Able Corporation incurred the following costs.
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Beginning direct materials inventory
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$16,000
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Beginning work-in-process inventory
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$7,000
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Beginning finished goods inventory
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$19,000
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Ending direct materials inventory
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$16,000
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Ending work in process
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$14,000
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Ending finished goods
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$ 26,000
|
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Factory supervisor's salary
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$28,000
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|
Depreciation on plant
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$12,000
|
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Sales
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$800,000
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|
Selling and administrative expenses
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$125,000
|
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Plant maintenance
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$6,000
|
|
Plant utilities
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$11,000
|
|
Direct material purchases
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$215,000
|
|
Direct labor
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$240,000
|
Calculate the following.
- Direct materials used
- Cost of goods manufactured
- Cost of goods sold
- Operating income
Problem 2:
Below is information from Job Card 506 for the Bearing Manufacturing Company.
Date started: June 15, 2015
Date Completed: July 24, 2015
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Date
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Direct Materials
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Direct Labor
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Applied Factory Overhead
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Job Total
|
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6/15/2015
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$ 5,000
|
|
|
|
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6/25/2015
|
|
$1,200
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$600
|
|
|
6/27/2015
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$2,300
|
|
|
|
|
7/6/2015
|
|
$ 1,540
|
$770
|
|
|
7/15/2015
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$2,600
|
|
|
|
|
7/24/2015
|
|
$760
|
$380
|
|
Job 506 was sold on credit on July 24, 2015, for 180% of its cost.
Factory OH was applied on the basis of DL.
Required:
- Prepare the journal entries to record the costs incurred for Job 506 in 2015 for direct materials, direct labor, and factory overhead.
- Prepare the journal entry to record the completion of Job 506.
- What is the predetermined factory overhead rate for Bearing Manufacturing?
- Prepare the journal entries to record the sale of Job 506.
Problem 3:
Kali Manufacturing Inc. began the year with the following.
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|
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Units
|
|
| |
Beginning work-in-process
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20,000
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20% complete
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| |
Transferred to finished goods
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60,000
|
|
| |
Ending inventory
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10,000
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70% complete
|
| |
Materials added at the beginning of the process
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|
Required
|
|
Calculate the equivalent units for
|
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a. material costs under the weighted average process cost method;
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b. conversion costs under the weighted average process cost method;
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c. material costs under the FIFO process cost method; and
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d. conversion costs under the FIFO process cost method.
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Problem 4
Glass Company manufactures a product through a continuous single-step process. All materials are added at the beginning of processing. Production and cost data for the company for the current month are as follows.
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Production Data
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Units
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In process, beginning of month (20% converted)
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2,000
|
|
Started during current month
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8,000
|
|
Completed and transferred to finished goods
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5,500
|
|
In process, end of month (60% converted)
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4,500
|
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Manufacturing Costs
|
|
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Work in process, beginning
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$21,450 ($15,000 Materials, $6,450 Conversion)
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|
Costs added to WIP during the period:
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|
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Materials
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$54,000
|
|
Direct labor cost
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$105,000
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|
Factory overhead cost
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$36,150
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Required Prepare a cost of production report for current month. Use Weighted Average process costing.
Problem 5:
Alliance Company manufactures two products (brushes and combs). The overhead costs have been divided into four cost pools that use the following activity drivers.
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# of Setups
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# of Orders
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Machine Hours
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Packing Orders
|
|
Brushes
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30
|
35
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2,000
|
100
|
|
Combs
|
10
|
65
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6,000
|
150
|
|
Cost per Pool
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$20,000
|
$10,000
|
$280,000
|
$60,000
|
Required
- Compute the allocation rates for each of the activity drivers listed.
- Allocate the overhead costs to Products S and T using activity-based costing.
- Compute the overhead rate using machine hours under the functional-based costing system.
- Allocate the overhead costs to Products S and T using the functional-based costing system overhead rate calculated in part (c).
Problem 6:
A company's sales volume averages 4,000 units per year.
Recently, its main competitor reduced the price of its product to $48.
The company expects sales to drop dramatically unless it matches the competitor's price.
In addition, the current profit per unit must be maintained.
Information about the product (for production of 4,000) is as follows.
| | |
Standard Quantity
|
Actual Quantity
|
Actual Cost
|
|
Materials (pounds)
|
|
5,800
|
6,000
|
$60,000
|
|
Labor (hours)
|
|
1,800
|
2,000
|
$20,000
|
|
Setups (hours)
|
|
0
|
225
|
$8,000
|
|
Material handling (moves)
|
|
0
|
400
|
$5,000
|
|
Warranties (number repaired)
|
|
0
|
300
|
$15,000
|
Required
- Calculate the target cost for maintaining current market share and profitability.
- Calculate the non-value-added cost per unit.
- If non-value-added costs can be reduced to zero, can the target cost be achieved?
Problem 7:
The Peace Company has the following functional (traditional) income statement for the prior month.
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Sales
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($50 * 100,000 units)
|
|
$5,000,000
|
|
Cost of goods sold
|
|
|
| |
Direct materials
|
$1,200,000
|
|
| |
Direct labor
|
$950,000
|
|
| |
Variable factory overhead
|
$600,000
|
|
| |
Fixed factory overhead
|
$850,000
|
$3,600,000
|
|
Gross profit
|
|
|
$1,400,000
|
|
Selling and administrative expense
|
|
|
|
| |
Variable
|
$250,000
|
|
| |
Fixed
|
$120,000
|
$370,000
|
|
Operating income
|
|
|
$1,030,000
|
|
There were no beginning and ending inventories.
|
|
|
Required:
- Calculate the contribution margin per unit.
- Calculate the contribution margin ratio.
- What is the break-even point in units?
- What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?
Problem 8:
Suzy Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9 per unit. Fixed costs are $60,000 per month.
Required
Determine each of the following values.
- Unit contribution margin
- Monthly break-even unit sales volume
- Before-tax monthly profit
- Monthly margin of safety in units
Create a contribution margin-based income statement.
Problem 9:
The Peace Company has the following functional (traditional) income statement for the prior month.
|
Sales
|
($50 * 100,000 units)
|
|
$5,000,000
|
|
Cost of goods sold
|
|
|
| |
Direct materials
|
$1,200,000
|
|
| |
Direct labor
|
$950,000
|
|
| |
Variable factory overhead
|
$600,000
|
|
| |
Fixed factory overhead
|
$850,000
|
$3,600,000
|
|
Gross profit
|
|
|
$1,400,000
|
|
Selling and administrative expense
|
|
|
|
| |
Variable
|
$250,000
|
|
| |
Fixed
|
$120,000
|
$370,000
|
|
Operating income
|
|
|
$1,030,000
|
|
There were no beginning and ending inventories.
|
|
|
Required:
- Calculate the contribution margin per unit.
- Calculate the contribution margin ratio.
- What is the break-even point in units?
- What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?
Problem 10:
Suzy Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9 per unit. Fixed costs are $60,000 per month.
Required
Determine each of the following values.
- Unit contribution margin
- Monthly break-even unit sales volume
- Before-tax monthly profit
- Monthly margin of safety in units
Create a contribution margin-based income statement.