Question;1.;Kristopher Manufacturing produces two types of entry doors: Deluxe and Standard.;The allocation basis for support costs has been direct labor dollars. For 2009;Kristopher compiled the following data for the two products;Deluxe;Standard;Sales;in units;50,000;400,000;Sales;price per unit;$650;$475;Direct;material and labor costs per unit;$180;$130;Manufacturing;overhead costs per unit;$80;$120;Last;year, Kristopher purchased an expensive robotics system to allow for more;decorative door products in the deluxe product line. The CFO suggested that an;activity-based costing (ABC) analysis could be valuable to help evaluate a;product mix and promotion strategy for the next sales campaign. She obtained;the following ABC information for 2009;Activity;Cost;Cost;Driver;Total;Deluxe;Standard;Setups;$500,000;# of;setups;500;400;100;Machine-related;$44,000,000;# of;machine hours;600,000;300,000;300,000;Packing;$5,000,000;# of;shipments;250,000;50,000;200,000;Required;(15 points);a. Using;the current system, what is the estimated;1. total;cost of manufacturing one unit for each type of door?;2. profit;per unit for each type of door?;b. Using;the activity-based costing data presented above;1.;compute the cost-driver rate for each overhead activity.;2.;compute the revised manufacturing overhead cost per unit for each type of entry;door.;3.;compute the revised total cost to manufacture one unit of each type of entry;door.;4.;compute the profit per unit for each type of door.;c. Is the;deluxe door as profitable as the original data estimated? Why or why not?;Question 2;The;Sterling Company uses a standard cost system in which manufacturing overhead;costs are applied to the units of the company?s single product on the basis of;direct labor-hours (DLHs). The standard cost card for the product follows;Standard;Cost Card-per unit of product;Direct;materials, 4 yards at $3.50 per yard $14;Direct;labor, 1.5 DLHs at $8 per DLH 12;Variable;overhead, 1.5 DLHs at $2 per DLH 3;Fixed;overhead, 1.5 DLHs at $6 per DLH 9;The;following data pertain to last year?s activities;- The;company manufactured 18,000 units of product during the year.;- A total;of 70,200 yards of material was purchased during the year at a cost of $3.75;per yard. All of this material was used to manufacture the 18,000 units.;- The;company worked 29,250 direct labor hours during the year at a cost of $7.80 per;hour.;- The;denominator activity level was 22,500 direct labor hours.;-;Budgeted fixed manufacturing overhead costs were $135,000 while actual;manufacturing overhead costs were $133,200.;- Actual;variable manufacturing overhead costs were $61,425.;Required;(15 points);a.;Compute the direct materials price and quantity variances for the year.;b.;Compute the direct labor rate and efficiency variances for the year.;c.;Compute the variable overhead spending and efficiency variances for the year.;d.;Compute the fixed overhead budget and volume variances for the year.;e.;Discuss some possible reasons for the direct labor variances that you computed.;Question;3;Pal Corporation is contemplating;purchasing equipment that would increase sales revenues by $438,000 per year;and cash operating expenses by $258,000 per year. The equipment would cost;$504,000 and have a 9 year life with no salvage value. The annual depreciation;would be $56,000.;Required;Determine;the simple rate of return on the investment to the nearest tenth of a percent.;Show your work!;Question;4;The management of Dulcinea Corporation is considering;a project that would require an initial investmentof $331,000 and would last for;8 years. The net operating income of the project is $54,000 including;deperecation of $40,000. The scrap value of the project's assets at the end of;the project would be $11,000.;Calculate;payback period.;Question;5;Vaden Company produces a single;product. The cost of producing and selling a single unit of this product at the;company?s normal activity level of 50,000 units per month is as follows;Direct materials $32.50Direct labor 7.20Variable manufacturing overhead;1.30Fixed manufacturing overhead 20.90Variable selling & administrative;expense 1.90Fixed selling & administrative expense 7.30;The normal selling price of the product is;$75.00 per unit.;An order has been received from an overseas;customer for 3,000 units to be delivered this month at a special discounted;price. This order would have no effect on the company?s normal sales price and;would not change the total amount of the company?s fixed costs. The variable;selling and administrative expense would be $0.30 less per unit on this order;than on normal sales.;Direct labor is a variable cost in this;company.;Required (10 points);a. Suppose there is ample idle capacity to produce the units required by the;overseas customer and the special discounted price on the special order is;$65.60 per unit. By how much would this special order increase (decrease) the;company?s net operating income for the month?;b. Suppose the company is already operating at capacity when the special order;is received from the overseas customer. What would be the opportunity cost of;each unit delivered to the overseas customer?;Question 6;Kristopher Limos, Inc., is considering the;purchase ofa limousine that would cost $149,868, would have a useful;life of 9 years, and would have no salvage value. The limousine;would bring in cash;inflows of $36,000 per year in excess of its cash operating costs.;Determine the internal rate of return on the investment in;the new limousine. Show work.;Question 7;EKH, Inc.;is considering the purchase of a machine that would cost $430,000 and would;last for 6 years, at the end of which, the machine would have a salvage value;of $47,000. The machine would reduce labor and other costs by $109,000 per;year. Additional working capital of $4,000 would be needed immediately, all of;which would be recovered at the end of 6 years. The company requires a minimum;pretax return of 17% on all investment projects. (Ignore income taxes in this;problem.);(a);Determine the net present value of the project.;Question;8;The Hayes Company manufactures and sells;several products, one of which is called a slip differential. The company;normally sells 30,000 units of the slip differential each month. At this;activity level, unit costs are;Direct;materials............................;$4;Direct;labor..................................;3;Variable;manufacturing overhead.....;4;Fixed;manufacturing overhead.........;5;Variable;selling..............................;3;Fixed;selling.................................;1;An;outside supplier has offered to produce the slip differentials for the Hayes;Company, and to ship them directly to the Hayes Company's customers. This;arrangement would permit the Hayes Company to reduce its variable selling;expenses by one third (due to elimination of freight costs). The facilities now;being used to produce the slip differentials would be idle and fixed;manufacturing overhead would continue at 60 percent of its present level. The;total fixed selling expenses of the company would be unaffected by this;decision.;Required;What;is the maximum acceptable price quotation for the slip differentials from the;outside supplier?;Question 10;Harris;Corp. manufactures three products from a common input in a joint processing;operation. Joint processing costs up to the split-off point total $200,000 per;year. The company allocates these costs to the joint products on the basis of;their total sales value at the split-off point.;Each product may be sold at the split-off point or processed further. The;additional processing costs and sales value after further processing for each;product (on an annual basis) are;The "Further Processing Costs" consist of variable and avoidable;fixed costs.Required;Which product or products should be sold at the split-off point, and which;product or products should be processed further? Show computations.;Question;11;Brink;Tech is a for-profit vocational school. The school bases its budgets on two;measures of activity (i.e., cost drivers), namely student and course. The;school uses the following data in its budgeting;In June, the school budgeted for 1,710 students and 110 courses. The school's;income statement showing the actual results for the month appears below:Required;Prepare a flexible budget performance report showing both the school's sales-volume;variances and flexible-budget variances for June. Label each variance as;favorable (F) or unfavorable (U).;Question;12;Mr. Earl Pearl, accountant for;Margie Knall Co., Inc., has prepared the following product-line income data;The following additional information is available;* The factory rent of $1,500 assigned to Product C is avoidable if the product;were dropped.;* The company's total depreciation would not be affected by dropping C.;* Eliminating Product C will reduce the monthly utility bill from $1,500 to;$800.;* All supervisors' salaries are avoidable.;* If Product C is discontinued, the maintenance department will be able to;reduce monthly expenses from $3,000 to $2,000.;* Elimination of Product C will make it possible to cut two persons from the;administrative staff, their combined salaries total $3,000.Required;Prepare an analysis showing whether Product C should be eliminated.
Paper#42929 | Written in 18-Jul-2015Price : $67