The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.

a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.

b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?

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The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

Direct materials and conversion equivalent units of production for August.

Direct materials and conversion costs per equivalent unit for August.

Cost of goods finished during August.

Cost of work in process at August 31.

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

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

Improving Decision Making: Making the Rent vs. Buy Decision for Data Storage for ABC Digital

Software skills: Spreadsheet formulas, and charts
Business skills: Technology rent vs. buy decision, TCO analysis

This project provides an opportunity for you help a real-world company make a decision about whether to rent or buy new technology for data storage. You’ll use spreadsheetsoftware to compare the total 4-year cost of ownership for two options.

Deciding whether to store data on the cloud or on-site is often the dilemma for most business owners. There are advantages and disadvantages to both options. However, in this project you are only focusing on the cost benefits of each option regardless of other aspects including the access time, privacy and scalability issues which are also critically important in making this decision.

Scenario

ABC Digital is looking for a solution for storing their data. They have approximately 100 Terabytes of data that they need to store. The followings are typical cost information associated to option 1, that is to store data on the premises:

The cost items associated to cloud-based storage (Option 2) is given below.

Note that with cloud solution, the backup and redundancies are provided by the cloud provider and the service is included in the cost.

Tasks

1. Use your spreadsheet application to calculate the cost of each option for year 1 to year 4. To get the full mark, you should use Excel formula when it is appropriate. In other words, I should be able to change the above parameters (listed in the tables) and the total cost values should be changed automatically. (30 points)

2. Use an appropriate chart type to present and compare the cost of both solutions in one graph for year 1 to year 4. (15 points)

3. Determine which cost items are considered as capital expenditure (Capex) and which ones are operational expenditures (Opex) for each solution. (15 points)

4. Calculate the total cost of ownerships for a 4-year period for each of the two solutions and suggest the best solution for the ABC Digital. (20 points)

5. One of the main advantages of spreadsheets is that you can easily change the parameters of the model and evaluate “What if...” types of scenarios. Your manager wants to see the sensitivity of the total cost for solution 1 in relation to the year-to-year increase in the “Facilities and Power Charges”. More specifically, your current solution shows the total cost when considering 8% year-to-year increase of the cost of “Facilities and Power Charges” as shown in the Table. However, she wants to see how your estimates changes with this quantity. You should evaluate the total costs over 4 years when evaluating 4%,6%,8% (your current solution), 10%,12% and 14% increase in the year-to-year cost of “Facilities and Power Charges”. The first year cost is still the same, i.e. $20,000 for all scenarios. You should create a new sheet for this. This sheet should show the total cost of solution 1 when changing the year-to-year changes in the Facilities and Power Charges as suggested above. (20 points)

1. Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

   	Department 1	Department 2	Total
   Prime cost	$375,000	$700,000	$1,075,000
   Overhead cost	$420,000	$240,000	$660,000
   Direct labor hours	16,000	50,000	66,000
   Machine hours	100,000	20,000	120,000

   During the year, Company reported the following actual results.

   	Department 1	Department 2	Total
   Prime cost	$475,000	$850,000	$1,325,000
   Overhead cost	$450,000	$300,000	$750,000
   Direct labor hours	20,000	60,000	80,000
   Machine hours	125,000	25,000	150,000

   Calculate the predetermined overhead rate Company uses to apply overhead in Department 1.

   		$4.20 per machine hour
   		$3.60 per machine hour
   		$26.25 per direct labor hour
   		$6.60 per machine hour

QUESTION 6

THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 – 9.

Company produces a product that passes through two departments: Department 1 and Department 2. Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

During the year, Company reported the following actual results.

Calculate the overhead applied to production in Department 1 for the year.

QUESTION 7

1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 – 9.

   Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

   	Department 1	Department 2	Total
   Prime cost	$375,000	$700,000	$1,075,000
   Overhead cost	$420,000	$240,000	$660,000
   Direct labor hours	16,000	50,000	66,000
   Machine hours	100,000	20,000	120,000

   During the year, Test Company reported the following actual results.

   	Department 1	Department 2	Total
   Prime cost	$475,000	$850,000	$1,325,000
   Overhead cost	$450,000	$300,000	$750,000
   Direct labor hours	20,000	60,000	80,000
   Machine hours	125,000	25,000	150,000

   Calculate the predetermined overhead rate Test Company uses to apply overhead in Department 2.

   		$12.00 per machine hour
   		$4.80 per direct labor hour
   		$13.20 per direct labor hour
   		$5.00 per direct labor hour

QUESTION 8

Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

During the year, Test Company reported the following actual results.

Calculate the overhead applied to production in Department 2 for the year.

QUESTION 9

Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

#9Calculate the total overhead variance for the year.

The Hoed Corp. manufactures hats. All material is placed in process as soon as the goods are started in Department A. and conversion costs are incurred evenly throughout the process. Upon completion of the product it is immediately transferred to Department B. Department A-Month of April 20xx Status -Work in process 3/31/xx at 50% conversion 20,000 units completed at a cost of $300,000 ( $250,000 material cost and $50,000 conversion cost.) -Units started during April 50,000 units -Units completed during April 30,000 units -Work in process April 30th were 40,000 units 50% converted for conversion -Direct material added during April $450,000 -Conversion cost added during April $200,000 Required: 1. Calculate the total cost of the goods completed in Department A during April. 2. Calculate the total cost of the ending work in process in Department A for April.

Table 1

1. If the average total cost of producing 12 dozen sheets of metal is $6, and the average total cost of producing 13 dozen muffins is $7, then how much is the marginal cost of producing the 13^thdozen metal sheet? Explain the formulas you use and show your math.

2. Assume that Joe’s fixed cost are $2,000, and his variable cost per worker is $400.
   1. Calculate the cost data for Joe’s roll forming company using Table 2 below.
   2. For each column, explain what is happening to Joe’s costs.
   3. Draw one graph showing Joe’s TC.
   4. Draw another graph showing Joe’s AFC, AVC, ATC, and MC.

Consider a perfectly competitive firm with total costs ?? = ? + ?? + ?? 2 a) Identify the fixed cost ??, and the variable cost of this firm, ??(?). (Each of them is just a part of the total cost.) b) Find the average cost ??(?), and the marginal cost ??(?). c) Long-run supply. Find the minimum of the ??(?) curve, which constitutes the “shutdown price” in a long-run setting. Use this “shut-down price” to describe the firm’s long-run supply curve. d) Evaluate the long-run supply curve at ? = 10, ? = 4, and ? = 2. e) Short-run supply curve. Use your results from part (a) to find the average variable cost function. Find the minimum of the ???(?) curve, which constitutes the “shutdown price” in a short -run setting. Use this “shut-down price” to describe the firm’s short-run supply curve. f) Evaluate the short-run supply curve at ? = 10, ? = 4, and ? = 2.

An analyst wants to determine whether the cost of a flight depends on the distance. She collects a set of data of the round-trip fare for flights between Boston and some other cities on major airlines and the distance between cities. The following table gives the descriptive statistics of the distance (in miles) and the cost (in dollars). Mean Standard Deviation Miles (x) 1650.4 1074.4 Costs (y) 291 111.71 r = 0.9352 Compute the coefficient of determination and interpret your answer.

a. 93.53% of total variations on the y-variable (Cost of the flight) can be explained by the regression line

b. 87.46% of total variations on the y-variable (Cost of the flight) can be explained by the regression line

c. There is a positive, strong linear relationship between the cost of the flight and the distance

d. There is a positive, weak linear relationship between the cost of the flight and the distance e. None of the choices

Consider a perfectly competitive firm with total costs ?? = ? + ?? + ?? ^2

a) Identify the fixed cost ??, and the variable cost of this firm, ??(?). (Each of them is just a part of the total cost.)

b) Find the average cost ??(?), and the marginal cost ??(?).

c) Long-run supply. Find the minimum of the ??(?) curve, which constitutes the “shutdown price” in a long-run setting. Use this “shut-down price” to describe the firm’s long-run supply curve.

d) Evaluate the long-run supply curve at ? = 10, ? = 4, and ? = 2.

e) Short-run supply curve. Use your results from part (a) to find the average variable cost function. Find the minimum of the ???(?) curve, which constitutes the “shutdown price” in a short -run setting. Use this “shut-down price” to describe the firm’s short-run supply curve.

f) Evaluate the short-run supply curve at ? = 10, ? = 4, and ? = 2.

5. Suppose a government attempts to compare two potential remedies to reduce fishing effort. The first remedy is increasing the per-unit tax on fishing effort. The per-unit tax on effort is represented as a leftward rotation of the total cost curve around the zero-effort point (i.e. the marginal cost of fishing effort increases). The second remedy is increasing the cost of a fishing license. The increase in the license fee is represented as a parallel upward shift of the total cost curve (i.e. marginal cost of fishing effort does not change). Assume that these two remedies raise the same amount of cost at the open-access outcome. In addition, the fishery under these remedies would still be profitable.

b) Assume the fishery is governed under an open-access regime, which does not have exclusivity. Compare the effect on fishing effort of these two remedies.