A company, Megah Setia, has the following cost structure:

1. Is it a long run cost structure? Explain your answer briefly.
2. Complete the appropriate numbers in the column of “Average fixed cost”.
3. Complete the appropriate numbers in the column of “Average total cost”.
4. Complete the appropriate numbers in the column of “marginal cost”.

Wildhorse Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO-cost-or-market at December 31, 2019, 2020 and 2021. This information is presented below.

Prepare the journal entries assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Oranges cost $1/kg and apples also cost $1/kg. Niki has $12 to spend on apples or oranges. He chooses to buy 5 kg of apples.

1. Draw (on a diagram measuring quantity of oranges on the horizontal axis) Niki’s budget line and show the optimal consumption point. Do not forget to draw the relevant indifference curve(s).

2. The government subsidizes consumption of apples so that apples now cost $0.5/kg). How does Niki’s budget line change? Show graphically (on the same diagram you used to answer question 3!) his optimal choice. Can you say whether he will buy more or less apples? Would Niki be better off, or worse off than in question 3?

In addition to the subsidy from question 4, the government has decided to introduce a head tax that would just allow him to continue purchasing the basket from question 3. How large should this tax rebate be? Show (on the same diagram you drew for question 3!) the new budget line and the new optimal basket. Can you say whether he will buy more or less apples? Would Niki be better off, or worse off than in question 3?

Exercise 3-3 (Algo) Schedules of Cost of Goods Manufactured and Cost of Goods Sold [LO3-3]

Primare Corporation has provided the following data concerning last month’s manufacturing operations.

Required:

1. Prepare a schedule of cost of goods manufactured for the month.

2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

1. Do we focus on after-tax cost of debt or before-tax cost of debt? Do we focus on new costs of debt or historical costs of debt? Why?

2. How to adjust component cost of debt, preferred stock, common stock for flotation costs?

3. When we calculate WACC, do we consider such current liabilities as accounts payable, accruals, and deferred taxes as sources of funding? Why?

P16-2 Cost of giving up early payment discounts  Determine the cost of giving up the discount under each of the following terms of sale. (Note: Assume a 365-day year.)

1. 2/10 net 30.

2. 1/10 net 30.

3. 1/10 net 45.

4. 3/10 net 90.

5. 1/10 net 60.

6. 3/10 net 30.

7. 4/10 net 180.

Which assumed inventory cost flow method:

1. usually parallels the actual physical flow of merchandise?
2. divides cost of goods available for sale by total units available for sale to determine a unit cost?
3. assumes that the latest units purchased are the first to be sold?

Fine Oak Furniture manufactures high-quality wooden desks and uses a standard cost system. A standard cost card for one model of desk, the “heritage”, developed for 2019, is shown below:

The company expected to produce and sell 300 units of the Heritage in March 2019.

Actual results for March 2019 are as follows:

• 310 units of the Heritage were produced.
• A total of 20,600 BF of wood was purchased and used at a cost of $9,990.
• Actual direct labour costs were $6,918 for 393 direct labour hours worked.
• Actual variable overhead incurred was $1,701 and actual fixed overhead incurred was $2,197.

Required:

Calculate the following variances and provide only numeric values without any formatting to the boxes given below. Be sure to indicate whether the variances are favourable or unfavourable as instructed. Round to the 4th decimal places for interim numbers, and round to the 2nd decimal places for final results.