You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during March.

Required:

1. Prepare a flexible budget for March.

2. Prepare a report showing the spending variances for March.

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March.

Required:

1. Calculate the activity variances for March.

2. Calculate the spending variances for March.

Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

Unadjusted Cost of Goods Sold equals $1,520,000, unadjusted Work in Process equals $286,000, and unadjusted Finished Goods equals $270,000.

What if any ending balance in a variance account that exceeds $9,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $160,200, and the prime cost in Finished Goods is $128,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=£840, year 2=£870, year 3=£900, and year 4=£970. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Round to the nearest 100th. Then, calculate the inflation rate between year1 and year 4 based on the first price index series. If you had used the other price index series, would you get a different inflation rate? If you are unsure, do the calculation and find out.

Hatchet Corporation sells one product (using the periodic system of inventory) and had the following inventory transactions during the current month: Beginning Inventory 200 units costing $7 each Purchase on the 5th 600 units costing $8 each Purchase on the 17th 400 units costing $10 each Units sold during the month 900 units at a retail price of $15 each Answer the following questions in the space below. Calculate the cost of goods sold during the month using the Last-In-First-Out method of inventory allocation. Calculate the ending inventory balance (in dollars) using the Weighted-Average method of inventory allocation.

Question 33

During 2016, Rafael Corp. produced 39,120 units and sold 39,120 for $16 per unit. Suppose the accountant for Rafael Corp. uses normal costing and uses the budgeted volume of 48,900 units. Variable manufacturing costs were $6 per unit. Annual fixed manufacturing overhead was $78,240 ($2 per unit). Variable selling and administrative costs were $2 per unit sold, and fixed selling and administrative expenses were $19,400. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.

Prepare a normal-costing income statement for the first year of operation.

You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should use to value its inventory and cost of goods sold. Mr. Meeks has narrowed the choice to LIFO and FIFO. He has heard that LIFO might be better for tax purposes, but FIFO has certain advantages for financial reporting to investors and creditors. You have been told that the company will be profitable in its first year and for the foreseeable future. Prepare a report for the president describing the factors that should be considered by Tangier in choosing between LIFO and FIFO

An income statement for the first year of operations for Patti Company appears below:

Additional information:

1. Accounts payable, end of year, $13,000.

2. Salaries payable, end of year, $8,450.

3. Inventories, end of year, $26,000.

4. Accounts receivable, end of year, $32,500.

Required:

Use the direct approach to calculate the cash provided (used) by operating activities for Patti Company. (Net cash outflows and amounts to be deducted should be indicated by a minus sign.)

The Covid19 pandemic has caused major shifts in supply and demand for various goods and services worldwide in only a few months. Applying the supply and demand model and market equilibrium framework discussed in this module:

1) Explain why it was so difficult to find face masks during the first few months of the pandemic or why you could only find them on secondary markets (ebay, amazon, etc.) for very high prices. Was it a change in demand, supply, or both that caused this to happen? Explain.

2) Explain why the price of gasoline has dropped significantly in the past few months since the pandemic began. Was it a change in demand, supply, or both that caused this to happen? Explain.