Project #14611 - Managerial Accounting

1) The Love Company has provided the following information:

 

Income tax rate                                                          30%

Selling price per unit                                              $6.60

Variable cost per unit                                             $5.28

Total fixed costs                                            $46,200.00

 

Required:

A) Compute the break-even point in units.

B) Compute the sales volume in units necessary to generate an after-tax net income of $10,000.

C) Compute the sales volume in units necessary to generate an after-tax net income of $20,000.

 

 

2) McBain Company, a manufacturer of windows, has prepared the following list of accounts and their balances:

 

 

Advertising expense                                                        $17,200

Wages expenseassemblers                                         36,840

Depreciation expensemachines                                21,480

Utilities expensefactory                                               21,120

Wages expenselathe operators                                  23,480

Repair expensemachine                                              4,520

Office salaries expense                                                    23,760

Salary expensefactory foreman                                 18,270

 

The company also made the following purchases of raw materials:

 

Purchases of glue                                                              $3,260

Purchases of nails and staples                                     1,600

Purchases of oak wood                                                   22,000

Purchases of glass                                                            23,000

 

There was no beginning or ending inventories.

 

Required:

Calculate the following:

 

A)Direct materials used

B)Direct labor

C)Indirect production costs

 

 

 

 

 

 

 

 

 

3) The cost of the Maintenance Department at Forest Manufacturing has always been charged to the production departments based on the number of employees.  Recently, an activity analysis of possible cost drivers was performed which indicated that the square feet of space may also be a predictor of costs to be assigned to each production department.  The Maintenance Department cost is $1,000,000.  The following data is available:

                                                                        Production Departments

                                                         Dept. X              Dept. Y                    Dept. Z

Number of Employees                     300                      250                             50

Square Feet of Space                    15,000                25,000                     10,000

 

Required:

Determine the amount of the maintenance department cost that should be allocated to Department X if the cost driver used is: (A) number of employees and (B) square feet of space.

 

 

4) The EEE Company has obtained the following data:

 

Month                                  Indirect Production Costs                           Direct Labor Hours

July                                                                          $92,095                                                      4,900

August                                                                   105,056                                                      5,480

September                                                               81,802                                                      3,700

October                                                                     99,400                                                      4,400

November                                                             109,794                                                      6,000

December                                                                97,404                                                      3,900

 

Required:

A) Using the high-low method, determine the cost function for the above data.  Round to two decimal places.

B) If direct labor hours equal 10,000, what are the total expected indirect production costs?

 

 

5) Lakers Company produces two products.  The following information is available:

 

                                                                                                                Product X                    Product Y

Selling price per unit                                                                        $46                                $36

Variable cost per unit                                                                       $38                                $24

 

Total fixed costs are $234,000.  Lakers plans to sell 21,000 units of Product X and 7,000 units of Product Y.

 

Required:

A) Compute the contribution margin for each product.

B) What is the expected net income?

C) Assume the sales mix is 3 units of Product X for every 1 unit of Product Y.

What is the break-even point in units for each product?

D) Assume the sales mix is 3 units of Product X for every 2 units of Product Y.

What is the break-even point in units for each product?

 

6) The Palin Company manufactures several products. The Palin Company has gathered the following information for the year ended December 31, 2010:

 

Sales                                                                                                                       110,000

Direct materials used                                                                                          20,800

Indirect production costsfixed                                                                      10,400

Indirect production costsvariable                                                                  6,600

Direct laborfixed                                                                                                12,300

Direct laborvariable                                                                                          22,300

Selling expensesfixed                                                                                      33,040

Selling expensesvariable                                                                                33,440

Finished goods inventory, January 1, 2010                                                  12,000

Finished goods inventory, December 31, 2010                                            22,000

Work in process inventory, January 1, 2010                                                           0

Work in process inventory, December 31, 2010                                                    0

 

Requirements:

A) Compute the Cost of Goods Manufactured for the year ended December 31, 2010.

B) Compute the Cost of Goods Sold for the year ended December 31, 2010.

C) Compute the Net Income(Loss) for the year ended December 31, 2010.

 

 

7) Sad Company has determined the following information for the year ended December 31, 2010:

 

Direct labor                                                                                                          $16,840

Direct material used                                                                                            16,300

General and administrative expenses                                                           14,240

Indirect production costs                                                                                   16,780

Selling expenses                                                                                                   13,599

Work in process inventory, January 1, 2010                                                           0

Work in process inventory, December 31, 2010                                                    0

Finished goods inventory, January 1, 2010                                                            0

Finished goods inventory, December 31, 2010                                                      ?

Cost of goods sold                                                                                                42,720

 

Requirements:

A) What is the Cost of Goods Manufactured for the year ended December 31, 2010?

B) What is Finished Goods Inventory at December 31, 2010?

 

 

8) The manufacturing division of an electronics company uses activity-based costing. The company has identified three activities and the related cost drivers for indirect production costs.

 

Activity                                                Cost Driver

Activity 1                                             Direct materials cost

Activity 2                                             Direct labor cost

Activity 3                                             Kilowatt hours

 

Three types of products are produced. Direct costs and cost-driver activity for each product for a month are as follows:

 

                                                                            Product A              Product B            Product C

Direct materials cost                                         $75,000                  $50,000              $125,000

Direct labor cost                                                    $6,000                     $1,000                   $3,000

Direct labor hours                                                  1,000                          500                     1,500

Kilowatt hours                                                    150,000                  200,000                150,000

 

Indirect production costs for the month are as follows:

 

Activity 1                                                              $12,000

Activity 2                                                                 20,000

Activity 3                                                                 16,000

Total                                                                       $48,000

 

Required:

A) Compute the indirect production costs allocated to each product using the ABC system.

B) Compute the indirect production costs allocated to each product using a traditional costing system. Assume indirect production costs are allocated to each product using the cost driver: direct labor hours.

 

 

9) Speedy Company has identified the following activities relating to indirect production costs:

 

Activity                                                                 Activity Costs                                     Cost Drivers

Machine Setup                                                   $180,000                                               1,500 setup hours

Materials Handling                                          $50,000                                                 12,500 pounds of materials

Electric Power                                                    $20,000                                                 20,000 kilowatt hours

 

Speedy Company has obtained the following data concerning two products:

                                                                                                                  Products

                                                                                                Speedy1                       Speedy2

Number of units produced                                            4,000                              20,000

Direct materials cost                                                        $20,000                         $25,000

Direct labor cost                                                                $12,000                         $20,000

Number of setup hours                                                   100                                 120

Pounds of materials used                                              500                                 1,500

Kilowatt-hours                                                                  1,000                              2,000

 

Required:

Using the activity-based costing approach, calculate the manufacturing cost per unit for Speedy1 and Speedy2.

 

10) Cleveland Recreation Center is planning its annual fundraiser.  The event committee has developed the following budget for the event.

 

Ballroom rental                                  $2,900

Entertainment                                    $4,500

Printing                                                $600 plus $9 per guest

Food                                                      $29 per guest

Decorations                                         $700 plus $5 per guest

 

The committee expects 3,000 people will attend the event.

 

Required:

A) Compute the fixed and variable costs of the event.

B) Prepare the cost function.

C) If Cleveland Recreation charges $100 per person, how much money will be raised by this event?

 

 

11) Southwest Hospital has fixed costs of $100 million per year.  Variable costs represent approximately 80% of the total revenue.  There are 50,000 patient-days estimated for next year.

 

Required:

A) What is the break-even point expressed in total revenue?

B) What is the average daily revenue per patient necessary to break even?

 

 

Subject Business
Due By (Pacific Time) 10/15/2013 12:00 am
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