Questions
Question 1. The following data is from the accounting records of Padcore Ltd. for the year...

Question 1.

The following data is from the accounting records of Padcore Ltd. for the year just ended:

Administrative expenses

           64,000

Administrative salaries

         110,000

Depreciation, factory

           25,000

Depreciation, office equipment

             8,000

Direct labour

         400,000

Factory equipment maintenance

           15,000

Factory supervisor's salary

           80,000

Insurance, factory

           22,000

Raw materials purchased

         260,000

Sales

     1,700,000

Sales salaries and commissions

         120,000

Selling expenses

           40,000

Supplies, factory

             9,000

Utilities, factory

           12,000

Beginning of

End of

the Year

the Year

Raw Materials

             20,000

             35,000

Work in process

             40,000

             30,000

Finished goods

             65,000

             40,000

Calculate the cost of goods manufactured, cost of goods sold and net income for the year just ended:

Question 2.

Waldorf Corporation had the following overhead costs for the previous year (Waldorf allocates overhead on the basis of direct labour hours):

Labour hours

Total Overhead

1st Quarter

                7,000

$              75,000

2nd Quarter

                6,000

$              74,000

3rd Quarter

                8,000

$              77,000

4th Quarter

                7,500

$              76,000

Assume that total overhead is comprised of Indirect materials (a variable cost), Rent (a fixed cost) and Maintenance (a mixed cost).  The breakdown of these three costs at the 6,000 labour hour level is as follows:

Indirect materials (V)

$                3,600

Rent (F)

                35,000

Maintenance (M)

                35,400

$              74,000

Determine how much of the total overhead at the 8,000 direct labour hour is maintenance.  Using the amount just determined and the high low method, estimate a cost formula for maintenance.  Determine what the cost formula for total overhead would be and estimate what total overhead costs would be at the 10,000 direct labour hour level.

Question 2A

Question 3.

The income statement for Big Franks Bicycle Emporium for the month just ended is as follows:

Sales

               300,000

Cost of goods sold

               140,000

Gross margin

               160,000

Less operating expenses

Selling expenses

             40,000

Depreciation

             25,000

Admin expenses

             65,000

Total operating expenses

               130,000

Net income

                 30,000

Additional information:

·       On average Frank sells his bikes for $300 each

·       The sales department has variable expenses of $12 per bike sold

·       Depreciation expense is unaffected by changes in the sales level

·       Admin costs are 70% fixed and 30% variable

Prepare an income statement for the month just ended using the contribution margin approach.

Question 4.

Wyatt Enterprises manufactures and sells a single product.  The company’s sales and expenses for the month just ended are as follows:

Total

Per Unit

Sales

$            190,000

$                      50

Less variable expenses

              114,000

                        30

Contribution margin

                76,000

$                      20

less fixed expenses

                60,000

Net income

$              16,000

Determine the break-even point in terms of both units and dollars.  How many units would need to be sold in a month to achieve a target profit of $25,000?  What is Wyatt’s margin of safety in both dollars and as a percentage?

Question 5.

The Happy Cardiologist Ltd. manufactures and sells pacemakers for $3,400 each.  Cost information for March was as follows:

Variable manufacturing costs per unit

$                   1,650

Variable selling costs per unit

                       150

Fixed manufacturing costs

                290,000

Fixed admin costs

                825,000

In March, the company sold 750 pacemakers.

Calculate the margin of safety in both dollars and as a percentage.  Compute the company’s degree of operating leverage.  If sales increase by 20%, by how much will net income increase?

In: Accounting

Work in Process Account Data for Two Months; Cost of Production Reports Pittsburgh Aluminum Company uses...

Work in Process Account Data for Two Months; Cost of Production Reports

Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1 and debits to the account during September were as follows:

Bal., 2,600 units, ¼ completed:
Direct materials (2,600 x $15.50) $40,300
Conversion (2,600 x ¼ x $8.50) 5,525
$45,825
From Smelting Department, 28,900 units $462,400
Direct labor 158,920
Factory overhead 101,402

During September, 2,600 units in process on September 1 were completed, and of the 28,900 units entering the department, all were completed except 2,900 units that were 4/5 completed.

Charges to Work in Process—Rolling for October were as follows:

From Smelting Department, 31,000 units $511,500
Direct labor 162,850
Factory overhead 104,494

During October, the units in process at the beginning of the month were completed, and of the 31,000 units entering the department, all were completed except 2,000 units that were 2/5 completed.

Required:

1. Enter the balance as of September 1 in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

ACCOUNT Work in Process-Rolling Department ACCOUNT NO.
BALANCE
DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT
Sept. 1 Bal., 2,600 units, 1/4 completed
Sept. 30 Smelting Dept., 28,900 units at $16.00/unit
Sept. 30 Direct labor
Sept. 30 Factory overhead
Sept. 30 Finished goods
Sept. 30 Bal., 2,900 units, 4/5 completed

If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.

Pittsburgh Aluminum Company
Cost of Production Report-Rolling Department
For the Month Ended September 30
Whole Units Equivalent Units
Units Direct Materials (a) Conversion (a)
Units charged to production:
Inventory in process, September 1
Received from Smelting Department
Total units accounted for by the Rolling Department
Units to be assigned costs:
Inventory in process, September 1
Started and completed in September
Transferred to finished goods in September
Inventory in process, September 30
Total units to be assigned costs


Costs
Costs Direct Materials Conversion Total Costs
Cost per equivalent unit:
Total costs for September in Rolling Department $ $
Total equivalent units
Cost per equivalent unit (b) $ $
Costs assigned to production:
Inventory in process, September 1 $
Costs incurred in September
Total costs accounted for by the Rolling Department $
Costs allocated to completed and partially completed units:
Inventory in process, September 1 balance (c) $
To complete inventory in process, September 1 (c) $ $
Cost of completed September 1 work in process $
Started and completed in September (c)
Transferred to finished goods in September (c) $
Inventory in process, September 30 (d)
Total costs assigned by the Rolling Department $


In: Accounting

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which...

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process—Filling on April 1 and debits to the account during April were as follows:

Bal., 600 units, 60% completed:
Direct materials (600 x $5.30) $ 3,180
Conversion (600 x 60% x $2.20) 792
$ 3,972
From Cooking Department, 13,200 units $71,280
Direct labor 18,060
Factory overhead 9,724

During April, 600 units in process on April 1 were completed, and of the 13,200 units entering the department, all were completed except 1,700 units that were 20% completed. Charges to Work in Process—Filling for May were as follows:

From Cooking Department, 15,200 units $85,120
Direct labor 25,580
Factory overhead 13,780

During May, the units in process at the beginning of the month were completed, and of the 15,200 units entering the department, all were completed except 800 units that were 80% completed.

Required:

1. Enter the balance as of April 1 in a four-column account for Work in Process—Filling. Record the debits and credits in the account for April. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion; (b) cost per equivalent unit; (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in April; and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

ACCOUNT Work in Process-Filling Department ACCOUNT NO.
BALANCE
DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT
Apr. 1 Bal., 600 units, 60% completed
       30 Cooking Dept., 13,200 units at $5.40
       30 Direct labor
       30 Factory overhead
       30 Finished goods
       30 Bal., 1,700 units, 20% completed

If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.

Hearty Soup Co.
Cost of Production Report-Filling Department
For the Month Ended April 30
Whole Units Equivalent Units
Units Direct Materials (a) Conversion (a)
Units charged to production:
Inventory in process, April 1
Received from Cooking Department
Total units accounted for by the Filling Department
Units to be assigned costs:
Inventory in process, April 1
Started and completed in April
Transferred to finished goods in April
Inventory in process, April 30
Total units to be assigned costs


Costs
Costs Direct Materials Conversion Total
Costs per equivalent unit:
Total costs for April in Filling Department $ $
Total equivalent units
Cost per equivalent unit (b) $ $
Costs charged to production:
Inventory in process, April 1 $
Costs incurred in April
Total costs accounted for by the Filling Department $
Cost allocated to completed and partially completed units:
Inventory in process, April 1 balance (c) $
To complete inventory in process, April 1 (c) $ $
Cost of completed April 1 work in process $
Started and completed in April (c)
Transferred to finished goods in April (c) $
Inventory in process, April 30 (d)
Total costs assigned by the Filling Department $

In: Accounting

[The following information applies to the questions displayed below.] The following data is provided for Garcon...

[The following information applies to the questions displayed below.]

The following data is provided for Garcon Company and Pepper Company.

Garcon Company Pepper Company
Beginning finished goods inventory $ 14,500 $ 16,300
Beginning work in process inventory 15,900 19,650
Beginning raw materials inventory 10,500 14,400
Rental cost on factory equipment 28,750 26,500
Direct labor 25,000 42,600
Ending finished goods inventory 20,000 13,000
Ending work in process inventory 23,500 19,600
Ending raw materials inventory 7,200 8,800
Factory utilities 9,150 12,250
Factory supplies used 11,500 5,400
General and administrative expenses 32,500 44,500
Indirect labor 2,350 7,960
Repairs—Factory equipment 6,140 2,600
Raw materials purchases 37,000 59,000
Selling expenses 62,800 58,600
Sales 213,030 340,010
Cash 29,000 15,700
Factory equipment, net 232,500 127,825
Accounts receivable, net 13,800 21,700

Required:
1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.
2. Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.
Garcon Company Pepper Company
Direct materials
Raw materials available for use
Direct materials used
Factory overhead
Total factory overhead
Total manufacturing costs
Total cost of work in process
Cost of goods manufactured

Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.
Garcon Company Pepper Company
Cost of goods available for sale
Cost of goods sold

In: Accounting

[The following information applies to the questions displayed below.] The following data is provided for Garcon...

[The following information applies to the questions displayed below.]

The following data is provided for Garcon Company and Pepper Company.

Garcon Company Pepper Company
Beginning finished goods inventory $ 14,500 $ 16,300
Beginning work in process inventory 15,900 19,650
Beginning raw materials inventory 10,500 14,400
Rental cost on factory equipment 28,750 26,500
Direct labor 25,000 42,600
Ending finished goods inventory 20,000 13,000
Ending work in process inventory 23,500 19,600
Ending raw materials inventory 7,200 8,800
Factory utilities 9,150 12,250
Factory supplies used 11,500 5,400
General and administrative expenses 32,500 44,500
Indirect labor 2,350 7,960
Repairs—Factory equipment 6,140 2,600
Raw materials purchases 37,000 59,000
Selling expenses 62,800 58,600
Sales 213,030 340,010
Cash 29,000 15,700
Factory equipment, net 232,500 127,825
Accounts receivable, net 13,800 21,700

Required:
1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.
2. Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.
Garcon Company Pepper Company
Direct materials
Raw materials available for use
Direct materials used
Factory overhead
Total factory overhead
Total manufacturing costs
Total cost of work in process
Cost of goods manufactured

complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.
Garcon Company Pepper Company
Cost of goods available for sale
Cost of goods sold

In: Accounting

The following data is provided for Garcon Company and Pepper Company. Garcon Company Pepper Company Beginning...

The following data is provided for Garcon Company and Pepper Company.

Garcon Company Pepper Company
Beginning finished goods inventory $ 12,800 $ 16,450
Beginning work in process inventory 15,500 21,900
Beginning raw materials inventory (direct materials) 7,500 12,750
Rental cost on factory equipment 32,250 22,300
Direct labor 21,400 40,600
Ending finished goods inventory 17,600 15,600
Ending work in process inventory 25,900 20,200
Ending raw materials inventory 6,600 7,400
Factory utilities 13,050 14,000
Factory supplies used (indirect materials) 9,400 3,700
General and administrative expenses 23,000 56,500
Indirect labor 1,250 8,260
Repairs—Factory equipment 6,380 1,800
Raw materials purchases 33,500 66,000
Selling expenses 64,400 51,100
Sales 243,030 337,510
Cash 28,000 16,200
Factory equipment, net 217,500 124,825
Accounts receivable, net 15,200 24,450

Required:
1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2019.
2. Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2019.

Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2019.
Garcon Company Pepper Company
Direct materials
Raw materials available for use 0 0
Direct materials used 0 0
Factory overhead
Total factory overhead 0 0
Total manufacturing costs
Total cost of work in process 0 0
Cost of goods manufactured $0 $0

Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2019.
Garcon Company Pepper Company
Cost of goods available for sale
Cost of goods sold $0 $0

In: Accounting

Required information [The following information applies to the questions displayed below.] The following data is provided...

Required information

[The following information applies to the questions displayed below.]

The following data is provided for Garcon Company and Pepper Company.

Garcon Company Pepper Company
Beginning finished goods inventory $ 12,700 $ 16,600
Beginning work in process inventory 18,000 23,550
Beginning raw materials inventory 11,500 13,350
Rental cost on factory equipment 27,250 26,950
Direct labor 20,600 43,000
Ending finished goods inventory 20,000 13,500
Ending work in process inventory 25,300 17,200
Ending raw materials inventory 6,200 8,000
Factory utilities 11,550 13,000
Factory supplies used 13,300 4,200
General and administrative expenses 30,500 58,000
Indirect labor 2,400 9,880
Repairs—Factory equipment 6,740 3,750
Raw materials purchases 37,500 60,500
Selling expenses 60,800 58,000
Sales 234,030 332,510
Cash 31,000 18,700
Factory equipment, net 262,500 151,825
Accounts receivable, net 16,000 24,450

Required:
1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.
2. Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Complete this question by entering your answers in the tabs below.

Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Garcon
Company		 Pepper
Company
Direct materials
Raw materials available for use
Direct materials used
Factory overhead
Total factory overhead
Total manufacturing costs
Total cost of work in process
Cost of goods manufactured

Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Garcon Company Pepper
Company
Cost of goods available for sale
Cost of goods sold

In: Accounting

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based...

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $19 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 53,800 units for the year, which will require 215,000 direct labor hours:

Activity Cost Driver Budgeted Costs for 2016 Cost Driver Used as Allocation Base Cost Allocation Rate
Materials handling $ 47,300 Number of parts used $ 0.22 per part
Cutting and lathe work 2,919,700 Number of parts used 13.58 per part
Assembly and inspection 3,397,000 Direct labor hours 15.80 per hour

The following production, costs, and activities occurred during the month of July:

Units Produced Direct Materials Costs Number of Parts Used Direct Labor Hours
3,470 $117,200 -13 13,300

Required:

a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.)

b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2016.) (Round "Cost per unit produced" to 2 decimal places.)

c. Which approach do you think provides better information for manufacturing managers?

Activity based costing
Direct labor hours basis

In: Accounting

Target Costing Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $375 and...

  1. Target Costing

    Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $375 and has a total product cost of $300, as follows:

    Direct materials $220
    Direct labor 60
    Factory overhead 20
    Total $300

    It is estimated that the competitive selling price for color laser printers of this type will drop to $360 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

    1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
    2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $8 per unit.
    3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines.

    The direct labor rate is $25 per hour.

    a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places.
    $

    b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
    $

    c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

    1. Direct labor reduction $
    2. Additional inspection $
    3. Injection molding productivity improvement $
    Total savings $

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In: Accounting

Think about how demand and supply may change over time given certain events. What is the...

Think about how demand and supply may change over time given certain events. What is the relationship between average total cost and marginal costs?

In: Economics