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1
Question
1.
(TCO F) Sandler Corporation bases
its predetermined overhead rate on the estimated machine hours for the upcoming
year. Data for the upcoming year appear below.
Estimated
machine hours 73,000
Estimated
variable manufacturing overhead $3.49
per machine hour
Estimated
total fixed manufacturing overhead $838,770
Required:
Compute the company's predetermined overhead rate. (Points : 25)
Compute the company's predetermined overhead rate. (Points : 25)
Question
2
(TCO C) Enciso Corporation is
preparing its cash budget for November. The budgeted beginning cash balance is
$31,000. Budgeted cash receipts total $135,000 and budgeted cash disbursements
total $141,000. The desired ending cash balance is $50,000. 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 November in good form. (Points : 25)
1.
(TCO
C) The following overhead data are for a department of a large company.
Actual costs
Static
Incurred budget
Activity
level (in
units)
800
750
Variable
costs:
Indirect materials
$6,850
$6,600
Electricity
$1,312
$1,275
Fixed
costs:
Administration
$3,570
$3,700
Rent
$3,320
$3,200
Required
Construct
a flexible budget performance report that would be useful in assessing how well
costs were controlled in this department.
2.
(TCO
D) Hanson, Inc. makes 1,000 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 $342
Direct
labor
80
Variable
manufacturing
OH 48
Fixed
manufacturing
OH
520
Total
$990
An outside supplier has offered to sell Hanson, Inc. all of the
prositrons it requires. If Hanson, Inc. decided to discontinue making the
prositrons, 10% 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 $850 each, should Hanson, Inc. accept the
offer? Fully support your answer with appropriate calculations.
3.
(TCO
E) The following absorption costing income statement and additional data are available
from the accounting records of Bernon Co. for the month ended May 31, 2007.
During the accounting period, 17,000 units were manufactured and sold at a
price of $60 per unit. There were no beginning inventories.
Sales
(17,000 @ $60) $1,020,000
Cost
of goods sold
612,000
Gross
profit $ 408,000
Selling
and administrative expenses 66,000
Income
from operations $
342,000
Additional
Information:
Cost
Total
Cost Number of Units Unit Cost
Manufacturing
costs:
Variable $442,000 17,000 $26
Fixed
170,000 17,000 10
Total $612,000 $36
Selling
and administrative expenses:
Variable
($2 per unit sold) $34,000
Fixed
32,000
Total $66,000
Required
Prepare a new income statement for the year using variable
costing. Comment on the differences, if any, between the absorption costing and
the variable costing income statements.
4. (TCO
A) The following data (in thousands of dollars) have been taken from the
accounting records of Karmana Corporation for the just-completed year.
Sales ...............................................................$950
Raw materials inventory,
beginning .....................$10
Raw materials inventory, ending
.........................$30
Purchases of raw materials
...............................$120
Direct labor
......................................................$180
Manufacturing overhead
...................................$230
Administrative expenses
...................................$100
Selling expenses
...............................................$140
Work-in-process inventory,
beginning ..................$50
Work-in-process inventory, ending
......................$40
Finished goods inventory,
beginning ..................$100
Finished goods inventory, ending
........................$80
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.
1.
(TCO
F) 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
materials for the month in the first processing department.
2.
(TCO
B) Longiotti Corporation produces and sells a single product. Data concerning
that product appear below.
Selling
price per unit $150.00
Variable
expense per unit $36.00
Fixed
expense per month $159,600
Required:
Determine
the monthly break-even in total dollar sales. Show your work!
3.
(TCO G) - (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:
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
conditionings hampoo?
TUTORIAL PREVIEW
a.
What is the net present
value of this investment opportunity?
|
Items
|
Year
|
Amount
|
16% Factor
|
Present value
|
|
Cost of machinery
|
0
|
$(375,000)
|
1.00
|
$(375,000)
|
|
Salvage value
|
10
|
$50,000
|
0.227
|
11,350
|
|
Overhaul
|
6
|
$(35,000)
|
0.41
|
(41,350)
|
