$40.00 $25.00
Units in beginning work-in-process inventory | 400 |
Materials costs | $6,900 |
Conversion costs | $2,500 |
Percentage complete for materials | 80% |
Percentage complete for conversion | 15% |
Units started into production during the month | 6,000 |
Units transferred to the next department during the month | 5,000 |
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 | 1,200 |
Percentage complete for materials | 60% |
Percentage complete for conversion | 30% |
Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department. (Points : 25)
Old System | New System | |
Cost of radar system | $30,000 | $50,000 |
Current salvage value | $10,000 | – |
Salvage value in 10 years | $5,000 | $8,000 |
Annual operating costs | $34,000 | $29,000 |
Upgrade required in 5 years | $4,000 | – |
Discount rate | 14% | 14% |
Required:
(a) What is the City of Paranoya’s net present value for the decision described above? Use the total cost approach.
(b) Should the City of Paranoya purchase the new system or keep the old system? (Points : 35)
Selling price per unit | $130.00 |
Variable expense per unit | $27.30 |
Fixed expense per month | $165,347 |
Required:
Determine the monthly break-even in either unit or total dollar sales. Show your work! (Points : 25)
Actual Costs Incurred | Static Budget | |
Activity level (in units) | 754,009 | 746,500 |
Variable Costs: | ||
Indirect materials | $328,897 | $325,640 |
Utilities | $174,332 | $171,890 |
Fixed Costs: | ||
General and administrative | $237,985 | $244,908 |
Rent | $135,500 | $135,000 |
(Points : 30)
Direct materials | $16,000 |
Direct labor | 18,000 |
Variable manufacturing overhead | 10,000 |
Fixed manufacturing overhead | 25,000 |
Total costs | $69,000 |
An outside supplier has offered to provide Part X at a price of $11 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier’s offer. (Points : 30)
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 factory overhead totals $18,000 for the year. This 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. (Points : 30)
. (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 | 1,200 |
Raw materials inventory, beginning | 25 |
Raw materials inventory, ending | 50 |
Purchases of raw materials | 180 |
Direct labor | 230 |
Manufacturing overhead | 250 |
Administrative expenses | 400 |
Selling expenses | 200 |
Work-in-process inventory, beginning | 150 |
Work-in-process inventory, ending | 120 |
Finished goods inventory, beginning | 100 |
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? (Points : 25)
Compute the company’s predetermined overhead rate for the recently completed year. (Points : 25)
Prepare the company’s cash budget for October in good form. (Points : 25)