Newcomb Manufacturing Company was started on January 1, Year 1, when it acquired $5,000 cash from the issue of common stock. During the first year of operation, $1,600 of direct raw materials was purchased with cash, and $1,200 of the materials was used to make products. Direct labor costs of $2,000 were paid in cash. Newcomb applied $1,280 of overhead cost to the Work in Process account. Cash payments of $1,280 were made for actual overhead costs. The company completed products that cost $3,200 and sold goods that had cost $2,400 for $4,000 cash. Selling and administrative expenses of $960 were paid in cash.

Required

1. Prepare T-accounts and record the events affecting Newcomb Manufacturing. Include closing entries.

2. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.

Exercise 5-3A Allocating product cost between cost of goods sold and ending inventory: multiple purchases LO 5-1

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 120 units at $55 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 142-unit purchase at $62 per unit; the second was a 220-unit purchase at $66 per unit. During the period, it sold 286 chairs.

Required
Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses

a. FIFO:

b. LIFO:
  

c. Weighted average: (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

a. FIFO:
  

1)Find

Marginal Utility for x and determine if it is diminishing

Marginal utility for y and determine if its diminishing

Marginal rate of Substitution of x for y (MRS_xy) and determine if its diminishing

U (x, y) = 2x^2/3y^1/3

U (x, y) = x³ + 4y^1/4

2. Continental Long Distance Telephone service offer am optional package for in-stare calling whereby each month the subscriber gets the first 50 minutes of in-state calls free, the next 100 min at $0.25/min, and each additional time at the normal rate of $0.50/min. Draw the budget constraint for in-state phone calls and the composite good for a subscriber with an income of $400/month.

Composite goods imply all other goods: Assume it costs $1 and its on the horizontal axis.

Newcomb Manufacturing Company was started on January 1, 2018, when it acquired $5,000 cash from the issue of common stock. During the first year of operation, $1,600 of direct raw materials was purchased with cash, and $1,200 of the materials was used to make products. Direct labor costs of $2,000 were paid in cash. Newcomb applied $1,280 of overhead cost to the Work in Process account. Cash payments of $1,280 were made for actual overhead costs. The company completed products that cost $3,200 and sold goods that had cost $2,400 for $4,000 cash. Selling and administrative expenses of $960 were paid in cash.

Prepare T-accounts and record the events affecting Newcomb Manufacturing. Include closing entries.

Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.

Calculate the inventory conversion cycle for Company A. (hint: First find the dollar amount of inventories. Consider the inventory turnover ratio)

If x 1 and x 2 are the number of items of two goods bought, a customer’s utility is U ( x 1 , x 2 ) = 2 x 1 x 2 + 3 x 1 . The unit cost is $ 1 for the first good and $ 3 for the second. Use Lagrange multipliers to find the maximum value of U if the consumer’s disposable income is $ 100 . Estimate the change in optimal utility if the consumer's disposable income increases by $ 8 .

FairWay Golf Carts manufacturers and sells a golf carts. The carts usually sell for $8,300 per unit. The company normally sells units as quickly as manufactured and does not maintain a finished goods inventory. However, during the most recent year, the company produced 21,300 units, but only sold 19,711. A foreign customer has requested to buy the other 1,589 units for delivery on December 31 of the year current year. The offered price is $6,325 per unit for all 1,589 units. Below are absorption-costing based calculations of ending inventory and net income, based on the 19,711 units already sold. Variable cost per item is $5,250. Fixed costs for manufacturing are $41 million. SG&A variable cost is $200 and fixed cost for SG&A is $10 million.

Prepare a revised absorption-costing based income statement, assuming acceptance of the 1,589 unit order. Also prepare variable-costing income statements (with and without the order). Compare the results and evaluate whether the order should be accepted.

Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis. Chapter 5 Activity-Based Costing and Management 225hiL6956X_ch05_168-229.indd 225 06/17/16 08:10 PMRequired: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000. Refer to the information given in the preceding problem for Fresno Fiber Optics and two of its custom-ers, Trace Telecom and Caltex Computer. Additional information for six of Fresno’s other customers for the most recent year follows:■ Problem 5–66Customer-Profitability Profile; Continuation of Preceding Problem (LO 5-9)Tele-Install, operating profit: $(18,000)Customer-Related ActivitiesCost Driver BaseCost Driver RateSales activity .................................................Sales visits .................................................$1,000Order taking .................................................Purchase orders ........................................200Special handling ...........................................Units handled ............................................50Special shipping ...........................................Shipments ..................................................500Cost-driver data for two of Fresno’s customers for the most recent year areCustomer-Related ActivitiesTrace TelecomCaltex ComputerSales activity ..................................................    8 visits ......................................................  6 visitsOrder taking ..................................................   15 orders ....................................................  20 ordersSpecial handling ............................................800 units handled ........................................600 units handledSpecial shipping ............................................ 18 shipments .............................................   20 shipmentsThe following additional information has been compiled for Fresno Fiber Optics for two of its cus-tomers, Trace Telecom and Caltex Computer, for the most recent year:Trace TelecomCaltex ComputerSales revenue ...............................................$190,000 ...............................................$123,800Cost of goods sold .......................................   80,000 ...............................................62,000General selling costs ....................................   24,000 ...............................................18,000General administrative costs .......................   19,000 ...............................................16,000

Required: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000.

Construct the amortization schedule for a $15000 debt that is to be amortized in 10 quarterly payments at 3% interest per quarter on the unpaid balance.

Vaughn Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company’s sales manager, prepared the following sales forecast for 2018. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.