Loan 3: 15-year versus 30-year mortgage

Amortize a mortgage for a $225,000 house with a 20% down payment for both a 15-year mortgage at 3.625% and a 30-year mortgage at 4.125%.

• 15-year mortgage monthly payment?
• What is the total interest cost over the life of the 15-year loan?
• 30-year mortgage monthly payment?
• What is the total interest cost over the life of the 30-year loan?
• Difference in interest costs between a 15-year and a 30-year mortgage?

MachineElectricityMachineElectricityMonthHoursCostsMonthHoursCostsJanuary 18,400 $ 7,393 July 20,400 $ 7,894 February 22,000 $ 8,672 August 20,500 $ 8,055 March 21,000 $ 8,226 September 22,400 $ 8,897 April 20,100 $ 7,808 October 22,200 $ 8,810 May 19,800 $ 7,511 November 21,900 $ 8,591 June 18,200 $ 7,301 December 21,100 $ 8,442 Using the high-low method determine:(a) the variable electricity cost per machine hour(b) the monthly fixed electricity cost in total.(c) the estimated total electricity costs for 24,000 machine hours.

Isoquant Analysis. A firm with production function q = K^1/4L^1/4 operates with variable labour and variable capital. The firm sells output at a competitive price p = 80 and hires labour at w = 2 and capital at r = 0.5. This firm

1. will produce q =
2. will hire L =
3. will lease capital K =
4. will incur total cost C =
5. will earn profits π =

Now the price rises to p = 120. This firm

1. will produce q =
2. will hire L =
3. will lease capital K =
4. will incur total cost C =
5. will earn profits π =

Imagine Chiquita owns a start up – Swanky Dog Inc. – a firm that sells high end winter coats for dogs. Dog coats sell for $80 each without deviation. She only has enough capacity in her facility to produce a maximum of 10 coats per week. The fixed costs of production are $100. The total variable costs are as follows:

Using the above information, start an Excel worksheet. Make categories and calculate the values for each of the following: price, quantity, fixed cost, variable cost, average variable cost, total costs, average total costs, marginal cost, total revenue, marginal revenue, and profit.

After finding all values in the worksheet, determine what the profit maximizing quantity is for Chiquita’s firm. How can you tell?

c)      Plot the data. In one plot, show ATC, AVC, MC, and MR for Q=[0, 10]. In a separate plot, show Profits as a function of quantity produced over Q=[0,10].

Greeson Clothes Company produced 23,000 units during June of the current year. The Cutting Department used 4,400 direct labor hours at an actual rate of $13.2 per hour. The Sewing Department used 7,300 direct labor hours at an actual rate of $12.9 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $13.1. The standard labor time for the Cutting and Sewing departments is 0.2 hour and 0.3 hour per unit, respectively.

a. Determine the direct labor rate, direct labor time, and total direct labor cost variance for the (1) Cutting Department and (2) Sewing Department.. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

b. The two departments have opposite results. The Cutting Department has a(n) unfavorable  rate and a(n) favorable  time variance, resulting in a total favorable  cost variance. In contrast, the Sewing Department has a(n) favorable  rate variance but has a(n) unfavorable  time variance, resulting in a total unfavorable  cost variance.

Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of directors and suggested the Percy Division be eliminated. “If the Percy Division is eliminated,” she said, “our total profits would increase by $26,100.”

In the Percy Division, cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,100 variable and $21,100 fixed. None of the Percy Division’s fixed costs will be eliminated if the division is discontinued.

Is Veronica right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company’s two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Required:

1. Determine the unit product costs of the Deluxe and Standard products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools:  

Exercise 15-16

An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2017.

Costs incurred: raw materials purchases $56,410, direct labor $50,600, manufacturing overhead $23,980. The specific overhead costs were: indirect labor $6,520, factory insurance $4,810, machinery depreciation $4,590, machinery repairs $2,330, factory utilities $3,910, and miscellaneous factory costs $1,820. Assume that all raw materials used were direct materials.

(a) Prepare the cost of goods manufactured schedule for the month ended June 30, 2017.

(Drop down options) Cost of Goods Manufactured, Direct Labor, Direct Materials, Direct Materials Used, Facility Insurance, Factory Utilies, Indirect Labor, Machinery Depreciation, Machinery Repairs, Manufacturing Overhead, Misc. Factory Costs, Raw Materials Inventory June 1, Raw Materials Inventory June 30, Raw Materials Purchases, Total Cost of Work in Process, Total Manufacturing Costs, Total Manufacturing Overhead, Total Raw Materials available for Use, Work in Process Inventory June 1st, Work in Process Inventory June 30, Finished Goods Inventory June 1, Finished Goods Inventory June 30

Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product W2 600 6 3,600 Product P8 900 4 3,600 Total direct labor-hours 7,200 The direct labor rate is $42.10 per DLH. The direct materials cost per unit is $208.60 for Product W2 and $145.30 for Product P8. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product W2 Product P8 Total Labor-related DLHs $ 223,576 3,600 3,600 7,200 Production orders orders 19,038 530 430 960 Order size MHs 333,386 3,930 3,730 7,660 $ 576,000 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product W2 would be closest to: Multiple Choice $261.14 per unit $186.31 per unit $480.00 per unit $118.99 per unit