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Question;Question;1;Question;1;The treasurer of Unisyms Company has accumulated;the following budget information for the first two months of the coming year;March;April;Sales.;$450,000;$520,000;Manufacturing costs;290,000;350,000;Selling and administrative;expenses;41,400;46,400;Capital additions;250,000;---;The company expects to sell about 35% of its merchandise for cash. Of sales on;account, 80% are expected to be collected in full in the month of the sale and;the remainder in the month following the sale. One-fourth of the manufacturing;costs are expected to be paid in the month in which they are incurred and the;other three-fourths in the following month. Depreciation, insurance, and;property taxes represent $6,400 of the probable monthly selling and;administrative expenses. Insurance is paid in February and a $40,000;installment on income taxes is expected to be paid in April. Of the remainder;of the selling and administrative expenses, one-half are expected to be paid in;the month in which they are incurred and the balance in the following month.;Capital additions of $250,000 are expected to be paid in March.;Current assets as of March 1 are composed of cash of $45,000 and accounts;receivable of $51,000. Current liabilities as of March 1 are composed of;accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for;operating expenses). Management desires to maintain a minimum cash balance of;$20,000.Prepare a monthly cash budget for;March and April.;Question;2;Trapp Co. was organized;on August 1 of the current year. Projected sales for the next three months are;as follows;August;$100,000;September;185,000;October;225,000;The company expects to sell 40% of its merchandise for cash. Of the sales on;account, one third are expected to be collected in the month of the sale and;the remainder in the following month.Prepare a schedule indicating cash;collections of accounts receivable for August, September, and October.;Question 3;Diamond Company produces a chair that requires 5 yds. of material;per unit. The standard price of one yard of material is $7.50. During the;month, 8,500 chairs were manufactured, using 43,700 yards at a cost of $7.60.;Determine the (a) price;variance, (b) quantity variance, and (c) cost variance.;Question;4;The Finishing Department of Paragon;Manufacturing Co. prepared the following factory overhead cost budget for;October of the current year, during which it expected to operate at a 100%;capacity of 10,000 machine hours;Variable cost;Indirect factory wages;$18,000;Power and light;12,000;Indirect materials;4,000;Total variable cost;$34,000;Fixed cost;Supervisory salaries;$12,000;Depreciation of plant and;equipment;8,800;Insurance and property taxes;3,200;Total fixed cost;24,000;Total factory overhead;$58,000;During October, the plant was operated for 9,000 machine hours and the factory;overhead costs incurred were as follows: indirect factory wages, $16,400, power;and light, $10,000, indirect materials, $3,000, supervisory salaries, $12,000;depreciation of plant and equipment, $8,800, insurance and property taxes;$3,200.Prepare a factory overhead cost;variance report for October. (The budgeted amounts for actual amount produced;should be based on 9,000 machine hours.);Question 5 (EX 24-5);In;divisional income statements prepared for franklin Electrical Company, the;Payroll Department costs are charged back to user divisions on the basis of the;number of payroll checks, and the Purchasing Department costs are charged back;on the basis of the number of purchase requisitions. The Payroll Department had expenses of 44010;and the Purchasing Department had expenses of 18720 for the year. The following annual data for Residential;Commercial, and Government Contract Divisions were obtained from corporate;records;Residential;Commercial Government Contract;Sales 420000 500000 1800000;Number;of employees;Weekly payroll (52 weeks per;year) 144 72 108;Monthly payroll 25 20 18;Number of purchase requisition per;year 1800 1530 1350;a.;Determine the total amount;of payroll checks and purchase requisitions processed per year by each;division.;b.;Using the activity base;information in (a), determine the annual amount of payroll and purchasing costs;charged back to the Residential, Commercial, and Government Contract Divisions;from payroll and purchasing services.;c.;Why does the Residential;Division have a larger service department charge than the other two divisions;even though its sales are lower?;(Question 6) EX24-9;Outdoor;Athletic Equipment Co. operates two divisions?the Winter Sports Division and;the Summer Sports Division. The following income and expense accounts were;provided from the trail balance as of June 30, 2008, the end of the current;fiscal year, after all adjustments, including those for inventories, were;recorded and posted;Sales?Winter;Sports (WS)Division???????????????????.950000;Sales?Summer;Sorts (SS) Division????????????????????1437500;Cost;of Goods Sold?Winter Sports (WS) Division---------------------------512500;Cost;of Goods Sold?Summer Sports (SS)Division????????????..687500;Sales;Expense?Winter Sports (WS)Division???????????????.150000;Sales;Expense?Summer Sports (SS) Division??????????????..205000;Administrative;Expense?Winter Sports (WS) Division?????????97000;Administrative;Expense?Summer Sport (SS) Division??????????128000;Advertising;Expense????????????????????????????.64500;Transportation;Expense?????????????????????????..100700;Accounts;Receivable Collection Expense????????????????58100;Warehouse;Expense???????????????????????????..120000;The;bases to be used in allocating expenses, together with other essential;information, are as follows;a.;Advertising expense-incurred at headquarters, charged back to;divisions on the basis of usage: Winter Sports Division, 28000, Summer Sports;Division, 36500.;b. Transportation;expense-charged back to divisions at a transfer price of 7.60 per bill of;lading: Winter Sports Division, 6000 bills of lading, Summer Sports Division;7250 bills of lading.;c.;Accounts receivable collection expense?incurred at;headquarters, charged back to divisions at a transfer price of 5.60 per;invoice: Winter Sports Diviosn, 4500 sales invoices, Summer Sports Division;5875 sales invoices.;d. Warehouse expense?charged;back to divisions on the basis of floor space used in storing division;products: Winter Sports Division, 25000 square feet, Summer Sports Division;12500 square feet.;Prepare a;divisional income statement with two column headings: Winter Sports Division;and Summer Sports Division. Provide supporting schedules for determining service;department charges.;Question 7 (EX24-20;Materials;used by the Industrial Division of Crow Manufacturing are currently purchased;from outside suppliers at a cost of 120 per unit. However, the same materials are available;from the Materials Division. The;Materials Division has unused capacity and can produce the materials needed by;the Industrial Division at a variable cost of 95 per unit.;a.;If a transfer price of 105;per unit is established and 40000 units of materials are transferred, with no;reduction in the Materials Division?s current sales, how much would Crow;Manufacturing?s total income from operations increase?;b.;How much would the;Industrial Division?s income from operations increase?;c.;How much would the;Materials Division?s income from operations increase?;Question 8 (PR24-5A);The;vice president of operations of I4 computer Inc. is evaluating the performance;of two divisions organized as investment centers. Invested assets and condensed;income statement data for the past year for each division are as follows;Personal;Computing Division Business Computing;Division;Sales 800000 1200000;Cost;of goods sold 460000 780000;Operating;Expenses 180000 156000;Invested;assets 500000 2000000;Instructions;1.;Prepare condensed;divisional income statements for the year ended Dec. 31 assuming that there;were no service department charges.;2.;Using the DuPont formula;for rate of return on investment, determine the profit margin, investment;turnover, and rate of return on investment for each division.;3.;If management?s minimum acceptable;rate or return is 15%, determine the residual the residual income for each;division.;4.;Discuss the evaluation of;the two divisions, using the performance measures determined in parts (1), (2);and (3).;information for the first two months of the coming year;March;April;Sales.;$450,000;$520,000;Manufacturing costs;290,000;350,000;Selling and administrative;expenses;41,400;46,400;Capital additions;250,000;---;The company expects to sell about 35% of its merchandise for cash. Of sales on;account, 80% are expected to be collected in full in the month of the sale and;the remainder in the month following the sale. One-fourth of the manufacturing;costs are expected to be paid in the month in which they are incurred and the;other three-fourths in the following month. Depreciation, insurance, and;property taxes represent $6,400 of the probable monthly selling and;administrative expenses. Insurance is paid in February and a $40,000;installment on income taxes is expected to be paid in April. Of the remainder;of the selling and administrative expenses, one-half are expected to be paid in;the month in which they are incurred and the balance in the following month.;Capital additions of $250,000 are expected to be paid in March.;Current assets as of March 1 are composed of cash of $45,000 and accounts;receivable of $51,000. Current liabilities as of March 1 are composed of;accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for;operating expenses). Management desires to maintain a minimum cash balance of;$20,000.Prepare a monthly cash budget for;March and April.;Question;2;Trapp Co. was organized;on August 1 of the current year. Projected sales for the next three months are;as follows;August;$100,000;September;185,000;October;225,000;The company expects to sell 40% of its merchandise for cash. Of the sales on;account, one third are expected to be collected in the month of the sale and;the remainder in the following month.Prepare a schedule indicating cash;collections of accounts receivable for August, September, and October.;Question 3;Diamond Company produces a chair that requires 5 yds. of material;per unit. The standard price of one yard of material is $7.50. During the;month, 8,500 chairs were manufactured, using 43,700 yards at a cost of $7.60.;Determine the (a) price;variance, (b) quantity variance, and (c) cost variance.;Question;4;The Finishing Department of Paragon;Manufacturing Co. prepared the following factory overhead cost budget for;October of the current year, during which it expected to operate at a 100%;capacity of 10,000 machine hours;Variable cost;Indirect factory wages;$18,000;Power and light;12,000;Indirect materials;4,000;Total variable cost;$34,000;Fixed cost;Supervisory salaries;$12,000;Depreciation of plant and;equipment;8,800;Insurance and property taxes;3,200;Total fixed cost;24,000;Total factory overhead;$58,000;During October, the plant was operated for 9,000 machine hours and the factory;overhead costs incurred were as follows: indirect factory wages, $16,400, power;and light, $10,000, indirect materials, $3,000, supervisory salaries, $12,000;depreciation of plant and equipment, $8,800, insurance and property taxes;$3,200.Prepare a factory overhead cost;variance report for October. (The budgeted amounts for actual amount produced;should be based on 9,000 machine hours.);Question 5 (EX 24-5);In;divisional income statements prepared for franklin Electrical Company, the;Payroll Department costs are charged back to user divisions on the basis of the;number of payroll checks, and the Purchasing Department costs are charged back;on the basis of the number of purchase requisitions. The Payroll Department had expenses of 44010;and the Purchasing Department had expenses of 18720 for the year. The following annual data for Residential;Commercial, and Government Contract Divisions were obtained from corporate;records;Residential;Commercial Government Contract;Sales 420000 500000 1800000;Number;of employees;Weekly payroll (52 weeks per;year) 144 72 108;Monthly payroll 25 20 18;Number of purchase requisition per;year 1800 1530 1350;a.;Determine the total amount;of payroll checks and purchase requisitions processed per year by each;division.;b.;Using the activity base;information in (a), determine the annual amount of payroll and purchasing costs;charged back to the Residential, Commercial, and Government Contract Divisions;from payroll and purchasing services.;c.;Why does the Residential;Division have a larger service department charge than the other two divisions;even though its sales are lower?;(Question 6) EX24-9;Outdoor;Athletic Equipment Co. operates two divisions?the Winter Sports Division and;the Summer Sports Division. The following income and expense accounts were;provided from the trail balance as of June 30, 2008, the end of the current;fiscal year, after all adjustments, including those for inventories, were;recorded and posted;Sales?Winter;Sports (WS)Division???????????????????.950000;Sales?Summer;Sorts (SS) Division????????????????????1437500;Cost;of Goods Sold?Winter Sports (WS) Division---------------------------512500;Cost;of Goods Sold?Summer Sports (SS)Division????????????..687500;Sales;Expense?Winter Sports (WS)Division???????????????.150000;Sales;Expense?Summer Sports (SS) Division??????????????..205000;Administrative;Expense?Winter Sports (WS) Division?????????97000;Administrative;Expense?Summer Sport (SS) Division??????????128000;Advertising;Expense????????????????????????????.64500;Transportation;Expense?????????????????????????..100700;Accounts;Receivable Collection Expense????????????????58100;Warehouse;Expense???????????????????????????..120000;The;bases to be used in allocating expenses, together with other essential;information, are as follows;a.;Advertising expense-incurred at headquarters, charged back to;divisions on the basis of usage: Winter Sports Division, 28000, Summer Sports;Division, 36500.;b. Transportation;expense-charged back to divisions at a transfer price of 7.60 per bill of;lading: Winter Sports Division, 6000 bills of lading, Summer Sports Division;7250 bills of lading.;c.;Accounts receivable collection expense?incurred at;headquarters, charged back to divisions at a transfer price of 5.60 per;invoice: Winter Sports Diviosn, 4500 sales invoices, Summer Sports Division;5875 sales invoices.;d. Warehouse expense?charged;back to divisions on the basis of floor space used in storing division;products: Winter Sports Division, 25000 square feet, Summer Sports Division;12500 square feet.;Prepare a;divisional income statement with two column headings: Winter Sports Division;and Summer Sports Division. Provide supporting schedules for determining service;department charges.;Question 7 (EX24-20;Materials;used by the Industrial Division of Crow Manufacturing are currently purchased;from outside suppliers at a cost of 120 per unit. However, the same materials are available;from the Materials Division. The;Materials Division has unused capacity and can produce the materials needed by;the Industrial Division at a variable cost of 95 per unit.;a.;If a transfer price of 105;per unit is established and 40000 units of materials are transferred, with no;reduction in the Materials Division?s current sales, how much would Crow;Manufacturing?s total income from operations increase?;b.;How much would the;Industrial Division?s income from operations increase?;c.;How much would the;Materials Division?s income from operations increase?;Question 8 (PR24-5A);The;vice president of operations of I4 computer Inc. is evaluating the performance;of two divisions organized as investment centers. Invested assets and condensed;income statement data for the past year for each division are as follows;Personal;Computing Division Business Computing;Division;Sales 800000 1200000;Cost;of goods sold 460000 780000;Operating;Expenses 180000 156000;Invested;assets 500000 2000000;Instructions;1.;Prepare condensed;divisional income statements for the year ended Dec. 31 assuming that there;were no service department charges.;2.;Using the DuPont formula;for rate of return on investment, determine the profit margin, investment;turnover, and rate of return on investment for each division.;3.;If management?s minimum acceptable;rate or return is 15%, determine the residual the residual income for each;division.;4.;Discuss the evaluation of;the two divisions, using the performance measures determined in parts (1), (2);and (3).

 

Paper#44126 | Written in 18-Jul-2015

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