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Accounting Misc. Problems Set




Question;P15-14 Calculate variable cost variances-explain results [LO 4, 5]The standards for one case of liquid weed killer are:Direct materialsDirect laborVariable overhead(based on machinehours)8 lbs. @ $9.75/lb.4.7 hrs. @ $20.8/hr.1.6 hrs. @ $ 7.15/hr.During the week ended August 6, the following activity took place:5,198 machine hours were worked.27,634 lbs. of raw material were purchased for inventory at a total cost of $274,958.3,420 cases of finished product were produced.27,219 lbs. of raw material were used.15,720 labor hours were worked at an average rate of $21.13 per hour.$35,866 actual variable overhead costs were incurred.Required:Calculate each of the following variances (Input all amounts as positive values. Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Round intermediate calculation to 2 decimal places and final answer to nearestwhole dollar amount. Omit the "$" sign in your response):a.Price variance for raw materials purchased.$Raw materials usage variance.$b.c.d.Direct labor rate variance.$Direct labor efficiency variance.$Variable overhead spending variance.e.fVariable overhead efficiency variance..$$E16-6 Accept special sales order? [LO 2, 3]AAA Lock Manufacturing Co. makes and sells several models of locks. The cost records for the ZForcelock show that manufacturing costs total $21 per lock. An analysis of this amount indicates that $12.18 ofthe total cost has a variable cost behavior pattern, and the remainder is an allocation of fixedmanufacturing overhead. The normal selling price of this model is $35 per lock. A chain store has offeredto buy 13,000 ZForce locks from AAA Lock at a price of $14.7 each to sell in a market that would notcompete with AAA Lock's regular business. AAA Lock has manufacturing capacity available and couldmake these locks without incurring additional fixed manufacturing overhead.Required:(Calculate the effect on AAA Lock's operating income of accepting the order from the chain store. (Omitathe "$" sign in your response.))Increase in contribution margin and operating income$E15-8 Direct material variances-solving for price and usage variances [LO 4, 5]Fiberworks Company is a manufacturer of fiberglass toy boats. The company has recently implemented astandard cost system and has designed the system to isolate variances as soon as possible. During themonth of August, the following results were reported for the production of 25,500 toy boats:Direct materials(fiberglass)purchasedDirect materialsissued intoproductionStandardpounds allowedper boatStandard priceper poundCost offiberglasspurchased50,400pounds39,800pounds1.52pounds$6.48$309,456Required:(Calculate the actual cost per pound of fiberglass purchased during August. (Round your answer to 2adecimal places. Omit the "$" sign in your response.))Actual cost$(Calculate the direct materials purchase price variance for August. (Do not round your intermediateb calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for) unfavorable, and "None" for no effect (i.e., zero variance). Input the amount as positive value.Omit the "$" sign in your response.)Direct materials purchase pricevariance$F(Calculate the direct materials usage variance for August. (Indicate the effect of each variance byc selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Input the amount as positive value. Round your answer to the nearest dollar amount. Omit the"$" sign in your response.)Direct materials usage variance$UE16-4 Sell or process further? [LO 2, 3]Mizzou Mining Company mines an iron ore called Alpha. During the month of December, 418,000 tons ofAlpha were mined and processed at a cost of $751,500. As the Alpha ore is mined, it is processed intoDelta and Pi, where 60% of the Alpha output becomes Delta and 40% becomes Pi. Each product can besold as is or processed into the refined products Super Delta and Precision Pi. Selling prices for theseproducts are:DeltaSellingpriceSuper DeltaPiPrecision Pi$21/ton$23/ton$20/ton$24/tonProcessing costs to refine Delta into Super Delta are $3,260,400: processing costs to refine Pi intoPrecision Pi are $501,600.Requirement 1:(What would be the incremental profit or loss per unit if Delta is refined into Super Delta? (Input theaamount as positive value. Omit the "$" sign in your response.))Incremental (Click toselect)profitloss$(What would be the incremental profit or loss per unit if Pi is refined into Precision Pi? (Omit the "$"bsign in your response.))Incremental (Click toselect)lossprofit$Requirement 2:(a Should Delta be sold as is or refined into Super Delta?)(Click to select)Delta should be processed further and sold as Super Delta.Delta should be sold as is.(b Should Pi be sold as is or refined into Precision Pi?)(Click to select)Pi should be sold as is.Pi should be processed further and sold as Precision Pi.Requirement 3:Identify any costs in the problem that are not relevant to this decision.(Click to select)Processing costs to refine Pi into Precision Pi are $501,600 not relevant.Processing costs to refineDelta into Super Delta are not relevant.The $751,500 cost incurred to produce the Alpha ore is not relevant.Requirement 4:What is the maximum profit that Mizzou Mining Company can expect to earn from the production of the418,000 tons of Alpha? (Omit the "$" sign in your response.)Maximum profit$E15-4 Performance reporting and flexible budgeting [LO 4, 5]For the stamping department of a manufacturing firm, the standard cost for direct labor is $14 per hour,and the production standard calls for 2,230 stampings per hour. During June, 115 hours were required foractual production of 234,150 stampings. Actual direct labor cost for the stamping department for June was$1,478.Required:(Complete the following performance report for June: (Input all amounts as positive values. Indicatea the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for) no effect (i.e., zero variance). Omit the "$" sign in your response.)FlexedBudgetDirectLabor$ActualVariance$$(Click toselect)NoneFU(Calculate the direct labor efficiency and rate variances for June. (Do not round your intermediateb calculations. Input all amounts as positive values. Indicate the effect of each variance by) selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Omit the "$" sign in your response.)Direct laborefficiencyvarianceDirect laborrate variance$(Click toselect)UNoneF$(Click toselect)UFNoneE15-12 Investment center analysis, ROI and residual income [LO 9]Brussels Corporation has three operating divisions and requires a 12% return on all investments.Selected information is presented here:Required:Calculate the missing amounts for each division.(Do not round your intermediate calculations. Roundthe Margin, Turnover and ROI to 2 decimal places. Round your remaining answers to the nearestwhole number. Omit the "$" & "%" signs in your response.)DivisionARevenuesOperatingincomeDivisionBDivision C$ 986,000$ 135,000$81,900OperatingassetsMarginTurnoverROIResidualincome$ 486,500$ 353,400%14turns1%%%turn3%$turns%$39,580P16-25 Calculate NPV, present value ratio, and payback [LO 7, 9]Duncan Company is considering the investment of $132,700 in a new machine. It is estimated that thenew machine will generate additional cash flow of $19,500 per year for each year of its 7-year life and willhave a salvage value of $14,500 at the end of its life. Duncan's financial managers estimate that the firm'scost of capital is 8%.Required:(Using Table 6-4 and Table 6-5, calculate the net present value of the investment. (Round pv factor to 4a decimal places, intermediate calculations and the final answer to the nearest dollar amount.) Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)Net present value$(Calculate the present value ratio of the investment. (Round pv factor to 4 decimal places,bintermediate calculations to the nearest dollar amount and final answer to 2 decimal places.))Present value ratio(c What is the internal rate of return of this investment, relative to the cost of capital?)The internal rate of return of this investment is (Click to select)equal tolesser thangreater than thecost of capital of 8%(d Calculate the payback period of the investment. (Round your answer to 2 decimal places.))Payback periodyearsE16-10 The make or buy decision [LO 2, 3][The following information applies to the questions displayed below.]Sycamore Company uses a certain part in its manufacturing process that it buys from an outside supplierfor $35 per part plus another $4 for shipping and other purchasing-related costs. The company will need21,600 of these parts in the next year and is considering making the part internally. After performing acapacity analysis, Sycamore determined that it has sufficient unused capacity to manufacture the 21,600parts but would need to hire a manager at an annual salary of $64,800 to oversee this production activity.Estimated production costs are determined to be:Directmaterial$22Direct laborVariableoverheadFixedoverhead(includesmanager at$3 per unit)Total unitcost9410$45E16-10 Part aRequired:(a Identify the relevant costs to make this part internally. (Select all that apply.))rev: 05-11-2011Historical costDirect laborDirect materialVariable overheadFixed overheadNew manager'ssalary


Paper#39550 | Written in 18-Jul-2015

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