Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

problem 1: Lott Corporation showed the following balances in its inventory accounts as of January 1:

Raw materials inventory $28,800
Work-in-process inventory 36,000
Finished goods inventory 24,000

The given transactions took place throughout the year:

1) Manufacturing overhead costs of $352,400 were incurred.
2) Raw material purchases totaled $76,800.
3) Direct labor charges in the amount of $410,400 were incurred.
4) The cost of goods sold was determined to be $540,000.
5) Raw materials in the amount of $86,200 were placed into production.
6) Cost of goods completed during the period was $549,800.

Find out the year-end balance of each of the following. You are not required to use T-Accounts to answer this problem, however whichever method used, please show all of your work and identify your answers clearly:

a) Raw materials inventory.
b) Work-in-process inventory.
c) Finished goods inventory.
d) Cost of goods sold.

problem 2
: Greenville National Bank has requested an analysis of checking account profitability by customer type. Customers are classified according to the size of their account: low balances, medium balances and high balances. The activities related with the three different customer categories and their related annual costs are give below.

Opening and closing accounts     $ 200,000
Issuing monthly statements           300,000
Processing transactions                2,050,000
Customer inquires                        400,000
Providing ATM services                 1,120,000
Total cost                               $ 4,070,000

Account Balance:

                                                         Low            Medium         High
Number of accounts opened/closed        15,000           3,000          2,000
Number of statements issued                450,000         100,000       50,000
Processing transactions                       18,000,000     2,000,000     500,000
Number of telephone minutes                1,000,000       600,000       400,000
Number of ATM transactions                 1,350,000       200,000       50,000
Number of checking accounts                38,000           8,000          4,000

a) Compute the annual cost per account by dividing the total cost of processing and maintain checking accounts by the total number of accounts. By using this traditional method of overhead allocation, find out the average monthly fee per that the bank must change to cover the costs incurred because of checking accounts?

b) Currently the bank offers free checking to all its customers. The interest revenues average $90 per account annually; though the interest revenues earned per account by category are $80, $100 and $165 annually for the low, medium and high-balance accounts respectively. Compute the average profit per account under the traditional method (average revenue less average cost computed in requirement a above).

c) By using the activity based costing method, compute the application rate that would be used for each of the banking activities shown above.

d) Next compute the profit per account by using the revenue per customer type and unit cost per customer type find outd by using the ABC method started in requirement c above.

e) After reviewing the analysis in requirement d, a vice-president recommended removing the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than make up for the loss via cross sales. He presented a survey which showed that 50 % of the customers would switch banks if a checking fee were imposed. Describe how you could validate the president’s argument by using activity-based costing

problem 3:

a) Indicate whether each of the following statements is true or false. Ignore the effect of income taxes on the transactions:

  • The break-even point is the point where total revenues equal total fixed costs.
  • If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even volume in units is 24,000 units.
  • If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $24 per unit.
  • If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, once it has covered its fixed costs, net income will increase by $30 for each additional unit sold.

b) Farrish Company believes that a market exists for an electronic game with a sales price of $80 per unit. The annual fixed costs are estimated at $1,400,000.

Required: If Farrish wants to earn a profit of $400,000 per year, find out the maximum amount that the variable costs per unit could be if the company believes that it can sell 50,000 of the games?

c) Aziz Company produces and sells air compressors for $250. The variable costs per unit are $150 plus a sales commission of 15% of the selling price. Total fixed costs compise of $8,000 in fixed overhead and $4,500 in fixed selling and administrative costs.

Required:

i) find out the contribution margin per unit.
ii) find out the break-even point in units and dollars.
iii) How many units should be sold to earn a profit of $10,000?
iv) What would be the break-even point in units if the sales commission is decreased to $10 per unit sold?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M91967

Have any Question? 


Related Questions in Financial Accounting

Assignemtgammy is considering building a facility to

Assignemt Gammy is considering building a facility to manufacture cupcakes to distribute nationally. Your assignment involves both the calculation of cash flows associated with the new investment under consideration and ...

Assignmentan economist was interested in modeling the

Assignment An economist was interested in modeling the relationship among annual income, level of education, and work experience. The level of education is the number of years of education beyond eighth grade, so 1 repre ...

Robert wondered why he was always so stressed out when he

Robert wondered why he was always so stressed out when he was dealing with Lucas, the latest addition to his team. On the face of it, the new hire seemed very agreeable and supportive, but whatever interactions he had ha ...

How does carr characterize the difference between

How does Carr characterize the difference between infrastrctural technology and proprietary technology? Can proprietary technologies be used for long term strategic advantage? What is an example of a company proprietary ...

Tracy company a manufacturer of air conditioners sold 100

Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2011. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/ ...

Need at least 750 wordsprepare and submit a report about

Need at least 750 words Prepare and submit a report about any government process which has been re engineered using IT like E-gate in the airport. Discuss the strategies of change management that you think was applied to ...

Chapter 1 1 which of the following goals of the firm are

Chapter 1 1) Which of the following goals of the firm are synonymous (equivalent) to the maximization of shareholder wealth? A) profit maximization B) maximization of the total market value of the firm's common stock C) ...

Problem 1on january 1 2010 branson designers issued 900

Problem 1 On January 1, 2010, Branson Designers issued $900 Million of its 8% bonds $836 million. The bonds were then prices to yield 10%. The interest will be payable on June 30 and December 31. Branson records interest ...

Assignment purchase point media corporation ppmc

Assignment: Purchase Point Media Corporation (PPMC) INTRODUCTION Purchase Point Media Corporation (PPMC) INTRODUCTION This case is based on actual financial projections developed and provided by a publicly traded firm, P ...

Martin-pullin bicycle corp mpbc located in dallas is a

Martin-Pullin Bicycle Corp. (MPBC), located in Dallas, is a wholesale distributor of bicycles and bicycle parts. Formed in 1981 by cousins Ray Martin and Jim Pullin, the firm's primary retail outlets are located within a ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro