How would you determine cost-effectiveness or a cost-benefit approach? If I want to purpose a hypothetical proposal to allow a $5,000 tax deduction for expenses incurred by children who take care of their elderly parents?
In: Accounting
The manufacturing costs of Ackerman Industries for the first three months of the year follow:
| Particulars | Total cost | Units produced |
| January | $1,900,000 | 20,000 units |
| February | 2,250,000 | 27,000 |
| March | 2,400,000 | 30,000 |
Using the high low method,Determine (a) the variable cost per unit and (b) the total fixed cost
In: Accounting
Product Cost Method of Product Costing
Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,320 cell phones are as follows:
| Variable costs per unit: | Fixed costs: | |||||||
| Direct materials | $76 | Factory overhead | $199,000 | |||||
| Direct labor | 30 | Selling and administrative expenses | 69,100 | |||||
| Factory overhead | 22 | |||||||
| Selling and administrative expenses | 18 | |||||||
| Total variable cost per unit | $146 | |||||||
Voice Com desires a profit equal to a 15% rate of return on invested assets of $601,500.
a. Determine the amount of desired profit from
the production and sale of 5,320 cell phones.
$
b. Determine the product cost per unit for the
production of 5,320 of cell phones. Round your answer to the
nearest whole dollar.
$ per unit
c. Determine the product cost markup percentage
for cell phones. Round your answer to two decimal places.
%
d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.
| Total Cost | $per unit |
| Markup | per unit |
| Selling price | $per unit |
In: Accounting
Explain the relationship of varying output with total fixed cost (TFC), total variable cost (TVC), average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC).
In: Economics
Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost
On August 1, Cairle Company’s work-in-process inventory consisted of three jobs with the following costs:
| Job 70 | Job 71 | Job 72 | |
| Direct materials | $1,700 | $2,000 | $850 |
| Direct labor | 1,900 | 1,200 | 900 |
| Applied overhead | 1,520 | 960 | 720 |
During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows:
| Job 70 | Job 71 | Job 72 | Job 73 | Job 74 | Job 75 | Job 76 | |
| Direct materials | $800 | $1,235 | $3,600 | $5,000 | $300 | $560 | $80 |
| Direct labor | 1,000 | 1,400 | 2,200 | 1,800 | 600 | 850 | 170 |
Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.
Required:
1. Calculate the predetermined overhead rate
based on direct labor cost.
% of direct labor cost.
2. Calculate the ending balance for each job as of August 31.
| Ending Balance | |
| Job 70 | $ |
| Job 71 | $ |
| Job 72 | $ |
| Job 73 | $ |
| Job 74 | $ |
| Job 75 | $ |
| Job 76 | $ |
3. Calculate the ending balance of Work in
Process as of August 31.
$
4. Calculate the cost of goods sold for
August.
$
5. Assuming that Cairle prices its jobs at cost
plus 25 percent, calculate Cairle’s sales revenue for August.
$
In: Accounting
In the book Advanced Managerial Accounting, Robert P.
Magee discusses monitoring cost variances. A cost variance
is the difference between a budgeted cost and an actual cost. Magee
describes the following situation:
Michael Bitner has responsibility for control of two
manufacturing processes. Every week he receives a cost variance
report for each of the two processes, broken down by labor costs,
materials costs, and so on. One of the two processes, which we'll
call process A , involves a stable, easily controlled
production process with a little fluctuation in variances. Process
B involves more random events: the equipment is more
sensitive and prone to breakdown, the raw material prices fluctuate
more, and so on.
"It seems like I'm spending more
of my time with process B than with process A,"
says Michael Bitner. "Yet I know that the probability of an
inefficiency developing and the expected costs of inefficiencies
are the same for the two processes. It's just the magnitude of
random fluctuations that differs between the two, as you can see in
the information below."
"At present, I investigate
variances if they exceed $2,659, regardless of whether it was
process A or B. I suspect that such a policy is
not the most efficient. I should probably set a higher limit for
process B."
The means and standard deviations of the cost variances of
processes A and B, when these processes are in
control, are as follows: (Round your z value to 2 decimal
places and final answers to 4 decimal places.):
| Process A | Process B | |
| Mean cost variance (in control) | $ 3 | $ 1 |
| Standard deviation of cost variance (in control) | $5,473 | $9,743 |
Furthermore, the means and standard deviations of the cost
variances of processes A and B, when these
processes are out of control, are as follows:
| Process A | Process B | |
| Mean cost variance (out of control) | $7,651 | $ 6,169 |
| Standard deviation of cost variance (out of control) | $5,473 | $9,743 |
(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,659 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.
| Process A | ||
| Process B | ||
(Click to select)Process AProcess B is investigated more often
(b) Assume that cost variances are normally
distributed and that both Process A and Process B
cost variances are out of control. Find the probability that a cost
variance for Process A will be investigated. Find the
probability that a cost variance for Process B will be
investigated. Which out-of-control process will be investigated
more often.
| Process A | ||
| Process B | ||
(Click to select)Process BProcess A is investigated more often.
(c) If both Processes A and B
are almost always in control, which process will be investigated
more often.
(Click to select)Process AProcess B will be investigated more
often.
(d) Suppose that we wish to reduce the probability
that Process B will be investigated (when it is in
control) to .3121. What cost variance investigation policy should
be used? That is, how large a cost variance should trigger an
investigation? Using this new policy, what is the probability that
an out-of-control cost variance for Process B will be
investigated?
| k | |
| P(x > 4,775) | |
In: Statistics and Probability
The records of ABC Company showed the following:
| Units | Unit Cost | Total Cost | ||
| January 1 | Beginning | 10,000 | 60 | 600,000 |
| April 1 | Purchase | 18,000 | 50 | 900,000 |
| October 1 | Purchase | 22,000 | 40 | 880,000 |
The physical inventory reveals 15,000 units on hand on December
31.
Compute the cost of ending inventory and cost of sales using:
| Inventory Cost Flow | Ending Inventory | Cost of Goods Sold (COGS) |
| First in, first out (FIFO) | ||
| Weighted Average | ||
| Last in, first out (LIFO) |
In: Accounting
Cost of Production Report: Average Cost 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 Department | ACCOUNT NO. | |||||||
| Date | Item | Debit | Credit | Balance | ||||
| Debit | Credit | |||||||
| Dec. | 1 | Bal., 13,500 units, 25% completed | 39,015 | |||||
| 31 | Direct materials, 233,600 units | 383,104 | 422,119 | |||||
| 31 | Direct labor | 217,447 | 639,566 | |||||
| 31 | Factory overhead | 312,911.5 | 952,477.5 | |||||
| 31 | Goods transferred, 235,600 units | ? | ? | |||||
| 31 | Bal., ? units, 75% completed | ? | ||||||
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.
| Sunrise Coffee Company | ||
| Cost of Production Report Roasting Department | ||
| For the Month Ended December 31 | ||
| Unit Information | ||
| Units to account for during production: | ||
| Inventory in process, December 1 | ||
| Received from materials storeroom | ||
| Total units accounted for by the Roasting Department | ||
| Units to be assigned costs: | ||
| Whole Units | Equivalent Units of Production | |
| Transferred to Packing Department in December | ||
| Inventory in process, December 31 | ||
| Total units to be assigned costs | ||
| Cost Information | ||
| Unit costs: | ||
| Costs | ||
| Total costs for December in Roasting Department | $ | |
| Total equivalent units | ||
| Cost per equivalent unit | $ | |
| Costs assigned to productio: | ||
| 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 | $ | |
In: Accounting
Sitcom Technology Case
Case Study: Cost Concept and Cost Sheet
Sitcom Technology was founded by two IIT graduates Rehan and Nixit in the year 2016 with the objective of providing IT solutions to various companies. They launched their FinTech start-up after getting funded Rs 25,00,000 by Business Ventures, one of the FinTech Angel investors. This was in the form of a loan at a 12% rate of interest.
Rehan utilized his unused two bedrooms flat in Bannerghatta, Karnataka worth Rs 60,00,000 for the office. Although he could get Rs 20,000 per month as rent for the same in the market, he rented it out to his start-up at Rs 15,000 per month and also decided to waive off the security deposit of Rs 100,0000 (going rate).
The other assets bought for their enterprise were four computers and a server (Rs. 200,000), two printers come scanner (Rs 18,000), two cordless phones & four mobiles (Rs 62,000), modem for wifi and other internet accessories (Rs 6000)and office furniture (Rs 1,70,000). After purchasing the furniture, they realized that Rs 20,000 invested in panel doors couldn’t be used. There was no return or refund for that. With no other option in hand, they sold these doors as scrap for Rs 8,000. Besides these purchases, they also invested Rs 40,000 in annual licenses for a lot of software.
Nixit picked up two of his juniors as Programmer and Visualizer come graphic designer after negotiating heavily on their hourly remuneration of 1,000 per hour on a freelancing basis. Depending on the number of hours invested in the development of a particular software/ERP/IT Solution, they were paid. In the month of April 2019, Sitcom Technology paid them Rs 84,000 for 42 hours of work put in by each one of them.
In addition to these two, a telephone operator and a data entry staff were also hired at Rs 13,000 and Rs 17,000 per month respectively. The monthly expenses of Sitcom Technology in April 2019 were:
|
Expenses |
Amount(Rs.) |
|
Salaries |
30,000 |
|
Rent |
15,000 |
|
Wages(peon) |
10,000 |
|
Electricity |
5,000 |
|
Telephone and internet charges |
12,000 |
|
Office stationery |
4,000 |
|
Trade Magazines |
500 |
|
Conveyances |
8,000 |
|
Advertising charges |
1,000 |
|
Tours and travel |
16,000 |
|
Snacks |
6,000 |
|
Miscellaneous |
5,000 |
In April 2019, Sitcom Technology received two big project orders from a leading private bank and one small programming work outsourced by a major IT company in Electronic City. The work was completed in the same month with all four of them putting in a lot of hours. The revenue generated from these three projects was Rs 4,10,000.
Question: Prepare the cost sheet for April 2019 and calculate the profit generated assuming the depreciation on fixed assets to be 10%.
NOTE- could you please provide me the solution ASAP.
In: Accounting
Cost Behavior Analysis in a Restaurant: High-Low Cost
Estimation
Assume a Jimmy John's restaurant has the following information
available regarding costs at representative levels of monthly
sales:
| Monthly sales in units | |||
|---|---|---|---|
| 5,000 | 8,000 | 10,000 | |
| Cost of food sold | $ 10,000 | $ 16,000 | $ 20,000 |
| Wages and fringe benefits | 4,250 | 4,400 | 4,500 |
| Fees paid delivery help | 1,250 | 2,000 | 2,500 |
| Rent on building | 1,200 | 1,200 | 1,200 |
| Depreciation on equipment | 600 | 600 | 600 |
| Utilities | 500 | 560 | 600 |
| Supplies (soap, floor wax, etc.) | 150 | 180 | 200 |
| Administrative costs | 1,300 | 1,300 | 1,300 |
| Total | $ 19,250 | $ 26,240 | $ 30,900 |
(a) Identify each cost as being variable, fixed, or mixed.
Cost of food sold:
Variable
Fixed
Mixed
Wages and fringe benefits:
Variable
Fixed
Mixed
Fees paid delivery help:
Variable
Fixed
Mixed
Rent on building:
Variable
Fixed
Mixed
Depreciation on equipment:
Variable
Fixed
Mixed
Utilities
Variable
Fixed
Mixed
Supplies (soap, floor wax, etc.):
Variable
Fixed
Mixed
Administrative costs:
Variable
Fixed
Mixed
(b) Use the high-low method to develop a schedule identifying the
amount of each cost that is fixed per month or variable per unit.
Total the amounts under each category to develop an equation for
total monthly costs.
Round variable cost answers to two decimal places.
| Fixed Costs | Variable Costs | ||
|---|---|---|---|
| Cost of food sold | Answer | Answer | X |
| Wages and fringe benefits | Answer | Answer | X |
| Fees paid delivery help | Answer | Answer | X |
| Rent on building | Answer | Answer | X |
| Depreciation on equipment | Answer | Answer | X |
| Utilities | Answer | Answer | X |
| Supplies (soap, floor wax, etc.) | Answer | Answer | X |
| Administrative costs | Answer | Answer | X |
| Total costs equation | Answer | Answer | X |
* where X = Unit sales
(c) Predict total costs for a monthly sales volume of 10,000
units.
$Answer
In: Accounting