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Bingham Corporation uses the weighted-average method in its process costing




Question;1. Bingham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.Work in process, beginning: Units in beginning work-in-process inventory400Materials costs$6,900Conversion costs$2,500Percentage complete for materials80%Percentage complete for conversion15%Units started into production during the month6,000Units transferred to the next department during the month5,000Materials costs added during the month$112,500Conversion costs added during the month$210,300Ending work in process:Units in ending work-in-process inventory1,200Percentage complete for materials60%Percentage complete for conversion30%Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department.2. (Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:Old SystemNew SystemCost of radar system$30,000$50,000Current salvage value$10,000-Salvage value in 10 years$5,000$8,000Annual operating costs$34,000$29,000Upgrade required in 5 years$4,000-Discount rate14%14%(a) What is the City of Paranoya's net present value for the decision described above? Use the total cost approach.(b) Should the City of Paranoya purchase the new system or keep the old system?3. Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:Units in beginning inventory0Units produced9,000Units sold7,000Sales$100,000Less cost of goods sold:Beginning inventory0Add cost of goods manufactured54,000Goods available for sale54,000Less ending inventory12,000Cost of goods sold42,000Gross margin58,000Less selling and admin. expenses28,000Net operating income$30,000Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold. Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.


Paper#45281 | Written in 18-Jul-2015

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