Consider a monopolist that operates on two. The total demand on the first market is D1(p1) = 80 − p1. The total demand on the second market is D2(p2) = 40 − p2. Let the cost function be C(q) = 20q.
(a) Suppose the monopolist cannot price discriminate , i.e., it faces a single demand D(p) = D1(p) + D2(p). Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus.
(b) Suppose the monopolist can charge a different price on each of the two mar- kets. Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus.
(c) Suppose that the monopolist can separate the markets and practice perfectprice discrimination within each market. Find the quantity traded on each market, total monopoly profit, consumer surplus, and total surplus.
In: Economics
Job Costing I Monticello Company uses a perpetual inventory system and has a highly labour intensive production process, so it assigns manufacturing overhead based on direct labour cost. Monticello’s predetermined overhead application rate for 2017 was computed from the following data: Total estimated factory overhead $1,232,500 Total estimated direct labour cost $850,000 The following activities took place in the work in process inventory during June: WIP Inventory A/C June 1 Bal. 25,625 Direct Materials Used 127,400 Other transactions incurred: Indirect material issued to production was $19,000 Total manufacturing labour incurred in June was $172,500, 80% of this amount represented direct labour. Other manufacturing overhead costs incurred for June amounted to $170,375. Two jobs were completed with total costs of $160,000 & $105,000 respectively. They were sold on account at a mark-up of 75% on cost. Required: i) Compute Monticello’s predetermined manufacturing overhead rate for 2017. ii) State the journal entries necessary to record the above transactions in the general journal: a) For direct materials used in June b) For indirect material issued to production in June c) For total manufacturing labour incurred in June d) To assign manufacturing labour to the appropriate accounts e) For other manufacturing overhead incurred f) For manufacturing overhead applied for June g) To move the completed jobs into finished goods inventory h) To sell the two completed jobs on account iii) Calculate the manufacturing overhead variance for Monticello and state the journal entries necessary to dispose of the variance. iv) What is balance on the Cost of Goods Sold account after the adjustment v) Determine the balance in work in process inventory on June 30.
In: Accounting
Cavalier Company has several processing departments. Costs
charged to the assembly department for November 2020 totalled
$2,601,819 as follows:
Work in process, November 1
Materials
$69,400
Conversion costs
47,900
$117,300
Materials added
1,892,150
Labour
226,000
Overhead
366,369
Production records show that 35,500 units were in beginning work in
process, 30% complete in terms of conversion costs, 691,000 units
were started into production, and 25,150 units were in ending work
in process, 40% complete in terms of conversion costs. Materials
are entered at the beginning of each process.
Determine the equivalent units of production and the unit
production costs for the assembly department. (Round unit costs to
2 decimal places, e.g. 15.25.)
Equivalent units
Unit cost
Materials$ per unit
Conversion costs$ per unit
Determine the assignment of costs to goods transferred out and
in process.
Costs accounted for
Transferred out$
Work in process, November 30
Materials$
Conversion costs
Total costs$
Prepare a production cost report for the assembly department.
(Round unit costs to 2 decimal places, e.g. 15.25.)
CAVALIER COMPANY
Assembly Department
Production Cost Report
For the Month Ended November 30, 2020
Equivalent Units
QuantitiesPhysical UnitsMaterialsConversion CostsTotal
Units to be accounted for
Work in process, November 1
Started into production
Total units
Units accounted for
Transferred out
Work in process, November 30
Total units
Costs
Unit costs
Costs in November$ $ $
Equivalent units
Unit costs$ $ $
Costs to be accounted for
Work in process, November 1$
Started into production
Total costs$
Cost Reconciliation Schedule
Costs accounted for
Transferred out$
Work in process, November 30
Materials$
Conversion costs
Total costs$
In: Accounting
Triumph Trophies makes trophies and plaques and operates at capacity. Triumphdoes large custom orders, such as the participant trophies for the Minnetonka Little League. The controller has asked you to compareplant-wide, department, and activity-based cost allocation.
|
Triumph Trophies Budgeted Information for the Year Ended November 30, 2014 |
|
Forming Department |
Trophies |
Plaques |
Total |
|
Direct materials |
$26,000 |
$23,500 |
$49,500 |
|
Direct manufacturing labor |
30,200 |
13,800 |
44,000 |
|
Overhead costs |
|||
|
Set up |
21,560 |
||
|
Supervision |
20,680 |
||
|
Assembly Department |
Trophies |
Plaques |
Total |
|
Direct materials |
$4,900 |
$87,150 |
$92,050 |
|
Direct manufacturing labor |
15,500 |
15,500 |
31,000 |
|
Overhead costs |
|||
|
Setup |
45,095 |
||
|
Supervision |
16,430 |
Setup costs in each department vary with the number of batches processed in each department. The budgeted number of batches for each product line in each department is as follows:
|
Trophies |
Plaques |
|
|
Forming department |
37 |
117 |
|
Assembly department |
43 |
102 |
Supervision costs in each department vary with direct manufacturing labor costs in each department.
|
1. |
Calculate the budgeted cost of trophies and plaques based on a singleplant-wide overhead rate, if total overhead is allocated based on total direct costs. |
|
2. |
Calculate the budgeted cost of trophies and plaques based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct costs of the assembly department. |
|
3. |
Calculate the budgeted cost of trophies and plaques if Triumph allocates overhead costs in each department using activity-based costing. |
|
4. |
Explain how the disaggregation of information could improve or reduce decision quality. |
In: Accounting
Shown here is an income statement in the traditional format for a firm with a sales volume of 7,500 units. Cost formulas also are shown:
|
Revenues |
$ |
34,100 |
|
Cost of goods sold ($5,600 + $2.15/unit) |
21,725 |
|
|
Gross profit |
$ |
12,375 |
|
Operating expenses: |
||
|
Selling ($1,170 + $0.10/unit) |
1,920 |
|
|
Administration ($3,650 + $0.20/unit) |
5,150 |
|
|
Operating income |
$ |
5,305 |
Required:
a. Prepare an income statement in the contribution margin format.
|
||||||||||||||||||||||||||||||||||||||||||||||||||
b. Calculate the contribution margin per unit and the contribution margin ratio. (Do not round intermediate calculations. Round contribution margin per unit to 2 decimal places.)
c-1. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 11,250 units. (Do not round intermediate calculations.)
c-2. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 3,750 units. (Do not round intermediate calculations.)
Refer to your answer to part a for total revenues of $34,100.
d-1. Calculate the firm’s operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues increase by $12,500. (Round intermediate calculations to 2 decimal places.)
d-2. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues decrease by $3,500. (Round intermediate calculations to 2 decimal places.)
In: Accounting
Long-Term Performance Report
Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below.
| Prevention costs: | |
| Prototype inspection | $ 220,000 |
| Vendor certification | 440,000 |
| Total prevention costs | $ 660,000 |
| Appraisal costs: | |
| Process acceptance | $ 235,000 |
| Test labor | 280,000 |
| Total Appraisal costs | $ 515,000 |
| Internal failure costs: | |
| Retesting | $ 147,500 |
| Rework | 295,000 |
| Total internal failure costs | $ 442,500 |
| External failure costs: | |
| Recalls | $ 392,000 |
| Product liability | 408,250 |
| Total external failure costs | $ 800,250 |
| Total quality costs | $2,417,750 |
At the zero-defect state, Nabors expects to spend $275,000 on quality engineering, $55,000 on vendor certification, and $75,000 on packaging inspection. Assume sales to be $2,200,000.
Required:
1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state.
| Nabors Company | ||||
| Long-Range Performance Report | ||||
| For the Year Ended June 30, 20x5 | ||||
| Actual Costs | Target Costs | Budget Variance | Favorable; or Unfavorable | |
| Prevention costs: | ||||
| $ | $ | $ | ||
| Total prevention costs | $ | $ | $ | |
| Appraisal costs: | ||||
| $ | $ | $ | ||
| Total appraisal costs | $ | $ | $ | |
| Internal failure costs: | ||||
| $ | $ | |||
| Total internal failure costs | $ | $ | ||
| External failure costs: | ||||
| $ | $ | |||
| Total external failure costs | $ | $ | ||
| Total quality costs | $ | $ | $ | |
| Percentage of sales | % | % | % | |
In: Accounting
Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below.
| Prevention costs: | |
| Prototype inspection | $ 280,000 |
| Vendor certification | 560,000 |
| Total prevention costs | $ 840,000 |
| Appraisal costs: | |
| Process acceptance | $ 295,000 |
| Test labor | 340,000 |
| Total Appraisal costs | $ 635,000 |
| Internal failure costs: | |
| Retesting | $ 177,500 |
| Rework | 355,000 |
| Total internal failure costs | $ 532,500 |
| External failure costs: | |
| Recalls | $ 245,500 |
| Product liability | 545,000 |
| Total external failure costs | $ 790,500 |
| Total quality costs | $2,798,000 |
At the zero-defect state, Nabors expects to spend $350,000 on quality engineering, $70,000 on vendor certification, and $60,000 on packaging inspection. Assume sales to be $2,500,000.
Required:
1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state.
| Nabors Company | ||||
| Long-Range Performance Report | ||||
| For the Year Ended June 30, 20x5 | ||||
| Actual Costs | Target Costs | Budget Variance | Favorable; or Unfavorable | |
| Prevention costs: | ||||
| $ | $ | $ | ||
| Total prevention costs | $ | $ | $ | |
| Appraisal costs: | ||||
| $ | $ | $ | ||
| Total appraisal costs | $ | $ | $ | |
| Internal failure costs: | ||||
| $ | $ | |||
| Total internal failure costs | $ | $ | ||
| External failure costs: | ||||
| $ | $ | |||
| Total external failure costs | $ | $ | ||
| Total quality costs | $ | $ | $ | |
| Percentage of sales | % | % | % | |
2. Why are quality costs still present for the
zero-defect state?
In: Accounting
Long-Term Performance Report
Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below.
| Prevention costs: | |
| Prototype inspection | $ 400,000 |
| Vendor certification | 800,000 |
| Total prevention costs | $ 1,200,000 |
| Appraisal costs: | |
| Process acceptance | $ 415,000 |
| Test labor | 460,000 |
| Total Appraisal costs | $ 875,000 |
| Internal failure costs: | |
| Retesting | $ 237,500 |
| Rework | 475,000 |
| Total internal failure costs | $ 712,500 |
| External failure costs: | |
| Recalls | $ 253,750 |
| Product liability | 581,750 |
| Total external failure costs | $ 835,500 |
| Total quality costs | $3,623,000 |
At the zero-defect state, Nabors expects to spend $500,000 on quality engineering, $100,000 on vendor certification, and $65,000 on packaging inspection. Assume sales to be $2,400,000.
Required:
1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state.
| Nabors Company | ||||
| Long-Range Performance Report | ||||
| For the Year Ended June 30, 20x5 | ||||
| Actual Costs | Target Costs | Budget Variance | Favorable; or Unfavorable | |
| Prevention costs: | ||||
| $ | $ | $ | ||
| Total prevention costs | $ | $ | $ | |
| Appraisal costs: | ||||
| $ | $ | $ | ||
| Total appraisal costs | $ | $ | $ | |
| Internal failure costs: | ||||
| $ | $ | |||
| Total internal failure costs | $ | $ | ||
| External failure costs: | ||||
| $ | $ | |||
| Total external failure costs | $ | $ | ||
| Total quality costs | $ | $ | $ | |
| Percentage of sales | % | % | % | |
2. Why are quality costs still present for the
zero-defect state?
In: Accounting
95.
The target cost is determined by taking
a.the expected selling price and adding desired profit
b.the expected selling price and subtracting the desired profit
c.the expected selling price and subtracting the budgeted standard cost
d.the budgeted standard cost and reducing it by 10%
94.
Using the variable cost method, determine the selling price (rounded to the nearest dollar) for 30,000 units using the following data:
| Variable cost per unit | $15 |
| Total fixed costs | $90,000 |
| Desired profit | $150,000 |
a.$23
b.$10
c.$15
d.$8
93.
Swan Company produces its product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
The markup percentage on product cost is
a.80%
b.70%
c.110%
d.47%
92.
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Flyer's current full cost for the product is $44 per unit.
In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
a.$1
b.$0
c.$3
d.$2
91.
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Flyer's current full cost for the product is $44 per unit.
The desired profit per unit is
a.$8
b.$5
c.$6
d.$4
90.
Mallard Corporation uses the product cost method of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Mallard desires a profit equal to a 12% return on invested assets of $800,000.
| Fixed factory overhead cost | $82,000 |
| Fixed selling and administrative costs | 45,000 |
| Variable direct materials cost per unit | 5.50 |
| Variable direct labor cost per unit | 7.65 |
| Variable factory overhead cost per unit | 2.25 |
| Variable selling and administrative cost per unit | 0.90 |
The unit selling price for the company's product is
a.$15.75
b.$19.35
c.$22.05
d.$21.25
89. v
Mallard Corporation uses the product cost method of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Mallard desires a profit equal to a 12% return on invested assets of $800,000.
| Fixed factory overhead cost | $82,000 |
| Fixed selling and administrative costs | 45,000 |
| Variable direct materials cost per unit | 5.50 |
| Variable direct labor cost per unit | 7.65 |
| Variable factory overhead cost per unit | 2.25 |
| Variable selling and administrative cost per unit | 0.90 |
The cost per unit for the production of the company's product is
a.$13.15
b.$15.40
c.$15.75
d.$17.22
88.
The target costing method assumes that
a.markup is added to total cost
b.the selling price is set by the marketplace
c.markup is added to product cost
d.markup is added to variable cost
87.
Which of the following methods of applying the cost-plus approach to product pricing includes selling expenses, administrative expenses, and desired profit in the markup?
a.demand-based method
b.variable cost method
c.product cost method
d.total cost method
86.
Which of the following is not a method commonly used in applying the cost-plus approach to product pricing?
a.product cost method
b.total cost method
c.fixed cost method
d.variable cost method
In: Accounting
Rumolt Motors has 35 million shares outstanding with a price of $14 per share. In addition, Rumolt has issued bonds with a total current market value of $521 million. Suppose Rumolt's equity cost of capital is 10%, and its debt cost of capital is 5%.
a. What is Rumolt's pretax weighted average cost of capital?
b. If Rumolt's corporate tax rate is 21%,
what is its after-tax weighted average cost of capital?
a. What is Rumolt's pretax weighted average cost of capital?
Rumolt's pretax weighted average cost of capital is nothing%.
(Round to two decimal places.)
In: Finance