Bell Computers purchases integrated chips at ?$350 per chip. The holding cost is ?$35 per unit per? year, the ordering cost is ?$118 per? order, and sales are steady at 405

per month. The? company's supplier, Rich Blue Chip? Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

1-99 units- $350

100-199- $325

200 or more units- $300

a. What is the optimal order quantity and the minimum annual cost for Bell Computers to? order, purchase, and hold these integrated? chips?

-The optimal order quantity after the change in pricing structure is (enter as whole number)

- The total annual cost for Bell computers to? order, purchase, and hold the integrated chips is.. {enter as whole number}

b. bell computers wishes to use a 10% holding cost rather than the fixed $36 holding cost in part a. what is the optimal order quantity, and what is the optimal annual cost?

-the optimal order quantity after the change in the holding cost calculation is (enter as whole number)

- the total annual cost for bell computers to order, purchase, and to hold integrated chips is (enter as whole number)

?

Problem 2-23A Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO2-6] Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 219,000 Purchases of raw materials $ 266,000 Direct labor ? Administrative expenses $ 158,000 Manufacturing overhead applied to work in process $ 332,000 Total actual manufacturing overhead costs $ 354,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 56,000 $ 37,000 Work in process ? $ 26,000 Finished goods $ 34,000 ? The total manufacturing costs for the year were $690,000; the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $664,000; and the net operating income was $34,000. The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Required: a. Prepare a schedule of cost of goods manufactured. b. Prepare a schedule of cost of goods sold. c. Prepare an income statement for the year.

1. Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.

   Starting Questions

   Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.

   Provide answers to the following questions (1)-(3).

   1. Why might Sarah want to use A detailed estimate of what a product should cost.standard costs to compare with her actual costs?

   a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.

   b. Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.

   c. Management can evaluate the differences between standard costs and actual costs to focus on correcting the The differences between actual and standard costs.cost variances.

   • a
   • b
   • c

   2. What are some possible drawbacks to using standard costs that Sarah might consider?

   a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards.

   b. Standards may become “stale” in a dynamic manufacturing environment.

   c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.

   d. Since standards are impossible to attain, they are a distraction from the work at hand.

   e. Since standards never change, they do not reflect reality.

   • a, b and c
   • b, c and d
   • c, d and e
   • a, d and e
   • b, d and e

   3. Sarah wants to be sure she understands the basic definitions involved:

   Answer the following questions by selecting the correct words.

   A favorable variance occurs when the actual cost (what the product does cost) is

   • greater than
   • less than
   • the same as
   the standard cost (what the product should cost). A favorable variance is represented by a
   • positive
   • negative
   number, indicating that costs are
   • higher
   • lower
   than expected.

   An unfavorable variance occurs when the actual cost (what the product does cost) is

   • greater than
   • less than
   • the same as
   the standard cost (what the product should cost). An unfavorable variance is represented by a
   • positive
   • negative
   number, indicating that costs are
   • higher
   • lower
   than expected.

   Direct Materials

   Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,101 for 7,090 units of direct materials in the production of 2,200 pairs of shoes.

   Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a A variance that occurs when the actual cost is less than standard cost.favorable cost variance, and a positive number for an A variance that occurs when the actual cost exceeds the standard cost.unfavorable cost variance.

   Actual Cost								Standard Cost
   Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
   	X	$			X	$			X	$
   	= $				= $				= $
   			Unfavorable Favorable Direct Materials Cost Price Quantity Rate Time Variance:				Unfavorable Favorable Direct Materials Cost Price Quantity Rate Time Variance:
   			$				$
   					Unfavorable Favorable Total Direct Materials Cost Price Quantity Rate Time Variance:
   					$

   Direct Labor

   Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,340 for 7,260 hours of direct labor in the production of 2,100 pairs of shoes.

   Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.

   Actual Cost								Standard Cost
   Actual Hours	X	Actual Rate		Actual Hours	X	Standard Rate		Standard Hours	X	Standard Rate
   	X	$			X	$			X	$
   	= $				= $				= $
   			Unfavorable Favorable Direct Labor Cost Price Quantity Rate Time Variance:				Unfavorable Favorable Direct Labor Cost Price Quantity Rate Time Variance:
   			$				$
   					Unfavorable Favorable Total Direct Labor Cost Price Quantity Rate Time Variance:
   					$

   Budget Performance Report

   Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a A report that summarizes actual costs, standard costs, and the differences for the units produced.Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

   Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.

   Manufacturing Costs	Standard Price	Standard Quantity	Standard Cost Per Unit
   Direct materials	$8.40 per unit	3.60 units per pair	$30.24
   Direct labor	$8.50 per hour	2.80 hours per pair	23.80
   Factory overhead	$2.70 per hour	2.80 hours per pair	7.56
   Total standard cost per pair			$61.60

   Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30
   Manufacturing Costs	Actual Costs	Standard Cost at Actual Volume	Cost Variance - (Favorable) Unfavorable
   Direct materials	$	$	$
   Direct labor
   Factory overhead
   Total manufacturing costs	$	$	$

   Final Questions

   Before Sarah makes any changes based on the Budget Performance Report for September, she wants to be sure she understands the results, and has the following questions for you.

   Answer the following questions (1) and (2). All questions pertain to the September data.

   1. What caused the total cost variance for direct materials?

   a. The actual quantity of direct materials per unit was less than the standard quantity.

   b. The actual price for direct materials per unit was less than the standard price.

   c. The favorable price variance dominated the unfavorable quantity variance, causing the total cost variance for direct materials to be favorable.

   d. The unfavorable quantity variance dominated the favorable price variance, causing the total cost variance for direct materials to be unfavorable.

   e. A factor other than those listed caused the total cost variance for direct materials.

   • a and b
   • b and c
   • c and d
   • d and e
   • a and e

   2. What caused the total cost variance for direct labor?

   a. The actual number of labor hours per unit was less than the standard number.

   b. The unfavorable rate variance was larger than the favorable time variance, causing the total cost variance for direct labor to be unfavorable.

   c. The favorable time variance was larger than the unfavorable rate variance, causing the total cost variance for direct labor to be favorable.

   d. The actual rate for labor hours per unit was less than the standard rate.

   e. A factor other than those listed caused the total cost variance for direct labor.

   • a and b
   • b and c
   • c and d
   • d and e
   • a and e

Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication.

The company provided the following estimates at the beginning of the year:

Machine Hours Molding    Fabrication    Total

   22,000 32,000 54,000

Fixed manufacturing overhead costs $ 780,000 $ 230,000    $ 1,010,000

Variable manufacturing overhead per machine-hour $ 5.00    $ 5.00

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:

Job D-75:

Molding    Fabrication Total Direct

materials cost    $ 377,000 $ 324,000 $ 701,000

Direct labor cost $ 230,000 $ 160,000 $ 390,000

Machine-hours    16,000 6,000    22,000

Job C-100:

Molding Fabrication    Total Direct

materials cost    $ 290,000    $ 250,000 $ 540,000

Direct labor cost $ 160,000    $ 240,000    $ 400,000

Machine-hours    6,000 26,000    32,000

Smithson had no overapplied or underapplied manufacturing overhead during the year. Assume Smithson uses a plantwide overhead rate based on machine-hours.

Required:

1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)

1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 167,200 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales $18,559,200 Cost of goods sold 6,586,000 Gross profit $11,973,200 Expenses: Selling expenses $3,293,000 Administrative expenses 1,961,000 Total expenses 5,254,000 Income from operations $6,719,200 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,665,000 in yearly sales. The expansion will increase fixed costs by $222,000, but will not affect the relationship between sales and variable costs. Required:

1. Determine the total variable costs and the total fixed costs for the current year.

Total variable costs $ NEED THIS - please show work

I have the total fixed cost so I do not need that.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.

Unit variable cost $ NEED THIS - please show work

Unit contribution margin $ NEED THIS - please show work

3. Compute the break-even sales (units) for the current year.

NEED THIS - please show work

4. Compute the break-even sales (units) under the proposed program for the following year.

NEED THIS - please show work

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $6,719,200 of income from operations that was earned in the current year. units

NEED THIS - please show work

6. Determine the maximum income from operations possible with the expanded plant.

NEED THIS - please show work

Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:

Process Costing – Packaging Department (Refer to Information 9)

Direct materials are added 90% at the beginning of the process and the remaining 10% are added when the cereal is 50% complete with the packaging process. Direct labor and overhead are added evenly throughout the process at the completion rate of the cereals.

Table 8 – Unit and cost information (Do not attempt to complete this table; it is for information only)

Added during Qtr. 1:

Direct Materials -- $9,733

Direct Labor – 790 hours @ $11.00 per hour

Overhead – OH is applied based on predetermined OH rate and actual DL hours

1. Determine the number of units completed during quarter 1.

(Formula to be used: Beginning WIP + Transferred in = Units completed + Ending WIP)

4,000+38,231= units completed + 4,200

Units completed = 38,031 units

2. Compute the equivalent units using the weighted average method.

(Formula: Equivalent units = physical units x percentage of completion)

3. Compute the cost per equivalent unit using the weighted average method.

4. Compute the cost of goods transferred to finished goods inventory

Costs of goods transferred = number of completed goods x total equivalent costs per unit

5. Compute the ending balance in WIP, Packaging

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 500 towels were in process and were 60 percent complete. The costs incurred were $1,780.

During the month, costs of $20,150 were incurred, 3,100 towels were started, and 250 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.

Required:

a. Prepare a production cost report; the company uses weighted-average process costing.

b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.

Prepare a production cost report; the company uses weighted-average process costing

Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:

  
Smithson had no overapplied or underapplied manufacturing overhead during the year.

Assume Smithson uses departmental overhead rates based on machine-hours.

2-a. Compute the predetermined departmental overhead rates. (Round your answer to 2 decimal places.)

2-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

2-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

2-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Mastery Problem: Evaluating Variances from Standard Costs

Sole Purpose Shoe Company

Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.

Starting Questions

Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.

Provide answers to the following questions (1)-(3).

1. Why might Sarah want to use standard costs to compare with her actual costs?

a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.

b. Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.

c. Management can evaluate the differences between standard costs and actual costs to focus on correcting the cost variances.

2. What are some possible drawbacks to using standard costs that Sarah might consider?

a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards.

b. Standards may become “stale” in a dynamic manufacturing environment.

c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.

d. Since standards are impossible to attain, they are a distraction from the work at hand.

e. Since standards never change, they do not reflect reality.

3. Sarah wants to be sure she understands the basic definitions involved:

Answer the following questions by selecting the correct words.

A favorable variance occurs when the actual cost (what the product does cost) is   the standard cost (what the product should cost). A favorable variance is represented by a   number, indicating that costs are   than expected.

An unfavorable variance occurs when the actual cost (what the product does cost) is   the standard cost (what the product should cost). An unfavorable variance is represented by a   number, indicating that costs are   than expected.

Direct Materials

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $61,321 for 6,890 units of direct materials in the production of 2,150 pairs of shoes.

Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Direct Labor

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,880 for 7,320 hours of direct labor in the production of 2,100 pairs of shoes.

Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.

Budget Performance Report

Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.

Final Questions

Before Sarah makes any changes based on the Budget Performance Report for September, she wants to be sure she understands the results, and has the following questions for you.

Answer the following questions (1) and (2). All questions pertain to the September data.

1. What caused the total cost variance for direct materials?

a. The actual quantity of direct materials per unit was less than the standard quantity.

b. The actual price for direct materials per unit was less than the standard price.

c. The favorable price variance dominated the unfavorable quantity variance, causing the total cost variance for direct materials to be favorable.

d. The unfavorable quantity variance dominated the favorable price variance, causing the total cost variance for direct materials to be unfavorable.

e. A factor other than those listed caused the total cost variance for direct materials.

2. What caused the total cost variance for direct labor?

a. The actual number of labor hours per unit was less than the standard number.

b. The unfavorable rate variance was larger than the favorable time variance, causing the total cost variance for direct labor to be unfavorable.

c. The favorable time variance was larger than the unfavorable rate variance, causing the total cost variance for direct labor to be favorable.

d. The actual rate for labor hours per unit was less than the standard rate.

e. A factor other than those listed caused the total cost variance for direct labor.