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1)Longiotti Corporation produces and sells a single product. Data concerning that product appear below. Selling price per unit $375.00 Variable expense per
1)Longiotti Corporation produces and sells a single product. Data concerning that product appear below.
Selling price per unit
$375.00
Variable expense per unit
$144.00
Fixed expense per month
$1,686,300
Required:Determine the monthly breakeven in units or dollar sales
2) Loxham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.
Work in process, beginning:
Units in beginning work in process inventory
400
Materials costs
$6,900
Conversion costs
$2,500
Percent complete for materials
80%
Percent complete for conversion
15%
Units started into production during the month
6,000
Units transferred to the next department during the month
5,400
Materials costs added during the month
$112,500
Conversion costs added during the month
$210,300
Ending work in process:
Units in ending work-in-process inventory
1,000
Percentage complete for materials
80%
Percentage complete for conversion
30%
Required: Calculate the equivalent units for conversion for the month in the first processing department.
3)Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below.
Units in beginning inventory
0
Units produced
9,000
Units sold
7,000
Sales
$100,000
Less cost of goods sold:
Beginning inventory
0
Add cost of goods manufactured
54,000
Goods available for sale
54,000
Less ending inventory
12,000
Cost of goods sold
42,000
Gross margin
58,000
Less selling and admin. expenses
28,000
Net operating income
$30,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
4) Ignore income taxes in this problem.) Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $375,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of Year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $85,000 per year for each of the 10 years. Axillar's discount rate is 16%.Required:Part A: What is the net present value of this investment opportunity?Part B: Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo?
5)(TCO F) Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $54,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $99,000. The desired ending cash balance is $100,000. The company can borrow up to $150,000 at any time from a local bank, with interest not due until the following month.Required: Prepare the company's cash budget for October in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance
6(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year.
Sales
1,300
Raw materials inventory, beginning
25
Raw materials inventory, ending
30
Purchases of raw materials
250
Direct labor
350
Manufacturing overhead
500
Administrative expenses
300
Selling expenses
250
Work in process inventory, beginning
150
Work in process inventory, ending
100
Finished goods inventory, beginning
80
Finished goods inventory, ending
110
Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?
7)Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $54,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $99,000. The desired ending cash balance is $100,000. The company can borrow up to $150,000 at any time from a local bank, with interest not due until the following month.Required: Prepare the company's cash budget for October in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance. (Points : 25)
8. (TCO F) NicSaybin Enterprises' accounting department collects all pertinent monthly operating data. Correct Answer: Correct Answer: Selected data are presented below for the current month. From the data provided, please provide Saybin Enterprises' management with a flexible budget analysis to see how costs were controlled.
Actual Costs Incurred
Static Budget
Activity level (in units)
755,000
746,500
Variable costs:
Indirect materials
$328,997
$325,640
Utilities
$174,332
$171,890
Fixed costs:
General and administrative
$237,985
$244,908
Rent
$135,500
$135,000
(TCO H) Hanson, Inc. makes 10,000 units per year of a part called a prositron for use in one of its products. Data concerning the unit production costs of the prositron follow.Direct materials $250Direct labor 125Variable manufacturing OH 50Fixed manufacturing OH 150Total $575
An outside supplier has offered to sell Hanson, Inc. all of the prositrons it requires. If Hanson, Inc. decided to discontinue making the prositrons, 20% of the above fixed manufacturing overhead costs could be avoided.Required: Assume Hanson, Inc. has no alternative use for the facilities presently devoted to production of the prositrons. If the outside supplier offers to sell the prositrons for $425 each, should Hanson, Inc. accept the offer? Fully support your answer with appropriate calculations
9(TCO B) Escatel Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. Data for the most recently completed year appear below.
Estimates made at the beginning of the year
Estimated labor hours
25,000
Estimated variable manufacturing overhead
$7.10
per labor hour
Estimated total fixed manufacturing overhead
$625,000
Actual labor hours for the year
28,000
Required:Compute the company's predetermined overhead rate for the recently completed year.
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*********** Corporation ******** *** ***** a ****** ******* **** concerning **** ******* ****** ************ price per unit$37500Variable ******* *** *************** ******* *** month$1686300Required:Determine *** ******* breakeven in ***** or ****** salesSolution:Break **** Sales * Fixed Cost * ******* ***** * ******** ********* 1686300 * 375 * 144 * **** ***** monthly ***** **** ********* Loxham *********** uses *** **************** ****** ** *** ******* ******* ****** Data ********** *** first ********** department *** *** **** recent ***** *** ****** ********* ** ******* ******************** ***** ** ********* **** in ******* ************ ********* ********** Conversion ********** Percent complete *** ************ ******* ******** for conversion15% ***** ******* **** ********** during the ********* ***** *********** ** *** next department during *** month5400 Materials ***** ***** during the ************ Conversion costs ***** ****** *** month$210300 Ending **** ** ********** ***** in ****** work-in-process inventory1000 ********** ******** *** ************ ********** complete *** ********************** ********* *** equivalent ***** *** ********** for *** month ** the ***** ********** ************************** ***** for materials *** *** ***** * 6200 UnitWorkingCalculation of ********** Unit (as *** Weighted *** ************ ************** ** ******************** ******** ********* & *********** ** *** **** ***************************** ****************** ********** ****************** Company ******** * ****** ******* Operating data *** the ******* and *** ********** costing ****** ********* for *** **** year *** ********* belowUnits ** beginning *************** ***************** ************************ **** of ***** ************** ************* **** ** goods ********************** ********* *** ************* ****** ****************** ** goods ************** *************** ******* *** admin **************** ********* income$30000Variable manufacturing ***** are $4 *** **** Fixed manufacturing ******** ****** ****** for *** year *** ***** ************* ******** *** ******* ** * **** of ** per **** ******** selling *** ************** expenses **** $1 *** unit soldRequired: ******* a *** ****** statement *** *** **** ***** ******** ******* ******* ** *** *********** ******* *** ********** ******* *** *** ******** costing ****** ********************************** : Variable ************* Inventory0Add * **** ** ***** *********************** x ******** ********* for ************** * Ending *** **** * *********** of ***** ************** * Variable ******* & ********** * $1)$7000Total Variable ********************************* * ***** ****************** ********************** ***** *********************************** Operating *************** ********* ****** ***** ********** ******* ** ****** whereas under ******** ******* it ***** out ** ****** The reason ** **** difference ** ***** ** due ** Ending ********* ******* *** ***** ********** ******* ******* under ******** ******* **** variable cost ** *** been ********** *** difference ** **** x ($6 - *** = ******* ****** ****** ***** ** **** ******** ** * *** conditioning shampoo **** **** ******* *** ******** ** *** ****** ********* *** ********* will **** ******* ** ******** ** **** * ****** life ** 10 ***** *** ** expected to **** a ******* ***** ** ****** ** the *** ** ** ***** *** ********* **** **** **** * ****** ******** ** *** end ** **** * * $40000 ******** in ******* capital will ** ****** for this ********** ******* *** ******* ******* **** ** ******** ** the end ** *** ** years *** *** shampoo ** expected ** ******** net **** ******* ** ****** *** **** for **** of *** 10 years ********* discount **** ** **************** ** What ** the net ******* ***** ** **** investment **************** ** ***** on **** answer ** (a) ***** ****** ******* ** ***** **** *** new ************ ************************** ******* **** *************************************** ******** (Purchase) * 100(37500000) (37500000)Cash Outflows (Overhaul) *** *** ********* (1436548)Cash Outflows **** * *** ********* *********** of **** outflows ************** inflows *** ***** 8500000 7327586Cash ******* *** ***** ******* *********** ******* *** ***** ******* *********** ******* *** ***** ******* 4694474Cash ******* *** 04761 ******* *********** inflows 600 ***** ******* *********** ******* *** ***** ******* *********** inflows *** ***** 8500000 *********** ******* *** ***** ******* *********** ******* 1000 02267 8500000 *********** *************** Value) **** 02267 ******* 1133418Cash *********** **** 02267 4000000 ******** ** **** ******* 43122586NPV ********* ** ****** ** ***** ***** NPV ** **************** ** ********* *********** ** preparing its **** budget for ******* *** ******** ********* cash balance ** ****** ******** cash receipts ***** $127000 *** budgeted **** ************* ***** $99000 *** ******* ending **** ******* ** ******* *** ******* can ****** up to $150000 at *** **** **** * ***** **** **** ******** not *** ***** the ********* ************** Prepare *** ********* **** ****** for ******* ** **** **** **** **** ** indicate **** ********* if *** ***** be ****** ** attain *** desired ****** **** balanceSolutionBeginning cash balance$ 54000Add: **** ********* *************** **** ******** *********** **** ************** ********** ****** **** ******** 82000Desire ******** 100000Loan **** local ***** ************** ** The ********* **** *** ********* ** ******** **** **** ***** **** *** accounting ******* ** *** ****** *********** *** *** ************** **************** ********* ********* beginning25Raw ********* inventory ending30Purchases ** *** ****************** labor350Manufacturing overhead500Administrative ****************** *************** ** ******* inventory **************** ** process ********* ***************** ***** inventory ******************* ***** ********* ************ the ***** **** ** ******* *** ********* ** ******** * ******** ** **** ** ***** ************ *** * Schedule ** **** of Goods Sold for *** year ** ******** **** ** the ****** ** *** ********* ********** ** the ****** ******** goods ********* ** overstated ** ********************* **** ** ***** manufactured:Direct materialsBeginning ******************************** *** ******************** materials ************* ************* ********************* overhead500manufaturing ***** incurred1095plus ********* wip150costs to ******* for1245less ****** ********** of ***** ***************** cost ** ***** ************* ******** *************** **** ** ***** manufactured1145cost ** ***** ********* fo ************ ending ******** ***** **************** of ***** sold11157)Matuseski *********** is preparing *** **** ****** *** October *** budgeted ********* cash ******* ** $54000 Budgeted cash receipts ***** ******* *** ******** **** ************* total $99000 *** ******* ****** cash ******* is ******* *** company *** ****** ** ** ******* at *** **** **** * local **** **** ******** *** due until *** ********* ************** ******* *** company's cash ****** for October ** good form **** sure ** ******** **** ********* ** any ***** be needed to attain the desired ****** **** balance ******* * ******************** **** balance$ 54000Add: **** ********* *************** **** balance$ *********** Cash disbursements$ 99000Total ****** **** balance$ 82000Desire ******** 100000Loan **** ***** bank$ ****** **** F) NicSaybin Enterprises' accounting ********** ******** all ********* monthly ********* data Correct Answer: ******* Answer: ******** **** *** presented ***** for *** ******* ***** **** *** **** ******** ****** provide ****** ************ ********** **** * ******** ****** ******** ** *** how costs were ******************** ***** ************** ************** ***** *** ******************************** ****************** *************************************************** ***************** and administrative$237985$244908Rent$135500$135000 Solution: *** Costs *** ******** ****** DeviationActivity ***** *** ****** ****** 750000 ****************************************************** ************** Materials ******* ******* $450 ************ ******* $173847 $484 ******** Costs:General ***** ************** ******* ******* $6923 (F)Rent ******* ******* **** *** _________________________________________________ ******* $883102 $6388 *** ************************************************** ** Hanson *** ***** 10000 units *** year of * **** ****** a ********* *** *** ** *** of *** products **** ********** *** unit ********** ***** ** *** ********* ************ ******************* ***** *********** ************* ********* ************* ** **************** ******* ******** has ******* ** sell ****** *** all ** *** prositrons ** requires If Hanson Inc decided ** *********** ****** the ********** 20% ** the ***** ***** manufacturing overhead ***** ***** ** **************** ****** ****** Inc *** ** *********** *** for the facilities ********* ******* to ********** of *** ********** ** *** ******* ******** ****** ** **** the prositrons *** **** each ****** ****** *** accept the offer? ***** ******* your answer with *********** ***************************** cost ** makingTotal ***** manufacturing overhead= * ******** $ ********** ** ***** ******** = * ********* ******** ***** cost *** producing *** product is 10% ** *** ************* ******** ** *** remaining *** *** ** ** ******** **** is ********** ** *** ****** ******** ***** ******** *** ***** * 300000/10000= * 30 per unitDirect materials $250Direct ***** *********** manufacturing ** ******* ************* OH **** ***** **** ** producing *** **** ** own ************* facility= Direct material + Direct ***** * Variable ************* ******** * ******** ***** ************* * ********* *** offer price that ** * *** ** **** **** *** ******** **** ** ************* ** *** facility *** offershould ** ******** and *** ******* ****** *** ** ************ ** own ************* ** ******* *********** ***** *** ************* overhead rate on *** estimated ***** ***** for *** ******** **** Data *** *** **** recently ********* **** ****** ************** **** ** the ********* of *** ****** ********* ***** ********************* ******** ************* overhead$710 perlabor hourEstimated ***** ***** ************* *************** ****** ***** hours *** the **** 28000 Required:Compute *** ********* ************* overhead rate *** the ******** ********* yearAnswer:Predetermined overhead **** is ** follows:estimated ***** ** *** ********** 25000*710= ************* ***** hour: ********** ************* ********* ************ ********* *************** *************** **** (both ***** and ********** ************** *********** ****** predetermined ******** **** ** *********** ******
