Managerial Accounting Final Work Through

Slapshot Company makes ice hockey sticks. On June 1, Slapshot had $48,000 of materials in inventory. During the month of June, the company purchased $132,000 of materials. On June 30, materials inventory equaled $45,000 Calculate the direct materials used in production for the month of June.

$135,000

Integrity decided to price its jobs at the total variable costs of the job plus 15%. The job for a medium sized dance club client included the following costs: DM $20000 DL 150000 Depreciation on 50000 Integrity's building Calculate the price charged by Integrity to the dance club.

$195,500

Frasco Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.025 hours. During the month of April, 750000 bottles were produced using 21000 labor hours @ $10. The standard wage rate is $9.50 per hour. Calculate the total variance for production labor for the month of April.

$31875 U

Head-first company plans to sell 5000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sale price; contribution margin is 40% of the sale price. Total fixed price equals $49500. Calculate the sales revenue that Head-First must make to earn operating income of $81,900 by using the point in sales equation.

$328,500

During the last 6 weeks, the actual costs of materials for Mandarin Company were as follows: Week 1 $48000 Week 4 $57000 Week 2 50000 Week 5 60000 Week 3 52500 Week 6 65000 The standard materials cost for each week was $50000 with an allowable deviation of plus or minus 5000. Plot the actual costs over time against the upper and lower limits. Comment on whether or not there is a need to investigate any of the variances.

$50000 +/- 5,000 Investigate cost < 45000 or > 55000

Ventura is considering an investment in a new automated manufacturing system. The new system requires an investment of $3,000,000 and either has even cash flows of $750,000 per year or the following expected annual cash flows: $375,000, $375,000, $1,000,000 $1,000,000 and $250,000. Calculate the payback period for each case.

(a) payback period = 4 yrs (b) annual cash flows at 5 is 250,000 total 3,000,000

Slapshot Company makes ice hockey sticks. Last week, direct materials costing $32,000 were put into production. Direct Labor of $28,000(10 workers x 200 hours x $14 per hour) was incurred. Manufacturing overhead equaled $60,000. By the end of the week, the company had manufactured 500 hockey sticks. 1. Calculate the total product cost for last week 2. Calculate the per-unit cost of one hockey stick that was produced 3. Calculate the total prime cost for last week 4. Calculate the per-unit prime cost 5. Calculate the total conversion cost for last week. 6. Calculate the per-unit conversion cost.

1. $120,000 2. $240 per stick 3. $60,000 4. $120 per stick 5. $88,000 6. $176 per stick

At the beginning of the year, Ilberg Company estimated the following costs Overhead $423600 Direct labor costs 532000 Ilberg uses normal costing and applies overhead at the rate of 80% of DL. At the end of the year, COGS was $1890000. Calculate the overhead variance for the year. Dispose of the overhead variance by adjusting COGS.

1. 2000 2. 1,888,000

Head-first company plans to sell 5000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45. Total fixed price equals $49500. Break-even units equal 1650. Calculate the margin of safety in terms of # of units. Calculate the margin of safety in terms of sales revenue.

1. 3350 2. $251250

Harry owns an inkjet printer and allows Mary and Natalie to print from it. He has two conditions: they must supply their own paper and they must pay him a fair amount for the ink. The print takes black and color cartridges.This black costs $25.50 and prints 850 pages. The color costs $31 and prints 310 pages. One ream of paper costs $2.50 and contains 500 sheets. Mary is printing 500 pages and Natalie is printing 1,000 pages. 1. Assuming that both women write papers using text only(black ink), what is the total amount owed to Harry by Natalie? By Mary? 2. What is the total cost of printing(ink and paper) for them both? 3. Now suppose that Natalie illustrates her writing with many large colorful pie charts and pictures and that about 20% of her total printing is primarily color. Mary uses no color illustrations. What is the total amount owed to Harry by both? What is the total cost of printing (ink and paper) for Natalie?

1. Mary - $15 Natalie - $30.00 2. Mary - 17.50 Natalie - 35 3. 49

Head-first company plans to sell 5000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, DL, Variable factory overhead, and variable selling expense). TFC = $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Calculate the break-even # of helmets.

1650 units

Slapshot Company makes ice hockey sticks. During the month of June, 1,900 sticks were completed at a cost of goods manufactured of $437,000. Suppose that on June 1, Slapshot had 350 units in finished goods inventory costing $80,000 and on June 30, 370 units in finished goods inventory costing $84,000. Prepare a cost of goods sold statement for the month of June Calculate the number of sticks that were sold during June.

1880 sold

Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Colby has just invested $400,000 in a book store. She expects to receive cash income of $120,000 per year from the investment. B. Kylie has just invested $1,400,000 in a new bio medical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $ 700,000, $420,000, and $280,000. c. Carson invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. D. Rahn invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. 2. what is the payback period for Kylie?

2.8 years

Units in Beg Inventory 0 Units produced 10000 Units sold($47 per unit) 9300 Variable Costs per unit DM 9 DL 6 Variable overhead 4 Fixed Costs Fixed overhead er unit 5 Fixed S&A 138000 calculate the COGS under absorption costing and make an income statement for absorption Calculate COGS under variable costing

24 x 9300 = 223200 absorption Sales 437100 COGS (223200) Gross Margin 213900 S&A Fixed (138000) Operation Income 75900 Ending Inventory 16800 19 x 9300 = 176700 variable Sales 437100 Variable Costs (176700) Variable Selling 0 Contribution Margin 260400 Fixed Costs: Mfg over (50000) Selling (138000) Operation Profit 72400 Ending Inventory 13300

Variable costs of production: DM 3 pounds @ .6 per lb DL .5 hr @ $16 per hr VOH .5 hr @ $2.20 FOH: Materials handling $6200 Depreciation 2600 Prepare a flexillbe budget for 2500 units, 3000 units, and 3500 units.

2500 units 3000 Units 3500 Units DM 4500 5400 6300 DL 20000 24000 28000 VOH 2750 3300 3850 FOH 8800 8800 8800 36050 41500 46950

Head-first company plans to sell 5000 bicycle helmets at $75 each in the coming year. Total fixed price equals $49500. Calculate the # of helmets Head-First must sell to earn operating income of $81,900.

4380 units

Lata inc produces aluminum cans. Production of 12 ounce cans has a standard unit quantity of 4.5ounces of aluminum per can. During the month of April, 300000 cans were produced using 1250000 ounces of aluminum. The actual cost of aluminum was $0.09 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum. Calculate the total variance for aluminum for the month of April.

4500

Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $75 and have variable costs of $45 each. The motorcycle helmets are priced at $220 and have variable costs of $140 each. Total fixed cost for Head-First as a whole = $58900 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 5000 bicycle helmets and 2000 motorcycle helmets. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.

5 B and 2M bicycle break-even = 950 motorcycle break - even = 380

Head-first company plans to sell 5000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, DL, Variable factory overhead, and variable selling expense). Fixed factory overhead is $20,000 and fixed selling and administrative expense is $29,500. Calculate the variable cost ratio Calculate the contribution margin ratio

60% = VCR 40% = CM ratio

At the beginning of the year, Ilberg Company estimated the following costs Overhead $416000 Direct labor costs 520000 Ilberg uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor cost is equal to total direct labor hours worked multiplied by the wage rate.) For the month of December, DL was $43700 Calculate the predetermined over head rate for the year. Calculate the overhead applied to production in December.

80% $34960

Bowling Company provided the following information for last year. Master budget Actual Data Budgeted production 4000 3800 units DM: .3 punds @ $0.6 per pound $6800 DL: .5 hrs @ $16 per hour 30500 VOH: .5 hr @ $2.20 4200 FOH: Materials handling $6200 6300 Depreciation, $2600 2600 Calculate the budgeted amounts for each cost category above for the 4000 budgeted units.

@ 4000 units = $52400 @ 3800 units = $ 50400 Variance = 2000 favorable

East Mullett manufacturing earned operating income last year as shown in the following income statement: Sales $3750000 COGS 2250000 Gross margin 1500000 S&A expense 1200000 Operating Income $300000 Less Income taxes 120000 Net Income 180000 At the beginning of the year, the value of operating assets was $1600000. At the end of the year, the value of operating assets were $1400000 Calculate average operating assets, margin, turnover, and return on investment. East Mullett requires a minimum rate of return of 5%. Calculate average operating assets and residual income. Total capital employed equaled $1200000. East Mullett's actual cost of capital is 4%. Calculate the EVA for East Mullett Manufacturing.

AOA = 1.5 million ROI = 20% Margin = 8% Turnover = 2.5 times AOA = 1.5 million Residual income = $225000 EVA = $132000

Units in Beg Inventory 300 Units produced 15000 Units sold($300 per unit) 12700 Variable Costs per unit DM 20 DL 60 Variable overhead 12 Fixed Costs Fixed overhead er unit 30 Fixed S&A 140000 How many units are in ending inventory Calculate the per-unit product cost absorption What is the value of ending inventory? absorption What is per-unit product cost? variable What is the value of ending inventory under variable costing?

Absorption= $122 per unit and total = 317200 Variable = $92 per unit cost and total = 239200

Harrison has been approached by a new customer with an offer to purchase 10000 units of its model IJ4 at a price of $5 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Harrison normally produces 75000 units of IJ4 per year but only plans to produce and sell 60000 in the coming year. The normal sales price is $12 per unit. Unit cost information for the normal level of activity is as follows: DM $1.75 DL 2.50 VOH 1.5 FOH 3.25 Total 9.00 What are the relevant costs and benefits of the 2 alternatives (accept or reject the special order)? By how much will OI increase or decrease if the order is accepted?

Accept OI decreases = 7500

Bowling Company budgeted the following amounts: DM 3 pounds @ .6 per lb DL .5 hr @ $16 per hr VOH .5 hr @ $2.20 FOH: Materials handling $6200 Depreciation 2600 At the end of the year, Bowling had the following actual costs for production of 3800 units: DM $6800 DL 30500 VOH 4200 FOH: Materials handling $6300 Depreciation 2600 Prepare a performance report using a budget on the actual level of production.

Budget = 502200 Actual = 50400 Variance = $180 Unfavorable

Slapshot Company makes ice hockey sticks. During the month of June, The company purchased $135,000 of materials. Also during the month of June, they incurred direct labor costs of $113,000 and manufacturing over head of $187,000. Inventory information is as follows: June 1 June 30 materials $48,000 $45,000 Work in Process $65,000 $63,000 Calculate the cost of goods manufactured for the month of June Calculate the cost of one hockey stick assuming that 1,900 sticks were completed during June.

Cost of goods manufactured: $437,000 $230 per stick

Yuhu manufactures cell phones and is developing a new model with a feature that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6 AM. The new phone model has a target price of $380. Management requires a 25% profit on new product revenues. Calculate the amount of desired profit. Calculate the target cost

Desired profit = 95 Target cost = 285

Manzer Enterprises produces premier raspberry jam. Output is measured in pints. Manzer had the following production data. Units in process 1/1 60% complete 36000 Units completed and transferred 240000 Units in process 1/31 40% complete 75000 Costs: WIP 1/1 54000 Costs added during January 351000 Using weighted average method, calculate the equivalent units for January. Calculate the unit cost for January. Assign costs to units transferred out and EWIP.

Equivalent units = 270000 Total cost units completed = 360000 total cost end WIP = 45000

At beginning of year, Hallett estimated the following: Cutting dep Sewing total Overhead 240000 350000 590000 DL hours 31200 100000 131200 Machine hours 150000 -- 150000 Refer to the information for Hallett above. Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of DL hours. Actual data for the month of June are as follows: Cutting Sewing Total Overhead 20610 35750 56360 DL hours 2800 8600 11400 Machine hours 13640 -- 13640 Calculate the predetermined overhead rates for the cutting and sewing departments. Calculate the overhead applied to production in each department for the month of June. By how much has each department's overhead been overapplied? Underapplied? Calculate the predetermined plantwide overhead rate. Calculate the overhead applied to production for the month of June. Calculate the overhead variance for the month of June.

Estimated rate: Cutting = 1.60 per machine hour sewing = 3.50 per DL hr Applied Overhead Rate: cutting = $21824 Sewing = $30100 Cutting = 1214 overapplied Sewing = 5650 underapplied $4.50 per DL hour Applied Overhead = $51300 Actual OH = %5060 under-applied

Month Tanning Appointments Total Cost 1 1600 $ 1754 2 2000 2140 3 3500 2790 4 2500 2400 5 1500 1790 6 2300 2275 7 2150 2200 8 3000 2640 Which month represents the high and the low point Using the high-low method compute the variable rate for tanning. Compute the fixed cost per month. Using the answers above write the cost formula for tanning services. Calculate the total predicted cost of tanning services for September for 2,500 appointments using the formula. Of that total cost, how much is the TFC for September? How much is the total predicted variable cost for September?

High = 3500 March Low = 1500 may $ .5 per appointment TFC = 1,040 TC = 1040 + $0.5(# of appointments) TC = 2290

Randel Company produces a variety of gardening tools and aids. The company is examining the possibility of investing in a new production system that will reduce the costs of the current system. The new system will require a cash investment of $3,455,400 and will produce net cash savings of $600,000 per year. The system has a projected life of 9 years. Calculate the IRR for the new production system.

IRR - 10%

January 41000 February 38000 March 50000 April 51000 Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6700 drums of solvent on hand. Prepare a production budget for the first quarter of the year. How the number of drums that should be produced each month as well as for the quarter in total.

J F M Q1 Unites Sold 41000 38000 50000 129000 End Units 9500 12500 12750 12750 Units Needed 50500 50500 62750 141750 Beg Units 6700 9500 12500 6700 Units Produced 43800 41000 51250 135050

Patirck Inc sells industrial solvents in 5 gallon drums. Patrick expects the following units to be sold in the 1st 3 months of the coming year. January 41000 February 38000 March 50000 The average price for a drum is $35. Prepare a sales budget for the 1st 3 months of the coming year, showing units and sales revenue by month and in total for the quarter.

J F M total Sales (units) 41k 38k 50k 129k Sales ($) 1435k 1330k 1750k 4515K

January 43800 February 41000 March 50250 Each drum requires 5.5 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw chemicals for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals $2. The cost of one drum is $1.60. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of January?

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Zion manufacturing had always made its component in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $25 each. Zion uses 10000 units of Component K2 each year. The cost per unit of this component is as follows: DM $12 DL 8.25 VOH 4.50 FOH 2 Total $26.75 What are the alternatives facing Zion manufacturing with respect to production of Component K2? List the relevant costs for each alternative. If Zion decides to purchase the component from Bryce, by how much will operating income increase/decrease? Which alternative is better? Assume that 75% of Zion's FOH for component K2 would be eliminated if the component were no longer produced. If Zion decides to purchase the component from Bryce, by how much will OI increase/decrease? Which is better? Briefly explain how increasing decreasing the 75% figure affects Zion's final decision to make or purchase the component. By how much would the per unit relevant fixed cost have to decrease before Zion would be indifferent (incur the same cost) between making versus purchasing the component?

Make per unit = $24.75 Buy per unit = 25 Make cost less, so make .25 difference per unit Buy: 2500 1.5 of FOH is relevant Make = $26.25 Buy = 25.00 buying costs $1.25 less per unit If we buy OI increase by 10000(1.25) = $12500

Bennett Inc. found that about 15% of its sales during the month were for cash. Bennett has the following accounts receivable payment experience. % paid in the month of sales 25 % paid in the month after the sale 68 % paid in the 2nd month after sale. 5 Bennett's anticipated sales for the next few months are as follows: April $250000 May 290000 June 280000 July 295000 August 300000 Calculate credit sales for May, June, June, August Prepare a schedule of cash receipts for July and August.

May June July August Sales 290K 280K 295K 300K Cash Sales 15% 43500 4200 44250 45000 Credit sales 85% 246500 238000 250750 255000 Cash Reciepts July August Cash Sales 44250 45000 Collection 12325 from credit June credit 161840 11900 July credit 62688 170510 August credit 63750 $281103 $291160

Davis Company produces a common machine component for industrial equipment in there departments. Molding Grinding Finishing DM $143200 $15200 $9800 DL 13800 33600 22800 Overhead 17500 136000 19000 During November, 9000 components were completed. There is no beginning or ending WIP in any department. Prepare a schedule showing the cost of DM, DL, and overhead for each department, product transferred in from a prior department, and total manufacturing cost. Calculate the unit cost.

Molding = 174500 Grinding = 359300 Finishing = 410900

Wright Inc. purchases raw materials on account for use in production. The DM purchases budget shows the following expected purchases on account: April $374400 May 411200 June 416000 Wight typically pays 20% on account in the month of billing and 80% the next month. How much cash is required for payments on account in May? How much cash is expected for payments on account in June?

Payments for: May June April purchases 299520 --------- May purchases 82240 328960 June purchases ---------- 83200 $381760 $412160

Manzana Company Company produces apple juice sold in gallons. Recently the company adopted the following material standard for one gallon of its apple juice: DM 128 oz @ .05 = $6.40 During the first week of operation, the company experienced the following results: a. Gallon units produced 20,000 b. Ounces of materials purchased and used: 2650000 ounces @ $0.045. c. No beginning or ending inventories of raw material. Compute the materials price and usage variance During the 2nd week, the materials usage variance was $4000 unfavorable and the materials price variance was $20000 unfavorable. The company purchased the used 2000000 ounces of material during this week. How many gallons of juice were produced and what was the actual price paid per ounce of materials.

Price variance = 13250 Usage Variance = 4600 15000 gallons AP = $.06

Murray Inc Production: Units in process 10/1 40% complete 10000 Units completed and transferred 68000 Units in process 10/31 60% complete 20000 Costs WIP, 10/1 $80000 Costs added during Oct $1520000 Prepare a production report for the cutting department.

Production report: Units started = 78000 Total equivalent units = 80000 Cost information ; cost per unit = $20 Valuing Inventories Completed units total $1360000 End WIP = 240000 Cost reconciliation 80000 + 1520000 = 1360000 + 240000

The Sabroso Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $270000 Other overhead 900000 Setting up equipment is based on setup hours, and other overhead is based on oven hours. Oscuro produces 2 products fudge and chocolate. Fudge Chocolate Units produced 5000 25000 Setup hours 4000 1000 Oven hours 1000 5000 Calculate the activity rate for setting up and other overhead how much total overhead is assigned to Fudge? What is the unit overhead assigned to Fudge? How much total overhead is assigned to Fudge using the plant wide overhead rate?

Rate setup $54 per setup hour $150 per oven hour # units Overhead/unit Fudge = $73.20 Chocolate = $32.16 sing rate based on oven hours $195 Overhead per unit = $39 for both

Avena Company produces ready-to-cook oatmeal. Each carton of oatmeal requires 16 ounces of rolled oat per carton (the unit quantity standard) and .05 labor hours (the unit labor standard). During the year, 8000000 cartons of oatmeal were produced. Calculate the total amount of oats allowed for the actual output. Calculate the total amount of labor hours allowed for the actual output.

SQ per unit of output actual output SQ or SH Materials 16 oz of oats 800K 12.8 million Labor .05 hours 800K 40000 hrs

Comfy Fut manufactures 2 types of university sweatshirts, the Swoop and the Rufus with unit contribution margins of $5 and $15. Regardless of type, each sweatshirt must be fed through a stitching machine to affix the appropriate university logo. The firm leases 7 machines that each provides 1000 hours of machine time per year. Each Swoop sweatshirt requires 6 minutes of machine time and each Rufus sweatshirt requires 20 minutes of machine time. Assume there are no other constraints. What is the Contribution margin per hour of machine time for each type of sweatshirt? What is the optimal mix of sweatshirts? What is the total contribution margin earned for the optimal mix? Assume that a maximum of 40000 units of each sweatshirt can be sold? What is the Contribution margin per hour of machine time for each type of sweatshirt? What is the optimal mix of sweatshirts? What is the total contribution margin earned for the optimal mix?

Swoop CM per hour or machine time = $5 Rufus CM per hour or machine time = $15 Optimal mix = 70000 Swoop Total = $35000 Swoop CM per hour or machine time = $50 Rufus CM per hour or machine time = $45 Optimal mix = 40000 Swoop and 9000 Rufus Total = $335000

Big Thumb manufactures portable flash drives for computers. They incur monthly depreciation costs of $15,000 on its plant equipment. Also, each drive requires materials and manufacturing overhead resources. On average, the company uses 10,000 ounces of materials to manufacture 5,000 flash drives per month. Each ounce of material costs $3.00. In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs $22,500 of variable manufacturing overhead resources to produce 5,000 flash drives per month. Create a formula for the monthly cost of flash drives for Big Thumbs. If the department expects to manufacture 6,000 flash drives next month, what is the expected fixed cost( assume that 6,000 units is within the company's current relevant range)? Total variable cost? Total manufacturing cost (both fixed and variable)?

TC = $15,000 + (10.50 x # of drives) TFC = $15,000 TVC = $63,000 Total Mfg. Cost = $78,000

Pizza V's makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January $ 7,000 360 February 8,140 550 March 9,899 630 April 9,787 610 May 8,490 480 June 7,450 350 July 9,490 570 August 7,531 310 Using high-low method, calculate the fixed cost of labor, calculate the variable rate per employee hour, and construct the cost formula for total labor cost.

TFC = $5237 TVC = $7.40 x # of hours TC = 5237 + 7.4(# of hours)

Pizza V's coeffiecients shown by regression program for their data are: Intercept 4,517 X Variable 8.20 Calculate the FC and the variable rate per employee hour Construct the cost formula for TC Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted.

TFC = 4,517 VR = 8.2 4,517 +8.2x

Total Labor Cost = $5,237 + ($7.40 x Employee Hours) Assume that 675 employee hours are budgeted for the month of September. Use the total Labor cost formula to Calculate total variable cost for September Calculate total labor cost for September

TVC = $4,995 TC = $10,232

Total Labor Cost = $5,237 + ($7.40 x Employee Hours) Assume that 4,000 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations. Calculate TVC for the year Calculate TFC for the year Calculate TC for the year

TVC = 29600 TFC = 62844 TC = 92444

Secented Cards Regular Inspection hours 180 120 setup hours 70 30 machine hours 160 480 number of moves 480 120 The following data have been collected: Inspecting products $7500 Setting up equipment 4750 Machining 5120 Moving materials 2700 Calculate the consumption ratios for the 4 drivers (round to 2 decimal places). Calculate the activity rates that would be used to assign costs to each product (round to 2 decimal places). Suppose that the activity rate for inspecting products is $20 per inspection hours. How many hours of inspection are expected for the coming year?

Total 300 100 640 600 Consumption ratios scented regular Inspection ,6 .4 Setup .7 .3 machine .25 .75 number of moves .8 .2

Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20 mdoel pump that can be used by Maple Division in the production motors that requlate the raising and lowering of the boat engine's stern drive unit. The market price of the h20 model is $720, and the full cost of the h20-model is $540. If Burt has a transfer pricing policy that requires transfer at full cost, what wil the transfer price be? Do you suppose that Indian and Maple divisions will choose to transfer at that price? If Burt has a transfer pricing policy that requires transfer at market price, what would the transfer price be? Do you suppose that Indian and Maple divisions would choose to transfer at that price? Now suppose that Burt allows negotiated transfer pricing and that Indian Division can avoid $120 of selling expense by selling to maple Division. Which division sets the minimum transfer price, and what is it? Which division sets the maximum transfer price, and what is it? Bargaining range?

Transfer price = $540 Div I won't transfer internally Div M is happy with the transfer Transfer price = $720 Both Divisions want the transfer. I sets min M sets max Bargaining range is $600 to $720

The blending department had the following data for the month of March. Units in BWIP -- Units completed 7200 Units in EQIP(40% complete) 750 Total manufacturing costs 27000 What is the output in equivalent units for March? What is the unit manufacturing cost for March? Compute the cost of goods transferred out for March? Calculate the value of March's EWIP?

Units started = 7950 750 x 40% = 300 total equivalent units = 7500 Cost / equivalent units = $3.60 total cost of completed units = 259200 total cost end units = 1080

The Receiving Department has 3 activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $15000 per year. The forklift is used only for unloading. The fuel for the forklift is $3600 per year. Other operating costs (maintenace) for the forklift total $1500 per year. Inspection uses some special testing equipment that has a depreciation of $1200 per year and an operating cost of $750. Recieving has 3 employees who have an average salary of $50,000 a year. The work distribution matrix for the receiving personnel is as follow: Activity % of time on activity Unloading 40% Counting 25 Inspecting 35 Calculate the cost of each activity.

Unloading = 80100 Counting = 375000 Inspecting = 54450

Holland has just completed development of a new cell phone. The new product is expected to produce annual revenues of $1,350,000. Producing the cell phone requires an investment in new equipment, costing $1,440,000. The cell phone has a projected life cycle of 5 years. After 5 years, the equipment can be sold for $180,00. Working capital is also expected to increase y $180,000, which Holland will recover by the end of the new product's life cycle. Annual cash operating expenses are estimated at $810,000. The required rate of return is 8%. Prepare a schedule of the projected annual cash flows. Calculate the NPV using only discount factors from Exhibit 14B.1(pg 647) Calculate the NPV of discounted factors from both Exhibit 14B.1 aand 14B.2(p. 648)

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Jack receives 8000 large trees each period that is subsequently processes into rough logs by stripping off the tree bark and leaves ( one tree = one leg). Jack's then must decide whether to sell its rough logs (for use in log cabin construction) at split-off or to process them further into refined lumber (for use in regular construction framing). Jack's normally sells logs for a per-unit prce of $495. Alternately, each log can be processed further into 800 feet of lumber at an additional cost of $0.15 per board foot. Also lumber can be sold for .75 per board foot. What is the contribution to income from selling the logs for log cabin construction? What is the contribution to income from processing the logs into lumber? Should jack's continue to sell the logs or process them further into lumber?

selling = 3.96 million process = 3.84 million Sell logs We are better off by $120000