9. Anka Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $240,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $36,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $36,000 and $60,000, respectively. Data on standard service-hours and number of employees are as follows:

Maint. Dept. Person. Dept. Dept. X Dept. Y
Standard service hours used 200 100 600 300
Number of employees 5 10 45 45

a) Using the direct method, calculate the cost of the Personnel Department allocated to Department X and to Department Y.
b) Using the direct method, calculate the cost of the Maintenance Department allocated to Department X and to Department Y.


10. Tracey Sales Co. has predicted the following costs for this year for 500,000 units:

Manufacturing Selling and Administrative
Variable $ 800,000 $250,000
Fixed 1,200,000 300,000
Total $2,000,000 $550,000

a) What is the markup on variable manufacturing costs needed to break even?
b) What is the markup on selling and administrative costs needed to break even?

11. The following information pertains to an item sold by Fritz Company:

Budget Actual
Unit sales 4,000 3,800
Unit selling price $800 $840
Unit standard variable costs $320

a. Determine the sales price variance (be sure to include F or U).
b. Determine the sales volume variance (be sure to include F or U).




12. Willowbrook Company has the following data for this year:

Bottling Division Mixing Division
Average operating assets $320,000 $ 800,000
Contribution margin 160,000 500,000
Operating income 80,000 120,000
Sales 500,000 1,300,000
Weighted-average cost of capital 17% 17%

Willowbrook Company has a target ROI of 17 percent.

Required: Calculate the following amounts for each division:
a. Operating investment turnover
b. ROI
c. Residual income


13. Budgeted sales of gloves for Perfect Fit Hands for the first six months of the year 2014 are as follows:

Months Unit Sales
January 700,000
February 820,000
March 760,000
April 720,000
May 1,280,000
June 1,500,000

The beginning inventory for 2014 is 210,000 units. The budgeted inventory at the end of a month is 30 percent of units to be sold the following month. 

Required: Prepare a purchases budget in units for each month, January through May.




Section 3 - Problems - 10 pts each

14. Anka Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $240,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $36,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $36,000 and $60,000, respectively. Data on standard service-hours and number of employees are as follows:

Maint. Dept. Person. Dept. Dept. X Dept. Y
Standard service hours used 200 100 600 300
Number of employees 5 15 25 20

Using the step method, if Personnel Department costs are allocated first, calculate the cost of:

a) Personnel Costs allocated to appropriate departments
b) Maintenance Costs allocated to appropriate departments
c) Total Costs in Dept. X & Y



15. Good Deal Electronics, Inc. manufactures two products, DVD Recorders and DVD Players, both on the same assembly line. The predicted sales are 20,000 DVD Recorders and 25,000 DVD Players. The predicted costs for the year 2014 are as follows:

Variable Fixed
Materials $400,000 $1,000,000
Other 500,000 1,600,000

Each product uses 50 percent of the materials costs. Based on manufacturing time, 60 percent of the other costs are assigned to the DVD Recorders, and 40 percent of the other costs are assigned to DVD Players. The management of Good Deal Electronics desires an annual profit of $350,000.

Required:
a. What price should Good Deal Electronics charge for each DVD Recorder and each DVD Player if management believes the Recorders should sell for 50 percent more than the DVD Players? (Rounded to 2 decimal places.)

b. What is the total profit per product?






16. Band Instruments Company has the following sales budget for the first three months of the current year:

Month Sales Revenue
January $600,000
February 150,000
March 440,000

Historically, the following trend has been established regarding cash collection of sales:

• 65 percent in month of sale
• 25 percent in month following sale
• 8 percent in second month following sale
• 2 percent uncollectible 

November and December sales were $100,000 and $200,000, respectively.

Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.


17. Augustus Company manufactures a single product that has a standard materials cost of $80 (4 units of raw materials at $20 per unit) and standard direct labor cost of $36 (1 hour per unit). 

The following data pertain to operations for May of this year:

Raw materials purchased and used in production of 1,500 units of finished product 6,200 units or raw material costing $63,240

Direct labor used 1,500 hours costing $60,000

Required:
a. Compute the following variances (show calculations):
1. Materials quantity, price, and total variance(be sure to include F or U).
2. Labor efficiency, rate, and total variance(be sure to include F or U).

b. Give one possible explanation for each of the six variances computed in requirement (a).




18. The Chip Division of Computer Co. has just revised its actual cost data for the year just ended. Chip Division transfers circuit boards to the Assembly Division, and incurs no selling expense for such transfers. Assembly Division can buy the same goods in the open market for $142 each. Chip's new cost data are:

Direct materials $ 60
Direct labor 30