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Cost Accounting Exercise




Question;1) Mayberry Company had the following journal entries;recorded for the end of June. Unfortunately, the company's only accountant quit;on July 10 and the president is at a loss as to the company's performance for;the month of June.;Materials Control 150,000;Direct Materials Price Variance 5,000;Accounts Payable Control 145,000;Work-in-Process;Control 60,000;Direct Materials;Efficiency Variance 4,000;Materials Control 64,000;Work-in-Process;Control 425,000;Direct;Manufacturing Labor Price Variance 7,500;Direct Manufacturing Labor Efficiency Variance 9,000;Wages Payable Control 423,500;Required;a. What;kind of performance did the company have for June? Explain each variance.;b. Why;is Direct Materials given in two entries?;2) Quiett Truck manufactures part WB23 used in several of;its truck models. 10,000 units are produced each year with production costs as;follows;Direct materials $;45,000;Direct manufacturing labor 15,000;Variable support costs 35,000;Fixed support costs 25,000;Total costs $120,000;Quiett Truck has the option of purchasing part WB23 from an;outside supplier at $11.20 per unit. If WB23 is outsourced, 40% of the fixed;costs cannot be immediately converted to other uses.;a. Describe;avoidable costs. What amount of the WB23 production costs is avoidable?;b. Should;Quiett Truck outsource WB23? Why or why not?;c. What;other items should Quiett Truck consider before outsourcing any of the parts it;currently manufactures?;3) Collier Bicycles has been manufacturing its own wheels;for its bikes. The company is currently;operating at 100% capacity, and variable manufacturing overhead is charged to;production at the rate of 30% of direct labor cost. The direct materials and direct labor cost;per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year.;A supplier offers to make the wheels at a price of $4;each. If the bicycle company accepts;this offer, all variable manufacturing costs will be eliminated, but the;$42,000 of fixed manufacturing overhead currently being charged to the wheels;will have to be absorbed by other products.;Required;a. Prepare;an incremental analysis for the decision to make or buy the wheels.;b. Should;Collier Bicycles buy the wheels from the outside supplier? Justify your answer.;4)Today, Turbo Ovens Manufacturing announced the;availability of a new convection oven that cooks more quickly with lower;operating expenses. Pat is considering the purchase of this faster, lower-operating cost;convection oven to replace the existing one they recently purchased. Selected;information about the two ovens is given below;Existing New Turbo Oven;Original cost $60,000 $50,000;Accumulated depreciation $ 5,000?;Current salvage value $40,000?;Remaining life 5 years 5 years;Annual operating expenses $10,000 $ 7,500;Disposal value in 5 years $ 0 $ 0;Required;a. What;costs are sunk?;b. What;costs are relevant?;c. What;are the net cash flows over the next 5 years assuming the Pizzeria purchases;the new convection oven?;d. What;other items should Pat, as manager of the Pizzeria, consider when making this;decision?;5) Buck Corporation plans to grow by offering a computer;monitor, the CM3000 that is superior and unique from the competition. Buck;believes that putting additional resources into R&D and staying ahead of;the competition with technological innovations are critical to implementing its;strategy.;Required;a. Is;Buck's strategy one of product differentiation or cost leadership? Explain;briefly.;Identify at least one key element;that you would expect to see included in the balanced scorecard;b. for;the financial perspective.;c. for;the customer perspective.;d. for;the internal business process perspective.;e. for;the learning and growth perspective.;6) Heather's Pillow Company manufactures pillows. The 20X5;operating budget is based on production of 20,000 pillows with 0.5 machine-hour allowed;per pillow. Variable manufacturing overhead is anticipated to be $220,000.;Actual production for 20X5 was 18,000 pillows using 9,500;machine-hours.;Actual variable costs were $20 per machine-hour.;Required;Calculate the variable overhead spending and efficiency;variances.;7) Everjoice Company makes clocks. The fixed overhead costs;for 20X5 total $720,000. The company uses direct labor-hours for fixed overhead;allocation and anticipates 240,000 hours during the year for 480,000 units. An;equal number of units are budgeted for each month.;During June, 42,000 clocks were produced and $63,000 were;spent on fixed overhead.;Required;a. Determine;the fixed overhead rate for 20X5 based on units of input.;b. Determine;the fixed overhead static-budget variance for June.;c. Determine;the production-volume;overhead variance for June.;8) Silver Lake Cabinets is approached by Ms. Jenny Zhang, a;new customer, to fulfill a large one-time-only special order for a product similar;to one offered to regular customers. The following per unit data apply for;sales to regular customers;Direct materials $100;Direct labor 125;Variable manufacturing support 60;Fixed manufacturing support 75;Total manufacturing costs 360;Markup (60%) 216;Targeted selling price $576;Silver Lake Cabinets has excess capacity. Ms. Zhang wants;the cabinets in cherry rather than oak, so direct material costs will increase;by $30 per unit.;Required;a. For Silver;Lake Cabinets, what is the minimum acceptable price of this one-time-only special;order?;b. Other;than price, what other items should Silver Lake Cabinets consider before accepting;this one-time-only special;order?;c. How;would the analysis differ if there was limited capacity?


Paper#45321 | Written in 18-Jul-2015

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