SP 8 Santana Rey receives the March bank statement for Business Solutions

SP 8 Santana Rey receives the March bank statement for Business Solutions on April 11, 2018. The March 31 bank statement shows an ending cash balance of $67,566. A comparison of the bank statement with the general ledger Cash account, No. 101, reveals the following.

a. S. Rey notices that the bank erroneously cleared a $500 check against her account in March that she did not issue. The check documentation included with the bank statement shows that this check was actually issued by a company named Business Systems.

b. On March 25, the bank issued a $50 debit memorandum for the safety deposit box that Business Solutions agreed to rent from the bank beginning March 25.

c. On March 26, the bank issued a $102 debit memorandum for printed checks that Business Solutions ordered from the bank.

d. On March 31, the bank issued a credit memorandum for $33 interest earned on Business Solutions’ checking account for the month of March.

e. S. Rey notices that the check she issued for $128 on March 31, 2018, has not yet cleared the bank.

f. S. Rey verifies that all deposits made in March do appear on the March bank statement.

g. The general ledger Cash account, No. 101, shows an ending cash balance per books of $68,057 as of March 31 (prior to any reconciliation).

Required

1. Prepare a bank reconciliation for Business Solutions for the month ended March 31, 2018.

2. Prepare any necessary adjusting entries. Use Miscellaneous Expenses, No. 677, for any bank charges. Use Interest Revenue, No. 404, for any interest earned on the checking account for the month of March.

Check (1) Adj. bank bal. $67,938

TUTORIAL PREVIEW

Bank Reconciliation Format 1

Special Problem 8

Bank Statement Balance

$67,566

Book Balance

$68,057

File name sp 8 Santana Rey.xls    File type: xls  PRICE: $5

MacIntyre Fabrications, Ltd., of Aberdeen, Scotland

P12-16 MacIntyre Fabrications, Ltd., of Aberdeen, Scotland, has recently begun a continuous improvement campaign in conjunction with a move toward Lean Production. Management has developed new performance measures as part of this campaign. The following operating data have been gathered over the last four months:

                                                                        Month

                                                            1          2          3          4

Throughput time . . . . . . . . . . . . . . . . . . . . . . ?          ?          ?          ?

Manufacturing cycle efficiency . . . . . . . . . . .             ?          ?          ?          ?

Delivery cycle time . . . . . . . . . . . . . . . . . . . . ?          ?          ?          ?

Percentage of on-time deliveries . . . . . . . . .    72%     73%     78%     85%

Total sales (units) . . . . . . . . . . . . . . . . . . . . .   10,540             10,570             10,550             10,490

Management would like to know the company’s throughput time, manufacturing cycle efficiency, and delivery cycle time. The data to compute these measures have been gathered and appear below:

                                                                        Month

                                                            1          2          3          4

Move time per unit, in days . . . . . . . . . . . .     0.5       0.5       0.4       0.5

Process time per unit, in days . . . . . . . . . .      0.6       0.5       0.5       0.4

Wait time per order before start of

production, in days . . . . . . . . . . . . . . . .          9.6       8.7       5.3       4.7

Queue time per unit, in days . . . . . . . . . . .      3.6       3.6       2.6       1.7

Inspection time per unit, in days . . . . . . . .      0.7       0.7       0.4       0.3

Required:

1. For each month, compute the following:

a. The throughput time.

b. The manufacturing cycle efficiency (MCE).

c. The delivery cycle time.

2. Using the performance measures given in the problem and those you computed in (1) above, identify whether the trend over the four months is generally favorable, generally unfavorable, or mixed. What areas apparently require improvement and how might they be improved?

3. Refer to the move time, process time, and so forth, given for month 4.

a. Assume that in month 5 the move time, process time, and so forth, are the same as for month 4, except that through the implementation of Lean Production, the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.

b. Assume that in month 6 the move time, process time, and so forth, are the same as for month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

TUTORIAL PREVIEW

1.  a., b., and c.

	Month
	1	2	3	4
Throughput time in days:
Process time	0.6	0.5	0.5	0.4
Inspection time	0.7	0.7	0.4	0.3

File name P12-16 MacIntyre Fabrications.doc     File type: docx  PRICE: $10

Comparative data on three companies in the same service industry are given below

P12-15 Comparative data on three companies in the same service industry are given below:

                                                            Company

                                                                                    A                     B                      C

Sales . . . . . . . . . . . . . . . . . . . . . . . .              $4,000,000      $1,500,000      $ ?

Net operating income . . . . . . . . . . . .            $ 560,000        $ 210,000        $ ?

Average operating assets . . . . . . . . .            $2,000,000      ?                      $3,000,000

Margin . . . . . . . . . . . . . . . . . . . . . . .              ?                      ?                      3.5%

Turnover . . . . . . . . . . . . . . . . . . . . . .             ?                      ?                      2

Return on investment (ROI) . . . . . . .             ?                      7%                   ?

Required:

1. What advantages are there to breaking down the ROI computation into two separate elements, margin and turnover?

2. Fill in the missing information above, and comment on the relative performance of the three companies in as much detail as the data permit. Make specific recommendations about how to improve the ROI.

TUTORIAL PREVIEW
1.  Breaking the ROI computation into two separate elements helps the manager to see important relationships that might remain hidden. First, the importance of turnover of assets as a key element to overall profitability 

File name P12-15 Comparative data.doc    File type: docx  PRICE: $9

Topaz Company makes one product and has set th

P11-13 Topaz Company makes one product and has set the following standards for materials and labor:

                                                            Direct               Direct

Materials          Labor

Standard quantity or hours per unit . . . .          ? pounds          2.5 hours

Standard price or rate . . . . . . . . . . . . . .           ? per pound     $9.00 per hour

Standard cost per unit . . . . . . . . . . . . . .          ?                      $22.50

During the past month, the company purchased 6,000 pounds of direct materials at a cost of $16,500. All of this material was used in the production of 1,400 units of product. Direct labor cost totaled $28,500 for the month. The following variances have been computed:

Materials quantity variance . . . . . . . . . . . . . . . $1,200 U

Total materials spending variance . . . . . . . . . . $300 F

Labor efficiency variance . . . . . . . . . . . . . . . . . $4,500 F

Required:

1. For direct materials:

a. Compute the standard price per pound for materials.

b. Compute the standard quantity allowed for materials for the month’s production.

c. Compute the standard quantity of materials allowed per unit of product.

2. For direct labor:

a. Compute the actual direct labor cost per hour for the month.

b. Compute the labor rate variance.

(Hint: In completing the problem, it may be helpful to move from known to unknown data either by using the variance formulas or by using the columnar format shown in Exhibits 10–5 and 10–6 .)

TUTORIAL PREVIEW

1. a. Materials price variance = AQ (AP – SP)

      6,000 pounds ($2.75 per pound* – SP) = $1,500 F**

      $16,500 – 6,000 pounds × SP = $1,500***

File name P11-13 Topaz Company .doc    File type: docx  PRICE: $9

Landers Company manufactures a number of products.

P11-12  Landers Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

                                                                                               Standard          Actual

                                                                                                            Cost per            Cost

                                                                                                            Unit                 per Unit

Direct materials:

Standard: 1.80 feet at $3.00 per foot . . . . . . . . . . . . .                         $ 5.40

Actual: 1.75 feet at $3.20 per foot . . . . . . . . . . . . . . .                                                 $ 5.60

Direct labor:

Standard: 0.90 hours at $18.00 per hour . . . . . . . . .                            16.20

Actual: 0.95 hours at $17.40 per hour . . . . . . . . . . . .                                                 16.53

Variable overhead:

Standard: 0.90 hours at $5.00 per hour . . . . . . . . . .                            4.50

Actual: 0.95 hours at $4.60 per hour . . . . . . . . . . . . .                                                 4.37

Total cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      $26.10               $26.50

Excess of actual cost over standard cost per unit . . . . .                       $0.40

The production superintendent was pleased when he saw this report and commented: “This $0.40 excess cost is well within the 2 percent limit management has set for acceptable variances.

It’s obvious that there’s not much to worry about with this product.”

Actual production for the month was 12,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

Required:

1. Compute the following variances for May:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. How much of the $0.40 excess unit cost is traceable to each of the variances computed in (1) above.

3. How much of the $0.40 excess unit cost is traceable to apparent inefficient use of labor time?

4. Do you agree that the excess unit cost is not of concern?

TUTORIAL PREVIEW

Alternatively, the variances can be computed using the formulas:

            Materials quantity variance = SP (AQ – SQ)

                = $3.00 per foot (21,000 feet – 21,600 feet)

                = $1,800 F

File name P11-12 Landers Company.doc   File type: docx  PRICE: $10