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DEVRY ACCT505 week 2 and 6 quiz, week 3 case study, midterm, and course project

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Question;A(TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?Student Answer: A steel factory that processes iron ore into steel barsA factory that processes sugar and other ingredients into black licoriceA costume maker that makes specialty costumes for figure skatersAll of theseQuestion 2. Question:(TCO F) Process costing would be appropriate for each of the following except:custom furniture manufacturing.oil refining.grain milling.newsprint production.Question 3. Question:(TCO F) Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be:the same as the units completed.less than the units completed.the same as the units started during the period.less than the units started during the period.Question 4. Question:(TCO F) Which of the following accounts is debited when direct labor is recorded?Work in processSalaries and wages expenseSalaries and wages payableManufacturing overheadQuestion 5. Question:(TCO F) During October, Crusan Corporation incurred $62,000 of direct labor costs and $4,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:debit to Work in Process of $66,000.credit to Work in Process of $66,000.debit to Work in Process of $62,000.credit to Work in Process of $62,000.Question 6. Question:(TCO F) Wedd Corporation had $35,000 of raw materials on hand on May 1. During the month, the company purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The debits to the Work in Process account as a consequence of the raw materials transactions in May total:$92,000.$0.$68,000.$87,000.(TCO F) Whether a company uses process costing or job-order costing depends on its industry. A number of companies in different industries are listed below:i. Brick manufacturerii. Contract printer that produces posters, books, and pamphlets to orderiii. Natural gas production companyiv. Dairy farmv. Coal mining companyvi. Specialty coffee roaster (roasts small batches of specialty coffee beans)For each company, indicate whether the company is most likely to use job-order costing or process costing.Question 2. Question:(TCO F) Job 484 was recently completed. The following data have been recorded on its job cost sheet:Direct materials$57,240Direct labor hours1,692 DLHsDirect labor wage rate$12 per DLHSNumber of units completed3,600 unitsThe company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $24 per direct labor-hour.Compute the unit product cost that would appear on the job cost sheet for this job.Question 3. Question:(TCO F) Harmon Company uses the weighted-average method in its process costing system. The Curing Department of Harmon Company reported the following information for the month of November.Units Percentage complete with respect to conversionWork in process, November 1 10,000 80%Units started 28,000Completed and transferred out 30,000Work in process, November 30 8,000 30%Costs for November Materials ConversionWork in process, November 1 $34,500 $48,600Added during the month $146,000 $194,400All materials are added at the beginning of the process.Required: Compute the following items using the weighted-average method:i. The equivalent units of production for materials.ii. The cost per equivalent unit for conversion.iii. The total cost assigned to units transferred out of the Curing Department during November.iv. The cost assigned to work in process inventory as of November 30.Question 4. Question:(TCO F) Weisinger Corporation has provided the following data for the month of January:InventoriesBeginningEndingRaw materials$28,000$29,000Work In process$16,000$14,000Finished goods$42,000$54,000Additional InformationRaw material purchases$56,000Direct labor costs$87,000Manufacturing overhead cost incurred$51,000Indirect materials included in manufacturing overhead costs incurred$3,000Manufacturing overhead cost applied to work in process$55,000Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form.Case Study 1Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:Number of seats per passenger train car 90Average load factor (percentage of seats filled) 70%Average full passenger fare $ 160Average variable cost per passenger $ 70Fixed operating cost per month $3,150,000Formula:Revenue = Units Sold * Unit priceContribution Margin = Revenue ? All Variable CostContribution Margin Ratio = Contribution Margin/Selling PriceBreak Even Points in Units = (Total Fixed Costs + Target Profit)/Contribution MarginBreak Even Points in Sales = (Total Fixed Costs + Target Profit)/Contribution Margin RatioMargin of Safety = Revenue - Break Even Points in SalesDegree of Operating Leverage = Contribution Margin/Net IncomeNet Income = Revenue ? Total Variable Cost ? Total Fixed CostUnit Product Cost using Absorption Cost = (Total Variable Cost + Total Fixed Cost)/# of unitsa. Contribution margin per passenger =?Contribution margin ratio =?Break-even point in passengers = Fixed costs/Contribution Margin =Passengers =?Break-even point in dollars = Fixed Costs/Contribution Margin Ratio =$?b. Compute # of seats per train car (remember load factor?)If you know # of BE passengers for one train car and the grand total of passengers, you can compute # of train cars (rounded) =?c. Contribution margin =?Break-even point in passengers = fixed costs/ contribution marginPassengers =?train cars (rounded) =?d. Contribution margin =?Break-even point in passengers = fixed costs/contribution marginPassengers =?train cars (rounded) =?e. Before tax profit less the tax rate times the before tax profit = after-tax income = $?Then, proceed to compute # of passengers -=?f. # of discounted seats =?Contribution margin for discounted fares X # discounted seats = $ each train X$? train cars per day X? days per month= $? minus $ additional fixed costs = $? pretax income.g. 1.Compute Contribution marginThen,# seats X $ X # train cars = $?Increased fixed cost (?)Pretax gain (loss) on new route $2 and 3. Compute # of passengers and train cars using computation approaches employed in some of the above problems.4. Springfield should consider such things as (Think of qualitative factors that are important. In other words, not the numbers but other things that have to be considered, e.g., risks)midtermTCO A) Direct material cost is a part ofConversion Cost YES.... Prime Cost NO.Conversion Cost NO.... Prime Cost YES.Conversion Cost YES.... Prime Cost YES.Conversion Cost NO.... Prime Cost NO.Question 2. Question:(TCO A) The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to bedirect costs.sunk costs.incremental costs.CORRECT None of the aboveQuestion 3. Question:(TCO A) Property taxes on a company's factory building would be classified as a(n)sunk cost.opportunity cost.period cost.variable cost.manufacturing cost.Question 4. Question:(TCO A) Within the relevant range, variable costs can be expected tovary in total in direct proportion to changes in the activity level.remain constant in total as the activity level changes.increase on a per-unit basis as the activity level increases.increase on a per-unit basis as the activity level decreases.None of the aboveQuestion 5. Question:(TCO F) When manufacturing overhead is applied to production, it is added tothe Cost of Goods Sold account.the Raw Materials account.the Direct Labor account.Question 6. Question:(TCO F) Which of the following statements about the process-costing system is incorrect?In a process-costing system, each processing department has a work-in-process account.In a process-costing system, equivalent units are separately computed for materials and for conversion costs.In a process-costing system, overhead can be under- or overapplied just as in job-order costing.In a process-costing system, materials costs are traced to units of products.Question 7. Question:(TCO F) Equivalent units for a process costing system using the FIFO method would be equal to: units completed during the period, plus equivalent units in the ending work-in-process inventory.units started and completed during the period, plus equivalent units in the ending work-in-process inventory.units completed during the period and transferred out.units started and completed during the period, plus equivalent units in the ending work-in-process inventory, plus work needed to complete units in the beginning work-in-process inventory.Question 8. Question:(TCO B) The contribution margin ratio always decreases when thebreak-even point increases.break-even point decreases.variable expenses as a percentage of net sales increase.variable expenses as a percentage of net sales decrease.:Question 9. Question:(TCO B) Which of the following would not affect the break-even point?Number of units soldVariable expense per unitTotal fixed expensesSelling price per unitQuestion 10. Question:(TCO E) In an income statement prepared using the variable costing method, fixed manufacturing overhead wouldnot be used.be used in the computation of the contribution margin.be used in the computation of net operating income but not in the computation of the contribution margin.be treated the same as variable manufacturing overhead.TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larden Corporation for the just-completed year.Sales$950Purchases of raw materials$170Direct labor$210Manufacturing overhead$220Administrative expenses$180Selling expenses$140Raw materials inventory, beginning$70Raw materials inventory, ending$80Work-in-process inventory, beginning$30Work-in-process inventory, ending$20Finished goods inventory, beginning$100Finished goods inventory, ending$70Required: Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.Question 2. Question:(TCO F) The Colorado Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.Percentage CompletedUnits Materials ConversionWork in process, June 1 80,000 65% 45%Work in process, Jun 30 65,000 75% 65%The department started 325,000 units into production during the month and transferred 340,000 completed units to the next department.Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.Question 3. Question:(TCO B) Drake Company's income statement for the most recent year appears below.Sales (45,000 units) $1,350,000Less: variable expenses 750,000Contribution margin 600,000Less: fixed expenses 375,000Net operating income $225,000Required:a. Calculate the unit contribution margin.b. Calculate the break-even point in dollars.c. If the company desires a net operating income of $290,000, how many units must it sell?Question 4. Question:(TCO E) Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:Selling price $ 175Units in beginning inventory 0Units produced 9,500Units sold 8,000Units in ending Inventory 1,500Variable costs per unit:Direct materials $ 55Direct labor $ 38Variable manufacturing overhead $ 2Variable selling and admin $ 10Fixed costs:Fixed manufacturing overhead $ 300,000Fixed selling and admin $ 125,000Required:a. What is the unit product cost for the month under variable costing?b. What is the unit product cost for the month under absorption costing?c. Prepare an income statement for the month using the variable costing method.d. Prepare an income statement for the month using the absorption costing method.="msonormal">="msonormal">quiz 6="msonormal">="msonormal">(TCO D) Return on investment (ROI) is equal to the margin multiplied bysales.turnover.average operating assets.residual income.Question 2. Question:(TCO D) For which of the following decisions are opportunity costs relevant?The decision to make or buy a needed partThe desision to keep or drop a product line(A)YesYes(B)YesNo(C)NoYes(D)NoNoChoice AChoice BChoice CChoice DQuestion 3. Question:(TCO D) Last year, the House of Orange had sales of $826,650, net operating income of $81,000, and operating assets of $84,000 at the beginning of the year and $90,000 at the end of the year. What was the company's turnover, rounded to the nearest tenth?9.510.29.89.2(TCO D) Financial data for Beaker Company for last year appear below.Beaker CompanyStatement of Financial PositionBeginning EndingBalance BalanceAssetsCash $50,000 $70,000Accounts receivable 20,000 25,000Inventory 30,000 35,000Plant and Equipment (net) 120,000 110,000Investment in Cedar Company 80,000 100,000Land (undeveloped) 170,000 170,000Total Assets $470,000 510,000Liabilities and Owners' EquityAccounts payable $70,000 $90,000Long-term debt 250,000 250,000Owner's equity 150,000 170,000Total liabilities and owner's equity $470,000 $510,000Beaker CompanyIncome StatementSales $414,000Less Operating Expenses 351,900Net Operating Income 62,100Less Interest and TaxesInterest Expense $30,000Tax Expense 10,000 40,000Net Income $22,000The company paid dividends of $2,100 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.Required:i. Compute the company's margin, turnover, and return on investment for last year.ii. The board of directors of Beaker Company has set a minimum required return of 20%. What was the company's residual income last year?Question 2. Question:(TCO D) Eber Wares is a division of a major corporation. The following data are for the latest year of operations.Sales $30,000,000Net Operating income $1,170,000Average operating assets $8,000,000The company's minimum required rate of return 18%Required:i. What is the division's margin?ii. What is the division's turnover?iii. What is the division's ROI?iv. What is the division's residual income?Question 3. Question:(TCO D) Tjelmeland Corporation is considering dropping product S85U. Data from the company's accounting system appear below.Sales $360,000Variable Expenses $158,000Fixed Manufacturing Expenses $119,000Fixed Selling and Administrative Expenses $94,000All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $55,000 of the fixed manufacturing expenses and $71,000 of the fixed selling and administrative expenses are avoidable if product S85U is discontinued.Required:i. According to the company's accounting system, what is the net operating income earned by product S85U? Show your work!ii. What would be the effect on the company's overall net operating income of dropping product S85U? Should the product be dropped? Show your work!Question 4. Question:(TCO D) Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows.Direct Materials $15.70Direct Labor $17.50Variable Manufacturing Overhead $4.50Fixed Manufacturing Overhead $14.60Unit Product Cost $52.30An outside supplier has offered to sell the company all of these parts it needs for $51.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $219,000 per year.If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $6.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.Required:i. How much of the unit product cost of $52.30 is relevant in the decision of whether to make or buy the part?ii. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?iii. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 30,000 units required each year?Question 5. Question:(TCO D) Biello Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month, current monthly production is 14,250 medals. The company normally charges $115 per medal. Cost data for the current level of production are shown below.Variable CostsDirect Materials $969,000Direct Labor $270,750Selling and Administrative $270,075Fixed CostsManufacturing $370,550Selling and Administrative $89,775The company has just received a special one-time order for 600 medals at $102 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.Required:Should the company accept this special order? Why?course project COURSE PROJECT A INSTRUCTIONSYou have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below.The company sells many styles of earrings, but all are sold for the same price?$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.Suppliers are paid $4 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase, the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.Monthly operating expenses for the company are given below:Insurance is paid on an annual basis, in November of each year.The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June, both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter.A listing of the company's ledger accounts as of March 31 is given below:The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month, any repayments are made at the end of a month.The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $50,000 in cash.Required:Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:? 1.o a. A sales budget, by month and in total.o b. A schedule of expected cash collections from sales, by month and in total.o c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.o d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.? 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $50,000.? 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.? 4. A budgeted balance sheet as of June 30.Here is Part B:Clark Paints: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000 with a disposal value of $40,000 and would be able to produce 5,500,000 cans over the life of the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of the next five years.The company would hire three new employees. These three individuals would be full-time employees working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages in addition to $2,500 of health benefits.It is estimated that the raw materials will cost 25? per can and that other variable costs would be 5? per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted.It is expected that cans would cost 45? per can if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be affected by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased.Required:1. Based on the above information and using Excel, calculate the following items for this proposed equipment purchase:Annual cash flows over the expected life of the equipmentPayback periodAnnual rate of returnNet present valueInternal rate of return2. Would you recommend the acceptance of this proposal? Why or why not. Prepare a short double spaced Wordpaper elaborating and supporting your answer.="font-family:>="msonormal">

 

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