Response to the following questions:
1. Nic Saybin Enterprises' accounting department collects all pertinent monthly operating data. 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.
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Actual Costs Incurred
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Static Budget
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Activity level (in units)
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755,000
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746,500
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|
|
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Variable costs:
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|
|
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Indirect materials
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$328,997
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$325,640
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Utilities
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$174,332
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$171,890
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Fixed costs:
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General and administrative
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$237,985
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$244,908
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Rent
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$135,500
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$135,000
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2. Lindon Company uses 10,000 units of Part Y each year as a component in the assembly of one of its products. The company is presently producing Part Y internally at a total cost of $100,000 as follows.
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Direct materials
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$20,000
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Direct labor
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40,000
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Variable manufacturing overhead
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16,000
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Fixed manufacturing overhead
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24,000
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Total costs
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$100,000
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An outside supplier has offered to provide Part Y at a price of $10 per unit. If Lindon stops producing the part internally, one third of the fixed manufacturing overhead would be eliminated.
Required: Should Lindon Company make or buy the part? Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer.
3. Duif Company's absorption costing income statement for the last year of operations is presented below.
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Sales
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$70,000
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Less cost of goods sold:
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Beginning inventory
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0
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Add cost of goods manufactured
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48,000
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Goods available for sale
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48,000
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Less ending inventory
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6,000
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Cost of goods sold
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42,000
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Gross margin
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28,000
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Less selling and admin. expenses
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25,000
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Net operating income
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3,000
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Data on units produced and sold for the year are given below.
Units in beginning inventory 0
Units produced 8,000
Units sold 7,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totaled $16,000 for the year. The fixed manufacturing overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 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. Complying with regulations is a(n)
batch-level activity.
product-level activity.
unit-level activity.
organization sustaining activity.
5 .Given the following data, what would ROI be?
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Sales
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$70,000
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Net operating income
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$10,000
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Contribution margin
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$20,000
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Average operating assets
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$50,000
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Stockholder's equity
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$25,000
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28.6%
20.0%
40.0%
50.0%
6 .)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 $500,000, 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 5. 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 $110,000 per year for each of the 10 years. Axillar's discount rate is 15%.
Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo?
7.Madlem, Inc., produces and sells a single product whose selling price is $280.00 per unit and whose variable expense is $168.00 per unit. The company's fixed expense is $201,600 per month.
Required: Determine the monthly break-even in either unit or total dollar sales. Show your work!
8.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.
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Estimates made at the beginning of the year
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Estimated labor hours
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25,000
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Estimated variable manufacturing overhead
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$7.10 per labor hour
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Estimated total fixed manufacturing overhead
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$625,000
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Actual labor hours for the year
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28,000
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Required:
Compute the company's predetermined overhead rate for the recently completed year.
9. 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.
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Work in process, beginning:
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Units in beginning work in process inventory
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400
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Materials costs
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$6,900
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Conversion costs
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$2,500
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Percent complete for materials
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80%
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Percent complete for conversion
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15%
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Units started into production during the month
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6,000
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Units transferred to the next department during the month
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5,400
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Materials costs added during the month
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$112,500
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Conversion costs added during the month
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$210,300
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|
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Ending work in process:
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Units in ending work-in-process inventory
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1,000
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Percentage complete for materials
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80%
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Percentage complete for conversion
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30%
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Required: Calculate the equivalent units for conversion for the month in the first processing department.
10.The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.
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Sales
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$1950
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Raw materials inventory, beginning
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$50
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Raw materials inventory, ending
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$30
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Purchases of raw materials
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$360
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Direct labor
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$120
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Manufacturing overhead
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$175
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Administrative expenses
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$100
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Selling expenses
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$140
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Work-in-process inventory, beginning
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$50
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Work-in-process inventory, ending
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$70
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Finished goods inventory, beginning
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$200
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Finished goods inventory, ending
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$105
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Use these 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, elaborate on the relationship between these schedules as they relate to the flow of product costs in a manufacturing company.
11. Payment Inc. is preparing its cash budget for February. The budgeted beginning cash balance is $47,000. Budgeted cash receipts total $165,000 and budgeted cash disbursements total $168,000. The desired ending cash balance is $65,000. The company can borrow up to $100,000 at any time from a local bank with interest not due until the following month.
Required: Prepare the company's cash budget for February in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.