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Nic Saybin Enterprises Accounting Department colle...




Nic Saybin Enterprises Accounting Department collects all pertinent monthly operating data. Selected data are presented below for the current month. From the data provided, please provide Saybin Enterprises Management with a flexible budget analysis to see how costs were controlled. Actual Costs Incurred Static Budget Activity level (in units) 754,009 746,500 Variable Costs: Indirect materials $328,897 $325,640 Utilities $174,332 $171,890 Fixed Costs: General and administrative $237,985 $244,908 Rent $135,500 $135,000 (TCO D) McMullen Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by McMullen to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor. The Accounting Department provided the following detail regarding the annual cost to produce electronic hinges: Direct materials $54,000 Direct labor 60,000 Variable manufacturing overhead 36,000 Fixed manufacturing overhead 90,000 Total costs $240,000 The Procurement Department provided the following supplier pricing: Supplier A price per hinge $11.00 Supplier B price per hinge $10.75 Supplier C price per hinge $10.50 The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet McMullen's technical specifications and quality requirements. If McMullen stops producing the part internally, 10% of the fixed manufacturing overhead would be eliminated. Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting an outside supplier's offer. (TCO E) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below: Units in beginning inventory 2,000 Units produced 9,000 Units sold 10,000 Sales $100,000 Less cost of goods sold: Beginning inventory 12,000 Add cost of goods manufactured 54,000 Goods available for sale 66,000 Less ending inventory 6,000 Cost of goods sold 60,000 Gross margin 40,000 Less selling and admin. expenses 28,000 Net operating income $12,000 Variable 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. Required: 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. TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year. Sales 1,200 Raw materials inventory, beginning 25 Raw materials inventory, ending 50 Purchases of raw materials 180 Direct labor 230 Manufacturing overhead 250 Administrative expenses 400 Selling expenses 200 Work-in-process inventory, beginning 150 Work-in-process inventory, ending 120 Finished goods inventory, beginning 100 Finished goods inventory, ending 110 Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated? Carter 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 inventory 400 Materials costs $6,900 Conversion costs $2,500 Percentage complete for materials 80% Percentage complete for conversion 15% Units started into production during the month 6,000 Units transferred to the next department during the month 5,800 Materials costs added during the month $112,500 Conversion costs added during the month $210,300 Ending work in process: Units in ending work-in-process inventory 1,400 Percentage complete for materials 70% Percentage complete for conversion 40% Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department. (TCO G) (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 System New System Cost of radar system $30,000 $50,000 Current salvage value $10,000 - Salvage value in 10 years $5,000 $8,000 Annual operating costs $34,000 $29,000 Upgrade required in 5 years $4,000 - Discount rate 14% 14% Required: (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? TCO B) Madlem, Inc., produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $86.40 per unit. The company's fixed expense is $720,384 per month. Required: Determine the monthly break-even in either unit or total dollar sales. Show your work!


Paper#4599 | Written in 18-Jul-2015

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