Problem 1:

Required:

a. T-accounts for the three inventory accounts and cost of sales.

b. Record beginning balances and post the transactions for the month.

c. Draw arrows to show the transfer between accounts.

d. Calculate the inventory balances as of September 30.

Problem 2:

Required:

a. What is the normal selling price for Product A in 20x3?

Problem 3:

Required:

a. Assuming Micha is correct in her estimates, what fee per hour sould Micha charge her clients?

b. At the fee calculated in (a), what would Micha earn in a month in which her time charged to clients was only 100 hours? Assume that all costs are fixed.

Problem 4:

Required:

a. Calculate normal selling prices for products J and K.

b. Using the prices calculated above, how much profit would result if the sales were 5,000 units of J and 15,000 units of K instead of 10,000 units of each?

c. Comment on the effect of changes in the product mix on total profit when the same profit margin percentage is used.

LIPMAN BOTTLE COMPANY

Questions:

1. Calculate the variable costs per thousand bottles for one separation rounds, two separation rounds, and two separation ovals, assuming that all ovals are printed on the machine with the automatic feature for ovals. Consider only two bottle size ranges - 0 -1 ounce and 17-32 ounces - and only two order quantity ranges - 5,000-9,999 and 100,000-249,999.

2. Prepare a suggested price list for the Albany area. Consider only one separation rounds and two separation rounds or ovals, and only two sizes and order quantities described in question

3. How did Mr. Lipman's goal of a 30 percent margin (at capacity) affect your price recommendations?

4. Which products should the company attempt to sell in New York - New Jersey? Explain.