ACC class 5

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Toronto Metropolitan University *

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406

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Accounting

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Apr 3, 2024

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- Indirect materials belong to overhead Problem 29 chapter 5 POR (predetermined overhead rate) = 472000 / 8000 = $59 Job 1 job 2 Direct materials 4500 8600 Direct labor 1000 2000 Applied overhead 59x200hours 59x200hours Total cost 17300 22400 +markup(30%) 5190 6720 Price 22490 29120 Test review Chatter 1 & 2 ruer Company manufactures tables. The company expects to manufacture and sell 40,000 tables in 20 2 2 . The regular selling price of the product is $30. Projected costs for 40,000 tables are as follows: Direct materials $ 100,000 Direct labour 40,000 Variable manufacturing overhead 60,000 Fixed manufacturing overhead 75,000* Fixed selling and administrative costs 45,000 Variable selling and administrative costs 80,000 *Total fixed manufacturing overhead increases to $100,000 for production levels over 60,000 units.

REQUIRED 1) Determine total variable manufacturing costs to produce 50,000 units. = (DM per unit + DL per unit + VOH per unit) x 50,000 units = (2.5 + 1 + 1.5)(50,000 units) = $250,000 2) Determine total manufacturing costs to produce 50,000 units. TVMC +TFMC = TMC 250,000 + 75,000 = 325,000 Confiable Muffler specializes in replacing mufflers. In April, purchases of materials equaled $200,000, the beginning inventory of material was $26,300, and the ending inventory of material was $14,250. Payments to direct labour during the month totaled $53,000. Overhead incurred was $120,000. Confiable Muffler also spent $15,000 on advertising and $3,000 on administration during the month. Revenues for the month were $500,000. REQUIRED: 1. What was the cost of materials used during April? (beginning material inventory) (+materials purchased) (= materials available for use) (- ending material inventory) (materials used) 26,300 + 200,000 = 226,300 226,300 - 14250 = 212050 2. What was the prime cost for April? Prime cost = DM + DL = $212050 + 53000 = 265050 3. What was the conversion cost for April? Conversion cost = DL + OH = 53000 + 120000 = 173000 4. What was the total service cost for April? Total service cost = DM + DL + OH = 212050 + 53000 + 120000 = 385050

5. What was the income for April? Sales 500,000 - service cost 385050 Gross margin 114950 - Operating expenses 18,000 Income 96950 Chapter 3 Patter Inc. believes their electricity costs are affected by the number of machine hours worked. Machine hours and electricity costs for 2021 were as follows: Month Machine Hours(X) Electricity Costs(Y) January 300 $ 6,000 February 240(XL) 4,250(YL) March 580 7,750 April 860 9,750 May 1040 11,250 June 940 11,000 July 1140 14,000 August 900 12,250 September 1240 (XH) 14,250(YH) October 740 7,750 November 480 7,000 December 380 6,500 REQUIRED: a)Using the high-low method, develop an estimate of variable electricity costs per machine hour. V = 14250 - 4250 = $10 per mhour 1240 - 240 B )Using the high-low method, develop an estimate of fixed electricity costs per month. F = y high - (V) (X high) = 14250 - (10)(1240) = 1850 c) Using the high-low method, develop a cost formula for monthly electricity costs. d) Estimate electricity costs for a month in which 500 machine hours are worked.

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Land Industries is considering a new product line. Expected variable unit costs are as follows: direct materials, $18.50; direct labour, $4.25; production supplies, $1.10; selling costs, $2.80; and other, $1.95. The following are annual fixed costs: depreciation, building and equipment, $36,000; advertising, $45,000; and other, $11,400. Land Industries plans to sell the product for $55.00. REQUIRED: (a)Compute the number of products the company must sell to(i) break even and (ii) earn a profit of $70,224. (i) BEP in unit = fixed cost / con margin per unit how to find con margin(price - VC per unit) (55 - 28.6)= 26.4 = 92,400 / 26.4 = 3,500 units (ii) target sales in units = fixed cost + income / con margin per unit = 92,400 + 70224 / 55 - 28.6 = 6160 units (b) Using the same data, compute the number of products that must be sold to earn a target profit of $139,520 if advertising costs rise by $40,000. Target sales in units = fixed cost + income / con margin per unit = (92,400 + 40,000) + 139,520 / 55 - 28.6 = 10,300 units (c)Assuming the original information and sales of 10,000 units, compute the new selling price the company must use to make a profit of $131,600. Target sales in units = fixed cost + income / con margin per unit = 92,400 + 131,600 / price - 28.6 = 92,400 + 131,600 / 51 - 28.6 = 10,000 units

Polaris, Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed costs equal $146,000. Each door handle sells for $12 and has variable costs of $9; each trim kit sells for $8 and has variable costs of $5. REQUIRED: (a)What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? Con margin per unit H k 12 - 9 = 3 8 - 5 = 3 Con margin ratio 3 / 12 = 0.25 3 / 8 = 0.375 (b) If Polaris sells 20,000 door handles and 40,000 trim kits, what is the net income? Total con margin - fixed cost = income (20,000 + 3) + (40,000 + 3) = 180,000 - 146,000 = 34,000 (c) Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by $35,000 and 70,000 trim kits can be produced and sold. Is this a good idea if the company would like to maximize income?

1) POR = $6 per DL hour 2) Overhead variance = actual overhead applied overhead = 290,000 $6 x 45000 = 270,000 Under applied 3) COGS $20, 000 Overhead $20,000 4) COGS 16,000 WIP 1000 FGI 3000

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