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ACCT- Learned Corporation recorded the following transactions for the just completed....




Question;APPLICATION PROBLEMS: (10 points each)All work must be shown to receive any creditQuestion 26: Learned Corporation recorded the following transactions for the just completedmonth.a.b.c.d.$80,000 in raw materials were purchased on account.$71,000 in raw materials was requisitioned for use in production. Of thisamount, $62,000 was for direct materials and the remainder was for indirectmaterials.Total labor wages of $112,000 were incurred. Of this amount, $101,000 wasfor direct labor and the remainder was for indirect labor.Additional manufacturing overhead costs of $175,000 were incurred.Required:Record the above transactions in journal entries.Question 27: Midwest Industrial Products Corporation makes two products, Product H andProduct L. Product H is expected to sell 50,000 units next year and Product L isexpected to sell 10,000 units. A unit of either product requires 0.2 direct laborhours.The companys total manufacturing overhead for the years is expected to be$1,920,000.Required:1. The company currently applies manufacturing overhead to products usingdirect labor-hours as the allocation base. If this is followed, how muchoverhead cost would be applied to each product? Compute both theoverhead cost per unit and the total amount of overhead cost that would beapplied to each product. (In other words, how much overhead cost is applied to a unit of Product H? Product L? How much overhead cost is applied in total to all the units of Product H? Product L?)2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead wouldbe divided in half between the two products, with $960,000 assigned to Product H and $960,000 assigned to Product L. If this is followed, how much overhead cost per unit would be applied to each product?3. Explain the impact on unit product costs of the switch in costing systems.Question 28: Data concerning a recent periods activity in the Prep Department, the first processing department in a company that uses processing costs, appear below.MaterialEquivalent units of production in ending work inprocessCost per equivalent unitConversion2,000$13.86800$4.43A total of 20,100 units were completed and transferred to the next processingdepartment during the period.Required:Compute the cost of the units transferred to the next department during the periodand the cost of the ending work in process inventory.Question 29: Harris Company manufactures and sells a single product. A partially completedschedule of the companys total and per unit costs over the relevant range of30,000 to 50,000 units produced and sold annually is given below:30,000Total Costs:Variable costs$180,000Fixed costs 300,000Units Produced and Sold40,00050,000????????????Total cost per unit???Total CostsCost per unit:Variable costFixed costRequired:1.Complete the schedule of the companys total and unit costs above.2.Assume that the company produces and sells 45,000 units during the year ata selling price of $16 per unit. Prepare a contribution format IncomeStatement for the year.Question 30: Whirly Corporations most recent Income Statement is shown below:TotalPer UnitSales (10,000 units)Variable expensesContribution MarginFixed expensesNet Operating incomeRequired:Prepare a new contribution format Income Statement under each of the followingconditions (consider each case independently):1.The sales volume increases by 100 units.2.The sales volume decreases by 100 units.3.The sales volume is 9,000 units.Question 31: Silver Company makes a product that is very popular as a Mothers Day gift.Thus, peak sales occur in May of each year, as shown in the companys salesbudget for the second quarter given below:AprilBudgeted sales (all on account)$300,000May$500,000June$200,000Total$1,000,000From past experience, the company has learned that 20% of a months sales arecollected in the month of the sale, another 70% are collected in the monthfollowing the sale, and the remaining 10% are collected in the second monthfollowing the sale. Bad debts are negligible and can be ignored. February salestotaled $230,000, and March sales totaled $260,000.Required:1.Prepare a schedule of expected cash collections from sales, by month and intotal for the second quarter.2.Assume that the company will prepare a budgeted balance sheet as of June30. Compute the accounts receivable as of that date.657-3Question 32: Puget Sound Divers is a company that provides diving services such asunderwater ship repairs to clients in the Puget Sound area. The companysplanning budget for May appears below:Puget Sound DiversPlanning BudgetFor the Month Ended May 31Budgeted diving-hours (q)Revenue ($365.00q)...100$36,500ExpensesWages and salaries ($8,000 + 125.00q)..Supplies ($3.00q)Equipment rental ($1,800 + $32.00q).Insurance ($3,400)..Miscellaneous ($630 + $1.80q)..Total expense.$20,5003005,0003,400810$30,010Net operating income.$ 6,490Required:During May, the companys activity was actually 105 diving-hours. Prepare aflexible budget for that level of activity.Question 33: Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat theBlue Glacier. Management has identified two cost drivers the number of cruisesand the number of passengers that it uses in its budgeting and performancereports. The company publishes a schedule of day cruises that it may supplementwith special sailings if there is sufficient demand. Up to 80 passengers can beaccommodated on the tour boat. Data concerning the companys cost formulasappear below:Fixed CostPer MonthVessel operating costs..$5,200Advertising.. 1,700$Administrative costs$4,300Insurance.$2,900Cost perCruise$480.00Cost perPassenger$2.00$ 24.00$1.00For example, vessel operating costs should be $5,200 per month plus $480 percruise plus $2 per passenger. The companys sales should average $25 perpassenger. The companys planning budget for July is based on 24 cruises and1,400 passengers.Required:Prepare the companys planning budget for July.657-4Question 34: Provide the missing data in the following table for a distributor of martial artsproducts:DivisionAlphaSales$?Net operating income.$?Average operating assets$800,000Margin4%Turnover. 5Return on investment (ROI)...?Bravo Charlie$11,500,000 $?$ 920,000$210,000$?$??7%??20%14%Question 35: Commercial Corporation provides business-to-business services onthe Internet. Data concerning the most recent year appear below:Sales..Net operating incomeAverage operating assets..Required:Consider each question below independently. Carry out all computations to twodecimal points.1. Compute the companys return on investment (ROI).2. The entrepreneur who founded the company is convinced that sales willincrease next year by 50% and that net operating income will increase by200%, with no increase in average operating assets. What would be thecompanys ROI?3. The chief financial officer of the company believes a more realistic scenariowould be a $1,000,000 increase in sales, requiring a $250,000 increase inaverage operating assets, with a resulting $200,000 increase in net operatingincome. What would be the companys ROI?Question 36: Delta Company produces a single product. The cost of producing and selling asingle unit of this product at the companys normal activity level of 60,000 unitsper year is:Direct materialsDirect labor...Variable manufacturing overheadFixed manufacturing overhead.Variable selling and administrative expenseFixed selling and administrative expense.The normal selling price is $21 per unit. The companys capacity is 75,000 unitsper year. An order has been received from a mail-order house for 15,000 units at aspecial price of $14.00 per unit. This order would not affect regular sales.Required:If the order is accepted, by how much will annual profits be increased ordecreased? (The order will not change the companys total fixed costs.)Question 37: Bed & Bath, a retailing company has two departments, Hardware and Linens.The companys most recent monthly contribution format Income Statementfollows:DepartmentTotalSales..Variable expenses..HardwareLinensContribution margin..Fixed expenses..Net operating income (loss)..A study indicates that $340,000 of the fixed expenses being charged to Linens aresunk costs or allocated costs that will continue even if the Linens Department isdropped. In addition, the elimination of the Linens Department will result in a10% decrease in the sales of the Hardware Department.Required:If the Linens Department is dropped, what will be the effect on the net operatingincome of the company as a whole?Question 38: Information on four investment proposals is given below:AInvestment required...................Present value of cash inflows.....Investment ProposalBCDNet present value.......................Life of the project......................5 years7 years6 years6 yearsRequired:1.Compute the project profitability index for each investment proposal.2. Rank the proposals in terms of preference.Question 39: Comparative financial statement data for Carmono Company follow:2009Cash..Account receivable...Inventory.Plant and equipment.Less accumulated depreciation.2008Total assetAccounts payable.Common stock.Retained EarningsTotal Liabilities and stockholders equityFor 2009, the company reported net income as follows:Sales..Cost of goods sold.Gross Margin.Selling and administrative expenses.Net IncomeDividends of $14 were declared and paid during 2009.Required:Using the indirect method, prepare a statement of cash flows for 2009.Question 40: The financial statements for Castile Products, Inc. are given below:Castile Products, Inc.Balance SheetDecember 31AssetsCurrent Assets:Cash..Accounts receivable, net..Merchandise inventory.Prepaid expenses...Total current assets..Property and equipment, netTotal assetsLiabilities and Stockholders EquityLiabilities:Current liabilitiesBonds payable, 10%......................................Total Liabilities.Stockholders equity:Common stock $5 par value..Retained Earnings..Total stockholders equityTotal liabilities and equityCastile ProductsIncome StatementFor the Year Ended December 31SalesCost of goods sold..Gross Margin..Selling and administrative expenses.Net operating incomeInterest expense.Net income before taxes.Income taxes (30%)...Net IncomeAccount balances at the beginning of the year were: accounts receivable $25,000,inventory $60,000. All sales were on account.Required:Compute financial ratios as follows:1. Gross margin percentage2. Current ratio3. Acid-test ratio4. Debt-to-equity ratio5. Average collection period6. Average sale period7. Times interest earned ratio8. Book value per share


Paper#37771 | Written in 18-Jul-2015

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