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5 questions related to managerial accounting

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Question;Here are 5 questions related to managerial accounting.1.TX;Companyproduces;avarietyof electricmotors. Management;follows;apricingpolicyof manufacturing cost;plus 60 percent. In;responseto a request;from Sporting Goods, the followingpricehas;beendeveloped for an;order;of300 Mini Motors (the smallest motor;TP Companyproduces);Manufacturing Costs;DirectMaterials;?????..;$10,000;DirectLabor;?????..;$12,000;FactoryOverhead;?????..;$18,000;Total;??????????????????;$40,000;Markup (60%)???????????????.;$24,000;Sellingprice????????????????..;$64,000;Mr;Smith;the president of SportingGoods;rejected this;price and offeredto;purchasethe 300;Minimotors;at a priceof$44,000.;Thefollowing additional;information is available.;? TP;Companyhas sufficient;excess;capacityto;producethe motors.;? Factoryoverhead is $400,000 for the currentyear. Ofthis amount, $100,000 is fixed.;Ofthe;$18,000 offactoryoverheadassigned;to Mini Motors, only$13,500 is driven bythe special order;$3,500 is afacility-level;cost.;? Sellingand;administrative expenses arebudgetedas;follows: Fixed????????$90,000peryear;(facilitylevel) Variable ??????..$20 per unit manufactured and;sold;Required;a. Thepresident;of TP Companywants to;know ifheshould allow Ms Smith to;havethe;MiniMotors for;$44,000. Determinetheeffect onprofits;of acceptingMrSmith?s;offer.;b. Brieflyexplain;why;certain costs should beomitted from;the;analysisin requirement;(a).;c. Assume TP Companyisoperatingat;capacityandcould;sellthe 300 Mini Motors at;its regular markup.;1. Determinethe opportunitycost;ofacceptingMr Smith?s offer.;2. Determinetheeffect;on profits of acceptingMr;Smith?s;offer.2.Frontier Companyis;preparingabudget for;Januaryand Februaryof nextyear. Thebalance;sheet as ofDecember 31,2011;follows;FrontCompany;BalanceSheet;31-Dec-11;Assets;Liabilties&Stockholders'Equity;Cash;$ 100,000;Accountspayable;$ 125,000;AccountsReceivable;$ 60,000;Operatingexpensepayable;$ 10,000;Inventory;$ 30,000;Miscellaneouspayable;$ 20,000;EquipmentLeasehold;$ 60,000;Capitalstock;$ 25,000;Retainedearnings;$ 70,000;Totalassets;$ 250,000;Totalliabilities&equity;$ 250,000;Monthlysales;dataforthe currentyear;and the budgeted data;for;thenextyear are as;follows;November2011;?????..;$180,000;February2012;?????..;$250,000;December2011;?????..;$100,000;March2012;?????..;$260,000;January2012;?????..;$240,000;April2012;?????..;$280,000;For 2012, the followingareexpected:? Fortypercent;of the salesrevenueiscollected duringthe;month of sale, with the balancecollected during;the followingmonth.? Cost;of goods sold is 60 percent of;sales. MerchandiseInventorysufficient;for20 percent of;thenext month?s sales;is to bemaintained at the end of;each month.;All purchasesforresale is paid;in the month followingthe month of purchase.? Operatingexpenses for;each month are estimatedat 10percent;of sales revenue. All operatingexpenses;arepaid for;duringthe followingmonth.? Income;taxes are;estimated are40percent of income beforetaxes.;Incometaxes;are paid 15 days after the;end of thequarter. Therewereno taxpayable on December31.;Themiscellaneous payables as;at December31, 2011;are;to be paid duringJanuary2012.Required:a. Prepare;a contribution margin;statement for;thequarterendingMarch;31,2012. Donot;preparemonthlystatements.b. Prepare abudgetedbalancesheetas;at March 31,2012.;(Hint: Preparepurchases and;cash budgets.)3.="msonormal">="msonormal">IT producesavarietyof computer accessories. To improvefinancial incentives;the Production Department and;the Sales Department arebothtreated;as profitcenters;with all goods produced;in theProduction;Department being?sold?to theSales department;at 150 percent of variable cost. The;costsof theAdministrativeDepartment;are;allocated equallyto;the Production and Salesdepartments.;Thefollowingperformancereportsarefor the Production;and Sales Departments;fortheyear;2010:ComputerITProductionDepartmentPerformanceReportForthe year2010;UnitSales;Actual;10,000;Budget;8,000;Variance;Salesrevenue;Lessvariablemanufacturingcosts;DirectMaterials;$ 241,500 (69,000);$ 147,000 (35,000);DirectLabor;(32,000);(21,000);ManufacturingOverhead;(60,000);(42,000);Total;(161,000);(98,000);Contribution Margin;Less:FixedCosts;Manufacturingoverhead;80,500 (24,000);49,000 (25,000);Administrative;(15,000);(10,000);Total;(39,000);(35,000);Manufacturingprofit;41,500;14,000;27,500 F;ComputerITSalesDepartmentPerformanceReportFor theyear2010;UnitSales;Actual;10,000;Budget;8,000;Variance;Salesrevenue;Lessvariablecosts;Costofgoodssold;$ 310,000 (241,500);$ 217,000 (147,000);Sellinganddistribution;(50,000);(35,000);Total;(291,500);(182,000);ContributionMargin;Less:FixedCosts;Sellinganddistribution;18,500 (8,000);35,000 (8,000);Administrative;(15,000);(10,000);Total;(23,000);(18,000);Sellingprofit/;(loss);(4,500);17,000;(21,500)U;Management;congratulated the Production department supervisorforanother;outstanding performanceand;offeredhimaraise. Themanager;oftheSales department;on the other hand, was;called;to a special meetingof theboardof;directorsand told that unless she provided an;adequateexplanation ofher department?s;performance;shewould be terminated.Required:Extremelyconcernedabout;herfuture with theorganization;the manager ofthe Salesdepartment;hasaskedyou(1)To evaluate;the 2010 performancereports for;each;department and(2)To assist;in preparingrevised;2010 performancereports for;each department;and the companyas awhole.4.GCompanybuysavarietyof fruits;from growers and then processes the;fruitinto a product line;offresh fruit;juices;and fruitflavorings. Themost recentyear?s sales;revenue was;$4,200,000. Variable costswere60;percent of;sales and fixed coststotalled $1,300,000. Garden Companyis;evaluatingtwo alternatives;designed;toenhanceprofitability.? Onestaff;member has;proposed that Garden Companypurchasemoreautomated;processingequipment. This;strategywould;increasefixed;costsby$300,000;but decreasevariablecoststo;54 percent of sales.? Another staffmemberhas suggested that GardenCompanyrelymoreon outsourcing for;fruitprocessing. This would reducefixed;costsby$300,000 but increasevariable;coststo 65 percent of sales.Required:Please assist;Garden Companymanagement byansweringthe followingquestions:a. What is;the current break-even;pointin sales dollars?b. Assumingan income;taxrate of34;percent, what;dollar sales;volumeis current required to obtain anafter-taxprofitof;$500,000.c. In;theabsenceof;incometaxes;at what sales volume will;both alternatives(automation;and outsourcing) providethe;same profit?;d. Brieflydescribeonestrength;and oneweakness;of both the automation;and;the outsourcing alternatives.5.OTCompanymanufacturesorangejam.;Becauseof bad weather,its;orange cropwas small.;The followingdatahave;beengatheredforthe;summer quarter of2012.Beginninginventory(cases)???????????0Casesproduced????????????????10,000Casessold?????????????????? 9,400Salespricepercase??????????????. $60Directmaterialspercase????????????. $8Directlaborpercase??????????????$9Variable manufacturingoverheadpercase?????. $3Totalfixed;manufacturingoverhead????????$400,000Variablesellingandadministrativecostpercase???$2Fixedsellingandadministrativecostpercase???? $48,000Required:a. Prepare an;incomestatement for thequarter;using;absorption costing.b. Prepare;an incomestatement for the;quarter usingvariable;costing. c. What is;the value of endinginventoryunder absorption costing?d. What is;the value of endinginventoryunder variable;costing?e. Explain the differenceinendinginventoryunder absorption costingand variable costing.;="msonormal">="msonormal">="msonormal">="msonormal">

 

Paper#43837 | Written in 18-Jul-2015

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