in the industry.
3. (1 point) Using the total cost function from part (a), derive the marginal cost function for firms in the industry.
4. (4 points) Using your answers to parts (b) and (c), find the quantity produced by each firm in a short run competitive equilibrium. Find the profit or loss of each firm in the short run equilibrium.
5. (2 points) Using your answers to parts (b) and (d), find the total number of firms in a short run equilibrium.
6. (4 points) In the long run, would you expect to see firms enter or exit the industry? Explain your reasoning. What effect will entry or exit have on market equilibrium (in terms of market price and quantity)?
7. (6 points) Given the cost curve above, what is the long run equilibrium price in the industry? What is the number of firms in a long run equilibrium?

Suppose you want to buy a new car and trying to choose between two models:

Model A: costs $17,000 and its gas mileage is 20 miles per gallon and its insurance is $200 per year.

Model B: costs $25,000 and its gas mileage is 35 miles per gallon and its insurance is $400 per year.

If you drive approximately 40,000 miles per year and the gas costs $3 per gallon:

Find a formula for the total cost of owning Model A where the number of years is the independent variable.

Find a formula for the total cost of owning Model B where the number of years is the independent variable.

Find the total cost for each model for the first five years.

If you plan to keep the car for four years, which model is more economical? How about if you plan to keep it for six years?

Find the number of years in which the total cost to keep the two cars will be the same.

Identify the number of months where neither car holds a cost of ownership advantage.

What effect would the cost of gas doubling have on cost of ownership? Graph or show hand calculations.

If you can sell neither car for 40% of its value at any time, how does the analysis change? Graph or show hand calculations.

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:

Overhead costs:

Distribution of Resource Consumption Across Activity Cost Pools:

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

What is the overhead cost assigned to Product W1 under activity-based costing?