Hobart Company manufactures attaché cases and suitcases. It has five manufacturing departments. The Molding, Component, and Assembly departments convert raw materials into finished goods; hence, they are treated as operating departments. The Power and Maintenance departments are treated as service departments because they support the three operating departments.

Hobart has always used a plantwide predetermined overhead rate with direct labor-hours as the allocation base for product costing purposes. The overhead rate is computed by dividing the company’s total estimated overhead cost (across the five manufacturing departments) by the total estimated direct labor-hours to be worked in the three operating departments.

The company has been experiencing declining profits; therefore, it is considering switching from plantwide overhead allocation to a departmental approach. Under the departmental approach, the service department costs would be allocated to the three operating departments. Then each operating department would compute its own overhead rate. The overhead rate in Molding would be based on machine-hours and the rates in Component and Assembly would be based on direct labor-hours.

The service departments’ estimated costs for the coming year are as follows:

The Power Department would allocate its variable costs to the operating departments based on estimated kilowatt hours used and it would allocate its fixed costs based on the percentage of peak-period capacity required. The Maintenance Department would allocate its variable costs to the operating departments based on estimated maintenance hours used and it would allocate its fixed costs based on the percentage of peak-period capacity required.

The corresponding data for allocating service department costs to operating departments are as follows:

The company also provided the following estimated data for its three operating departments:

1. Compute the company’s predetermined plantwide overhead rate.

2. Assume the company decides to use departmental overhead rates.

a. Using the direct method, allocate the variable and fixed service department costs to the operating departments.

b. Calculate the predetermined departmental overhead rates for each of the three operating departments.

3. One of Hobart’s products is a small attaché case that uses the following machine-hours and direct labor-hours in the three operating departments:

a. Calculate the amount of overhead that would be applied to this attaché case using the plantwide approach.

b. Calculate the amount of overhead that would be applied to this attaché case using the departmental approach.

4a. Is the plantwide approach overcosting or undercosting the attaché case compared to the departmental approach?

Cost is classified on the basis of behaviour as fixed cost, variable cost and semi-variable cost. You are required to explain these 3 elements of cost with an example in an engineering organization

what are the fixed cost variable cost, semi variable cost and sunk cost for oil and refinery sector companies like HPCL, IOL etc?

Assignment Exercise 23–1: Cost of Owning and Cost of Leasing Cost of owning and cost of leasing tables are reproduced below.

Required Using the appropriate table from the Chapter 13 Time Value of Money Appendices appearing as 13-A, 13-B, and 13-C, record the present-value factor at 10% for each year and compute the present-value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate was 6% instead of 10%?

Question 9 options:

Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up). The data is in the following table, and there are some negative values because sometimes the supplier is able to layout the pattern better than the computer ("Waste run up," 2013).

Table #11.3.3: Run-ups for Different Plants Making Levi Strauss Clothing

Do the data show that there is a difference between some of the suppliers? Test at the 1% level

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Let x₁ = percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up) from plant 1

Let x₂ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let x₃ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let x₄ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let x₅ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

Let ?₁ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 1

Let ?₂ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let ?₃ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let ?₄ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let ?₅ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

(i) Which of the following statements correctly defines the null hypothesis H_O?

A. All five mean percentage differences are equal

B. Two of the mean percentage differences are not equal

C. At least four of the mean percentage differences are equal

D. At least two of the mean percentage differences are not equal

Enter letter corresponding to correct answer

Let ?₁ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 1

Let ?₂ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let ?₃ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let ?₄ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let ?₅ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

(ii) Which of the following statements correctly defines the alternate hypothesis H_A?

A. All five mean percentage differences are equal

B. Two of the mean percentage differences are not equal

C. At least four of the mean percentage differences are equal

D. At least two of the mean percentage differences are not equal

Enter letter corresponding to correct answer

(iii) Enter the level of significance ? used for this test:

Enter in decimal form. Examples of correctly entered answers:  0.01    0.02    0.05    0.10

(iii) Calculate sample mean and sample standard deviation for Plant 1 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:  

13.27,2.31

0.27,0.06

-10.30,0.79

(v)  Calculate sample mean and sample standard deviation for Plant 2 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:  

13.27,2.31

0.27,0.06

-10.30,0.79

(vi) Calculate sample mean and sample standard deviation for Plant 3 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:  

13.27,2.31

0.27,0.06

-10.30,0.79

(vii) Calculate sample mean and sample standard deviation for Plant 4 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:  

13.27,2.31

0.27,0.06

-10.30,0.79

(viii) Calculate sample mean and sample standard deviation for Plant 5 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:  

13.27,2.31

0.27,0.06

-10.30,0.79

(ix) Using technology, determine F ratio test statistic and corresponding p-value.

Use "CTRL-click" to access link. Enter test statistic to nearest hundredth, then enter comma, then enter p-value to nearest thousandth. Examples of correctly entered responses:

12.33,0.004   

7.50,0.000

6.77,0.504

  (x) Comparing p-value and ? value, which is the correct decision to make for this hypothesis test?  

A. Reject H_o

B. Fail to reject H_o

C. Accept H_o

D. Accept H_A

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 970,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of the year was $26. All of the company’s sales are on account.

Required:

Compute the following financial data for this year:

1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Exercise 14-5 Financial Ratios for Assessing Profitability [LO14-5] Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 820,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of the year was $19. All of the company’s sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 3,812 $ 3,980 Accounts receivable, net 12,500 9,200 Inventory 9,800 8,280 Prepaid expenses 1,820 2,140 Total current assets 27,932 23,600 Property and equipment: Land 6,200 6,200 Buildings and equipment, net 19,400 19,200 Total property and equipment 25,600 25,400 Total assets $ 53,532 $ 49,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 9,700 $ 8,400 Accrued liabilities 640 800 Notes payable, short term 320 320 Total current liabilities 10,660 9,520 Long-term liabilities: Bonds payable 7,500 7,500 Total liabilities 18,160 17,020 Stockholders' equity: Common stock 820 820 Additional paid-in capital 4,300 4,300 Total paid-in capital 5,120 5,120 Retained earnings 30,252 26,860 Total stockholders' equity 35,372 31,980 Total liabilities and stockholders' equity $ 53,532 $ 49,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 81,000 $ 76,000 Cost of goods sold 53,000 49,000 Gross margin 28,000 27,000 Selling and administrative expenses: Selling expenses 8,700 8,200 Administrative expenses 12,200 11,200 Total selling and administrative expenses 20,900 19,400 Net operating income 7,100 7,600 Interest expense 900 900 Net income before taxes 6,200 6,700 Income taxes 2,480 2,680 Net income 3,720 4,020 Dividends to common stockholders 328 656 Net income added to retained earnings 3,392 3,364 Beginning retained earnings 26,860 23,496 Ending retained earnings $ 30,252 $ 26,860 Required: Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Cuneo Company’s income statements for the last 3 years are as follows:

1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

3. Prepare a common-size income statement for Year 3 by expressing each line item as a percentage of sales revenue. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of this year was $18. All of the company’s sales are on account.

Required:

Compute the following financial data for this year:

1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Exercise 14-5 Financial Ratios for Assessing Profitability [LO14-5]

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of this year was $18. All of the company’s sales are on account.

Required:

Compute the following financial data for this year:

1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)