Arnett Corp. manufactures computer desks in its

White Bear LakeWhite Bear Lake​,

MinnesotaMinnesota​,

plant. The company uses​ activity-based costing to allocate all manufacturing conversion costs​ (direct labor and manufacturing​ overhead). Its activities and related data follow.

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​(Click the icon to view the activity areas and related​ data.)

Requirements

Requirement 1. Compute the​ per-unit manufacturing product cost of Standard desks and Unpainted desks. ​(Complete all input boxes. Enter a​ "0" for any zero amounts. Round your answers to the nearest whole​ dollar.)

Your manufacturing facility produces three styles of coffee tables for its customers. All three of the tables use the same Baltic birch plywood oval and then are treated differently to create the final products. The Waltons model has a natural wood finish and wooden legs. The jetsons model has aluminum sheet laminated to the wood base and aluminum legs. The Miami vice model has hot pink finish applied and black iron legs. The plywood ovals are manufactured in a process environment. Then, they are transferred to the next department where they undergo transformation into the finished products. The second department is a job-order cost environment.

Using the data on this page, prepare the process cost summary on the blank form provided. Then, using your answer from the process cost summary and other information provided, complete the job-order cost report by computing manufacturing cost per unit for each of the three models. Please not that the job order cost report is not complete – you’ll need to add some lines to arrive at your final manufacturing costs per unit.

Raw materials Factory overhead

Beginning RM Inventory 16,960 Indirect materials used 174,300

Rm Purchases (on credit) 452,100 Indirect labor used 95,700

Direct material used 247,620 other overhead costs 186,550

Indirect materials used 174,400 Total overhead incurred 456,550

Ending RM Inventory 47,040                                              

Factory Payroll Factory overhead (Applied at180%DL 467,730)

Direct Labor used 259,850 Direct Labor used 259,850

Indirect Labor used 95,700 overhead applied 467,730

Total payroll 355,550 total conversion 727,580

Units Costs

Beginning WIP 5,200 Beginning WIP- DM 12900

Started into production 20,300 Beginning WIP conversion 27,100

Ending WIP 4,500 Total 40,000

Ending WIP DM added-247,620

90 percent complete with respect to direct Conversion added- 727,580

Materials Total costs- 1,015,200

40 percent complete with respect to

conversion   

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments—Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q?

12. If Job P included 20 units, what was its unit product cost?

13. If Job Q included 30 units, what was its unit product cost?

14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q?

15. What was Sweeten Company’s cost of goods sold for March?

Assume Acme Corporation is a typical monopoly: Construct a graph illustrating Acme’s average and marginal cost curves and the demand curve facing it. Identify profit maximizing output and price, total revenues, total costs, and total profits. Assume the economy moves into a recession and the demand for Acme’s product falls. On the same graph, show the effect of the recession on equilibrium price, output, and profits. Your response should be one graph and an explanation for the graph.

Swain Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. The company’s beginning balance in Retained Earnings is $59,000. It sells one product for $176 per unit and it generated total sales during the period of $635,360 while incurring selling and administrative expenses of $55,100. Swain Company does not have any variable manufacturing overhead costs and its standard cost card for its only product is as follows:

During the period, Swain recorded the following variances:

Required:

1. When Swain closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?

2. Prepare an income statement for the year.

3. What is Swain’s ending balance in Retained Earnings?

Required 1.

When Swain closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?

Required 2.

Swain Company

Income Statement

For the year

Required 3.

Ending balance in retained earnings:

Five Card Draw manufactures and sells 23,000 units of Diamonds, which retails for $170, and 26,000 units of Clubs, which retails for $190. The direct materials cost is $25 per unit of Diamonds and $31 per unit of Clubs. The labor rate is $20 per hour, and Five Card Draw estimated 124,000 direct labor hours. It takes 2 direct labor hours to manufacture Diamonds and 3 hours for Clubs. The total estimated overhead is $496,000. Five Card Draw uses the traditional allocation method based on direct labor hours.

What is the gross profit per unit for Diamonds and Clubs?

What is the total gross profit for the year?

b. They use a traditional cost system and estimates next year's overhead will be $180,000, with the estimated cost driver of 180,000 direct labor hours. It manufactures three products and estimates the following costs:

If the labor rate is $25 per hour, what is the per-unit cost of each product?

c.

What would be the predetermined rate for each cost pool? Round "Rate" answers to two decimal places.

Purchases$92,000

Materials inventory, March 1 6,000

Materials inventory, March 31 . 8,000 .

Direct labor 25,000

Factory overhead . 37,000

Work in process, March 1 . 22,000 .

Work in process, March 31 . 23,500 .

Finished goods inventory, March 1 . 21,000 .

Finished goods inventory, March 31 . 30,000

Sales . 257,000

Sales and administrative expenses . 79,000

Please enter an account name for every "$" that is underneath the title. The possible name options are

Beginning work in progress inventory, March 1

Cost of materials placed in production

Direct Labor

Ending work in process inventory, March 31

Sales

Beginning materials inventory

Factory overhead

Wages Expense

Cost of goods sold

Direct Labor

Gross Profit

Purchases

Utility expense

Cost of materials available for use

Finished goods inventory

Rent expense

Interest expense

Rent expense

Sales

Sales and administrative expenses

Less direct labor

Less ending materials inventory

Less factory overhead

Less sales

Less utilities expense

Beginning finished goods inventory

Cost of finished goods available for sale

Pluse cost of goods manufactured

Net income

Net loss

a. Prepare a schedule of cost of goods manufactured.

Traditional Product Costing versus Activity-Based Costing
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year:

Project 7: Evaluating Recruiting Sources

The purpose of this exercise is to (a) conduct an in-depth analysis of various recruitment sources and (b) recommend the ideal mix of sources for an organization.

Using the data above, compute the following:

• Cost per hire
• Cost per 6 month of survival
• Cost per 1 year of survival
• Cost per above average performer

What is your best source and why?

What is the worst source and why?

If no one source could supply more than 40% of the total number of hires needed, what mix of recruitment sources would you recommend and why?

Tinkle-Tinkle Glass Company makes glass globe paper weights for desks. The company uses a job-order cost system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Fabrication Department is based on machine hours, and the rate in the Finishing Department is based on direct labor hours. At the beginning of the year, the company’s management made the following estimates for the year:

                                                                                                            Department

                                                                                                Fabrication       Finishing

Machine hours                                                                         83,000            28,000

Direct labor hours                                                                     30,000            43,000

Direct material cost                                                                 $412,000            $213,000

Direct labor cost                                                                      $299,000            $692,000

Fixed manufacturing overhead cost                                            $799,000           $279,000

Variable manufacturing overhead per machine hour                       $2.05                    --

Variable manufacturing overhead per direct labor hour                       --                  $2.00

Job 25 (the Christmas holiday special) was started on August 1 and completed on August 31. The company’s cost records show the following information concerning the job:

                                                                                                            Department     

                                                                                                Fabrication       Finishing

Machine hours                                                                                  315                   80

Direct labor hours                                                                              105                 125

Direct materials cost                                                                      $1,305          $1,030

Direct labor cost                                                                                $880              1,085

Compute the predetermined overhead rate used during the year in the Fabrication Department. (Round to two decimal places.) Do the same for the Finishing Department. (Round to two decimal places.) Be careful to use the proper cost driver.

Compute the total overhead cost applied to Job 25 (in dollars and cents).

What would be the total cost recorded for Job 25? If Job 25 contained 50 units, what would be the unit product cost? If it contained 800 units, what would be the unit product cost? (Round to two decimal places.)

At the end of the year, the records of Tinkle-Tinkle Glass revealed the following actual cost and

operating data for all jobs during the year:

                                                                                                            Department

                                                                                                Fabrication       Finishing

Machines hours                                                                           87,000               31,000

Direct labor hours                                                                        32,000               30,000

Direct materials cost                                                                 $424,000           $160,000

Manufacturing overhead cost                                                    $712,000           $287,000         

What was the amount of actual overhead in each department at the end of the year? Was it underapplied or overapplied? (You should have a total of four answers for this question.)