Managerial Accounting Long Problems Review

Selling Price Per unit: $250 VE per unit: $150 FE: $35,000 If monthly sales increased from 400 Units per month to 450 units per month, how much will profits increase, use Profit equation 3

((CMR x Sales) -FE) (.40 x 112,500) - 35,000) =10,000

Selling Price Per unit: $250 VE per unit: $150 CM per Unit: $100 CM Ratio: 40% FE: $35,000 if Company Dipshit wants to increase advertising by $10,000, which in turn would raise monthly fixed costs from $35,000 to $45,000, Dipshit believes that monthly sales will increase from 450 units to 520 units, thereby growing sales by $30,000, Should Dipshit do this?(Equation Method)

((P x Q) - (V x Q) - FE) (250 x 520) - (150 x 450) - 45,000) =7000 (Yes dipshit should)

Selling Price Per unit: $250 VE per unit: $150 FE: $35,000 If monthly sales increased from 400 Units per month to 450 units per month, how much will profits increase, use Profit equation 1

((P x Q) - (V x Q) - FE) (Plug numbers into Profit equation 1) (250 x 450) - (150 x 450) -35,000) =10,000

Pookie B Corporation sells a product for $10 per unit. The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Tropp to realize a profit of 10% of sales?

((Target profit analysis = Target profit + FE) / CMR)) (Find CMR) (40%) (Sales = (10%Sales + 420,000) / 40%) (40%Sales = 10%Sales + 420,000) (30%Sales = 420,000) = $1,400,000

Selling Price Per unit: $250 VE per unit: $150 FE: $35,000 If monthly sales increased from 400 Units per month to 450 units per month, how much will profits increase, use Profit equation 2

((UCM x Q) - FE) ((100 x 450) - 35,000) =10,000

Bennette Corporation has provided the following data concerning its overhead costs for the coming year: Overhead Costs: Wages and salaries $340,000 Depreciation $120,000 Rent $140,000 Total $600,000 The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year Activity Cost Pool. Total Activity Assembly. ----30,000 labor-hours Order processing. 500 orders Other. NA Activity Cost Pools--------Assembly --Order Processing. -Other----Total Wages and salaries. -----------40%.------- 35%-------------- 25%. --100% Depreciation. -------------------15%. -------45% --------------40% --100% Rent -----------------------------35% --------30% -------------35%.-- 100% The activity rate for the Order Processing activity cost pool is closest to:

(1.Find total percentage of order processing activity cost pools to overhead costs) (340,000*.35=119,000) (120,000*.45=54,000) (140,000*.30=42,000) (2. add up amounts and divide by order processing cost pool)(215,000/500) =430

Rickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. It is considering implementing an activity-based costing (ABC) system that allocates all $614,400of its manufacturing overhead to four cost pools Activity Cost Pool-Activity Measure-Estimated Overhead Cost-Expected Act. Machining----------Machine-hours------$ 198,000-------------10,000MHs Machine setups----Number of setups---$ 86,400--------------180setups Product design----Number of products-$ 82,000----------------2products General factory---Direct labor-hours----$ 248,000-------------12,000DLHs Activity Measure---Product Y--Product Z Machine-hours------6,800-------3,200 Number of setups---50---------130 Number of products-1----------1 DLH----------------7,800-------4,200 Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

(19.80 x 6,800) (134,640) + (19.80 x 3200) (63,360) (198,000) (Product Y= 134,640/198,000) (Product Z = 63,360/ 198,000) Product Y = 68% Product Z = 32%

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 If sales increases to 2,000 units, what would be the increase in NOI

(22.5 x 1,000) = 22,500

Rick CO. makes one product and provided the following information to help prepare its master budget: The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. What are the budgeted sales for July?

(23,000 x 60) =1,380,000

Bracken Corporation is a small wholesaler of gourmet food products. Sales are budgeted at: November= $330,000 December =$340,000 January =$340,000 Collections: In the month:80% Month Following Sale: 17% Uncollectible: 3% COGS = 75% of Sales. -The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. -Payment for merchandise is made in the month following the purchase. Other monthly Cash Expenses= $21,800 Monthly depreciation is $19,000. What are December cash disbursements for merchandise purchases?

(Acknowledge that payment for merchandise is made in the month following the purchase) (November) (Calculate Merchandise purchases for November) (Sales= 330,000) (COGS = 247,500) (Desired Ending Merchandise Inventory= December COGS x 70%) (178,500) (+) (Expected Beginning Merchandise Inventory = 173,250) (-) =252,250

Month-----------Merchandise Purchases--------Sales January-----------142,000------------------------172,000 February---------148,000------------------------166,000 March------------136,000-------------------------160,000 April-------------154,000-------------------------178,000 May--------------160,000-------------------------166,000 Customers pay 70% of their balances in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 2% discount on all amounts due. Cash payments for operating expenses in May will be $114,400; RRR's cash balance on May 1 was $122,000. What are the expected cash disbursements during May

(Acknowledge that the company pays all incomes in the month following the the purchase and takes advantage of a 2% discount on all amounts due) (April = 154,000 x 98%) (May Payments = 114,000) =265,320

Zee Corporation has developed the following cost standards for the production of its leather backpacks: -------------------------------------Standard Cost/ Backpack Leather (.9 yards x 22/ yard)---------19.80 DL (1.3 Hours x 9.00/ hour)----------11.70 Variable Overhead (1.3 hours x 15)-19.50 Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows: Number of Backpacks Produced:15,000 DLH Incurred:18,800 Yards of Leather used in Production:14,100 Cost of Leather Purchased:306,675 Direct Labor Cost: 159,800 Variable Overhead Cost:285,760 The direct materials purchase variance is computed when the materials are purchased. What is the Direct Material Quantity Variance

(Actual:) (AQ Purchased:14,500 (AQ Used: 14,100 (AC:306,675 (AO:15,000 (AP:21.15 (AQ Purchased / AC) (Standard:) (SQ: .9) (SP: $22) (SQ allowed:13,500) (14,100 - 13,500) x 22) =13,200 (Unfavorable)

Zee Corporation has developed the following cost standards for the production of its leather backpacks: -------------------------------------Standard Cost/ Backpack Leather (.9 yards x 22/ yard)---------19.80 DL (1.3 Hours x 9.00/ hour)----------11.70 Variable Overhead (1.3 hours x 15)-19.50 Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows: Number of Backpacks Produced:15,000 DLH Incurred:18,800 Yards of Leather used in Production:14,100 Cost of Leather Purchased:306,675 Direct Labor Cost: 159,800 Variable Overhead Cost:285,760 The direct materials purchase variance is computed when the materials are purchased. Whats the Direct Material Price Variance

(Actual:) (AQ Purchased:14,500 (AQ Used: 14,100 (AC:306,675 (AO:15,000 (AP:21.15 (AQ Purchased / AC) (Standard:) (SQ: .9) (SP: $22) (SQ allowed:13,500) (PV= (21.15 -22) x 14,500) =(12,325) (Unfavorable)

Zee Corporation has developed the following cost standards for the production of its leather backpacks: -------------------------------------Standard Cost/ Backpack Leather (.9 yards x 22/ yard)---------19.80 DL (1.3 Hours x 9.00/ hour)----------11.70 Variable Overhead (1.3 hours x 15)-19.50 Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows: Number of Backpacks Produced:15,000 DLH Incurred:18,800 Yards of Leather used in Production:14,100 Cost of Leather Purchased:306,675 Direct Labor Cost: 159,800 Variable Overhead Cost:285,760 The direct materials purchase variance is computed when the materials are purchased. Whats the Labor Rate Variance

(Actual:) (AQ: 18,800) (AC: 159,800) (AO:15,000) (Standard:) (SQ:1.3) (SP:9.00) (SQallowed:19,500) (AP=AC/AQ) (8.5) PV=(9,400) (Favorable)

Zee Corporation has developed the following cost standards for the production of its leather backpacks: -------------------------------------Standard Cost/ Backpack Leather (.9 yards x 22/ yard)---------19.80 DL (1.3 Hours x 9.00/ hour)----------11.70 Variable Overhead (1.3 hours x 15)-19.50 Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows: Number of Backpacks Produced:15,000 DLH Incurred:18,800 Yards of Leather used in Production:14,100 Cost of Leather Purchased:306,675 Direct Labor Cost: 159,800 Variable Overhead Cost:285,760 The direct materials purchase variance is computed when the materials are purchased. Whats the Labor Efficiency Variance

(Actual:) (AQ: 18,800) (AC: 159,800) (AO:15,000) (Standard:) (SQ:1.3) (SP:9.00) (SQallowed:19,500) QV=(6,300) (Favorable)

Hargenrader Inc. produces and sells two products. During the most recent month, Product P02S's sales were $24,000 and its variable expenses were $7,920. Product O50U's sales were $41,000 and its variable expenses were $14,180. The company's fixed expenses were $40,350. Determine the overall break-even point for the company in total sales dollars

(BEP sales dollars = FE/CMR) (Create CVP income statement for company and find FE and CMR) (P02S) (+). (O50U) (=). (Total) (Sales = 24,000) (Sales = 41,000) (sales= 65,000) (VE= 7920) (VE= 14,180) (VE= 22,100) (CM = 16080) (CM= 26820) (CM=42,900) ----------------------------------------------------(FE=40,350) (CMR= 42,900/65,000) =61136.36

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 Whats the BEP in Unit Sales and $ Sales

(BEP unit sales = FE/UCM) (14,850/ 22.5) (BEP $ Sales = BEP Unit sales x selling price per unit) (660 x 50) BEP Units = 660 BEP $ = 33,000

Month-----------Merchandise Purchases--------Sales January-----------142,000------------------------172,000 February---------148,000------------------------166,000 March------------136,000-------------------------160,000 April-------------154,000-------------------------178,000 May--------------160,000-------------------------166,000 Customers pay 70% of their balances in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 2% discount on all amounts due. Cash payments for operating expenses in May will be $114,400; RRR's cash balance on May 1 was $122,000. What is the Expected Cash balance on may 31st

(Beginning cash balance :122,000) (+) (Cash collected in May:167,800) (+) (Cash disbursements in May: 265,320) (-) =24,480

Rick CO. makes one product and provided the following information to help prepare its master budget: The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. What is the estimated production in units for July?

(Budgeted Sales for July:23,000) (Desired Ending inventory (+) (25,000 x 20%) (5,000) (=Total Needs) (28,000) (Expected Beginning Inventory (-) (4,600) Required Production for July= 23,400

Cane Company manufactures 2 products called Alpha and Beta that sell for $180 and $145. Each product uses only 1 type of RM that costs $6/pound. Company produces 118,000 of each product .-----------------------------Alpha-----Beta Direct material------------$ 36-------$ 24 Direct Labor----------------32----------27 VMOH----------------------19----------17 TMOH----------------------27----------30 Variable selling expenses-24----------20 Common fixed expenses--27----------22 Total cost per unit-------$ 165-------$ 140 Assume Cane expects to produce and sell 92,000 Alphas during the current year. A supplier offered to manufacture and deliver 92,000 Alphas to Cane for a price of $128 per unit. What is the financial advantage (disadvantage) of buying 92,000 units from the supplier instead of making those units? (Make or Buy)

(Buy= 92,000 x 128/unit) ($ 11,776,000) (For make you have to plug in the numbers) (Calculate Costs) (DM=92,000 x 36) (DL=92,000 x 32) (VMOH=92,000 x 19) (TMOH= 118,000 x 27) (Total Costs = 11,190,000) (11,776,000 > 11,190,000) (difference is 586,000) Cane Co. would be at a financial disadvantage of 586,000 if they decided to buy Alpha instead of making it themselves

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what are the estimated cost of goods sold and gross margin for Ju

(COGS = Unit sales x UPC) (23,000 x $52) (1,196,000) (Gross Margin=total sales - COGS) (1,380,000-1,196,000) (184,000) COGS=1,196,000 Gross Margin=184,000

Bracken Corporation is a small wholesaler of gourmet food products. Sales are budgeted at: November= $330,000 December =$340,000 January =$340,000 Collections: In the month:80% Month Following Sale: 17% Uncollectible: 3% COGS = 75% of Sales. -The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. -Payment for merchandise is made in the month following the purchase. Other monthly Cash Expenses= $21,800 Monthly depreciation is $19,000. What is the cost of December merchandise purchases?

(Calculate COGS for December and January) (December Sales = 340,000) (December COGS = 340,000 x 75%) (255,000) (January Sales = 340,000) (January COGS = 340,000x 75%) (255,000) (Calculate Merchandise Purchases of December) (Sales:340,000 (COGS:255,000) (Desired Ending Merchandise Inventory: (70% x January COGS) (178,500) (+) (Expected Merchandise Inventory: (70% x December COGS) (178,500) (-) =255,000

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If we assume there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what is the estimated unit product cost?

(Calculate UPC for DM, DL and MOH then ad up sums) (DM= $2.50 x 4 Pounds =$10.00) (DL= 2 DLH x $13/Hour = $26.00) (MOH= 2 DLH x $8) = $16.00) =$52.00

BW Department Store expects to generate the following sales for the next three months :----------------------July------- August --------September Expected sales. $490,000. ---$540,000 -------$580,000 BW's cost of goods sold is 60% of sales dollars. At the end of each month, BW wants a merchandise inventory balance equal to 25% of the following month's expected cost of goods sold. What dollar amount of merchandise inventory should BW plan to purchase in August

(Calculate for August) (Budgeted COGS= 540,000 x .60)(A) (324,000) (Desired ending Merch. Inventory= (580,000 x .60) x .25)(B)(87,000) (Total Needs= (A) + (B)) (411,000) ( Less Beginning Merch. inventory=324,000 x .25) (81,000) =330,000

DDD Company sells logo sports merchandise and does custom embroidery. They are trying to decide whether or not to continue embroidery. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if the embroidery were dropped. ----------------------------Embroidery-----------Apparel Sales Sales----------------------$120,000--------------$420,000 Variable Costs------------$90,000--------------$220,000 Contribution Margin------$30,000--------------$200,000 Direct Fixed Costs--------$18,000---------------$70,000 Allocated Common FC--$20,000---------------$70,000 Total Fixed Costs---------$38,000--------------$140,000 Net Income---------------($8,000)---------------$60,000 Assume that if embroidery was dropped, apparel sales would increase 20%. Now what is the impact on profits if embroidery is dropped?

(Calculate net revenue from keeping Embroidery) (Sales:120,000) (Costs:) (VC:90,000) (Direct Fixed Costs:18,000) (Total: 12,000) (Calculate net revenue from Dropping Embroidery) (Revenue from Embroidery:0) (Costs:) (VC:0) (Direct Fixed Costs:0) (All direct FC's could be avoided if a segment is dropped) (Applied Sales: 200,000 x 20%) (Total:40,000) DDD should drop embroidery

DDD Company sells logo sports merchandise and does custom embroidery. They are trying to decide whether or not to continue embroidery. The following information is available for the segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if the embroidery were dropped. ----------------------------Embroidery-----------Apparel Sales Sales----------------------$120,000--------------$420,000 Variable Costs------------$90,000--------------$220,000 Contribution Margin------$30,000--------------$200,000 Direct Fixed Costs--------$18,000---------------$70,000 Allocated Common FC--$20,000---------------$70,000 Total Fixed Costs---------$38,000--------------$140,000 Net Income---------------($8,000)---------------$60,000 What would be the impact on profits if embroidery was dropped?

(Calculate net revenue from keeping Embroidery) (Sales:120,000) (Costs:) (VC:90,000) (Direct Fixed Costs:18,000) (Total: 12,000) (Calculate net revenue from Dropping Embroidery) (Revenue from Embroidery:0) (Costs:) (VC:0) (Direct Fixed Costs:0) (All direct FC's could be avoided if a segment is dropped) (total:0) (compare net revenues for keeping and dropping the segment) DDD should keep embroidery

FFF Skate, Inc. currently manufactures the wheels that it uses for its in-line skates. The annual costs to manufacture the 150,000 wheels needed each year are as follows: Total Cost Direct Material:$165,000 Direct Labor:45,000 Variable Overhead:60,000 Fixed Overhead:300,000 Total:$570,000 OOO Rubber Co. has offered to provide FFF with all of its annual wheel needs for $3.50 per wheel. Now, assuming that in addition to the fact that 75% of the fixed overhead above could be totally avoided, FFF would be able to rent out the freed up space and could generate $72,000 of income annually. Based on this information, should FFF make the wheels or buy (outsource) them from OOO?

(Calculate new offer) (No DM,DL,VMOH) (FMOH= 300,000 x 75%) (75,000) (Amount Per Wheel= 3.50 x 150,000) (525,000) (Total: 600,000) (Add new opportunity cost of 72,000 if FFF decides to make wheels themselves) (Direct Material:$165,000) (Direct Labor:45,000) (Variable Overhead:60,000) (Fixed Overhead:300,000) (Opportunity Cost:72,000) (Total:642,000) (Compare Offer vs FFF Making wheel themselves) (Make Themselves= 642,000) (Buy=600,000) FFF should buy wheels form OOO

FFF Skate, Inc. currently manufactures the wheels that it uses for its in-line skates. The annual costs to manufacture the 150,000 wheels needed each year are as follows: Total Cost Direct Material:$165,000 Direct Labor:45,000 Variable Overhead:60,000 Fixed Overhead:300,000 Total:$570,000 OOO Rubber Co. has offered to provide FFF with all of its annual wheel needs for $3.50 per wheel. Assuming that if FFF accepts this offer, 75% of the fixed overhead above could be totally eliminated (avoided). Based on this information, should FFF make the wheels or buy (outsource) them from OOO?

(Calculate new offer) (No DM,DL,VMOH) (FMOH= 300,000 x 75%) (75,000) (Amount Per Wheel= 3.50 x 150,000) (525,000) (Total: 600,000) (Compare Offer vs FFF Making wheel themselves) (Make Themselves= 570,000) (Buy=600,000) FFF would be at a financial disadvantage of 300,000 if they buy the wheels from OOO, they should make the wheels themselves

Bracken Corporation is a small wholesaler of gourmet food products. Sales are budgeted at: November= $330,000 December =$340,000 January =$340,000 Collections: In the month:80% Month Following Sale: 17% Uncollectible: 3% COGS = 75% of Sales. -The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. -Payment for merchandise is made in the month following the purchase. Other monthly Cash Expenses= $21,800 Monthly depreciation is $19,000. What is the difference between cash receipts and cash disbursements for December

(Cash receipts: 328,100) (Cash Disbursements:) (Merchandise Inventory Purchases in December:252,750) (Monthly expenses: 21,800) (Total:274,550) =53,550

Hargenrader Inc. produces and sells two products. During the most recent month, Product P02S's sales were $24,000 and its variable expenses were $7,920. Product O50U's sales were $41,000 and its variable expenses were $14,180. The company's fixed expenses were $40,350. If the sales mix shifts toward Product P02S with no change in total sales, what will happen to the break-even point for the company

(Create CVP for P02S) (CMR = 16080 / 24,000) =60223.88

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 Whats the DOL

(DOL = CM/NOI) (22,500/7,650) =2.94

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If we assume that there is no FMOH and the VMOH $8 per direct labor-hour, what is the estimated finished goods inventory balance at the end of July?

(Desired Ending FG for July = 25,000 x 20%) (5,000 x 52 (UPC)) =260,000

MMM CORP. has two investment centers. Each investment center is a separate division of the corporation. MMM's imputed interest rate is 12% Division One Sales margin=21% Capital turnover=35% Invested capital=$ 2,200,000 Income=$161,700 Division Two Invested capital $1,000,000 Sales revenue $700,000 Income $ 200,000 Calculate ROI & RI for the 2 divisions

(Division 1:) (SM x CT = ROI) =7.35% (RI= 161,600 - (2,200,000 x 12%) =(102,300) (Division 2:) (ROI = (NOI/SM) x (Sales/CT) (200,000/700,000) x (700,000/1,000,000) ROI=20% (RI=200,000 x (1,000,000 x 12%) RI=80,000

Cane Company manufactures 2 products called Alpha and Beta that sell for $180 and $145. Each product uses only 1 type of RM that costs $6/pound. Company produces 118,000 of each product .-----------------------------Alpha-----Beta Direct material------------$ 36-------$ 24 Direct Labor----------------32----------27 VMOH----------------------19----------17 TMOH----------------------27----------30 Variable selling expenses-24----------20 Common fixed expenses--27----------22 Total cost per unit-------$ 165-------$ 140 Assume Cane's customers would buy a maximum of 92,000 units of Alpha and 72,000 units of Beta. Also assume the raw material available for production is limited to 300,000 pounds. How many units of each product should Cane produce to maximize its profits?

(Find Beta first because it yields a higher CM/ pound of RM)(calculate beta for total pounds) (4 x 72,000) (288,000) (since available production is limited to 300,000 pounds, Alpha can only have 12,000 pounds) (12,000 pounds/ 6 pounds per unit) Alpha: 2,000 pounds Beta: 72,000 pounds

Cane Company manufactures 2 products called Alpha and Beta that sell for $180 and $145. Each product uses only 1 type of RM that costs $6/pound. Company produces 118,000 of each product .-----------------------------Alpha-----Beta Direct material------------$ 36-------$ 24 Direct Labor----------------32----------27 VMOH----------------------19----------17 TMOH----------------------27----------30 Variable selling expenses-24----------20 Common fixed expenses--27----------22 Total cost per unit-------$ 165-------$ 140 What contribution margin per pound of raw material is earned by each of the two products?

(Find CM's for both products) (CMU for Alpha=69) (CMU for Beta=57) (find how many pounds of DM it takes to produce one unit)(Alpha=36/6) (6) (Beta=24/6) (4) (Divide CMU's for each product by how many pounds of Dm it takes to produce on unit of each product) (Alpha=69/6) (Beta=57/4) Alpha=11.50/pound Beta=14.25/pound

Rick CO. makes one product and provided the following information to help prepare its master budget: The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. Whats the Accounts Rec. balance for the end of July?

(Find July sales and multiply that amount by the % that isn't collected in the month of July) (1,380,000 x 70%) =966,000

SSS Company has established the following MOH cost pools and cost drivers: Overhead Cost Pool--------Budgeted Overhead Cost-------Cost Driver Machine Setups-------------$400,000----------------------Number of Setups Material Handling-----------$220,000----------------------Units of RM Quality Control Inspection-$80,000---------------------Number of Inspections Other Overhead Costs-----$500,000-------------------Machine Hours Overhead Cost Pool---------Budgeted Level for Cost Driver Machine Setups----------------200 Setups Material Handling--------------100,000 Units Quality Control Inspection----2,000 Inspections Other Overhead Costs-------100,000 MH Order Number 222 has the following Requirements: Machine Setups:3 RM:600 Units Inspections;15 Machine Hours:2000 Machine Hours Suppose that SSS were to use a single, POHR based on MH. Compute the POHR and the total manufacturing overhead assigned to order #222

(Find POHR by adding up all the Budgeted Overhead Cost amounts and then dividing it by the MH from the Budgeted level for cost driver) (Multiply the POHR by order number 222's MH) =24,000

Rickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. It is considering implementing an activity-based costing (ABC) system that allocates all $614,400of its manufacturing overhead to four cost pools Activity Cost Pool-Activity Measure-Estimated Overhead Cost-Expected Act. Machining----------Machine-hours------$ 198,000-------------10,000MHs Machine setups----Number of setups---$ 86,400--------------180setups Product design----Number of products-$ 82,000----------------2products General factory---Direct labor-hours----$ 248,000-------------12,000DLHs Activity Measure---Product Y--Product Z Machine-hours------6,800-------3,200 Number of setups---50---------130 Number of products-1----------1 DLH----------------7,800-------4,200 Whats the Company's Plant Wide Overhead Rate?

(Find POHR) (614,400/12,000) =51.20

Goodman Corporation has sales volumes of 3,000 units at $80 per unit. Variable costs are 35% of the sales price. If total fixed costs are $66,000, the degree of operating leverage is:

(Find UCM and NOI) (sales = 240,000) (VE=84,000) (CM=156,000) (FE=66,000) (NOI=90,000) (Calculate DOL) (156,000/90,000) =1.73

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity is given below: ------------------------Alpha-----Beta DM-------------------$ 36-------$ 24 DL----------------------32----------27 VMOH-----------------19----------17 TMOH-----------------27----------30 VS&A------------------24----------20 CE----------------------27----------22 Total cost/unit-------$ 165-------$ 140 Assume Cane normally produces and sells 52,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

(Find UCM for beta) (24+27+17+20=88) (145-88=57) (Find CM if Beta was dropped) (57 x 52,000= 2,964,000) (-2,964,000) (Find Traceable FMOH) (118,000 x 30) (3,540,000) (add numbers up) =576,000

Annika Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and of Product B is 1,000 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool------Total Cost----------Total Activity---------------------------------------------------TOTAL COST----Product A-----Product B----Total Activity 1:-----------------$ 18,000----------700--------300--------1,000 Activity2:-----------------$ 24,000----------500--------100---------600 Activity3:-----------------$ 60,000----------800--------400---------1,200 The activity-based costing cost per unit of Product A is closest to:

(Find activity levels for all activities) (18,000/1,000) (24,000/600) (60,000/1,200) (Multiply activity rates by levels of activity for product A) (add up the numbers and divide by number of units in Product A) =18.15

Pookie B Manufacturing makes a single product. Budget information regarding the current period: Revenue (50,000 units at $30.00 each): $1,500,000 Direct materials:250,000 Direct labor:100,000 Variable manufacturing overhead:300,000 Fixed manufacturing overhead:400,000 Net income:$450,000 BOG Co. approaches Pookie B with a special order for 20,000 units at a price of $18 per unit. Unit variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders. Assuming that Pookie B has excess capacity, in other words, they will not incur any additional fixed costs if they accept the special offer. Should AAA accept or reject the special order?

(Find current Per Unit Cost) (Sales) (1.5M/50,000) (30) (DM) (250,000/50,000) (5) (DL) (100,000/50,000) (2) (VMOH) (300,000/50,000) (6) (New Offer) (Sales: 20,000 x 18) (Costs) (DM= 20,000 x 5) (DL= 20,000 x 2) (VMOH = 20,000 x 6) (Total = 20,000 x 5) (yes they should accept this offer)

Pookie B Manufacturing makes a single product. Budget information regarding the current period: Revenue (50,000 units at $30.00 each): $1,500,000 Direct materials:250,000 Direct labor:100,000 Variable manufacturing overhead:300,000 Fixed manufacturing overhead:400,000 Net income:$450,000 BOG Co. approaches Pookie B with a special order for 20,000 units at a price of $18 per unit. Unit variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders. Now, assuming that AAA is already operating at capacity and will incur an additional $150,000 in fixed manufacturing overhead if the order is accepted. Should AAA accept or reject the special order?

(Find current Per Unit Cost) (Sales) (1.5M/50,000) (30) (DM) (250,000/50,000) (5) (DL) (100,000/50,000) (2) (VMOH) (300,000/50,000) (6) (New Offer) (Sales: 20,000 x 18) (Costs) (DM= 20,000 x 5) (DL= 20,000 x 2) (VMOH = 20,000 x 6) (FMOH- 20,000 x 7.5) (Total = 20,000 x -2.5) (Reject This offer)

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity is given below: ------------------------Alpha-----Beta DM-------------------$ 36-------$ 24 DL----------------------32----------27 VMOH-----------------19----------17 TMOH-----------------27----------30 VS&A------------------24----------20 CE----------------------27----------22 Total cost/unit-------$ 165-------$ 140 Assume that the same person is offering a offer for Alpha for $128 per unit with 22,000 additional alphas will incur an additional FMOH expense of 400,000. What is the financial advantage (disadvantage) of accepting the new customer's order?

(Find new revenue of new proposal for Alpha) (22,000 x 128) (2,816,000) (find new costs for Alpha) (DM=22,000 x 36) (DL=22,000 x 32) (VMOH=22,000 x 19) (FMOH=400,000) (Variable S&A=22,000 x 24) (Add up amounts) (total Variable cost= 2,842,000) (2,816,000-2,842,000) =26,000 (Financial Disadvantage)

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity is given below: ------------------------Alpha-----Beta DM-------------------$ 36-------$ 24 DL----------------------32----------27 VMOH-----------------19----------17 TMOH-----------------27----------30 VS&A------------------24----------20 CE----------------------27----------22 Total cost/unit-------$ 165-------$ 140 Assume Cane expects to produce and sell 92k Alphas during the current year. 1 of Cane's sales representatives found a new customer willing to buy 22,000 additional Alphas for a price of $128/ unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

(Find new revenue of new proposal for Alpha) (22,000 x 128) (2,816,000) (find new costs for Alpha) (DM=22,000 x 36) (DL=22,000 x 32) (VMOH=22,000 x 19) (Variable S&A=22,000 x 24) (Add up amounts) (total variable cost = 2,442,000) (2,816,000-2,442,000) =374,000(Financial Advantage)

Rick CO. makes one product and provided the following information to help prepare its master budget: The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. What are the expected cash collections for July?

(Find sales for each month) (June=552,000) (July=1,380,000) (August=1,500,000) (September= 1,560,000) (Use Percentages given to find numbers and add sums up to find expected cash collections for July) =800,400

Moallankamp Corporation produces and sells a single product. Data concerning that product are: ----------------------Per Unit---------------------% of Sales Selling Price----------230------------------------100% VE---------------------46-------------------------20% CM-------------------184-------------------------80% Fixed expenses are $1,131,000 per month. The company is currently selling 7,000 units per month The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $117,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

(Find total CVP statement for current income statement before commission incentive) (Sales= 230 x 7000) (VE= 46 x 70000) (CM= 184 x 7000) (FE=1,131,000) (NI= 157,000) (calculate new CVP income statement for commissions incentive) (Sales = 230 x 7400) (VE = 66 x 7400) (CM = 164 x 7400) (FE = 1,104,000) (NI= 199,600) The new commissions incentive will increase NOI by 426,000

The Fime Corporation uses a standard costing system. The following data have been assembled for December: Actual direct labor-hours worked--5,800 hours Standard direct labor rate--$8 per hour Labor efficiency variance--$2,000 (Unfavorable) The standard hours allowed for December's production is:

(Labor efficiency variance = (AH − SH) × SR) (Plug Numbers in) (2,000=5,800- SH) x 8) (SH x 8=46,400 - 2000) SH=5,500

Krizun Industries makes heavy construction equipment. The standard for a particular crane calls for 12 direct labor-hours at $16 per direct labor-hour. During a recent period 900 cranes were made. The labor efficiency variance was $4,400 Unfavorable. How many actual direct labor-hours were worked?

(Labor efficiency variance = (Actual Hours − Standard Hours) × Standard Rate) (4,400 = AH - (900 x 12) x 16) (4,400 = (AH - 10,800) x 16)) (4,400 = (AH x 16) - 172,800) AH = 11,075 DLH

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: DM: 4 pounds at $10 per pound =$ 40 DL: 2 hours at $16 per hour= 32 Variable overhead: 2 hours at $6 per hour=12 Total standard cost / unit$ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: Purchased 150,000 pounds of RM at a cost of $9.20 per pound. All of this material was used in production .Direct laborers worked 62,000 hours at a rate of $17 per hour. Total variable manufacturing overhead for the month was $390,600. What is the labor efficiency variance for March?

(Labor efficiency= Quantity Variance) (QV= (AQused - SQallowed) x PS) (34,500 x 2) (62,000 - 69,000) x 16) =(112,000) (favorable)

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: DM: 4 pounds at $10 per pound =$ 40 DL: 2 hours at $16 per hour= 32 Variable overhead: 2 hours at $6 per hour=12 Total standard cost / unit$ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: Purchased 150,000 pounds of RM at a cost of $9.20 per pound. All of this material was used in production .Direct laborers worked 62,000 hours at a rate of $17 per hour. Total variable manufacturing overhead for the month was $390,600. What is the labor rate variance for March?

(Labor rate = price Variance) (PV = (AP - PS) x AQ Purchased) (17-16) x 62,000) =62,000 (Unfavorable)

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 What is the margin of safety in dollars? What is the margin of safety percentage?

(M.O.S = $Sales - BEP$) (50,000-33,000) (MOS%=MOS$/Sales) (17,000/50,000) MOS$=17,000 MOS%= 34%

Hopi Corporation expects the following operating results for next year: Sales: $400,000 Margin of safety: $100,000 Contribution margin ratio: 75% Degree of operating leverage: 4 What is Hopi expecting total fixed expenses to be next year?

(Margin of safety in dollars = Total budgeted (or actual) sales − Break-even sales) ($100,000 = $400,000 − Break-even sales) (300,000) (Dollar sales to break even = Fixed expenses / CM ratio)(300,000=FE / .75) =225,000

The LaGrange Corporation had the following budgeted sales for the first half of the current year: -----------Cash Sales-------- Credit Sales January--- $80,000 ------------$180,000 February --$85,000 ------------$200,000 March ------$46,000 -----------$160,000 April------- $41,000 ------------$126,000 May ---------$51,000 -----------$230,000 June--------$ 80,000------------$ 30,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on sales: 45% in month of sale 35% in month following sale 20% in second month following sale The accounts receivable balance on January 1 of the current year was $71,000, of which $55,000 represents uncollected December sales and $16,000 represents uncollected November sales. What is the budgeted accounts receivable balance on May 31?

(May Sales= 1 - (45% in the month of the sale) (May= 230,000 x 55%) (April Sales= 1 - (45% in the month of the sale) + 35% in the month following the sale) (April Sales = 126,000 x 20%) (March Sales = 1 - 45% in the month of the sale) + 35% in the month following the sale + 20% in the second month following the sale) (March Sales = 160,000 x 0) (Add Up numbers) =151,700

Month-----------Merchandise Purchases--------Sales January-----------142,000------------------------172,000 February---------148,000------------------------166,000 March------------136,000-------------------------160,000 April-------------154,000-------------------------178,000 May--------------160,000-------------------------166,000 Customers pay 70% of their balances in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 2% discount on all amounts due. Cash payments for operating expenses in May will be $114,400; RRR's cash balance on May 1 was $122,000. What are the Expected Cash Payments for May

(Multiply Sales by said percentages) (March= 160,000 x 10%) (April = 178,000 x 20%) (May = 166,000 x 70%) (Add up amounts) =167,800

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity is given below: -----------------------------Alpha-----Beta Direct material------------$ 36-------$ 24 Direct lab-------------------32----------27 VMOH----------------------19----------17 TMOH----------------------27----------30 Variable selling expenses-24----------20 Common fixed expenses--27----------22 Total cost per unit-------$ 165-------$ 140 What is the total traceable fixed manufacturing overhead for each of the two products?

(Multiply Segment traced MOH by number of units produced)(Alpha= 118,000 x 27) (Beta= 118,000 x 30) Alpha=3,186,000 Beta= 3,540,000

Rick CO. makes 1 product:Heres the Info The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If 100,800 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July?

(Multiply amount to of pounds of RM that are needed to be purchased in July by unit cost or RM) (94,320 x $2.50) =$235,800

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If 100,800 pounds of raw materials are needed to meet production in August, what is the estimated raw materials inventory balance at the end of July?

(Multiply following months amount by ending rm inventory % and then by the cost of RM/ Pound) (100,800 x 10%) (10,800 x 2.50) =25,200

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what is the estimated net operating income for July?

(NOI = Gross Margin - S&A Expenses) (S&A Expenses = 103,400) =80,600

Bracken Corporation is a small wholesaler of gourmet food products. Sales are budgeted at: November= $330,000 December =$340,000 January =$340,000 Collections: In the month:80% Month Following Sale: 17% Uncollectible: 3% COGS = 75% of Sales. -The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. -Payment for merchandise is made in the month following the purchase. Other monthly Cash Expenses= $21,800 Monthly depreciation is $19,000. What are expected cash collections in December?

(November:330,000 x 17%) (December: 340,000 x 80%) (January: 340,000 x 0% (3% uncollectible) =328,100

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: DM: 4 pounds at $10 per pound =$ 40 DL: 2 hours at $16 per hour= 32 Variable overhead: 2 hours at $6 per hour=12 Total standard cost / unit$ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: Purchased 150,000 pounds of RM at a cost of $9.20 per pound. All of this material was used in production .Direct laborers worked 62,000 hours at a rate of $17 per hour. Total variable manufacturing overhead for the month was $390,600. If Preble had purchased 177,000 pounds of materials at $9.20 per pound and used 150,000 pounds in production, what would be the materials Price variance for March?

(PV = (AP - PS) x AQ Purchased) (9.20 - 10) x 177,000) =(141,600) (Favorable)

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 how many units are needed to achieve a target profit of 13,500

(Profit = (UCM x Q) - FE)) (13,500 = 22.50 x Q - 14,850) (28,350=22.50Q) =1,260

Selling Price Per unit: $250 VE per unit: $150 FE: $35,000 Compute the unit sales needed to achieve a target profit of $40,000 (equation method)

(Profit= Unit CM x Q - FE) (40,000= 100 x Q - 35,000) (100 x Q= 40,000 + 35,000) (Q= 75,000/ 100) =750

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: DM: 4 pounds at $10 per pound =$ 40 DL: 2 hours at $16 per hour= 32 Variable overhead: 2 hours at $6 per hour=12 Total standard cost / unit$ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: Purchased 150,000 pounds of RM at a cost of $9.20 per pound. All of this material was used in production .Direct laborers worked 62,000 hours at a rate of $17 per hour. Total variable manufacturing overhead for the month was $390,600. If Preble had purchased 177,000 pounds of materials at $9.20 per pound and used 150,000 pounds in production, what would be the materials quantity variance for March?

(QV= (AQused - SQallowed) x PS) (150,000 - 138,000) x 10) =120,000 (unfavorable)

Westerville Company reported the following results from last year's operations: Sales$ 1,900,000 Variable expenses-550,000 Contribution margin-1,350,000 Fixed expenses-875,000 Net operating income-$ 475,000 Average operating assets-$ 1,187,500 At the beginning of this year, the company has a $237,500 investment opportunity with the following cost and revenue characteristics: Sales$ 380,000 Contribution margin ratio-50% of sales Fixed expenses-$ 133,000 The company's minimum required rate of return is 10%. Whats last years RI

(RI= Net income - (AOA x minimum rate of return) (475,000 -( 1,187,500 X ,10) =356,250

Division, which is part of SSS Enterprises, recently reported a sales margin of 30%, and ROI of 21%. Residual income of $220,000. MMM uses an imputed interest rate (i.e., required rate of return) of 10%. Compute MMM's capital turnover and AOA)

(ROI = SM x CT) (21%= 30% x CT) CT=70% (ROI= Income/AOA) (so Income. = 21% x AOA) (RI= Income - (AOA x Minimum rate)) (220,000= income -(.10 x AOA) (so 220,000 = 21%AOA - 10%AOA) (220,000=11%AOA) AOA= 2,000,000

Rick CO. makes 1 product:Heres the Info The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If 100,800 pounds of RM are needed to meet production in August, how many pounds of RM should be purchased in July?

(Required units of production for July=23,400) (Units of raw materials needed per unit of finished goods =4)(23,400 x 4= 93,600) (Add Desired Units of ending RM inventory) (100,800 x 10%) (10,800 + 93,600 =103,680) (minus the expected beginning inventory) (103,680 - 9,360) =94,320

Westerville Company reported the following results from last year's operations: Sales$ 1,900,000 Variable expenses-550,000 Contribution margin-1,350,000 Fixed expenses-875,000 Net operating income-$ 475,000 Average operating assets-$ 1,187,500 At the beginning of this year, the company has a $237,500 investment opportunity with the following cost and revenue characteristics: Sales$ 380,000 Contribution margin ratio-50% of sales Fixed expenses-$ 133,000 The company's minimum required rate of return is 10%. What is last year's margin?

(SM= NI/Sales) =25%

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) :Sales--$ 50,000 Variable expenses--27,500 Contribution margin--22,500 Fixed expenses--14,850 Net operating income$ 7,650 If sales decrease to 900 units, what would be the new NOI

(Sales = 900 x 50) (VE= 27.5 x 900) (CM = 22.5 x 900) (FE = 14,850) NOI=5,400

If average operating assets are $200,000, the turnover is 2.0, the return on investment (ROI) is 30%, and the minimum required rate of return on average operating assets is 11.5%, then the residual income is closest to:

(Step 1: Calculate the sales:) (Average operating assets (a)$ 200,000) (Turnover (b)2.0) (Sales (a) × (b)$ 400,000) (Step 2: Calculate the margin:) (Return on investment (a)30%) (Turnover (b)2.0) (Margin (a) ÷ (b)=15%) (Step 3: Calculate the net operating income:) (Sales (a)$ 400,000) (Margin (b)15%) (Net operating income (a) × (b)$ 60,000) (Step 4: Calculate the residual income:) (Net operating income (a)$ 60,000) (Required return ($200,000 × 11.5%) (b)$ 23,000) (Residual income (a) − (b) =$ 37,000

Sales= 400,000 COGS: Variable Costs = 240,000 Fixed Costs = 50,000 Gross Margin = 110,000 Administrative Expenses: Variable = 20,000 Fixed = 60,000 Net Income = 30,000 Using cost-volume-profit analysis and relevant formulas, calculate the sales level (in dollars) the company needed to achieve a target profit of $100,000 for the year.

(Target Profit analysis for dollar sales equation = (FE + Target Profit)/ CMR)) (Plug in numbers) (target profit = (110,000 + 100,000)/ 35%) =600,000

Westerville Company reported the following results from last year's operations: Sales$ 1,900,000 Variable expenses-550,000 Contribution margin-1,350,000 Fixed expenses-875,000 Net operating income-$ 475,000 Average operating assets-$ 1,187,500 At the beginning of this year, the company has a $237,500 investment opportunity with the following cost and revenue characteristics: Sales$ 380,000 Contribution margin ratio-50% of sales Fixed expenses-$ 133,000 The company's minimum required rate of return is 10%. Whats last years Turnover

(Turnover= Sales/AOA) =1.6

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. In July what are the total estimated cash disbursements for RM purchases? Assume the cost of RM purchases in June is $131,040; and $100,800 pounds of RM are needed to meet production in August

(Use %'s to calculate) (131,040 x 70%) (235,800 x 30%) (Add up numbers) =162,468

Rickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. It is considering implementing an activity-based costing (ABC) system that allocates all $614,400of its manufacturing overhead to four cost pools Activity Cost Pool-Activity Measure-Estimated Overhead Cost-Expected Act. Machining----------Machine-hours------$ 198,000-------------10,000MHs Machine setups----Number of setups---$ 86,400--------------180setups Product design----Number of products-$ 82,000----------------2products General factory---Direct labor-hours----$ 248,000-------------12,000DLHs Activity Measure---Product Y--Product Z Machine-hours------6,800-------3,200 Number of setups---50---------130 Number of products-1----------1 DLH----------------7,800-------4,200 Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

(Use POHR x Product DLH to find MOHA) (Divide Each products MOHA by the total amount of MOHA)(399,360/614,400) (215,040/614,400) Product Y= 65% Product Z= 35%

At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July showed that actual maintenance costs totaled $13,150 and that the associated rate variance was $420 unfavorable. If 6,700 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was

(Variable overhead rate variance) = (Actual hours × Actual Rate) − (Actual hours × Standard Rate) (plug in numbers) (-420= 13,150 -6,700 x SR) (6700 X SR = 13,150 - 420) SR=1.90

Paparo Corporation has provided the following data from its activity-based costing system: Activity Cost Pool----------Total Cost----------Total Activity Assembly------------------$ 846,040------------52,000 machine-hours Processing orders---------$ 64,056--------------1,700 orders Inspection------------------$ 102,408-------------1,360inspection-hours Data concerning the company's product Q79Y appear below: Annual unit production and sales--450 Annual machine-hours---1,080 Annual number of orders--70 Annual inspection hours--20 Direct materials cost--$ 44.00 per unit Direct labor cost--$ 41.03per unit According to the activity-based costing system, the average cost of product Q79Y is closest to:

(calculate activity rates for all activity cost pools) (multiply those activity rates by product information) (multiply Direct materials cost and Direct labor cost by 450)(Add up all the numbers) (divide that number by 450 to get a per unit cost) =133.29

The controller for SSS Company has established the following manufacturing overhead cost pools and cost drivers: Overhead Cost Pool--------Budgeted Overhead Cost-------Cost Driver Machine Setups-------------$400,000----------------------Number of Setups Material Handling-----------$220,000----------------------Units of RM Quality Control Inspection-$80,000---------------------Number of Inspections Other Overhead Costs-----$500,000-------------------Machine Hours Overhead Cost Pool---------Budgeted Level for Cost Driver Machine Setups----------------200 Setups Material Handling--------------100,000 Units Quality Control Inspection----2,000 Inspections Other Overhead Costs-------100,000 MH Order Number 222 has the following Requirements: Machine Setups:3 RM:600 Units Inspections;15 Machine Hours:2000 Machine Hours Compute the total manufacturing overhead that should be assigned to order no. 222 by using ABC

(divide each overhead cost pool by each budgeted level for the cost drivers) (Multiply those amounts by Order Number 222's requirements)(Add up all the numbers) =17,920

Sukhu Corporation's activity-based costing system has three activity cost pools--Fabricating, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: Fabricating--$ 7,300 Setting Up--$ 26,900 Other--$ 13,800 Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products: ------------------MHs-------Batches Product M0----8,200--------650 Product P9------3,200------1,050 Total------------11,400-------1,700 Calculate activity rates for each activity cost pool using activity-based costing

(divide fabricating cost pool by total activity level)(7,300/11,400) (26,900/1,700) Fabricating= .64 Setting Up= 15.82

Cane Company manufactures 2 products called Alpha and Beta that sell for $180 and $145. Each product uses only 1 type of RM that costs $6/pound. Company produces 118,000 of each product. ------------------------Alpha-----Beta DM-------------------$ 36-------$ 24 DL----------------------32----------27 VMOH-----------------19----------17 TMOH-----------------27----------30 VS&A------------------24----------20 CE----------------------27----------22 Total cost/unit-------$ 165-------$ 140 Assume Cane normally produces and sells 72,000 Betas and 92,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? (Keep or Drop)

(find CM lost if Beta is discontinued) (Find VC) (DM+DL+VMOH+Variable S&A) (88)(145-88=CM) (CM x72,000) (=-4,104,000) (Find TMOH) (30 x 118,000) (3,540,000) (Find new CM for alpha with increased sales) (Find cm for alpha) (69) (69 x 12,000) (828,000) (combine numbers) (-4,104,000 + 3,540,000 +828,000) =264,000 (Cane Co. should drop Beta)

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units 30% of credit sales are collected in the month of the sale and 70% in the following month. The ending FG inventory equals 20% of the following month's unit sales. The ending RM inventory equals 10% of the following month's RM prod. needs. Each unit of FG requires 4 pounds of raw materials. The RM cost $2.50 per pound. 30% of RM purchases are paid for in the month of purchase and 70% in the following month. The DL wage rate is $13 per hour. Each unit of finished goods requires 2 DLH The variable S&A expense per unit sold is $1.80. The fixed S&A expense per month is $62,000. If 100,800 pounds of raw materials are needed to meet production in August, what is the estimated accounts payable balance at the end of July?

(multiply cost or RM for July by % of RM purchases that are unpaid in July) (235,800 x 70%) =165,060

JJJ Company had the following results: Actual direct labor hours: 34,500 hours Standard direct labor hours: 35,000 hours Total actual direct labor cost: $ 241,500 Direct labor efficiency variance: $ 3,200 (Favorable) Calculate the direct labor rate variance (indicate whether F or U).

(plug in info into Actual and Standard) (Actual:) (AQ:34,500) (AP:(241,500/34,500) (7) (AO:241,500) (Standard:) (SQ:?) (SP:?) (SQallowed:35,000) (Solve for SP) (Direct Labor efficiency Variance= (AQ-SQallowed) x (SP) (3,200= 34,500 - 35,000 x SP) (3200= -500SP) (-500SP = -3200) (SP=6.4) (Plug that into Price variance formula to find Direct Labor Rate Variance) (PV= (7-6.4) *34,500) =20,700 (Unfavorable)

MMM Company has set the following standards for one unit of product: Direct material Quantity: 5 pounds per unit Price per pound: $9 per pound Direct labor Quantity: 3 hours per unit Rate per hour: $20 per hour Actual costs incurred in the production of 2,000 units were as follows: Direct material: $89,280 ($9.30 per pound) Direct labor: $118,900 ($20.50 per hour) Whats the DL Efficiency Variance

= (4000) (Favorable)

MMM Company has set the following standards for one unit of product: Direct material Quantity: 5 pounds per unit Price per pound: $9 per pound Direct labor Quantity: 3 hours per unit Rate per hour: $20 per hour Actual costs incurred in the production of 2,000 units were as follows: Direct material: $89,280 ($9.30 per pound) Direct labor: $118,900 ($20.50 per hour) Whats the DM Quantity Variance

=(3600) (Favorable)

MMM Company has set the following standards for one unit of product: Direct material Quantity: 5 pounds per unit Price per pound: $9 per pound Direct labor Quantity: 3 hours per unit Rate per hour: $20 per hour Actual costs incurred in the production of 2,000 units were as follows: Direct material: $89,280 ($9.30 per pound) Direct labor: $118,900 ($20.50 per hour) Whats the DM Price Variance?

=2880 (Unfavorable)

MMM Company has set the following standards for one unit of product: Direct material Quantity: 5 pounds per unit Price per pound: $9 per pound Direct labor Quantity: 3 hours per unit Rate per hour: $20 per hour Actual costs incurred in the production of 2,000 units were as follows: Direct material: $89,280 ($9.30 per pound) Direct labor: $118,900 ($20.50 per hour) Whats the DL Rate Variance

=2900 (unfavorable)

Rickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. It is considering implementing an activity-based costing (ABC) system that allocates all $614,400of its manufacturing overhead to four cost pools Activity Cost Pool-Activity Measure-Estimated Overhead Cost-Expected Act. Machining----------Machine-hours------$ 198,000-------------10,000MHs Machine setups----Number of setups---$ 86,400--------------180setups Product design----Number of products-$ 82,000----------------2products General factory---Direct labor-hours----$ 248,000-------------12,000DLHs Activity Measure---Product Y--Product Z Machine-hours------6,800-------3,200 Number of setups---50---------130 Number of products-1----------1 DLH----------------7,800-------4,200 What is the activity rate for the for each activity cost pool

Machining =19.80 Machine Setups= 480 Product Design=41,000 General Factory=20.67

Rickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. It is considering implementing an activity-based costing (ABC) system that allocates all $614,400of its manufacturing overhead to four cost pools Activity Cost Pool-Activity Measure-Estimated Overhead Cost-Expected Act. Machining----------Machine-hours------$ 198,000-------------10,000MHs Machine setups----Number of setups---$ 86,400--------------180setups Product design----Number of products-$ 82,000----------------2products General factory---Direct labor-hours----$ 248,000-------------12,000DLHs Activity Measure---Product Y--Product Z Machine-hours------6,800-------3,200 Number of setups---50---------130 Number of products-1----------1 DLH----------------7,800-------4,200 Using the ABC system, how much total manufacturing overhead cost is assigned to Product Y and Product Z

Y= 360,866 Z= 284,134