What is the meaning of step-variable cost, step-fixed cost, semi-variable (or mixed) cost, and curvilinear cost? Can you explain with one example?

Equivalent Units and Related Costs; Cost of Production Report; Entries

Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on December 1, 2016:

The following costs were charged to Work in Process—Filling during December:

During December, 38,400 units of specialty chemicals were completed. Work in Process—Filling Department on December 31 was 3,300 units, 90% completed.

Required:

1. Prepare a cost of production report for the Filling Department for December. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

Learning Objective 2, Learning Objective 3 and Learning Objective 4.

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

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2. Remember that there are three types of inventory; materials, work in process, and finished goods. What costs are captured in the work in process account? Are these units 100% complete or are they being transferred to another department?

Learning Objective 2, Learning Objective 3 and Learning Objective 4.

3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs. If required, round your answers to two decimal places.

4. The cost of production report may be used as the basis for allocating product costs between and . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.95 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $348,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N ranch was $191.60 (800 square feet @ $23.95 per hundred square feet). Calculate the customer margin earned on this job.

req 1

Prepare the first-stage allocation of costs to the activity cost pools.

req 2

Prepare the first-stage allocation of costs to the activity cost pools.

req 3

The company recently completed a 800 square foot carpet-cleaning job at the Flying N ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

req 4

The revenue from the Flying N ranch was $191.60 (8 hundred square feet @ $23.95 per hundred square feet). Calculate the customer margin earned on this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

The following costs were charged to Work in Process—Filling during January:

During January, 53,700 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,700 units, 40% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

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2. Remember that there are three types of inventory; materials, work in process, and finished goods. What costs are captured in the work in process account? Are these units 100% complete or are they being transferred to another department?

3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.

4. Discuss the uses of the cost of production report and the results of part (3).

The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Preparation of Individual Budgets

During the first calendar quarter of 2019, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 6,000 units in the urban region at a unit price of $53 and 5,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 4,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:

*Varies per unit sold, not per unit produced.

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors:

Do not use negative signs with any of your answers below.

1. Total sales

($Answer)

2. Production

(Answer units)

3. Material purchase cost

4. Direct labor costs

($Answer)

5. Manufacturing overhead costs

6. Selling and administrative expenses

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

Round answers to the nearest whole number.
Do not use negative signs with your answers.

the spots with a(    - ) in the boxes (not including the ones in the top box with the numbers). or the word Answer (question 1,2,4) is what I need help figuring out can you plans include how you got the answers like the steps to get the answers so I can know how to solve future problems

The Steelie Dan Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which produces 170 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are in total six drilling machines, but at present only three of them are operational. Each drilling machine drills part C at a rate of 70 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C. The final assembly line produces at a rate of 190 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if need arises, it can add a second shift of eight hours for the assembly lines. The cost of assemble labor is 30 cents per part for each assembly line; the cost of drilling labor is 10 cents per part. For drilling the cost of electricity is two cent per part. The total overhead cost has been calculated as $1,100 per week. The depreciation cost for equipment has been calculated as $30 per week.

a. Create a process flow diagram to determine the process capacity of the entire process.

b. Suppose a second shift of eight hours is run for assembly line 1 and the same is done for the final assembly line. In addition, four of the six drilling machines are made operational. The drilling machines, however, operate for just eight hours a day. What is the new process capacity (number of components produced per week)? Which of the three operations limits the capacity.

c. Management decides to run a second shift of eight hours for assembly line1 plus a second shift of only four hours for the final assembly line. Five of the six drilling machines operate for eight hours a day. What is the new capacity? Which of the three operations limits the capacity?

d. Determine the cost per unit output for questions (b) and (c). Item Calculation Cost Cost of part A Cost of part B Cost of part C Electricity Assembly 1 labor Final assembly labor Drilling labor Overhead Depreciation Total Cost Cost per unit = Item Calculation Cost Cost of part A Cost of part B Cost of part C Electricity Assembly 1 labor Final assembly labor Drilling labor Overhead Depreciation Total Cost per unit=

e. The product is sold at $3.00 per unit. Assume that the cost of a drilling machine (fixed cost) is $30,000 and the company produces 8,000 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $3.00 per unit, what would be the break-even number of units?

Total Product Offer

One of the American Marketing Association's definitions of marketing says it's "a set of processes for creating, communicating, and delivering value to customers." When consumers calculate the value of a product, they look at the benefits and then subtract the price to see whether the benefits exceed the costs, including the cost of driving to the store or shipping fees if they buy the product online. Whether consumers perceive a product as the best value depends on many factors, including the benefits they seek and the service they receive. To satisfy consumers, marketers must learn to listen better and constantly adapt to changing market demands. From a strategic marketing viewpoint, a product is more than just the physical good or service. A total product offer consists of everything consumers evaluate when deciding whether to buy something. The basic product or service may be a cell phone or a hotel room, but the total product offer includes other aspects of the good or service.

Read the case below and answer the questions that follow.

At the time the new iPhone 3GS was introduced, it was described on Apple's website in the following way:

Priced from $199 to $299, Apple promises that its new iPhone 3GS is the fastest, most powerful iPhone yet. The new version features video recording, Voice Control, and up to 32GB of storage. iPhone is more than just a phone. It combines three devices in one:

a revolutionary mobile phone, a widescreen iPod, and a breakthrough Internet device. All that and more makes it the best phone you'll ever use. The Apple iPhone is a revolutionary phone. With the Multi-Touch interface on iPhone, you can make a call simply by tapping a name or number in your contacts or favorites list, your call log, or just about anywhere. Visual Voicemail lets you select and listen to messages in whatever order you want—just like email. The Apple iPhone shows off your content—music, movies, TV shows, and more—on a beautiful 3.5-inch display. Add to your collection by downloading music and video wirelessly from the iTunes Store. Scroll through songs and playlists with the touch of a finger. Even browse your album artwork using Cover Flow. The Apple iPhone uses fast 3G and Wi-Fi wireless connections to deliver rich HTML email, Maps with GPS, and Safari—the most advanced web browser on a mobile device. It has Google and Yahoo! search built in. And since iPhone multitasks, you can make a phone call while emailing a photo or surfing the web over a Wi-Fi or 3G connection.

The Apple iPhone comes with some amazing applications. And you can choose from thousands more on the App Store and download them with a tap. Your iPhone gets even better with every new app. Play games. Be more productive. Keep yourself entertained. No matter what you want to do on iPhone, there's an app for that. With iPhone, Apple combined innovative hardware features with the world's most advanced mobile operating system to redefine what a mobile phone can do. Applications work together seamlessly and they sync with your computer—whether you're on a Mac or a PC. From its revolutionary Multi-Touch display to its intelligent keyboard to its smart sensors, iPhone is years ahead of any other mobile phone.

What is the total product offer for the Apple iPhone?

Absorption and Variable Costing Income Statements for Two Months and Analysis

During the first month of operations ended July 31, Head Gear Inc. manufactured 32,600 hats, of which 30,600 were sold. Operating data for the month are summarized as follows:

During August, Head Gear Inc. manufactured 28,600 designer hats and sold 30,600 hats. Operating data for August are summarized as follows:

Required:

1a. Prepare an income statement for July using the absorption costing concept. Enter all amounts as positive numbers.

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1a. & b. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = income from operations
*(Manufactured Units - Sold units) x (total manufacturing costs/manufactured units)
a & b. Sales - variable cost of goods sold* = Manufacturing margin; Manufacturing margin - variable selling and administrative expenses = Contribution margin; Contribution margin - (fixed manufacturing costs + fixed selling and administrative expenses) = income from operations
*Variable cost of goods sold = Variable cost of goods manufactured - [(Manufactured Units - Sold units) x (variable manufacturing costs/manufactured units)]

Learning Objective 1 and Learning Objective 2.

1b. Prepare an income statement for August using the absorption costing concept. Enter all amounts as positive numbers.

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Learning Objective 1 and Learning Objective 2.

2a. Prepare an income statement for July using the variable costing concept. Enter all amounts as positive numbers.

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2a. & b. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = income from operations
*(Manufactured Units - Sold units) x (total manufacturing costs/manufactured units)
a & b. Sales - variable cost of goods sold* = Manufacturing margin; Manufacturing margin - variable selling and administrative expenses = Contribution margin; Contribution margin - (fixed manufacturing costs + fixed selling and administrative expenses) = income from operations
*Variable cost of goods sold = Variable cost of goods manufactured - [(Manufactured Units - Sold units) x (variable manufacturing costs/manufactured units)]

Learning Objective 1 and Learning Objective 2.

2b. Prepare an income statement for August using the variable costing concept. Enter all amounts as positive numbers.

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Learning Objective 1 and Learning Objective 2.

3a. For July, income from operations reported under variable costing is less than absorption costing due to part of fixed manufacturing costs that are expensed.

3b. When large changes in inventory levels occur from one period to the next, it is possible for management to misinterpret such increases (or decreases) in income from operations as due to changes in:

costs.

prices.

sales volume.

"sales volume", "prices" and "costs" are correct.

None of these choices is correct.

The correct answer is:
d

4. Based on your answers to (1) and (2), did Head Gear Inc. operate more profitably in July or in August? Explain.

Head Gear Inc. was equally profitable in July and in August under the variable costing concept. The difference in income reported under the absorption costing concept is due to allocating fixed manufacturing costs to the July 31 ending inventory .

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3a. Review the effects on income from operations when the number of units manufactured differs from the number of units sold and how managers should analyze these situations.

3b. Remember that under absorption costing, both variable and fixed selling and administrative costs are combined and then subtracted from gross profit to obtain income from operations.

Learning Objective 1 and Learning Objective 2.

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Partially correct