Rundle Industries produces two electronic decoders, P and T. Decoder P is more sophisticated and requires more programming and testing than does Decoder T. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows:

Expected activity for each product follows:

Required:

a) Compute the overhead rate for each activity pool. (Repair and maintenance, Programming Cost, Software Inspections, Product Testing)

b) Determine the overhead cost allocated to each product. (Decoder P, Decoder T)

(Round answers to 2 decimal places)

Variable Costing Income Statement

On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept:

Assume the fixed manufacturing costs were $9,135 and the fixed selling and administrative expenses were $4,180.

Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.

1. On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.absorption costing concept:

   Weatherford Company Absorption Costing Income Statement For the Month Ended November 30
   Sales (5,900 units)			$123,900
   Cost of goods sold:
   Cost of goods manufactured (7,000 units)	$105,000
   Inventory, November 30 (1,000 units)	(15,000)
   Total cost of goods sold			90,000
   Gross profit			$33,900
   Selling and administrative expenses			19,330
   Income from operations			$14,570

   Assume the fixed manufacturing costs were $21,000 and the fixed selling and administrative expenses were $9,470.

   Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.

   Sales		$
   Variable cost of goods sold:
   Variable cost of goods manufactured	$
   Inventory, November 30
   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

1. You are trying to determine the WACC for White Sox. It has the following characteristics. (12 points)

1. Discount rate of 10%.   The company had pre-tax net income of $50mm last year and paid taxes of $10mm.
2. White Sox has $900mm of total liabilities, $100mm of accounts payable, and $650mm of debt.
3. The company has 120mm shares authorized, 17mm shares issued, and 7mm shares of treasury stock.   The stock traded at $65 per share two years ago and now trades at $97.87 per share.
4. A 10-year senior bond was issued 1 year ago. It is priced at 97 today. The coupon rate is 6% paid semi-annually. Use the YTM on this bond as a proxy for the pre-tax cost of total debt.
5. The company pays a dividend of $.75 per share per quarter. Twelve years ago, the dividend was $0.30 per share. The ten-year treasury rate is 2%. The company’s Beta is 1.5 and the market return for equities is 8%.

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

The cost of beginning inventory according to the company’s costing system was $7,887 of which $4,867 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $178,496. The costs per equivalent unit for the month were:

Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Weighted Average Process Costing
Minot Processing Company manufactures one product on a continuous basis in two departments, Processing and Finishing. All materials are added at the beginning of work on the product in the Processing Department. During November 2017, the following events occurred in the Processing Department:

Additional information follows:

• Minot uses weighted average costing and applies manufacturing overhead to Work-in-Process at the rate of 100 percent of direct labor cost.
• Ending inventory in the Processing Department consists of 4,500 units that are one-third converted.
• Beginning inventory contained 2,000 units, one-half converted, with a cost of $27,300 ($17,300 for materials and $10,000 for conversion).

(a) Prepare a cost of production report for the Processing Department for November.

Do not use negative signs with any of your answers.

Cost per equivalent unit in process

(Round answers two decimal places.)

(b) Prepare an analysis of all changes in Work-in-Process.

Do not use negative signs with any of your answers.

Departmental Overhead Rates

Lansing, Inc., provided the following data for its two producing departments:

Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 25,000 units of Form A produced and sold and 50,000 of Form B.

Required:

1. Calculate the overhead rates for each department.

2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. Round your answers to the nearest cent.

How does this compare with the plantwide rate unit cost, using direct labor hours?
Relative to the plantwide rate, the cost increased  for Form A and decreased for Form B.

3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates. Round your answers to the nearest cent.

Compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?

Relative to the plantwide rate, the cost increased  for Form A and decreased for Form B.

Feedback

1. For departmental rates, OH rates are assigned to each production department either per machine hrs. or direct labor hrs. Dept. estimated OH ÷ machine hour = rate per machine hour. Dept. estimated OH ÷ direct labor hour = rate per direct labor hour

2. Machine hours are used to assign OH of the Molding Dept. and direct labor hours are used to assign OH of the Polishing Dept. Total applied OH ÷ Units of production = Unit OH cost (each form). Plantwide rate = total estimated OH ÷ total direct hours

3. Use new numbers given and calculate OH the same as in Requirement 1 & 2, compare departmental to plantwide, and give conclusion of the results.

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office

furniture distributors. The company has a simple ABC system that it uses for internal decision making. The

company has two overhead departments whose costs are listed on the following page:

Manufacturing overhead .................................. $500,000

Selling and administrative overhead ................ 300,000

Total overhead costs ........................................ $800,000

The company’s ABC system has the following activity cost pools and activity measures:

Activity Cost Pool Activity Measure

Assembling units ..................... Number of units

Processing orders .................... Number of orders

Supporting customers ............. Number of customers

Other ........................................ Not applicable

Costs assigned to the “Other” activity cost pool have no activity measure; they consist of the costs of

unused capacity and organization-sustaining costs—neither of which are assigned to orders, customers, or

the product.

Ferris Corporation distributes the costs of manufacturing overhead and of selling and administrative

overhead to the activity cost pools based on employee interviews, the results of which are reported below:

Question 1

1. Perform the first-stage allocation of overhead costs to the activity cost pools and find manufacturing overhead for Assembling units.

Question 2

Compute activity rates for the activity cost pools and find the activity rate for processing orders

Question 3

Compute activity rates for the activity cost pools and find the activity rate for supporting customers

Question 4

Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Assembeling unit?

Question 5

Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Processing orders?

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

The activity bases identified for each activity are as follows:

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

Each product requires 40 minutes per unit of machine time.

3. Consider the production function Q = K²L , where L is labor and K is capital.

a.[4] What is the Marginal Product of Capital for this production function? Is it increasing, decreasing, or constant? Briefly explain or show how you arrived at your answer.

b.[4] Does this production function exhibit increasing, constant or decreasing returns to scale? Briefly explain or show how you arrived at your answer.

c.[5] If the firm has capital fixed at 15 units in the short run and the firm must produce 8,000 units of the good, find the cost-minimizing quantity of Labor. If labor is paid $200 and capital is rented at $400, what is the Total Cost at this short run equilibrium?

d.[10] Find the long-run cost minimizing quantities of Labor and Capital when labor is paid $200, Capital is rented at $400, and the firm must produce 8,000 units of the good. What is Total Cost at the long run equilibrium?

4. Consider the production function for a blueprint, B that can be produced using either 1/2 hour of computer time (C) or three hours of a manual draftsman’s time, D.

a.[4] Which of the following equations represents the production function for blueprints? Choose either B = ½ C + 3 D, or B = 2 C + D.

b.[4] Does this production function exhibit increasing, constant or decreasing returns to scale? Briefly explain or show how you arrived at your answer.

c.[3] On the axes given, draw the isoquant that produces exactly 20 Blueprints.

d.[3] On the same graph, draw at least one isocost line (including the cost minimizing one) if the price of computer time is $10 per hour and the price of a draftsman’s time is $5 per hour.

e.[5] What is the cost minimizing bundle of computer and draftsman time? What is the total cost at that equilibrium?

5. Consider a firm with total cost: TC = 10Q³ – 100 Q² + 300Q, where Q is output.

a.[4] Find the equations for Marginal Cost and Average Total Cost.

b.[3] What is the efficient scale of production for this firm?

c.[3] At which quantities does this firm exhibit economies of scale?

answer as many as possible please. Thank you