Exercise 5S-3 Assigning Costs to Units-FIFO Method [LO5S-8]

Data concerning a recent period’s activity in the Assembly Department, the first processing department in a company that uses the FIFO method in its process costing, appear below:

A total of 26,000 units were completed and transferred to the next processing department during the period. Beginning work in process inventory consisted of 2,000 units and ending work in process inventory consisted of 1,000 units.

Required:

1. Compute the Assembly Department's cost of ending work in process inventory for materials, conversion, and in total for the period.

2. Compute the Assembly Department's cost of units transferred out to the next department for materials, conversion, and in total for the period.

Part 2

Schroeder Baking Corporation uses a process costing system in its large-scale baking operations. The Mixing Department is one of the company’s processing departments. In the Mixing Department in July, the cost of beginning work in process inventory was $1,460, the cost of ending work in process inventory was $3,120, and the cost added to production was $36,540.

Required:

Prepare a cost reconciliation report for the Mixing Department for July.

Assuming Titan had 70 customers in 2015 and 80 customers in 2016,

1. calculate the operating income of Titan for 2015 and 2016;

Particulars                                                                   2015                                         2016

Revenue; 800*450;900*430                                   360,000                                 387,000

Direct Material Cost 3200*35;3300*35                112,000                                 115,500

Conversion Cost                                                      1,800,000                               1,650,000

Selling and Customer Service cost                         495,000                                   495,000

Total Cost                                                              2,407,000                                     2,260,500

Profit/Loss                                                            (2,047,000)                                 (1,873,500)

Suppose that during 2016, the overall market for AllPads grew 3%. The decrease in the selling price of the AllPad and increase in market share (that is, sales increases greater than 3%) are the result of Titan’s strategic actions.

1. Calculate how much of the change in operating income from 2015 to 2016 is due to the industry market size factor, product differentiation, and cost leadership. How does this relate to Titan’s strategy and its success in implementation? Explain.

Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 10,000 flat panel televisions, of which 9,400 were sold. Operating data for the month are summarized as follows:

Required:

1. Prepare an income statement based on the absorption costing concept.

2. Prepare an income statement based on the variable costing concept.

1.Sparacino Corporation has provided the following information:

If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

2. Glew Corporation has provided the following information:

If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

3.Fasheh Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:

If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 10,900 flat panel televisions, of which 10,100 were sold. Operating data for the month are summarized as follows:

Required:

1. Prepare an income statement based on the absorption costing concept.

2. Prepare an income statement based on the variable costing concept.

Broadway Company produces and sells two models of calculators. The following monthly data are provided:

Total monthly fixed costs are expected to be $15,000. What is the break-even point in sales dollars at the expected sales mix? (Do not round your intermediate calculations.)

$19,231

$43,478

$68,182

$64,286

When drawing a cost-volume-profit graph, how are the axes labeled?

The horizontal axis would be labeled with dollars (of cost or revenue), while the vertical axis would be labeled with number of units (volume or activity).

The horizontal axis would be labeled with dollars (of total fixed costs), while the vertical axis would be labeled with dollars (of total variable costs).

The horizontal axis would be labeled with number of units (volume or activity), while the vertical axis would be labeled with dollars (of cost or revenue).

None of these answers is correct.

When performing sensitivity analysis, which of the following is an example of a variable that management may consider changing to answer "what if" questions?

Variable cost per unit

Sales price per unit

Fixed cost per unit

Both Variable cost per unit and Sales price per unit are correct.

Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 9,700 flat panel televisions, of which 9,000 were sold. Operating data for the month are summarized as follows:

Required:

1. Prepare an income statement based on the absorption costing concept.​ ​

Sales _______

Cost of goods sold:

Cost of goods manufactured ____________

Inventory, July 31 _____________

Total cost of goods sold ____________

Gross profit______________

Selling and administravice expenses __________

Income from operations _______________

2. Prepare an income statement based on the variable costing concept.

Sales ___________-

Variable cost of goods sold:

Variable cost of goods manufactured ___________

Inventory, July 31___________

Total variable cost of goods sold ____________

Manufacturing margin _____________

Variable selling and administrative expenses ________________

Contribution margin _____________

Fixed costs:

Fixed manufacturing costs _____________

Fixed selling and administrative expenses ____________

Total fixed costs _________________

Income from operations ______________

Bob​ Carlton's golf camp estimates the following workforce requirements for its services over the next two​ years: Quarter 1 2 3 4 5 6 7 8 Demand​ (hrs) 4,200 6,400 3,100 5,000 4,400 6,240 3,800 5,000

Each certified instructor puts in 480 hours per quarter regular time and can work an additional 120 hours overtime.​ Regular-time wages and benefits cost Carlton $7,200 per employee per quarter for regular time worked up to 480 hours, with an overtime cost of $20 per hour.

Unused regular time for certified instructors is paid at $15 per hour

. There is no cost for unused overtime capacity. The cost of​ hiring, training, and certifying a new employee is $10,000. Layoff costs are $4,000 per employee.

Currently 8 employees work in this capacity.

(a) Find a workforce plan using the level strategy that allows for no delay in service. It should rely only on overtime and the minimum amount of undertime necessary. What is the total cost of the​ plan? 701000

(b) Use a chase strategy that varies the workforce level with minimal undertime and without using overtime. What is the total cost of this plan? 809600

(c) Propose a low-cost, mixed strategy and calculate its total cost. (Any strategy that improves on both the chase and level strategies is acceptable; no need to find the optimal schedule.)

Wu Company incurred $44,200 of fixed cost and $54,600 of variable cost when 2,100 units of product were made and sold.

If the company's volume increases to 2,600 units (within relevant range), the total cost per unit will be:

$17.00.

$21.00.

$43.00.

$38.00.

1. Periodic Inventory by Three Methods

   Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:

   			Purchases Invoices
   Model	Inventory, January 1		1st		2nd		3rd		Inventory Count, December 31
   A10	__		4 at	$ 40	4 at	$ 43	4 at	$ 46	5
   B15	8 at	$ 82	4 at	73	3 at	79	6 at	86	7
   E60	3 at	68	3 at	58	15 at	61	9 at	63	5
   G83	7 at	247	6 at	255	5 at	265	10 at	264	9
   J34	12 at	84	10 at	86	16 at	93	16 at	94	13
   M90	2 at	117	2 at	119	3 at	137	3 at	139	5
   Q70	5 at	155	4 at	165	4 at	170	7 at	175	8

   Required:

   1. Determine the cost of the inventory on December 31 by the The method of inventory based on the assumption that the cost of goods sold should be charged against revenue in the order in which costs were incurred.first-in, first-out method.

   If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.

   Dymac Appliances Cost of the Inventory-FIFO Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   A10
   B15
   B15
   E60
   G83
   J34
   M90
   M90
   Q70
   Q70
   Total				$

   2. Determine the cost of the inventory on December 31 by the A method of inventory costing based on the assumption that the most recent inventory costs should be charged against revenue.last-in, first-out method.

   If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the OLDEST units first.

   Dymac Appliances Cost of the Inventory-LIFO Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   A10
   B15
   E60
   E60
   G83
   G83
   J34
   J34
   M90
   M90
   M90
   Q70
   Q70
   Total				$

   3. Determine the cost of the inventory on December 31 by the A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs.weighted average cost method.

   Dymac Appliances Cost of the Inventory-Weighted Average Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   B15
   E60
   G83
   J34
   M90
   Q70
   Total				$

   4a. Which inventory method would be preferred for income tax purposes in periods of rising prices?

     

   • FIFO method
   • LIFO method
   • Specific identification method
   • Weighted average method

   4b. Which inventory method would be preferred for income tax purposes in periods of declining prices?

     

   • FIFO method
   • LIFO method
   • Specific identification method
   • Weighted average method