Kansas Supplies is a manufacturer of plastic parts that uses the weighted-average process costing method to account for costs of production. It produces parts in three separate departments: Molding, Assembling, and Packaging. The following information was obtained for the Assembling Department for the month of April.

Work in process on April 1 had 111,000 units made up of the following:

During April, 511,000 units were transferred in from the Molding Department at a cost of $715,400. The Assembling Department added the following costs:

Assembling finished 411,000 units and transferred them to the Packaging Department.

At April 30, 211,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at April 30 was as follows:

Required:

a. Prepare a production cost report using the weighted-average method.

Shelly's Boutiques and Crafts had revenue of $5,700,000 this year on sales of 575,000 units. Variable costs were 35% and fixed costs totaled $3,150,000. Although the first five years were relatively profitable, increases in competition have led to a negative trend in profitability that has led them to the point where they have to make some changes to stay afloat. The company is evaluating two options to stay afloat.

Option 1: Purchase machinery to automate their operations. this machinery cost $625,000 but will decrease variable costs by 9%

Option 2: Outsource the production of one of their main components that requires a substantial amount of machinery and skilled labor. This will reduce fixed costs by $425,000, but increases variable costs from their current 35% of sales to 40% of sales.

a. determine break even points in units before changes. what is fixed cost total? what is the contribution margin per unit? what is the break even point in units?

b.) Assuming an income tax rate of 35%, what dollar value of sales is required to earn an after tax profit of $800,000 What before tax profit would be needed to earn an after tax profit of $800,000? what is the contribution margin raton? What dollar amount of sales would be required to earn the after tax profit described above?

c.) Calculate the operating leverage before applying any of the options: What is the contribution margin in Total? What is the operating income in total? what is the operating leverage factor?

d.) Calculate the break even point in units after applying Option 1: What is the new fixed cost in total? What is the new contribution margin per unit? What is the new break even point in units?

e.) Calculate the operating leverage after applying Option 1: What is the new contribution margin in Total? What is the new operating income in total? what is the new operating leverage factor?

f.) Calculate the break even point in units after applying Option 2: What is the new fixed cost in total? What is the new contribution margin per unit? What is the new break even point in units?

g.) Calculate the operating leverage after applying Option 2: What is the new contribution margin in Total? What is the new operating income in total? what is the new operating leverage factor?

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.

Feedback

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.

Feedback

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.

Feedback

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.

Feedback

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.

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?

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?