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## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

problem 1: The Braggs & Struttin' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units.

Sales                                          \$1,600,000.
Less: COGS                                 1,120,000.
Gross margin:                               \$480,000.
Less: Operating expenses               100,000.
Income:                                      \$380,000.

Cost of goods sold consists of \$810,000 of variable costs and \$310,000 of fixed costs. Operating expenses consists of \$30,000 of variable costs and \$70,000 of fixed costs.

Required:

A) find out the break-even point in units and sales dollars.

B) find out the safety margin (in dollars).

C) Braggs & Struttin' received an order for 6,000 units at a price of \$25.00. There will be no increase in fixed costs, but variable costs will be reduced by \$0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order, assuming there is no opportunity costs.

problem 2: Webster, Inc. began operations at the start of the current year, having a production target of 60,000 units. Actual production totaled 60,000 units, and the company sold 95% of its manufacturing output at \$50 per unit. The following costs were incurred:

Manufacturing:
Direct materials used                          \$240,000
Direct labor                                      480,000

Variable                                           180,000
Fixed                                               630,000

Required:

A) Supposing the use of variable costing, compute the cost of Webster's ending finished-goods inventory.

B) Compute the company's contribution margin. Would Webster disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?

C) Supposing the use of absorption costing, how much fixed selling and administrative cost would Webster include in the ending finished-goods inventory?

D) Compute the company's gross margin.

problem 3: Jackson Corporation uses a standard cost system, applying manufacturing overhead on the basis of machine hours. The company's overhead standards per unit are shown below.

Variable overhead: 4 hours at \$9 per hour.
Fixed overhead: 4 hours at \$6* per hour.
Based on planned monthly activity of 120,000 machine hours.

Actual data for May were:

Number of units produced: 29,000.
Number of machine hours worked: 125,000.

Required:

A) Compute the spending and efficiency variances for variable overhead.

B) Compute the budget and volume variances for fixed overhead.

Accounting Basics, Accounting

• Category:- Accounting Basics
• Reference No.:- M91393

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