Terry Linens, Inc., manufactures bed and bath linens. The Bath Linens Department
sews terry cloth into towels of various sizes. Terry uses the weighted average method.
All materials are added at the beginning of the process. The following data are for
the Bath Linens Department for August:

Production:
Units in process, August 1, 25 percent complete*       10,000
Units completed and transferred out                            60,000
Units in process, August 31, 60 percent complete*     20,000

Costs:
Work in process, August 1:
   Materials    $49,000
   Conversion costs 2,625
      Total                                          $51,625

Current costs:
Materials $351,000
Conversion costs    78,735
     Total                                         $429,735

*With respect to conversion costs

Required

1. Prepare a physical flow schedule for the Bath Linens Department for August.
2. Calculate equivalent units of production for the Bath Linens Department for August.
3. Calculate unit cost for materials, for conversion, and in total for the Bath Linens Department for August.
4. Calculate the cost of units transferred out and the cost of ending work in process.
5. Prepare a cost reconciliation for the Bath Linens Department for August.
6. Prepare a cost of production report for the Bath Linens Department for August using the weighted average method.

global services is considering a promotional campaign that will increase annual credit sales by $570,000 the company will require investments in accounts receivable, inventory, and plant and equipment. the turnover for each is as follows:

accounts receivable... 3x

inventory... 6x

plant and equipment... 1x

all $570,000 of the sales will be collectible. However, collection cost will be 3 percent of sales, and production and selling costs will be 70 percent of sales. The cost to carry inventory will be 6 percent of inventory. depreciation expense n plant and equipment will be 5 percent of plant and equipment. the tax rate is 30 percent.

A. compute the investments in accounts receivable, inventory, and plant and equipment based on the turover ratios. add the three together.

Accounts Receivable- ?

Inventory- ?

Plant and Equipment- ?

Total investment- ?

B. compute the accounts receivable collection costs and production and selling costs and add the two figures together.

Collection cost- ?

Production and selling cost- ?

total collection, production and selling cost- ?

C. Compute the costs of carrying inventory.

D. compute the depreciation expense on new plant and equipment.

E. Compute the total of all costs from parts B, C, and D.

F. Compute income after taxes.

G1. What is the after tax rate of return?

Work in Process Account Data for Two Months; Cost of Production Reports. Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1 and debits to the account during September were as follows:

During September, 1,200 units in process on September 1 were completed, and of the 27,120 units entering the department, all were completed except 2,100 units that were 60% completed. Charges to Work in Process—Rolling for October were as follows:

During October, the units in process at the beginning of the month were completed, and of the 31,200 units entering the department, all were completed except 1,600 units that were 90% completed.Required: 1. Enter the balance as of September 1 in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

2. Provide the same information for October by recording the October transactions in the four-column work in process account. Construct a cost of production report, and present the October computations (a through d) listed in part (1).

Comprehensive Problem #3

Part 1:
Wilson Mfg, Inc. produces sport caps for various professional teams throughout the region.
The company uses a continuous job cost accounting system to manufacture their products.

Wilson’s trial balance on June 1 is as follows:
Wilson Mfg, Inc.
Trial Balance
June 1, 2014
Account Debit Credit
Cash $ 14,000
Accounts Receivable 155,000
Raw Materials Inventory 5,700
Work-in-Process Inventory 39,400
Finished Goods Inventory 20,400
Plant Assets 200,000
Accumulated Depreciation $ 72,000
Accounts Payable 127,000
Wages Payable 1,700
Common Stock 142,000
Retained Earnings 91,800
Sales Revenue
Cost of Goods Sold
Manufacturing Overhead
Selling & Administrative Expenses .
Totals $ 434,500 $ 434,500

The following transactions were completed during the month of June.
a. Collections on account, $152,000.
b. Selling and administrative expenses incurred and paid, $28,000.
c. Payments on account, $36,000.
d. Materials purchases on account, $26,700.
e. Materials requisitioned and used in production:
(1) Direct materials, $8,500
(2) Indirect materials, $1,000
f. Wages incurred during June:
(1) Direct labor, $20,100
(2) Indirect labor, $14,900
g. Wages paid in June include the balance in Wages Payable ($1,700) at May 31,
plus $32,200 of wages incurred during June.
h. Depreciation on plant and equipment, $2,600.
i. Manufacturing overhead is allocated at the predetermined overhead rate of 50%
of direct labor cost.
j. The company produced 11,375 caps during June for a total cost of $45,500.
k. Sales on account during June, $111,000. Cost of the products sold was $50,600.
l. Adjusted for over-allocated or under-allocated manufacturing overhead.

Requirements:
(1) Open T-accounts (or Balance Column account forms) for each of the accounts listed in the
June 1 Trial Balance (with their balances, using Bal. as the reference) .
(2) Journalize the transactions (a. through l.) for the company, using the standard job cost
accounts.
(3) Post the journal entries to the T-accounts (or Balance Column account forms) using the
transaction letters as a reference.
(4) Prepare a trial balance as of June 30, 2014.

Comprehensive Problem #3
Part 2:
Wilson Mfg, Inc. is considering expansion of operations since current market prospects look
very favorable as well in the near future. The anticipated selling price of sport caps is $7.50.
Variable costs of producing each cap is $3.00. Annual fixed costs are estimated to be
$42,660. Company management requires some additional information with which to
determine the feasibility of this proposed expansion.

Requirements:
(1) Determine the company’s contribution margin.
(2) Determine the company’s contribution ratio.
(3) Calculate the company’s breakeven point in units of product.
(4) Calculate the company’s breakeven point in sales dollars.
(5) Determine the number of units of product that the company will have to produce and sell
to earn a profit of $40,000 annually. (Round answer to the nearest whole unit)

The Marginal Principle states, “Increase the level of activity as long as its marginal benefit exceeds its marginal cost. Choose the level at which the marginal benefit equals the marginal cost.” The Widget Factory makes and sells widgets in a perfectly competitive market, operating in the short term. Fixed cost per widget is $4 Labor costs is $23 per worker (Variable cost per worker) Widgets sell for $13 each (Revenue price per unit) Workers 10 11 12 13 14 15 16 17 Output 6 30 41 46 50 53 55 56 Suggestion:

It is helpful to first put your data into a table, and then create the graph. Refer to chapters 5 and 6 for examples of tables and for the MC, MR and ATC formulas. Using the data from above:. Graph the Marginal Cost (MC), the Marginal Revenue (MR), and the Average Total Cost (ATC). What level of output will the firm select, and how many employees will be hired? What is the economic profit at this level of output, and what is the economic profit at output levels slightly above and slightly below this level?

Repeat #1, but alter your data by increasing labor costs to $28 (due to higher wage rate, higher costs of benefits, etc.). Graph the Marginal Cost (MC), the Marginal Revenue (MR), and the Average Total Cost (ATC). What level of output will the firm select, and how many employees will be hired? What is the economic profit at this level of output, and what is the economic profit at output levels slightly above and slightly below this level?

Repeat #1, but alter your data by increasing fixed costs to $6 (due to higher rent, energy, taxes, material costs, etc.) Graph the Marginal Cost (MC), the Marginal Revenue (MR), and the Average Total Cost (ATC). What level of output will the firm select, and how many employees will be hired? What is the economic profit at this level of output, and what is the economic profit at output levels slightly above and slightly below this level?

Repeat #1, but raise the price of the product to $15. Graph the Marginal Cost (MC), the Marginal Revenue (MR), and the Average Total Cost (ATC). What level of output will the firm select, and how many employees will be hired? What is the economic profit at this level of output, and what is the economic profit at output levels slightly above and slightly below this level?

Repeat #1, but lower the price of the product to $10. Graph the Marginal Cost (MC), the Marginal Revenue (MR), and the Average Total Cost (ATC). What level of output will the firm select, and how many employees will be hired? What is the economic profit at this level of output, and what is the economic profit at output levels slightly above and slightly below this level? State a general observation about the number of employees who will need to be hired in the 1-5 scenarios.

_{Production and Costs Homework #5}

_{The following information that apply to Lisa’s Cupcake Shoppe should be used to answer the questions.}

1. _{Lisa’s Cupcake Shoppe is a small shop that sells cupcakes in a university town. Lisa owns three mixers.  Her other inputs are ovens, flour, cupcake tins, frosting and of course, workers.  She estimates that her daily production function when she varies the number of workers employed (and at the same time, of course, flour, frosting, etc.) is as shown in the accompanying table.}

1. _{What are the fixed inputs and variable inputs in the production of cupcakes?}
2. _{What is the marginal product of the first worker? The second worker? The third worker?}
3. _{Why does marginal product decline as the number of workers increases?}

2. _{The production for Lisa’s Cupcake Shoppe is given in Problem 1.  Lisa pays each of her workers $80 per day, including the costs of her other variable inputs.  Her fixed cost is $100 per day.}
   1. _{What is Lisa’s variable cost and total cost when she produces 110 cupcakes? 200 cupcakes? Calculate the total variable cost (TVC) and total cost (TC) for every level of output given in Problem 1.}
   2. _{What is the marginal cost per cupcake for the first 110 cupcakes? For the next 90 cupcakes? Calculate the marginal cost (MC) for all remaining levels of output.}
   3. _{For each level of output, calculate the average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) per cupcake.}

3.        _{a. What principle explains why the AFC declines as output increases? Explain your answer.}

_{b. What principle explains why the AVC increases as output increases? Explain your answer.}

_{c. How many cupcakes will be produced when ATC is minimized?}

_{Production and Costs Homework #5 Please answer all questions and each part}

_{The following information that apply to Lisa’s Cupcake Shoppe should be used to answer the questions.}

1. _{Lisa’s Cupcake Shoppe is a small shop that sells cupcakes in a university town. Lisa owns three mixers.  Her other inputs are ovens, flour, cupcake tins, frosting and of course, workers.  She estimates that her daily production function when she varies the number of workers employed (and at the same time, of course, flour, frosting, etc.) is as shown in the accompanying table.}

1. _{What are the fixed inputs and variable inputs in the production of cupcakes?}
2. _{What is the marginal product of the first worker? The second worker? The third worker?}
3. _{Why does marginal product decline as the number of workers increases?}

2. _{The production for Lisa’s Cupcake Shoppe is given in Problem 1.  Lisa pays each of her workers $80 per day, including the costs of her other variable inputs.  Her fixed cost is $100 per day.}
   1. _{What is Lisa’s variable cost and total cost when she produces 110 cupcakes? 200 cupcakes? Calculate the total variable cost (TVC) and total cost (TC) for every level of output given in Problem 1.}
   2. _{What is the marginal cost per cupcake for the first 110 cupcakes? For the next 90 cupcakes? Calculate the marginal cost (MC) for all remaining levels of output.}
   3. _{For each level of output, calculate the average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) per cupcake.}

3.        _{a. What principle explains why the AFC declines as output increases? Explain your answer.}

_{b. What principle explains why the AVC increases as output increases? Explain your answer.}

_{c. How many cupcakes will be produced when ATC is minimized?}