Odessa, Inc., manufactures one model of computer desk. The
following data are available regarding units shipped and total
shipping costs:
| Month | Number of Units Shipped | Total Shipping Cost |
| January | 40 | $2,950 |
| February | 75 | 3,650 |
| March | 25 | 2,250 |
| April | 35 | 1,850 |
| May | 30 | 2,300 |
| June | 55 | 3,250 |
| July | 50 | 3,000 |
Required:
1. Prepare a scattergraph of Odessa’s shipping cost and
draw the line you believe best fits the data.
3. Using the high-low method, calculate Odessa’s
total fixed shipping costs and variable shipping cost per
unit.
4. Perform a least-squares regression analysis on
Odessa’s data. (Use Microsoft Excel or a statistical
package to find the coefficients using least-squares regression.
Round your answers to 2 decimal
places.)
5. Using the regression output, create a linear
equation (y = a + bx ) for estimating Odessa’s
shipping costs.
In: Accounting
US Auto Company would like to offer rebates to its customers in order to increase sales. If it lowers prices sales will increase. This will depend on the price elasticity of demand. Assume that the price elasticity of demand is 1.5. This firm is considering a $400 rebate on its cars. Also assume the following information on prices and costs before the rebates:
Average price per car $9,000 per car
Expected sales volume at $9,000) per car 1,000,000 cars
Average total costs per car $8,200 per car
Total variable cost $6,400,000,000
Please show the calculation. Thank you.
In: Finance
McKinsey Machines Ltd manufactures a single product A. It has two cost centers namely molding department and painting department.
|
Information |
Molding Department |
Painting Department |
|
Total Manufacturing overheads |
$ 1,806,000 |
$ 2,205,000 |
|
Total Machine hours (estimated) |
210,000 |
|
|
Total Direct Labour Cost |
$ 1,260,000 |
McKinsey Ltd executes job no. 410. The cost and output details of Job No.410 are given below:
|
Information |
Molding Department |
Painting Department |
|
Direct Materials |
$ 1,410 |
$ 996 |
|
Direct Labour |
$ 870 |
$ 2,040 |
|
Number of machine hours used in job no. 410 |
330 hours |
|
|
Output (units) (expected to be received from Job No. 410) |
150 units |
|
Overheads allocation to Job No. 410 will be as follows:
(a) Molding department overheads will be allocated based on machine hours
(b) Painting Department overheads will be allocated using direct labour costs (as a percentage).
Required
(4) Explain why the costs reported under traditional costing and activity-based costing differ from one another?
In: Accounting
Indicate the missing amount for each letter.
|
Case |
||||||
|---|---|---|---|---|---|---|
|
1 |
2 |
|||||
|
Direct materials used |
$9,850 | $enter a dollar amount | (g) | |||
|
Direct labor |
5,460 | 9,060 | ||||
|
Manufacturing overhead |
9,030 | 4,350 | ||||
|
Total manufacturing costs |
enter a dollar amount | (a) | 16,870 | |||
|
Beginning work in process inventory |
1,490 | enter a dollar amount | (h) | |||
|
Ending work in process inventory |
enter a dollar amount | (b) | 3,300 | |||
|
Sales revenue |
25,200 | enter a dollar amount | (i) | |||
|
Sales discounts |
2,720 | 2,120 | ||||
|
Cost of goods manufactured |
18,100 | 22,160 | ||||
|
Beginning finished goods inventory |
enter a dollar amount | (c) | 3,870 | |||
|
Goods available for sale |
22,510 | enter a dollar amount | (j) | |||
|
Cost of goods sold |
enter a dollar amount | (d) | enter a dollar amount | (k) | ||
|
Ending finished goods inventory |
4,340 | 2,630 | ||||
|
Gross profit |
enter a dollar amount | (e) | 7,620 | |||
|
Operating expenses |
3,350 | enter a dollar amount | (l) | |||
|
Net income |
enter a total net income amount | (f) | 5,350 | |||
eTextbook and Media
Prepare a condensed cost of goods manufactured schedule for Case 1.
|
CASE 1 |
||||
|---|---|---|---|---|
|
$enter a dollar amount |
||||
|
$enter a dollar amount |
||||
|
enter a dollar amount |
||||
| enter a dollar amount | ||||
| enter a total of the three previous amounts | ||||
|
enter a total amount for this part of the schedule |
||||
| enter a dollar amount | ||||
|
$enter a total amount for this schedule |
||||
eTextbook and Media
Prepare an income statement for Case 1.
|
CASE 1 |
||||
|---|---|---|---|---|
|
$enter a dollar amount |
||||
| enter a dollar amount | ||||
|
$enter a total amount for section one |
||||
|
enter a dollar amount |
||||
| enter a dollar amount | ||||
|
enter a total of the two previous amounts |
||||
| enter a dollar amount | ||||
| enter a total amount for section two | ||||
|
enter a total amount for the first part |
||||
| enter a dollar amount | ||||
|
$enter a total net income or loss amount |
||||
Prepare the current assets section of the balance sheet for Case 1.
Assume that in Case 1 the other items in the current assets section
are as follows: Cash $3,330, Receivables (net) $15,440, Raw
Materials $640, and Prepaid Expenses $410. (List
Current Assets in order of liquidity.)
|
CASE 1 |
||||
|---|---|---|---|---|
|
$enter a dollar amount |
||||
|
enter a dollar amount |
||||
|
$enter a dollar amount |
||||
|
enter a dollar amount |
||||
| enter a dollar amount | ||||
|
enter a subtotal of the three previous amounts |
||||
| enter a dollar amount | ||||
|
$enter a total amount for this section |
||||
In: Accounting
Owen Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Owen Company uses the FIFO method to compute equivalent units. Production and cost data for the month of March are as follows.
|
|
|
Percentage |
|||
| Work in process units, March 1 | 200 | 80 | % | ||
| Units started into production | 1,310 | ||||
| Work in process units, March 31 | 290 | 40 | % | ||
|
|
||
| Work in process units, March 1 | $19,030 | |
| Direct materials | 49,780 | |
| Direct labor | 26,200 | |
| Manufacturing overhead | 30,248 |
|
|
|
Percentage |
|||
| Work in process units, March 1 | 140 | 75 | % | ||
| Units started into production | 1,000 | ||||
| Work in process units, March 31 | 60 | 25 | % | ||
|
|
||
| Work in process units, March 1 | $6,190 | |
| Direct materials | 30,000 | |
| Direct labor | 14,100 | |
| Manufacturing overhead | 19,560 |
Calculate the equivalent units of production for materials and conversion costs for both the bicycles and the tricycles.
|
Materials |
Conversion Costs |
|||
| Equivalent Units of bicycles | ||||
| Equivalent Units of tricycles |
eTextbook and Media
Calculate the unit costs of production for materials and conversion costs for both the bicycles and the tricycles.
|
Materials |
Conversion Costs |
|||
| Unit costs of bicycles | ||||
| Unit costs of tricycles |
eTextbook and Media
Calculate the assignment of costs to units transferred out and
in process at the end of the accounting period for both the
bicycles and the tricycles.
Bicycles
|
Costs accounted for: |
||
|
Transferred out |
$ |
|
|
Work in process, March 31 |
||
|
Materials |
$ |
|
|
Conversion costs |
||
|
Total costs |
$ |
Tricycles
|
Costs accounted for: |
||
|
Transferred out |
$ |
|
|
Work in process, March 31 |
||
|
Materials |
$ |
|
|
Conversion costs |
||
|
Total costs |
$ |
eTextbook and Media
Prepare a production cost report for the month of March for the
bicycles only.
|
OWEN COMPANY |
||||||
|
Equivalent Units |
||||||
|
Quantities |
Physical |
|
Conversion |
|||
|
Units to be accounted for |
||||||
|
Work in process, March 1 |
||||||
|
Started into production |
||||||
|
Total units |
||||||
|
Units accounted for |
||||||
|
Completed and transferred out |
||||||
|
Work in process, March 1 |
||||||
|
Started and completed |
||||||
|
Work in process, March 31 |
||||||
|
Total units |
||||||
|
|
|
Conversion |
|
|||
|
Unit costs |
||||||
|
Costs in March |
$ |
$ |
$ |
|||
|
Equivalent units |
||||||
|
Unit costs |
$ |
$ |
$ |
|||
|
Costs to be accounted for |
||||||
|
Work in process, March 1 |
$ |
|||||
|
Started into production |
||||||
|
Total costs |
$ |
|||||
|
Cost Reconciliation Schedule |
||||||
|
Costs accounted for |
||||||
|
Transferred out |
||||||
|
Work in process, March 1 |
$ |
|||||
|
Conversion costs to complete beginning inventory |
||||||
|
Started and completed |
$ |
|||||
|
Work in process, March 31 |
||||||
|
Materials |
||||||
|
Conversion costs |
||||||
|
Total costs |
$ |
|||||
In: Accounting
Budgeted income statement and supporting budgets for three months
Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year:
a. Estimated sales at $125 per unit:
| January | 25,000 | units |
| February | 30,000 | units |
| March | 45,000 | units |
| April | 50,000 | units |
b. Estimated finished goods inventories:
| January 1 | 2,000 | units |
| January 31 | 10% | of next month’s sales |
| February 28 | 10% | of next month’s sales |
| March 31 | 10% | of next month’s sales |
c. Work in process inventories are estimated to be insignificant (zero).
d. Estimated direct materials inventories:
| January 1 | 1,000 | lbs. |
| January 31 | 1,500 | lbs. |
| February 28 | 2,000 | lbs. |
| March 31 | 2,500 | lbs. |
e. Manufacturing costs:
| Per Unit | |
| Direct materials (0.8 lb. per unit × $15 per lb.) | $ 12 |
| Direct labor (2.5 hrs. per unit × $24 per hr.) | 60 |
| Variable factory overhead ($1.20 per direct labor hour) | 3 |
| Fixed factory overhead ($200,000 per month, allocated using 40,000 units) | 5 |
| Total per-unit manufacturing costs | $80 |
f. Selling expenses:
| Variable selling expenses | $4 | per unit |
| Fixed selling expenses | $150,000 | |
| Administrative expenses (all fixed costs) | $400,000 |
6. Prepare a cost of goods sold budget for March.
| Bellaire Inc. | ||||
| Cost of Goods Sold Budget | ||||
| For the First Quarter Ending March 31 | ||||
| January | February | March | First Quarter | |
| Beginning finished goods inventory | $ | $ | $ | $ |
| Cost of goods manufactured: | ||||
| $ | $ | $ | $ | |
| Total cost of goods manufactured | $ | $ | $ | $ |
| $ | $ | $ | $ | |
| $ | $ | $ | $ | |
Feedback
The cost of goods sold budget combines the budgeted costs from the direct labor, direct materials, and factory overhead budgets with estimated beginning and ending inventory to estimate a total cost of goods sold.
7. Prepare a selling and administrative expenses budget for March. Enter all amounts as positive number.
| Bellaire Inc. | ||||
| Selling and Administrative Expenses Budget | ||||
| For the First Quarter Ending March 31 | ||||
| January | February | March | First Quarter | |
| Selling expenses: | ||||
| x$ | x$ | x$ | x$ | |
| Total variable selling expenses | $ | $ | $ | $ |
| Total selling expenses | $ | $ | $ | $ |
| Administrative expenses: | ||||
| Total selling and administrative expenses | $ | $ | $ | $ |
8. Prepare a budgeted income statement with budgeted operating income for March.
| Bellaire Inc. | ||||
| Budgeted Income Statement | ||||
| For the First Quarter Ending March 31 | ||||
| January | February | March | First Quarter | |
| $ | $ | $ | $ | |
| Gross profit | $ | $ | $ | $ |
| Selling and administrative expenses: | ||||
| $ | $ | $ | $ | |
| Total selling and administrative expenses | $ | $ | $ | $ |
| $ | $ | $ | $ | |
In: Accounting
Owen Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Owen Company uses the FIFO method to compute equivalent units. Production and cost data for the month of March are as follows.
|
|
|
Percentage |
|||
| Work in process units, March 1 | 190 | 80 | % | ||
| Units started into production | 1,380 | ||||
| Work in process units, March 31 | 300 | 40 | % | ||
|
|
||
| Work in process units, March 1 | $19,070 | |
| Direct materials | 49,680 | |
| Direct labor | 25,900 | |
| Manufacturing overhead | 29,810 |
|
|
|
Percentage |
|||
| Work in process units, March 1 | 140 | 75 | % | ||
| Units started into production | 990 | ||||
| Work in process units, March 31 | 60 | 25 | % | ||
|
|
||
| Work in process units, March 1 | $6,460 | |
| Direct materials | 30,690 | |
| Direct labor | 14,300 | |
| Manufacturing overhead | 20,000 |
Calculate the equivalent units of production for materials and conversion costs for both the bicycles and the tricycles.
|
Materials |
Conversion Costs |
|||
| Equivalent Units of bicycles | ||||
| Equivalent Units of tricycles |
eTextbook and Media
Calculate the unit costs of production for materials and conversion costs for both the bicycles and the tricycles.
|
Materials |
Conversion Costs |
|||
| Unit costs of bicycles | ||||
| Unit costs of tricycles |
eTextbook and Media
Calculate the assignment of costs to units transferred out and
in process at the end of the accounting period for both the
bicycles and the tricycles.
Bicycles
|
Costs accounted for: |
||
|
Transferred out |
$ |
|
|
Work in process, March 31 |
||
|
Materials |
$ |
|
|
Conversion costs |
||
|
Total costs |
$ |
Tricycles
|
Costs accounted for: |
||
|
Transferred out |
$ |
|
|
Work in process, March 31 |
||
|
Materials |
$ |
|
|
Conversion costs |
||
|
Total costs |
$ |
eTextbook and Media
Prepare a production cost report for the month of March for the bicycles only.
|
OWEN COMPANY |
||||||
|
Equivalent Units |
||||||
|
Quantities |
Physical |
|
Conversion |
|||
|
Units to be accounted for |
||||||
|
Work in process, March 1 |
||||||
|
Started into production |
||||||
|
Total units |
||||||
|
Units accounted for |
||||||
|
Completed and transferred out |
||||||
|
Work in process, March 1 |
||||||
|
Started and completed |
||||||
|
Work in process, March 31 |
||||||
|
Total units |
||||||
|
|
|
Conversion |
|
|||
|
Unit costs |
||||||
|
Costs in March |
$ |
$ |
$ |
|||
|
Equivalent units |
||||||
|
Unit costs |
$ |
$ |
$ |
|||
|
Costs to be accounted for |
||||||
|
Work in process, March 1 |
$ |
|||||
|
Started into production |
||||||
|
Total costs |
$ |
|||||
|
Cost Reconciliation Schedule |
||||||
|
Costs accounted for |
||||||
|
Transferred out |
||||||
|
Work in process, March 1 |
$ |
|||||
|
Conversion costs to complete beginning inventory |
||||||
|
Started and completed |
$ |
|||||
|
Work in process, March 31 |
||||||
|
Materials |
||||||
|
Conversion costs |
||||||
|
Total costs |
$ |
|||||
In: Accounting
|
JORGE COMPANY |
||||
|
CVP Income Statement (Estimated) |
||||
|
For the Year Ending December 31, 2017 |
||||
|
A |
Sales |
$1800000 |
||
|
Variable expenses |
||||
|
Cost of goods sold |
1170000 |
|||
|
Selling expenses |
70000 |
|||
|
Administrative expenses |
20000 |
|||
|
B |
Total variable expenses |
$1260000 |
||
|
C=A-B |
Contribution margin |
$540000 |
||
|
Fixed expenses |
||||
|
Cost of goods sold |
280000 |
|||
|
Selling expenses |
65000 |
|||
|
Administrative expenses |
60000 |
|||
|
D |
Total fixed expenses |
$405000 |
||
|
E=C-D |
Net income |
$135000 |
||
|
(b) |
Compute the break-even point in (1) units and (2) dollars. |
|||
|
(b)(1) |
Break-even point in units |
|||
|
Unit selling price |
$0.5 |
|||
|
Unit variable costs |
$0.35 |
|||
|
Unit contribution margin |
$0.15 |
|||
|
Fixed costs |
$405000 |
|||
|
Unit contribution margin |
$0.15 |
|||
|
Break-even point in units |
2700000 |
|||
|
(b)(2) |
Break-even point in dollars |
|||
|
Break-even point in units |
2700000 |
|||
|
Unit selling price |
$0.5 |
|||
|
Break-even point in dollars |
$1350000 |
|||
|
(c ) |
Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full percent.) |
|||
|
Contribution margin ratio |
||||
|
A |
Unit contribution margin |
$0.15 |
||
|
B |
Unit selling price |
$0.5 |
||
|
C=A/B x 100 |
Contribution margin ratio |
30% |
||
|
Margin of safety ratio |
||||
|
A |
Total sales |
1800000 |
||
|
B |
Break-even sales |
1350000 |
||
|
C=A-B |
Margin of safety (dollars) |
450000 |
||
|
A |
Total sales |
1800000 |
||
|
D=C/A |
Margin of safety ratio |
25% |
||
|
(d) |
Determine the sales dollars required to earn net income of $180,000. |
|||
|
Sales dollars required to earn target income |
||||
|
Fixed costs |
$405000 |
|||
|
Target income |
$180000 |
|||
|
A |
Total fixed cost + target income |
$585000 |
||
|
B |
Contribution margin ratio |
30% |
||
|
C=A/B |
Sales dollars required |
$1950000 |
Requirement (last)
If sale price changed to $0.6 and fixed manufacturing cost become $300000, then
|
Sales |
[3600000 units x 0.6] |
$2160000 |
|
|
Variable expenses |
|||
|
Cost of goods sold |
1170000 |
||
|
Selling expenses |
70000 |
||
|
Administrative expenses |
20000 |
||
|
Total variable expenses |
$1260000 |
||
|
Contribution margin |
$900000 |
||
|
Fixed expenses |
|||
|
Cost of goods sold |
300000 |
||
|
Selling expenses |
65000 |
||
|
Administrative expenses |
60000 |
||
|
Total fixed expenses |
$425000 |
||
|
Net income |
$475000 |
Assume
that
the
unit
selling
price
per
bottle
changed
to
$0.60
each,
and
fixed
manufacturing
costs
increased
to
$300,000.
Show
impact
of
these
changes
on
calculations.
In: Accounting
Claude's Port-A-Potties produces two different models of portable toiletry units (Luxury and Standard). Mechanical systems for both toiletry units are made in the components department. Once the mechanical systems are completed, it is combined with the housing assembly in the finishing department. Furthermore, there is also a support department that supports both the components and finishing departments.
The activities, costs, and drivers associated with these two manufacturing processes and the production support process are below:
| Process | Activity | Overhead Cost | Driver | Quantity | |||
| Components | Changeover | $ | 475,620 | Number of batches | 1,930 | ||
| Machining | 803,634 | Machine hours | 8,670 | ||||
| Setups | 68,963 | Number of setups | 200 | ||||
| $ | 1,348,217 | ||||||
| Finishing | Welding | $ | 419,700 | Welding hours | 6,200 | ||
| Inspecting | 766,945 | Number of inspections | 705 | ||||
| Rework | 776,312 | Rework orders | 140 | ||||
| $ | 1,962,957 | ||||||
| Support | Purchasing | $ | 263,116 | Purchase orders | 300 | ||
| Providing space | 67,100 | Number of units | 8,600 | ||||
| Providing utilities | 98,204 | Number of units | 8,600 | ||||
| $ | 428,420 | ||||||
Actual production information concerning the two product lines was provided:
| Luxury | Standard | |
| Units produced | 3,600 | 7,000 |
| Welding hours | 3,100 | 8,000 |
| Batches | 600 | 430 |
| Number of inspections | 475 | 350 |
| Machine hours | 5,400 | 8,920 |
| Setups | 120 | 120 |
| Rework orders | 165 | 230 |
| Purchase orders | 240 | 415 |
***************************************************************************************************************************************************************************************
a. Using the ABC method, determine the overhead cost per unit for both the Luxury and Standard product lines. Round your answers to 2 decimal places.
| Overhead assigned | ||||
| Activity | Activity Rate | Luxury | Standard | |
| Components | ||||
| Changeover | per batch | |||
| Machining | per machine hour | |||
| Setups | per setup | |||
| Finishing | ||||
| Welding | per welding hour | |||
| Inspecting | per inspection | |||
| Rework | per rework order | |||
| Support | ||||
| Purchasing | per purchase order | |||
| Providing space and utilities | per unit | |||
| Total Overhead Costs | ||||
| Total Units Produced | ||||
| Overhead Cost per Unit | ||||
b. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $480 for the Luxury model and $290 for the Standard model. Round your answers to 2 decimal places.
Total cost per unit - Luxury
Total cost per unit - Standard
c. If the market price for the Luxury model is $1,400, and the market price for the Standard model is $1,000, what is the profit or loss per unit for each model? Round your answers to 2 decimal places.
Total Net Profit (Loss) per unit - Luxury
Total Net Profit (Loss) per unit - Standard
In: Accounting
Birch PaperBirch Paper
Co. produces the paper used by wallpaper manufacturers.
BirchBirch's
four-stage process includes mixing, cooking, rolling, and cutting.
On
MarchMarch
1, the Mixing Department had
550550
rolls of paper in process. During
MarchMarch,
the Mixing Department completed the mixing process for those
550
rolls and also started and completed the mixing process for an additional
3,850
rolls of paper. The department started but did not finish the mixing process for an additional
500
rolls, which were
20 %
complete with respect to both direct materials and conversion work at the end of
MarchMarch.
Direct materials and conversion costs are incurred evenly throughout the mixing process.
The Mixing Department compiled the following data for March:
|
Direct |
Direct |
Manufacturing |
Total |
||||
|
Materials |
Labor |
Overhead Allocated |
Costs |
||||
|
Beginning inventory, Mar. 1 |
$360 |
$515 |
$230 |
$1,105 |
|||
|
Costs added during March |
5,490 |
3,265 |
3,640 |
12,395 |
|||
|
Total costs |
$5,850 |
$3,780 |
$3,870 |
$13,500 |
|||
|
1. |
Prepare a production cost report for the Mixing Department for
March The company uses the weighted-average method. |
|
2. |
Journalize all transactions affecting the company's mixing
process during
March Assume labor costs are accrued and not yet paid. |
Prepare a production cost report for the Mixing Department for
MarchMarch.
The company uses the weighted-average method. (Round all cost per unit amounts to the nearest cent and all other amounts to the nearest whole dollar. Abbreviation used: EUP = equivalent units of production.)
|
Birch Paper, Co. |
|||||
|
Production Cost Report-Mixing Department |
|||||
|
Month Ended March 31 |
|||||
|
Equivalent Units |
|||||
|
Physical |
Direct |
Conversion |
|||
|
UNITS |
Units |
Materials |
Costs |
||
|
Units to account for: |
|||||
|
Total units to account for |
|||||
|
Units accounted for: |
|||||
|
Total units accounted for |
|||||
|
Direct |
Conversion |
Total |
|
|
COSTS |
Materials |
Costs |
Costs |
|
Costs to account for: |
|||
|
Total costs to account for |
|||
|
Cost per equivalent unit |
|
Costs accounted for: |
|||
|
Total costs accounted for |
Requirement 2. Journalize all transactions affecting the company's mixing process during
MarchMarch.
Assume labor costs are accrued and not yet paid.
Begin with a summary journal entry to record the assignment of direct materials, direct labor, and the allocation of manufacturing overhead to the Mixing Department. (Prepare a single compound journal entry. Record debits first, then credits. Exclude explanations from any journal entries.)
|
Date |
Accounts |
Debit |
Credit |
|
|
Mar. |
31 |
|||
Prepare the journal entry to record the cost of the units completed and transferred out of the Mixing Department.
|
Date |
Accounts |
Debit |
Credit |
|
|
Mar. |
31 |
|||
In: Accounting