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Chapters 1-6 - Principles of Accounting II




Question;Chapters 1-6 Principles of Accounting II;1. Maintenance costs at a Tierce Corporation factory are listed below;Machine - Hours;Maintenance Cost;January;4,198;$ 60,787;February;4,161;$ 60,545;March;4,114;$ 59,859;April;4,156;$ 55,785;May;4,177;$ 60,650;June;4,135;$ 59,670;July;4,190;$ 60,726;August;4,169;$ 60,546;September;4,068;$ 59,352;Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the high-low method to estimate the variable and fixed components of this cost, these estimates would be closest to;$6.54 per machine-hour, $33,332 per month;$13.42 per machine-hour, $55,785 per month;$11.04 per machine-hour, $14,441 per month;$11.04 per machine-hour, $15,876 per month;2.;Sperberg Corporation's operating leverage is 4.8. If the company's sales increase by 13.75%, its net operating income should increase by about;13.75%;4.80%;57.05%;66.00%;3.;The following partially completed T-accounts summarize transactions for Fabatz Company during the year;Raw Materials;---;---;Beg Bal;1,650;8,800;8,800;Work in Process;---;---;Beg Bal;2,800;22,100;7,650;8,200;4,800;Finished Goods;---;---;Beg Bal;6,400;23,300;22,100;Manufacturing Overhead;---;---;1,150;4,800;2,500;1,700;Wages and Salaries Payable;---;---;13,700;Beg Bal;1,250;13,700;Cost of Goods Sold;---;---;23,300;The manufacturing overhead was;$550 underapplied;$1,700 overapplied;$550 overapplied;$1,700 underapplied;4.;Candice Corporation has decided to introduce a new product. The product can be manufactured using either a capital-intensive or labor-intensive method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows;Capital-;Labor-Intensive;Intensive;Variable manufacturing cost per unit;$;14.00;$;17.60;Fixed manufacturing cost per year;$;2,524,000;$;1,382,400;---;The company's market research department has recommended an introductory selling price of $30 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $500,000. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured.;Required;a.;Calculate the break-even point in units if Candice Corporation uses the (Do not round intermediate calculations.);Break-even point in units;Capital-intensive manufacturing method;Labor-intensive manufacturing method;---;b.;Determine the unit sales volume at which the net operating income is the same for the two manufacturing methods. (Do not round intermediate calculations. Round your answer to the nearest whole number.);Sales volume;c.;Assuming sales of 310,000 units, what is the degree of operating leverage if the company uses the: (Do not round intermediate calculations. Round your answers to 2 decimal places.);Degree of operating leverage;Capital-intensive manufacturing method;Labor-intensive manufacturing method;---;d.;What is your recommendation to management concerning which manufacturing method should be used, if the sales volume is in excess of the one calculated under Requirement (b)?;Labor-intensive manufacturing method;Capital-intensive manufacturing method;5.;Ermoin Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.;Work in process, beginning;Units in process;1,300;Percent complete with respect to materials;80;%;Percent complete with respect to conversion;20;%;Costs in the beginning inventory;Materials cost;$;3,040;Conversion cost;$;5,165;Units started into production during the month;16,800;Units completed and transferred out;16,800;Costs added to production during the month;Materials cost;$;113,960;Conversion cost;$;507,900;Work in process, ending;Units in process;1,300;Percent complete with respect to materials;40;%;Percent complete with respect to conversion;30;%;---;Required;Using the FIFO method;a.;Determine the equivalent units of production for materials and conversion costs.;Materials;Conversion;Equivalent units of production;---;b.;Determine the cost per equivalent unit for materials and conversion costs. (Round your answers to 2 decimal places.);Materials;Conversion;Cost per equivalent unit;$;$;---;c.;Determine the cost of ending work in process inventory. (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.);Cost of ending work in process inventory;$;d.;Determine the cost of units transferred out of the department during the month. (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.);Cost of units transferred out;$;6.;Erkkila Inc. reports that at an activity level of 8,100 machine-hours in a month, its total variable inspection cost is $231,579 and its total fixed inspection cost is $196,830.;What would be the total variable inspection cost at an activity level of 8,300 machine-hours in a month?;Assume that this level of activity is within the relevant range. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.);$231,579;$201,690;$428,409;$237,297;7.;Mannarelli Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below;Units;Percent Complete with Respect to Conversion;Beginning work in process inventory;30,000;20%;Transferred in from the prior department during September;121,000;Ending work in process inventory;40,000;90%;According to the company's records, the conversion cost in beginning work in process inventory was $17,260 at the beginning of September. Additional conversion costs of $542,568 were incurred in the department during the month.;The cost per equivalent unit for conversion costs for September is closest to (Round off to three decimal places.);$4.484;$3.707;$3.654;$3.848;8.;Budget data for the Bidwell Company are as follows;Sales (130,000 units);$1,300,000;Expenses;Fixed;Variable;Raw materials;$ 390,000;Direct labor;260,000;Overhead;$ 130,000;195,000;Selling and administrative;143,000;65,000;Total expenses;$ 273,000;$ 910,000;1,183,000;Net operating income;$ 117,000;The number of units Bidwell would have to sell to earn a net operating income of $195,000 is;130,000 units;91,000 units;156,000 units;195,000 units;9.;Wilson Company has a process costing system. The Assembly Department had the following costs for May;Materials;Labor & Overhead;Work in process inventory, May 1;$ 64,000;$ 51,000;Costs added during May;$ 238,000;$ 119,000;Assume that Wilson uses the weighted-average method and that for May the company computed 17,000 equivalent units for labor and overhead. The cost per equivalent unit for labor and overhead for the month would have been;$10.00;$21.00;$7.00;$3.00;10.;DeAnne Company produces a single product. The company's variable costing income statement for August appears below;DeAnne Company Income statement For the month ended August 31;Sales ($19 per unit);$798,000;Variable expenses;Variable cost of goods sold;378,000;Variable selling expense;84,000;Total variable expenses;462,000;Contribution margin;336,000;Fixed expenses;Fixed manufacturing;111,000;Fixed selling and administrative;37,000;Total fixed expenses;148,000;Net operating income;$188,000;The company produced 37,000 units in August and the beginning inventory consisted of 10,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. The value of the company's inventory on August 31 under the absorption costing method is (Do not round your intermediate calculations.);$45,000;$60,000;$74,405;$70,000;11.;Carr Company produces a single product. During the past year, Carr manufactured 43,000 units and sold 29,000 units. Production costs for the year were as follows;Fixed manufacturing overhead;$ 430,000;Variable manufacturing overhead;$ 548,250;Direct labor;$ 361,200;Direct materials;$ 464,400;Sales totaled $2,233,000, variable selling expenses totaled $438,600, and fixed selling and administrative expenses totaled $188,000. There were no units in beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at (Do not round your intermediate calculations.);$678,059;$788,509;$587,300;$753,997;12.;Hickory Company manufactures two products?15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: (The total estimated overhead cost may not agree with the sum of allocated overhead costs to each product.);Activity Cost Pool;Activity Measure;Estimated Overhead Cost;Expected Activity;Machining;Machine-hours;$;213,400;11,000;MHs;Machine setups;Number of setups;$;61,600;140;setups;Production design;Number of products;$;78,000;2;products;General factory;Direct labor-hours;$;244,000;10,000;DLHs;---;Activity Measure;Product Y;Product Z;Machining;6,400;4,600;Number of setups;60;80;Number of products;1;1;Direct labor-hours;7,400;2,600;---;Required;What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.);Machining activity cost pool;$ per MH;13.;Tsuchiya Corporation manufactures a variety of products. Last year, the company's variable costing net operating income was $78,500. Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $48,000. What was the absorption costing net operating income last year?;$48,000;$126,500;$30,500;$78,500;14.;Smith Company sells a single product at a selling price of $30 per unit. Variable expenses are $12 per unit and fixed expenses are $62,100. Smith's break-even point is;10,350 units;3,450 units;2,070 units;5,175 units;15.;On April 1, Stelter Corporation had $38,000 of raw materials on hand. During the month, the company purchased an additional $64,000 of raw materials. During April, $74,000 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 $7,400. Prepare journal entries to record these events. Use those journal entries to answer the following question;The credits to the Work in Process account as a consequence of the raw materials transactions in April total;65,700;74,000;0;64,000;16.;Temblador Corporation purchased a machine 7 years ago for $342,500 when it launched product E26T. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 330 machine costing $346,500 or by a new model 230 machine costing $308,500. Management has decided to buy the model 230 machine. It has less capacity than the model 330 machine, but its capacity is sufficient to continue making product E26T. Management also considered, but rejected, the alternative of dropping product E26T and not replacing the old machine. If that were done, the $308,500 invested in the new machine could instead have been invested in a project that would have returned a total of $308,500.;In making the decision to invest in the model 230 machine, the opportunity cost was;$342,500;$409,500;$346,500;$308,500;17.;The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product;Production volume;1,000 units;2,000 units;Direct materials;$ 67.70 per unit;$ 67.70 per unit;Direct labor;$ 67.00 per unit;$ 67.00 per unit;Manufacturing overhead;$ 93.60 per unit;$ 66.90 per unit;The best estimate of the total monthly fixed manufacturing cost is (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.);$133,800;$53,400;$93,600;$224,300;18.;A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations;Units in beginning inventory;0;Units produced;8,000;Units sold;7,800;Units in ending inventory;200;Variable costs per unit;Direct materials;$47;Direct labor;$45;Variable manufacturing overhead;$13;Variable selling and administrative;$10;Fixed costs;Fixed manufacturing overhead;$276,000;Fixed selling and administrative;$88,000;What is the absorption costing unit product cost for the month? (Round your intermediate calculations to whole dollar value.);$105;$140;$115;$150;19.;The following data were taken from the accounting records of Abacus Company which uses the FIFO method in its process costing system;Beginning work in process inventory;31,000 units (materials 100% complete, labor and overhead 55% complete);Started in process during the period;102,000 units;Ending work in process inventory;41,000 units (materials 100% complete, labor and overhead 65% complete);The equivalent units are;Material, 102,000 units, labor and overhead, 101,600 units;Material, 117,450 units, labor and overhead, 113,750 units;Material, 73,150 units, labor and overhead, 74,700 units;Material, 133,000 units, labor and overhead, 118,650 units;20.;The following partially completed T-accounts summarize transactions for Fabatz Company during the year;Raw Materials;---;---;Beg Bal;3,000;8,400;10,400;Work in Process;---;---;Beg Bal;4,400;23,700;7,400;10,900;6,900;Finished Goods;---;---;Beg Bal;8,000;24,900;23,700;Manufacturing Overhead;---;---;2,100;6,900;4,100;3,300;Wages and Salaries Payable;---;---;16,300;Beg Bal;2,600;12,800;Cost of Goods Sold;---;---;24,900;The manufacturing overhead applied was;6,900;4,100;3,300;16,100;21.;Job 731 was recently completed. The following data have been recorded on its job cost sheet;Direct materials;$;3,291;Direct labor-hours;78;labor-hours;Direct labor wage rate;$;13;per labor-hour;Machine-hours;138;machine-hours;The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 731 would be;$4,305;$6,237;$3,318;$5,397;22.;The activity in Nolan Company's Blending Department for the month of April is given below;Number of units;Labor and overhead percent complete;Work in process inventory, April 1;24,000;40%;Started into process during the month;82,000;Work in process inventory, April 30;26,000;50%;All materials are added at the beginning of processing in the Blending Department.;The equivalent units for material for the month, using the FIFO method, are;91,600 units;106,000 units;82,000 units;108,000 units;23.;During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $33,000. Division D's sales were closest to;$49,500;$220,000;$73,333;$132,000;24.;During the month of September, direct labor cost totaled $12,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during September were $76,000, the manufacturing overhead was;$30,000;$64,000;$46,000;$18,000;25.;Gangwer Corporation produces a single product and has the following cost structure;Number of units produced each year;7,200;Variable costs per unit;Direct materials;$49;Direct labor;$19;Variable manufacturing overhead;$11;Variable selling and administrative expense;$7;Fixed costs per year;Fixed manufacturing overhead;$266,400;Fixed selling and administrative expense;$187,200;The absorption costing unit product cost is (Do not round your intermediate calculations.);$37.0;$86.0;$123.0;$116.0;26.;The Donaldson Company uses a job-order costing system. The following data were recorded for July;July 1;Added During July;Work in Process;---;Job Number;Inventory;Direct Materials;Direct Labor;475;$;1,150;$;430;$;230;476;$;650;$;630;$;830;477;$;830;$;650;$;1,150;478;$;630;$;850;$;1,650;Overhead is applied to jobs at the rate of 90% of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson's Work in Process inventory balance on July 31 was;$2,677;$2,110;$5,829;$3,054;27.;Compton Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates;Dept.A;Dept.B;Direct labor cost;$;63,000;$;40,000;Manufacturing overhead;$;80,010;$;68,450;Direct labor-hours;8,700;9,700;Machine-hours;4,700;18,500;What predetermined overhead rate would be used in Department A and Department B, respectively?;79% and $4.12;79% and $7.06;79% and $3.70;127% and $3.70;28.;Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a contribution margin ratio of 35%. The company's fixed expenses are $54,900. If Rothe desires a monthly target net operating income equal to 15% of sales, the amount of sales in units will have to be (rounded);1,220 units;1,743 units;4,067 units;3,050 units;29.;Gambarini Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $199.00 per unit.;Sales volume (units);6,000;7,000;Cost of goods sold;$ 522,600;$ 609,700;Selling and administrative costs;$ 636,600;$ 660,400;The best estimate of the total monthly fixed cost is (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.);$ 493,800;$ 1,159,200;$ 1,214,650;$ 1,270,100;30.;During February, Degan Inc. transferred $55,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $60,000 (assume there was enough beginning balance in the Finished goods inventory account). The journal entries to record these transactions would include a;credit to Cost of Goods Sold of $60,000;credit to Finished Goods of $55,000;debit to Finished Goods of $60,000;credit to Work in Process of $55,000


Paper#44919 | Written in 18-Jul-2015

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