21. The Paul Manufacturing Company uses the process cost system and the average cost method.  The following production data are for the month of April, 2016.

Prepare a cost of production summary for the month.

The following cost functions apply to X Company's regular production and sales during the year: Cost of goods sold: $6.05 (X) + $146,520 Selling and administrative expenses: $1.05 (X) + $69,960 where X is the number of units produced and sold. During the year, X Company sold 66,000 units for $18.00 each. At the end of the year, a company offered to buy 4,460 units but was only willing to pay $12.00 each. X Company had the capacity to produce the additional 4,460 units.

5. If X Company had accepted the special order, firm profits would have increased by

6. Consider the following three changes. Direct material costs on the special order would have increased by $0.71 per unit, direct labor costs on the special order would have decreased by $0.42 per unit, and X Company would have had to rent special equipment for $1,000. Independent of your answer to (5), the effect of these changes would have been to reduce profit on the special order by

7. In order to retain all of X Company's regular customers, it would have had to reduce the regular selling price by $0.37. If the selling price were reduced and next year's unit sales turned out to be the same as this year's sales, firm profits would have fallen by

ASSUME CONVERSION COSTS INFORMATION IS AS FOLLOWS: BEGINNING COST = $87,500, CURRENT COST = $233,980. WHAT ARE TOTAL CONVERSION COSTS ALLOCATED TO UNITS TRANSFERRED OUT?

$CC ALLOCATED TO UNITS TRANSFERRED OUT___________

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SMITH HAS THE FOLLOWING PROCESS COSTING DATA FOR WIP DEPT # 2:

            BEGINNING UNITS       30,000

            UNITS STARTED 63,000

            ENDING UNITS 17,000

            CONVERSION COSTS ARE 45 PERCENT COMPLETE WITH REGARDS TO ENDING WIP.

FIFO Periodic System

COGS:

Ending Inventory:

Average Cost Periodic System

COGS:

Ending Inventory:

FIFO Previous System

COGS:

Ending Inventory:

Average Cost Previous System

COGS:

Ending Inventory:

Show Solutions

The fixed cost to restart production is $104,400 per model. Once production starts the variable cost to make each vehicle is $272.50 per vehicle. The firm’s management is trying to decide if the firm should only concentrate on the domestic (Canadian) market (Estimated 745 of vehicles) or pursue export opportunities (Estimated combined 11710 of vehicles) Calculate the total cost per vehicle for the two (2) options. Which of the two (2) options do you recommend? Why?

Relevant cost, the make or buy decision

The Rocky Road Company has the following cost information regarding a product that it makes with a current volume of 40,000 units.

Unit Cost

Total Cost

Direct Material

$100

$4,000,000

Direct Labor

$40

$1,600,000

VMOH

$60

$2,400,000

FMOH

$75

$3,000,000

It had has been approached by the Smooth Road Company with an offer to make this product.

The offer is to make 40,000 units at a cost of $240 per unit.

After a special study of the make or buy decision, the Rocky Road Company determined that of its total fixed costs of $3,000,000, there were avoidable costs of $1,200,000.

Provide the following:

A) The per unit cost for each input and total cost to make the product

B) The per unit and total cost to buy the product from the Smooth Road Company

C) Your recommendation (with a short rationale as to why)

The special study determined that if the Rocky Road Company accepted the offer made by the Smooth Road Company, then additional resources would be freed that could be used to generate additional units of another product. This would generate $6,000,000 in revenues at a cost of $5,400,000. In light of this new information, please show your work and provide:

D) The total cost to make the product

E) The total cost to buy the product from the Smooth Road Company

F) Your recommendation (with a short rationale as to why)

1. Both job order cost and process cost are systems used in accounting to track manufacturing costs. What circumstances related to the manufacturing would justify the use of one vs another?

2.What is your opinion about the value of harmonizing accounting standards for global equity markets? Please explain.

Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.

In your manufacturing company, how would you access and separate the product cost and period cost?
Show your explanation briefly with a suitable numerical example.