Managerial Economics Question.

(Please solve both A and B, and mention which one is A and B, thank you for working so much hard for me, I appreciate it.)

1. Royersford Kinitting Mills Ltd. sells a line of women's knit underwear. The firm now sells about 20,000 pairs a year at an average price of $10 each. Fixed costs amount to $60,000, and total variable costs equal $120,000. The production department has estimated that a 10 percent increase in output would not affect fixed costs but would reduce average variable cost by 40 cents.

The marketing department advocates a price reduction of 5 percent to increase sales, total revenues, and profits. The arc elasticity of demand with respect to prices is estimated at -2.

A) Evaluate the impact of the proposal to cut prices on (i) total revenue, (ii) total cost, and (iii) total profits.

B) If average variable costs are assumed to remain constant over a 10 percent increase in output, evaluate the effects of the proposed price cut on total profits.

ontribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage
Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:
 Estimated
Fixed Cost Estimated Variable Cost
(per unit sold)Production costs:      Direct materials  $17   Direct labor  12   Factory overhead$626,700  9  Selling expenses:      Sales salaries and commissions130,200  4   Advertising44,100      Travel9,800      Miscellaneous selling expense10,800  3  Administrative expenses:      Office and officers' salaries127,300      Supplies15,700  1   Miscellaneous administrative expense14,600  2   Total$979,200  $48  
It is expected that 10,200 units will be sold at a price of $192 a unit. Maximum sales within the relevant range are 13,000 units.
Required:

1.   Prepare an estimated income statement for 20Y7.

Belmain Co.Estimated Income StatementFor the Year Ended December 31, 20Y7 $Cost of goods sold: $  Cost of goods soldGross profit$Expenses:Selling expenses: $   Total selling expenses$Administrative expenses: $  Total administrative expensesTotal expensesIncome from operations$

2.  What is the expected contribution margin ratio? Round to the nearest whole percent.
 %
3.  Determine the break-even sales in units and dollars.
Units unitsDollars units
4.  Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$ 
5.  What is the expected margin of safety in dollars and as a percentage of sales?
Dollars:$ Percentage: (Round to the nearest whole percent.)%
6.  Determine the operating leverage. Round to one decimal place.

Allocating Joint Costs Using the Sales-Value-at-Split-Off Method

Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning.

Information on a recent purchase of 20,000 pounds of apples is as follows: Assume that Orchard Fresh, Inc., uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of apples:

Total joint cost is $15,000.

Required:

1. Allocate the joint cost to the four grades of apples using the sales-value-at-split-off method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.

2. What if the price at split-off of Grade B apples increased to $1.20 per pound? How would that affect the allocation of cost to Grade B apples? How would it affect the allocation of cost to the remaining grades? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.

Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 20,000 pounds of apples is as follows: Assume that Orchard Fresh, Inc., uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of apples: Grades Pounds Price at Split-Off (per lb.) Grade A 1,800 $4.00 Grade B 5,000 1.00 Slices 8,000 0.50 Applesauce 5,200 0.10 Total 20,000 Total joint cost is $18,000. Required: 1. Allocate the joint cost to the four grades of apples using the sales-value-at-split-off method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation Grade A $ Grade B Slices Applesauce Total $ 2. What if the price at split-off of Grade B apples increased to $1.20 per pound? How would that affect the allocation of cost to Grade B apples? How would it affect the allocation of cost to the remaining grades? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation Grade A $ Grade B Slices Applesauce Total $

Koufax Materials Corporation produces plastic products for home appliances and electronics. The financial department has produced the following information for the year ended December 31.

Required:

a. Prepare a cost of goods manufactured and sold statement.

b. Prepare an income statement.

repare a cost of goods manufactured and sold statement.

Prepare an income statement. (Loss amounts should be indicated with a minus sign.)

Required:

a. Prepare a cost of goods manufactured and sold statement.

b. Prepare an income statement.

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $11.50 per direct labor-hour was based on a cost formula that estimated $460,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

1. Raw materials were purchased on account, $618,000.
2. Raw materials used in production, $569,400. All of of the raw materials were used as direct materials.
3. The following costs were accrued for employee services: direct labor, $410,000; indirect labor, $150,000; selling and administrative salaries, $338,000.
4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $382,000.
5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $310,000.
6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
7. Jobs costing $1,372,600 to manufacture according to their job cost sheets were completed during the year.
8. Jobs were sold on account to customers during the year for a total of $3,202,500. The jobs cost $1,382,600 to manufacture according to their job cost sheets.

4. What is the total amount of manufacturing overhead applied to production during the year?

5. What is the total manufacturing cost added to Work in Process during the year?

6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?

7. What is the ending balance in Work in Process?

West Texas Chemical Company manufactures a product called Kylon, which requires three raw materials. Production is in batches of 1,000 gallons of finished product. The firm uses standard costs as a control device. Its standard costs for materials for each batch of Kylon have been established as follows:

The output is packaged in 50-gallon drums. During the month of June 2019, 200 drums of Kylon were produced. There was no beginning or ending inventory of work in process. The materials actually used during June are listed below:

Compute the total variance between the actual cost of the materials used during June and the standard cost of the materials. Also compute the total variance for each type of material. (Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance).)

Analyze the variances for each type of material for the month. (Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance).)

On January 1, 2017, Park Rapids Lumber Company issued $80 million in 20-year, 10% bonds payable.  Interest is payable semiannually on June 30th and December 31st.  Bond discounts and premiums are amortized straight-line at each interest payment date.

a. Record the journal entry when the bonds were issued on January 1, 2017, make the necessary the journal entry to record the payment of bond interest on June 30, 2017, under each of the following assumptions:

1. The bonds were issued at 98. Round your answers to the nearest dollar.

2. The bonds were issued at 101. Round your answers to the nearest dollar.

b. Compute the net bond liability at December 31, 2017, under assumptions 1 and 2 above.  Round to the nearest dollar.

c. Under which of the above assumptions, 1 or 2 would the investor’s effective rate of interest be higher? Explain.

With an average of 24,000 units every year in its manufacturing process. The supply chain partner who charges a price per unit of $3000 for the component. Each order costs $500 to process. the operations manager wants to factor in inventory holding cost at 13.75% of the unit cost. (1) Determine the economic order quantity (EOQ) and total annual cost if ordering the EOQ number of units. How much will DBS be able to save by adopting the EOQ versus a current Q = 400? What is the reorder point with safety stock if lead time is 21 days, standard deviation of weekly demand is 3.75 and on an average the firm operates for a total of 48 weeks every year? Assume a z value of 1.645 corresponding to the desired service level What would the reorder point be without safety stock and how would you interpret each of the two reorder points? (2) Environmental considerations, material losses and waste disposal can be included in the EOQ model to improve inventory management practices. Assume that on an average 7.5% of the components that DBS purchases are damaged in transit thus becoming unusable and have to be disposed of. Disposal cost is $250 per unit. Find the new EOQ and total annual cost when the disposal cost is considered. What implications does this have for the sustainability of DBS’ inventory practices?

Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $225,720 and total machine hours at 62,700. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:    

Job 101 was completed and sold for $50,600.
Job 102 was completed but not sold.
Job 103 is still in process.

Actual overhead costs recorded during the first month of operations totaled $14,180.

Required:

1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion.

2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101.

3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold.

(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round your intermediate calculations.)