Select the term from the list provided that best describes each of the following descriptions or definitions.
| Your Answer | Description or Definition | Term |
| A. The sales volume that equates total revenue with total costs | 1. Break-even point | |
| B. A strategy that sets the selling price at an amount sufficient to recover a specified amount or percentage of profit based on the product's cost | 2. Contribution margin per unit | |
| C. (Total sales - Total variable costs) divided by Number of units sold | 3. Contribution margin ratio | |
| D. Spreadsheet technique that analyzes "What if" questions to assess the impact on profits of simultaneous change in costs and volumes | 4. Cost-plus pricing | |
| E. A strategy that sets the selling price based on competitive forces and then determines what cost structure will allow the firm to earn its desired profit | 5. Cost-volume-profit analysis | |
| F. The examination of the interrelationships between selling prices, volumes, and variable and fixed costs | 6. Equation technique | |
| G. (Selling price ? Variable costs)/Selling price | 7. Margin of safety | |
| H. A strategy that sets selling price based on the assumption that people will pay more for a product because of its brand name or media attention | 8. Prestige pricing | |
| I. (Budgeted sales ? Break-even sales) divided by Budgeted sales | 9. Sensitivity analysis | |
| J. Break-even point = (Unit selling price × number of units sold) = Total fixed costs + (Unit variable cost × Number of units sold) | 10. Target pricing |
In: Accounting
Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 100 liters of its biggest selling product is as follows. Input Quantity Cost Total Chemical (in liters) (per liter) Cost Chem-A 22 $ 13 $ 286 Chem-B 62 14 868 Chem-C 41 20 820 125 $ 1,974 There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 12-liter containers for sale. Thus, the standard material cost for a 12-liter container is $236.88 [= ($1,974 ÷ 100 liters) × 12 liters per container]. The actual quantities of direct materials and the cost of the materials placed in production during September were as follows (materials are purchased and used at the same time). Input Chemical Quantity (in liters) Total Cost Chem-A 18,560 $ 239,248 Chem-B 49,400 687,320 Chem-C 36,040 958,220 104,000 $ 1,884,788 A total of 8,200 containers (98,400 liters) were produced during September.
Required: Calculate the total direct material variance for the liquid product for the month of September and then further analyze the total variance into: a. & b. Materials price and efficiency variances and materials mix and yield variances.
(Do not round intermediate calculations. Round “Standard mix values” to 3 decimal places. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.)
In: Accounting
|
GIOJ is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: |
|
Level of Activity |
|||||
| Low | High | ||||
| Direct labor-hours | 48,300 | 64,400 | |||
| Total factory overhead costs | $ | 269,360 | $ | 304,780 | |
|
The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 48,300-hour level of activity as follows: |
| Indirect materials (variable) | $ | 86,940 |
| Rent (fixed) | 134,000 | |
| Maintenance (mixed) | 48,420 | |
| Total factory overhead costs | $ | 269,360 |
|
To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. |
| Required: |
| 1. |
Estimate how much of the $304,780 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $304,780 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) |
| 2. |
Using the high-low method, estimate a cost formula for maintenance. (Do not round intermediate calculations.) |
| 3. |
What total factory overhead costs would you expect the company to incur at an operating level of 53,130 direct labor-hours? (Do not round intermediate calculations.) |
In: Accounting
|
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: |
|
Level of Activity |
|||||
| Low | High | ||||
| Direct labor-hours | 74,700 | 99,600 | |||
| Total factory overhead costs | $ | 303,860 | $ | 348,680 | |
|
The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 74,700-hour level of activity as follows: |
| Indirect materials (variable) | $ | 112,050 |
| Rent (fixed) | 139,000 | |
| Maintenance (mixed) | 52,810 | |
| Total factory overhead costs | $ | 303,860 |
|
To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. |
| Required: |
| 1. |
Estimate how much of the $348,680 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $348,680 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) |
| 2. |
Using the high-low method, estimate a cost formula for maintenance. (Do not round intermediate calculations.) |
| 3. |
What total factory overhead costs would you expect the company to incur at an operating level of 82,170 direct labor-hours? (Do not round intermediate calculations.) |
In: Accounting
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments--Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
| Molding | Fabrication | Total | |||||||
| Estimated total machine-hours used | 2,500 | 1,500 | 4,000 | ||||||
| Estimated total fixed manufacturing overhead | $ | 10,250 | $ | 15,150 | $ | 25,400 | |||
| Estimated variable manufacturing overhead per machine-hour | $ | 1.50 | $ | 2.30 | |||||
| Job P | Job Q | |||||
| Direct materials | $ | 14,000 | $ | 8,500 | ||
| Direct labor cost | $ | 21,800 | $ | 7,900 | ||
| Actual machine-hours used: | ||||||
| Molding | 1,800 | 900 | ||||
| Fabrication | 700 | 1,000 | ||||
| Total | 2,500 | 1,900 | ||||
Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.
Required:
12. If Job P included 20 units, what was its unit product cost?
2. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q?
3.What was Sweeten Company’s cost of goods sold for March?
In: Accounting
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the
Gas Cooker and the Charcoal Smoker. The Cooker is a premium product
sold in upscale outdoor shops; the Smoker is sold in major discount
stores. Following is information pertaining to the manufacturing
costs for the current month.
| Gas Cooker | Charcoal Smoker | |
|---|---|---|
| Units | 1,000 | 4,000 |
| Number of batches | 60 | 10 |
| Number of batch moves | 80 | 20 |
| Direct materials | $20,000 | $100,000 |
| Direct labor | $20,000 | $27,000 |
Manufacturing overhead follows:
| Activity | Cost | Cost Driver |
|---|---|---|
| Materials acquisition and inspection | $288,000 | Amount of direct materials cost |
| Materials movement | 16,900 | Number of batch moves |
| Scheduling | 42,000 | Number of batches |
| $346,900 |
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
HINT: Use 7.3809 for overhead rate calculations.
| Total cost_____________ | ||
| Gas Cooker | $____________Answer | per unit |
| Charcoal Smoker | $____________Answer | per unit |
(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
| Total cost | $_________ | |
| Gas Cooker | $_________ | per unit |
| Charcoal Smoker | $_________ | per unit |
In: Accounting
The Fields Company has two manufacturing departments, forming
and painting. The company uses the weighted-average method of
process costing. At the beginning of the month, the forming
department has 30,000 units in inventory, 80% complete as to
materials and 20% complete as to conversion costs. The beginning
inventory cost of $69,100 consisted of $50,200 of direct materials
costs and $18,900 of conversion costs.
During the month, the forming department started 390,000 units. At
the end of the month, the forming department had 40,000 units in
ending inventory, 80% complete as to materials and 30% complete as
to conversion. Units completed in the forming department are
transferred to the painting department.
| Beginning work in process inventory | $ | 69,100 |
| Direct materials added during the month | 1,507,160 | |
| Conversion added during the month | 1,031,660 | |
1- Calculate the equivalent units of production for the forming
department.
| direct material | |
| conversion |
2.
Calculate the costs per equivalent unit of production for the
forming department.
| direct material | |
| conversion |
3.
Using the weighted-average method, assign costs to the forming
department’s output—specifically, its units transferred to painting
and its ending work in process inventory.
| cost of units transferred out | EUP | cost per EUP | total costs | |
| direct material | ||||
| conversion | ||||
| total costs transferred out | ||||
| cost of ending work in process | EUP | cost per EUP | Total costs | |
| Direct materials | $0.00 | $0.00 | ||
| Conversion | $0.00 | $0.00 | ||
| Total costs of ending work in process | ||||
| Total costs assigned |
In: Accounting
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:
| Direct labor-hours required to support estimated production | 150,000 | |
| Machine-hours required to support estimated production | 75,000 | |
| Fixed manufacturing overhead cost | $ | 420,000 |
| Variable manufacturing overhead cost per direct labor-hour | $ | 4.60 |
| Variable manufacturing overhead cost per machine-hour | $ | 9.20 |
During the year, Job 550 was started and completed. The following information is available with respect to this job:
| Direct materials | $ | 195 |
| Direct labor cost | $ | 288 |
| Direct labor-hours | 15 | |
| Machine-hours | 5 | |
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)
In: Accounting
1.
Manufacturing Income Statement, Statement of Cost of Goods Manufactured
Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.
| On Company |
Off Company |
|||
| Materials inventory, December 1 | $61,580 | $80,670 | ||
| Materials inventory, December 31 | (a) | 91,160 | ||
| Materials purchased | 156,410 | (a) | ||
| Cost of direct materials used in production | 165,030 | (b) | ||
| Direct labor | 232,160 | 181,510 | ||
| Factory overhead | 72,050 | 90,350 | ||
| Total manufacturing costs incurred in December | (b) | 521,930 | ||
| Total manufacturing costs | 587,470 | 716,340 | ||
| Work in process inventory, December 1 | 118,230 | 194,410 | ||
| Work in process inventory, December 31 | 99,760 | (c) | ||
| Cost of goods manufactured | (c) | 517,090 | ||
| Finished goods inventory, December 1 | 104,070 | 90,350 | ||
| Finished goods inventory, December 31 | 109,000 | (d) | ||
| Sales | 907,690 | 806,700 | ||
| Cost of goods sold | (d) | 521,930 | ||
| Gross profit | (e) | (e) | ||
| Operating expenses | 118,230 | (f) | ||
| Net income | (f) | 179,090 | ||
Required:
1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.
| Letter | On Company | Off Company |
| a. | $ | $ |
| b. | $ | $ |
| c. | $ | $ |
| d. | $ | $ |
| e. | $ | $ |
| f. | $ | $ |
2. Prepare On Company's statement of cost of goods manufactured for December.
| On Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Month Ended December 31 | |||
| $ | |||
| Direct materials: | |||
| $ | |||
| $ | |||
| $ | |||
| Total manufacturing costs incurred during December | |||
| Total manufacturing costs | $ | ||
| $ | |||
3. Prepare On Company's income statement for December.
| On Company | ||
| Income Statement | ||
| For the Month Ended December 31 | ||
| $ | ||
| Cost of goods sold: | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
In: Accounting
Manufacturing Income Statement, Statement of Cost of Goods Manufactured
Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.
| On Company |
Off Company |
|||
| Materials inventory, December 1 | $74,990 | $100,490 | ||
| Materials inventory, December 31 | (a) | 113,550 | ||
| Materials purchased | 190,470 | (a) | ||
| Cost of direct materials used in production | 200,970 | (b) | ||
| Direct labor | 282,710 | 226,100 | ||
| Factory overhead | 87,740 | 112,550 | ||
| Total manufacturing costs incurred in December | (b) | 650,170 | ||
| Total manufacturing costs | 715,400 | 892,350 | ||
| Work in process inventory, December 1 | 143,980 | 242,180 | ||
| Work in process inventory, December 31 | 121,480 | (c) | ||
| Cost of goods manufactured | (c) | 644,140 | ||
| Finished goods inventory, December 1 | 126,730 | 112,550 | ||
| Finished goods inventory, December 31 | 132,730 | (d) | ||
| Sales | 1,105,350 | 1,004,900 | ||
| Cost of goods sold | (d) | 650,170 | ||
| Gross profit | (e) | (e) | ||
| Operating expenses | 143,980 | (f) | ||
| Net income | (f) | 223,090 | ||
Required:
1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.
| Letter | On Company | Off Company |
| a. | $ | $ |
| b. | $ | $ |
| c. | $ | $ |
| d. | $ | $ |
| e. | $ | $ |
| f. | $ | $ |
2. Prepare On Company's statement of cost of goods manufactured for December.
| On Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Month Ended December 31 | |||
| $ | |||
| Direct materials: | |||
| $ | |||
| $ | |||
| $ | |||
| Total manufacturing costs incurred during December | |||
| Total manufacturing costs | $ | ||
| $ | |||
3. Prepare On Company's income statement for December.
| On Company | ||
| Income Statement | ||
| For the Month Ended December 31 | ||
| $ | ||
| Cost of goods sold: | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
In: Accounting