Questions -
Q1. Lynnwood Manufacturing Company had the following account balance for the quarter ending December 31:
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Beginning direct materials inventory
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$40,000
|
|
Beginning work in process inventory
|
55,000
|
|
Beginning finished goods inventory
|
65,000
|
|
Direct labor
|
125,000
|
|
Direct materials purchases
|
150,000
|
|
Ending direct materials inventory
|
25,000
|
|
Ending work in process inventory
|
48,000
|
|
Ending finished goods inventory
|
72,000
|
|
Fixed manufacturing overhead
|
80,000
|
|
Fixed selling and administrative expenses
|
70,000
|
|
Revenues or Sale
|
700,000
|
|
Variable manufacturing overhead
|
80,000
|
|
Variable selling and administrative expenses
|
100,000
|
Required:
a. What is the amount of direct materials used during the period?
b. What is the amount of cost of goods manufactured during the period?
c. What is the amount of cost of goods sold during the period?
d. What is the amount of net income (assuming no income taxes)?
e. What is the total amount of prime costs?
f. What is the total amount of conversion costs?
Q2. Habor Company has the following budgeted operation results fo r 2014 for 40000 units.
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Revenues
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$200 per unit
|
|
|
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Variable selling and administrative expenses
|
50 per unit
|
|
Variable manufacturing costs
|
120 per unit
|
|
|
|
Fixed selling and administrative expenses
|
$495,000
|
|
Fixed manufacturing costs
|
625,000
|
A foreign wholesaler wants to buy 3,000 units at a price of $155 per unit. All fixed costs would remain within the relevant range (up to capacity). The variable selling costs would only be on the regular units sold. In other words, there would not be any variable selling expenses on the special units sold. Harbor Company has the capacity to produce 44,000 units per year.
Required:
a. Produce a contribution income statement without the special order (assume no income taxes)
b. Should Harbor Company produce the special order? Justify your answer. If Harbor Company accepts the special order, they must produce and sell the entire 3,000 units for $155 per unit.
c. Should Harbor Company produce the special order for 6,000 units for $155? Justify your answer by redoing the income statement assuming the special order. If Harbor Company accepts the special order, they must produce and sell the entire 6,000 units for $155. In other words, they may lose regular customers.
Q3. Jordon Company produced and sold 50,000 units in 2014. The units sold for $140 each. During the period, the following cost were incurred:
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Variable selling and administrative expenses per unit
|
$15
|
|
Variable manufacturing overhead per unit
|
20
|
|
Direct labor per unit
|
30
|
|
Direct materials per unit
|
25
|
|
|
|
Fixed selling and administrative expenses
|
$550,000
|
|
Fixed manufacturing overhead
|
650,000
|
Tax rate is 40 percent.
Required:
a. Calculate each of the following:
i. Variable production cost per unit
ii. Full absorption cost per unit
iii. Variable costs per unit
iv. Full (total) cost per unit
v. Contribution margin per unit
vi. Gross margin per unit
b. Produce a gross margin income statement that includes taxes and net income.