Questions
trategic Initiatives and CSR Get Hitched Inc. is a production company that is in the process...

trategic Initiatives and CSR

Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company’s current sales revenue is $2,100,000. Currently, the company’s gross profit is 35% of sales, but the company’s target gross profit percentage is 40%. The company’s current monthly cost of production is $1,365,000. Of this cost, 40% is for labor, 20% is for materials, and 40% is for overhead.

The strategic initiative being tested at Get Hitched is a redesign of its production process that splits the process into two sequential procedures. The make up of the costs of production for Procedure 1 is currently 50% direct labor, 45% direct materials, and 5% overhead. The makeup of the costs of production for Procedure 2 is currently 50% direct labor, 20% direct materials, and 30% overhead. Company management estimates that Procedure 1 costs twice as much as Procedure 2.

1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit at the current level of sales.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

2. The company’s actual direct materials cost is $390,600 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

3. The company is planning a CSR initiative to reuse some of the indirect materials used in production during Procedure 2. These indirect materials normally make up 60% of the overhead cost for Procedure 2, but the CSR initiative would reduce the usage of indirect materials. Determine what the maximum new cost of these indirect materials could be for Procedure 2 if this CSR initiative is expected to enable the company to meet its target gross profit percentage (holding all other costs constant).

Maximum new cost of P2 overhead materials:
$

In: Accounting

Strategic Initiatives and CSR Get Hitched Inc. is a production company that is in the process...

Strategic Initiatives and CSR

Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company’s current sales revenue is $2,100,000. Currently, the company’s gross profit is 35% of sales, but the company’s target gross profit percentage is 40%. The company’s current monthly cost of production is $1,365,000. Of this cost, 40% is for labor, 20% is for materials, and 40% is for overhead.

The strategic initiative being tested at Get Hitched is a redesign of its production process that splits the process into two sequential procedures. The make up of the costs of production for Procedure 1 is currently 50% direct labor, 45% direct materials, and 5% overhead. The makeup of the costs of production for Procedure 2 is currently 50% direct labor, 20% direct materials, and 30% overhead. Company management estimates that Procedure 1 costs twice as much as Procedure 2.

1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit at the current level of sales.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

2. The company’s actual direct materials cost is $390,600 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

3. The company is planning a CSR initiative to reuse some of the indirect materials used in production during Procedure 2. These indirect materials normally make up 70% of the overhead cost for Procedure 2, but the CSR initiative would reduce the usage of indirect materials. Determine what the maximum new cost of these indirect materials could be for Procedure 2 if this CSR initiative is expected to enable the company to meet its target gross profit percentage (holding all other costs constant).

Maximum new cost of P2 overhead materials:
$

In: Accounting

Strategic Initiatives and CSR Get Hitched Inc. is a production company that is in the process...

Strategic Initiatives and CSR

Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company’s current sales revenue is $2,100,000. Currently, the company’s gross profit is 35% of sales, but the company’s target gross profit percentage is 40%. The company’s current monthly cost of production is $1,365,000. Of this cost, 60% is for labor, 20% is for materials, and 20% is for overhead.

The strategic initiative being tested at Get Hitched is a redesign of its production process that splits the process into two sequential procedures. The make up of the costs of production for Procedure 1 is currently 50% direct labor, 45% direct materials, and 5% overhead. The makeup of the costs of production for Procedure 2 is currently 50% direct labor, 20% direct materials, and 30% overhead. Company management estimates that Procedure 1 costs twice as much as Procedure 2.

1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit at the current level of sales.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

2. The company’s actual direct materials cost is $390,600 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure.

Cost makeup of Procedure 1:

Direct Labor $
Direct Materials
Overhead
Total $

Cost makeup of Procedure 2:

Direct Labor $
Direct Materials
Overhead
Total $

3. The company is planning a CSR initiative to reuse some of the indirect materials used in production during Procedure 2. These indirect materials normally make up 60% of the overhead cost for Procedure 2, but the CSR initiative would reduce the usage of indirect materials. Determine what the maximum new cost of these indirect materials could be for Procedure 2 if this CSR initiative is expected to enable the company to meet its target gross profit percentage (holding all other costs constant).

Maximum new cost of P2 overhead materials:
$

In: Finance

QUESTION 3 A friend of yours owns a kitchen manufacturing business in Limerick City called Blurred...

QUESTION 3
A friend of yours owns a kitchen manufacturing business in Limerick City called Blurred Kitchens Limited. The business employs twenty-six people and these comprise fully qualified carpenters, trainee carpenters, sales staff, delivery staff and administration staff. Your friend has recently received a job proposal from a large developer in Donegal to manufacture and fit kitchens for 25 houses in a housing estate in Donegal Town. The work will take eight weeks to fully complete. He has made out the following financial details for you to study and has asked you to write a formal consultancy report for which you will be financially rewarded. Raw materials
The chief raw material that Blurred Kitchens Limited uses in all its kitchens is an Indonesian timber. This timber will cost GH₵4,600 per kitchen. There is already, in stock, enough timber to make and fit 5 kitchens. This stock of timber had originally cost GH₵3,280 per kitchen but has since increased in price. Supplementary materials will cost GH₵98 per kitchen. There is sufficie nt stock of supplementary materials to be able to complete this job.
Labour
Three extra workers will need to be employed if this job goes ahead. One additional qualified carpenter will be paid GH₵900 per week for 8 weeks. Two additional unqualified carpenters will be paid GH₵410 each, per week, for 8 weeks. A supervisor carpenter, currently employed full- time, will need to spend 4 weeks supervising this job. He is currently paid GH₵1,100 per week. An administrative staff member who would generate income of GH₵240 per kitchen for the business by selling add-on products such as microwaves, will now have to be employed for 6 weeks on this particular job, and will not be able to perform his usual sales duties for the duration of the job. This staff member is currently a full-time employee and is paid a salary of GH₵690 per week.
Overheads
Production overheads are expected to be GH₵3,800 for this particular job, 75% of these costs will be fixed. A cutting machine with a net book value of GH₵290,000 will be needed. Straight line depreciation of 20% is applied to this machine. A truck that is currently rented out to a customer at GH₵515 per weekwill need to be diverted from this use. This truck has a depreciation charge of GH₵1,500 per month in the accounts of Blurred Kitchens Limited. A general overhead of GH₵400 per week is charged through the accounts of Blurred Kitchens Limited and will apply whether this particular job goes ahead or not.
Accounts department
The accounts department employs two staff. These are both paid GH₵45,000 per annum. This cost is treated as a fixed cost. One of the staff will need to work overtime for the entire length of the job. This overtime is usually GH₵220 per staff member per week. Advertising
An advertising campaign carried out by Blurred Kitchens Limited at the beginning of the current financial year, which may have sparked this interest from Donegal, has already cost GH₵18,200. Only 50% of this has been paid so far and the remainder will not be paid until the end of the year. Kitchen design
In order to impress the Donegal customer, the design of these particular kitchens were made by a graphic design firm in Ennis earlier in the year. These designs were more expensive than the more usual in –house designs. The costs for these designs came to GH₵3,900 in total and they will not be used for any other job.
Accommodation
Due to travelling a long distance for this particular job accommodation will be necessary. It is estimated that 8 employees will need to spend 42 nights each in a local hotel at a cost of GH₵ 48 per night each.
Payme nt
The developer has agreed to pay 25% of the job proposal in advance and the remainder will be paid 6 months after completion.
Mark up on total costs
A mark up of 150% on full costs is required on all jobs.
Re quire d:
a) Prepare a detailed report for Blurred Kitchens Limited, clearly explaining the basis for inclusion and exclusion of each element of costs for this job. b) Calculate the total cost and required mark-up of the above job. c) Discuss factors, other than costs, that should also be considered before this job can be accepted.
d) Discuss how Blurred Kitchens Limited may reduce the risks involved in the job.

In: Accounting

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all...

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 13,000 units, 80% completed $151,840*
    *Direct materials (13,000 × $7.6) $98,800
    Conversion (13,000 × 80% × $5.1) 53,040
$151,840
Materials added during January from Weaving Department, 200,400 units $1,553,100
Direct labor for January 456,417
Factory overhead for January 557,843
Goods finished during January (includes goods in process, January 1), 202,800 units —
Work in process, January 31, 10,600 units, 25% completed —

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, January 1
Started and completed in January
Transferred to finished goods in January
Inventory in process, January 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
Direct Materials Conversion
Total costs for January in Cutting Department $ $
Total equivalent units
Cost per equivalent unit $ $
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, January 1 $
Costs incurred in January
Total costs accounted for by the Cutting Department $
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance $
To complete inventory in process, January 1 $
Cost of completed January 1 work in process $
Started and completed in January $
Transferred to finished goods in January $
Inventory in process, January 31
Total costs assigned by the Cutting Department $

b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

Increase or Decrease Amount
Change in direct materials cost per equivalent unit $
Change in conversion cost per equivalent unit $

In: Accounting

1.Suppose the income elasticity of demand of jewelry is 6 and assume that jewelry is a...

1.Suppose the income elasticity of demand of jewelry is 6 and assume that jewelry is a normal good, for a 5% increase in income, what will happen to the quantity demanded of jewelry?

A.

The quantity demanded of jewelry will decrease by 6%
B.

The quantity demanded of jewelry will decrease by 30%
C.

The quantity demanded of jewelry will increase by 30%
D.

The quantity demanded of jewelry will increase by 6%
E.

The quantity demanded of jewelry will increase by 5%

2.Which of the following is true?

A.

Inferior goods have positive income elasticity of demand
B.

If the cross price elasticity of demand is negative, these two goods are complements
C.

If the cross price elasticity of demand is positive, these two goods are complements.
D.

Necessities tend to be more income elastic than luxuries
E.

If the cross price elasticity of demand is negative, these two goods are substitutes.

3. At Mcdonald, as the price of grilled chicken salad increases from $4 to $6 while the quantity demanded of Big Mac rises from 700 to 900 a day. Which of the following is NOT true?

A.

The cross elasticity of demand is 5/8
B.

At Mcdonald, grilled chicken salad and Big Mac are substitutes.
C.

For every 10% increase in the price of grilled chicken salad, we should expect to see a 6.25% increase in the quantity demanded of Big Mac.
D.

We can tell from the above information that Big Mac is a normal good.
E.

none of the above

4. Which of the following is true?

A.

The law of diminishing marginal returns states that when successive equal amounts of a variable resource are combined with a fixed amount of another resource, marginal increase in output that can be attributed to each additional unit of the variable resource will eventually decline.
B.

The amount of fixed inputs does not change with the amount of output
C.

The slope of a production function curve is positive but the slope decreases with the amount of inputs
D.

According to the law of diminishing marginal returns, as more inputs are added, the total output increases at a decreasing rate.
E.

All of the above

5. Which of the following is NOT true?

A.

Total cost is the sum of fixed cost and total variable cost
B.

A cost function shows the relationship between total cost and the quantity of output
C.

A cost function is downward sloping because of the law of diminishing marginal returns
D.

Average total cost can be obtained by dividing total cost by the quantity of output
E.

Total cost is positively related to the quantity of output

In: Economics

Digital River Inc. provides cable TV and Internet service to the local community. The activities and...

Digital River Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Digital Light are identified as follows:

1

Activities

Activity Cost

2

Billing error correction

$30,000.00

3

Cable signal testing

86,400.00

4

Reinstalling service (installed incorrectly the first time)

29,000.00

5

Repairing satellite equipment

32,400.00

6

Repairing underground cable connections to the customer

19,000.00

7

Replacing old technology cable with higher quality cable

170,000.00

8

Replacing old technology signal switches with higher quality switches

123,000.00

9

Responding to customer home repair requests

24,600.00

10

Training employees

25,600.00

11

Total

$540,000.00
Amount Descriptions
Appraisal
External failure
Internal failure
Non-value-added
Prevention
Value-added

Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.

Quality Activities Activity Cost Quality Cost Classification VA/NVA
Billing error correction $ 30,000
Cable signal testing 86,400
Reinstalling service (installed incorrectly the first time) 29,000
Repairing satellite equipment 32,400
Repairing underground cable connections to the customer 19,000
Replacing old technology cable with higher quality cable 170,000
Replacing old technology signal switches with higher quality switches 123,000
Responding to customer home repair requests 24,600
Training employees 25,600
Total $540,000

B. Prepare a cost of quality report. Assume that sales are $1,900,000. Round percentages to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Digital River Inc.

Cost of Quality Report

1

Quality Cost Classification

Quality Cost

Percent of Total Quality Cost

Percent of Total Sales

2

3

4

5

6

Total

Prepare a value-added/non-value-added analysis. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Digital River Inc.

Value-Added/Non-Value-Added Activity Analysis

1

Category

Amount

Percent

2

3

4

Total

Interpret the information in (B) and (C).

What percentage of total costs of quality are considered to be value-added?  %

In: Accounting

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all...

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 15,000 units, 80% completed $171,600*
    *Direct materials (15,000 × $8) $120,000
    Conversion (15,000 × 80% × $4.3) 51,600
$171,600
Materials added during January from Weaving Department, 231,200 units $1,861,160
Direct labor for January 429,748
Factory overhead for January 525,248
Goods finished during January (includes goods in process, January 1), 233,800 units —
Work in process, January 31, 12,400 units, 45% completed —

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the The rate used to allocate costs between completed and partially completed production.cost per equivalent unit computations, round your answers to two decimal places.

Units charged to production:
Inventory in process, January 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, January 1
Started and completed in January
Transferred to finished goods in January
Inventory in process, January 31
Total units to be assigned cost
Cost Information
Cost per equivalent unit:
Direct Materials Conversion
Total costs for January in Cutting Department $ $
Total equivalent units
Cost per equivalent unit $ $
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, January 1 $
Costs incurred in January
Total costs accounted for by the Cutting Department $
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance $
To complete inventory in process, January 1 $ $
Cost of completed January 1 work in process $
Started and completed in January $
Transferred to finished goods in January $
Inventory in process, January 31
Total costs assigned by the Cutting Department

$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

Increase or Decrease Amount
Change in direct materials cost per equivalent unit Increase
  • Decrease
  • Increase
 $
Change in conversion cost per equivalent unit Decrease
  • Decrease
  • Increase
 $

In: Accounting

I WOULD HAVE SEPERATED THE QUESTIONS BUT UNFORTUNATELY ALL OF THESE QUESTIONS/PROBLEMS SEEMED TO BE RELATED...

I WOULD HAVE SEPERATED THE QUESTIONS BUT UNFORTUNATELY ALL OF THESE QUESTIONS/PROBLEMS SEEMED TO BE RELATED WITH EACH OTHER.

Problem 1

Ambulance Services of America (ASA) operates a fleet of ambulances that make scheduled pickups and deliveries for its customers (nursing homes, hospitals, etc.) in the Pennsylvania area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system:

Driver and first-aid worker wages

   $840,000

Vehicle operating expense

     270,000

Vehicle depreciation

     150,000

Customer representative salaries and expenses

     180,000

Office expenses

     40,000

Administrative expenses

     340,000

     Total cost

$1,820,000

The distribution of resource consumption across the activity cost pools is as follows:

Travel

Pickup and

Delivery

Customer

Service

Other

Total

Driver and first-aid worker wages

40%

45%

10%

5%

100%

Vehicle operating expense

75%

5%

0%

20%

100%

Vehicle depreciation

70%

10%

0%

20%

100%

Customer representative salaries and expenses

0%

0%

85%

15%

100%

Office expenses

0%

25%

35%

40%

100%

Administrative expenses

0%

5%

55%

40%

100%

Required:

Complete the first-stage allocations of cost to activity cost pools as illustrated in Exhibit 6-6. (Hint: Complete the following table):

Travel

Pickup & Delivery

Customer Service

Other

Total

Driver and first-aid worker wages

Vehicle operating expense

Vehicle depreciation

Customer representative salaries & expenses

Office expenses

Administrative expenses

    Total cost

Problem 2

Ophthalmic Instruments and Supplies Corporation has supplied the following data for use in its activity-based costing system:

Overhead Costs

Wages and salaries

$350,000

Other overhead costs

200,000

Total overhead costs

$550,000

Activity Cost Pool

Activity Measure

Total Activity

Direct labor support

Number of direct labor-hours

10,000 DLHS

Order processing

Number of orders

500 orders

Customer support

Number of customers

100 customers

Other

This is an organizational-sustaining activity

Not applicable

Distribution of Resource Consumption

Across Activities

Direct Labor Support

Order Processing

Costumer Support

Other

Total

Wages and salaries

30%

35%

25%

10%

100%

Other overhead costs

25%

15%

20%

40%

100%

During the year, Ophthalmic Instruments and Supplies Corporation completed an order for a special optical medical instrument for a new customer, Valley Grande Hospital. This customer did not order any other products during the year. Data concerning the order follow:

Data Concerning the Valley Grande Hospital Order

Selling price

$295 per unit

Units ordered

100 units

Direct materials

$264 per unit

Direct labor-hours

0.5 DLH per unit

Direct labor rate

$25 per DLH

Required:

1. Using Exhibit 6-6 as a guide, prepare a report showing the first-stage allocations of overhead cost to the activity pools. (Hint: Complete the following table):

Direct Labor Support

Order Processing

Costumer Support

Other

Total

Wages and salaries

Other overhead costs

Total cost

2. Using Exhibit 6-7 as a guide, compute the activity rates for the activity cost pools. (Hint: Complete the following table):

Activity Cost Pool

Total Cost

Total Activity

Activity Rate

Direct labor support

10,000 DLHS

Order processing

500 orders

Customer support

100 customers

3. Using Exhibit 6-10 as a guide, prepare a report showing the overhead costs for the order from Valley Grande Hospital, including customer support costs. (Hint: Complete the following table):

Activity Cost Pool

(a)

Activity Rate

(b)

Activity

(a) x (b)

ABC Cost

Direct labor support

50 DLHS*

Order processing

1 order

Customer support

1 customer

Total

////////////////////

////////////////////

$

*0.5 DLH per unit x 100 units= 50 DLHs

4. Using Exhibit 6-12 as a guide, prepare a report showing the customer margin for Valley Grande Hospital. (Hint: Complete the following table):

Sales (                                                                          )

$

Costs:

   Direct materials (                                                     )

   Direct labor (                                                            )

   Direct labor support overhead

   Order processing overhead

   Customer support overhead

   TOTAL COSTS

$

Customer margin

$

In: Accounting

Name 1) On December 31, 3017, Harrison Company had the following balance sheet: Harrison Company Balance...

Name

1) On December 31, 3017, Harrison Company had the following balance sheet:

Harrison Company

Balance Sheet

At December 31, 2017
Cash $4,800 Accounts Payable $3,000

Accounts Receivable

 $3,900

Inventory - Note 1

 $1,800

Equipment - Note 2

 25000

Common Stock Par Value $1,

 $8,000

Accumulated Depreciation

 -5000

Authorized 100,000 shares,
$20,000

outstanding 8,000 shares

Additional Paid in Equity

 $2,000
Total Pd in Equity $10,000
Retained Earning $17,500
Total Assets $30,500

Total Liabilities &

Stockholders Equity

 $30,500

Notes to the Financial Statement:

Note 1: Inventory - Harrison Company uses the FIFO method of inventory. The inventory

of $1,800 consisted of 3,000 units at a cost of $.60 per unit.

Note 2: As noted above, total Common Stock, $1.00 par authorized in the Corporate Charter are 100,000 shares.

As of 12/31/17 8,000 shares are outstanding

During the first six months of 2018, Harrison Company had the following transactions:
1)

On January 5, purchased 4,000 units of inventory at a cost of $.72 per unit on account.
2)

On February 8, sold 4,400 units of inventory at $.90 per unit on account.
3)

On April 12, purchased 2,200 units of inventory at a cost of $.75 per unit on account.
4)

On June 14, sold 2,000 units of inventory at $.95 per unit

REQUIREMENTS:
1)

Determine the total sales for Harrison Company for the period ending June 30, 2018
in both units and dollars.
SALES: Total Total
Units $
2)

Complete the following inventory schedule to determine goods available for sale,
both in units & dollars
Date Units Unit Cost Extension $
Beginning Inventory $0.60
Purchases

GOODS AVAILABLE FOR SALE

 -
3)

Determine the Cost of Goods Sold Schedule based on the FIFO method of inventory,

to the nearest $ is acceptable.
FIFO
Units Unit Cost Extension $
opening Balance

Cost of Goods Sold
4)

Determine the Gross Profit
GROSS PROFIT

In: Accounting