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1. Allocating activity cost pools to products Burgandy Corporation makes plastic and wooden picture frames. The company has assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows: $67,000 to power costs, and $40,000 to production set-up costs. Additional monthly data are provided below: Sales revenue Direct materials. Direct labor. Machine hours... Production runs. Units produced and sold. Plastic Wooden Frames Frames $254,000 $179,000 $101,000 $38,360 $53,360 $92,720 107,420 7,580 65 35 59,000 29,000 Power costs are allocated to products using machine hours as an activity base. Set-up costs are allocated to products based on the number of production runs each product line requires. (a) Allocate manufacturing overhead from the activity cost pools to each product line. (b) Compare the total per-unit cost of manufacturing plastic frames and wooden frames. (c) On a per-unit basis, which product line appears to be most profitable?

1. Allocating activity cost pools to products Burgandy Corporation makes plastic and wooden picture frames. The company has assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows: $67,000 to power costs, and $40,000 to production set-up costs. Additional monthly data are provided below: Sales revenue Direct materials. Direct labor. Machine hours... Production runs. Units produced and sold. Plastic Wooden Frames Frames $254,000 $179,000 $101,000 $38,360 $53,360 $92,720 107,420 7,580 65 35 59,000 29,000 Power costs are allocated to products using machine hours as an activity base. Set-up costs are allocated to products based on the number of production runs each product line requires. (a) Allocate manufacturing overhead from the activity cost pools to each product line. (b) Compare the total per-unit cost of manufacturing plastic frames and wooden frames. (c) On a per-unit basis, which product line appears to be most profitable?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hi teacher, please help to write down the answers of the attached 10 questions, thanks.

1. Allocating activity cost pools to products Burgandy Corporation makes plastic and wooden picture frames. The company has assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows: $67,000 to power costs, and $40,000 to production set-up costs. Additional monthly data are provided below: Sales revenue Direct materials. Direct labor... Machine hours.. Production runs Units produced and sold. 2. Power costs are allocated to products using machine hours as an activity base. Set-up costs are allocated to products based on the number of production runs each product line requires. (a) Allocate manufacturing overhead from the activity cost pools to each product line. (b) Compare the total per-unit cost of manufacturing plastic frames and wooden frames. (c) On a per-unit basis, which product line appears to be most profitable? 3. Multiple product companies Cat food Dog food. Process costing with equivalent units and beginning inventory The records of Westminster Manufacturing Company for the month of May show the following costs in Department A: Beginning Inventory Direct Materials Direct Labor Overhead (150% of Direct Labor Cost) Total $ Pet Park International sells cat food and dog food. Its monthly fixed costs average $620,000. Cat food sales represent 80% of the company's total revenue. Dog food sales constitute the remaining 20%. The company has provided the following information expressed on a per-case basis: The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units were completed and transferred out during May, and 20,000 units remained in the work in process inventory. The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead. Compute the following: (a) Direct materials cost per equivalent unit: $ (b) Equivalent units of production for direct labor and overhead: (c) Total cost of 100,000 units completed: $ (d) Total cost of 20,000 units in process at the end of the month: 4. Incremental analysis - accepting a special order Sales Variable Costs (a) The total monthly sales revenue required to break-even is $ (Rounded) (b) The total monthly sales revenue required to earn an operating income of $135,000 is $_ departments Departments responsibility (c) The company's margin of safety at a monthly sales level of $2,500,000 is $ Common Income from (d) If monthly fixed costs increase by $10,000, the break-even point, expressed in sales dollars, will increase to $ Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. month at Direct labor Direct Materials Variable overhead Total fixed overhead (a) The average cost per unit at the 4,000-unit-per-month production level is $_ per unit. (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is Harding is considering an month from January month. At the same while keeping costs steady. Required: 5. Harding Company expected sales to be 50,000 units in February, 45,000 in March, and 55,000 units in April. Each unit sells for $18.00 each. The following costs pertain to each unit: 6. Using a responsibility income statement Contribution margin Fixed costs traceable to fixed costs margins operations On the basis of operations that (a) Spending Equipment (b) Closing the Department Department traceable to Shown below is the current monthly income statement of Metro Video, by profit centers: (A.) What will operating income be in each of the three months before the advertising campaign? (B.) If Harding goes ahead with the advertising campaign, how much would operating income increase or decrease each month? Would you advise them to go ahead with the campaign? Sales Dollars $560,000 (268,800) $291,200 Metro (67,200) $224.000 (61,600) $162,400 Income by Profit Centers For the Month Ended April 30, 20 $5,000 per month Department Sales. Variable expenses Traceable fixed costs. Average total Video Income Capital Turnover ROI Estimated Estimated Estimated due in METRO VIDEO Statement to March and time Harding 9.Capital budgeting % 100 (48) 7. Responsibility income statement (a) Contribution margin: (b) Contribution margin (c) Responsibility (d) Increase in from a 10% increase Mason for each proposal: assets of the branch Dollars $280,000 (198,800) 52 $ 81,200 (12) (25.200) 40 29 Sales Cost of Sales Operating Expenses Operating Earnings Average Invested Capital Minimum Residual $5.00 $3.00 $1.75 $45,000 a month Acceptable Return Initial investment cost useful life... this information, compute the increase in monthly income from may be expected to result from each of the following actions: in advertising is expected to increase sales in the by 35%. $_ Equipment Sales Department to expand is expected to increase by $105,000 per the Video Rentals margin: $_ Expenses Depreciation annual responsibility Incremental revenue.. Incremental advertising campaign which will cost $15,000 per is expected to increase sales by 8% a will reduce sales prices to $17.00 per unit Classico's Pizza, a chain of pizza parlors, views investment center. The local branch reported current year: expenses: Equipment Compute the answers for items A-D. other than $56,000 salvage value. annual net income. All revenue and cash. Compute month. This action also Department by $40,000 $ ratio: Incremental net income.. for (a) Annual net cash flow: (b) Payback period (in years): (c) Average investment: (d) Return on average investment: present value: (e) Net in sales volume: $ Segments (09) Sales % Dollars 100 $280,000 71) (70,000) 29 $210,000 20 and depreciation. (straight-line basis). $254,000 $179,000 $101,000 $38,360 $92,720 7,580 35 29,000 Compute the following measures for this investment center: Plastic Wooden Frames Frames Selling Contribution Price Margin $16 $9 $40 $30 $1 5 at $1 due in at 12%.. years, discounted 6 years, discounted $1 received annually years, discounted $1 received annually for 5 at 6 years, discounted at the $53,360 107,420 12%... allowing the revenue of $ 756,000 $ 315,000 $ 252,000 A expenses other the following $1,890,000 12% B с D $168,000 8. The following information is available for the Hancock Company. 65 59,000 10. Flynn Corporation is debating production system. The system year life with a salvage value of $70,000. The the new production system are as follows: Video Rentals (42,000) (15) _% the is expected Co. is evaluating two alternative investment proposals. Below are data 12%.. 12%.. each per month. $_ The following information was taken from present value tables: Proposal A $ 120,750 405,000 535,500 803,250 $1,864,500 Video the margin that would be expected to result % 100 (25) 75 $ following $84,000 the following for each proposal (round payback year and round return on average investment 5 years $ 4,000 $ 8,200 will cost $450,000, All revenue and expenses other than depreciation will be received and paid in cash. The company uses a discount rate of 12% in evaluating all capital investments. Compute tenth of a of a percent): 60 branch location as an results the whether to purchase Rentals Video Rentals to increase fixed costs Proposal A $ (a) Annual net cash flow: $ (b) Payback period: (c) Return on average investment: (d) Net present value, discounted at an due in 10 years, discounted at 6%, is 0.558; present annually for 10 years, discounted at 6%, is 7.360): $_ $3,600,000 $2,970,000 $270,000 $1,440,000 a and estimated (f) Based on your analysis, which proposal appears to be the best investment? than for this proposal: (rounded) % for Proposal B $96,000 6 years -0- $ 8,000 Present Value .567 .507 3.605 4.111 period to the nearest to the nearest tenth $ $85,000 38,000 Proposal B $ $ new computerized have % an estimated 10- operating results from $180,000 depreciation will be received and paid in (123,000) $57,000 annual rate of 6% (present value of $1 of $1 received value
Transcribed Image Text:1. Allocating activity cost pools to products Burgandy Corporation makes plastic and wooden picture frames. The company has assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows: $67,000 to power costs, and $40,000 to production set-up costs. Additional monthly data are provided below: Sales revenue Direct materials. Direct labor... Machine hours.. Production runs Units produced and sold. 2. Power costs are allocated to products using machine hours as an activity base. Set-up costs are allocated to products based on the number of production runs each product line requires. (a) Allocate manufacturing overhead from the activity cost pools to each product line. (b) Compare the total per-unit cost of manufacturing plastic frames and wooden frames. (c) On a per-unit basis, which product line appears to be most profitable? 3. Multiple product companies Cat food Dog food. Process costing with equivalent units and beginning inventory The records of Westminster Manufacturing Company for the month of May show the following costs in Department A: Beginning Inventory Direct Materials Direct Labor Overhead (150% of Direct Labor Cost) Total $ Pet Park International sells cat food and dog food. Its monthly fixed costs average $620,000. Cat food sales represent 80% of the company's total revenue. Dog food sales constitute the remaining 20%. The company has provided the following information expressed on a per-case basis: The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units were completed and transferred out during May, and 20,000 units remained in the work in process inventory. The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead. Compute the following: (a) Direct materials cost per equivalent unit: $ (b) Equivalent units of production for direct labor and overhead: (c) Total cost of 100,000 units completed: $ (d) Total cost of 20,000 units in process at the end of the month: 4. Incremental analysis - accepting a special order Sales Variable Costs (a) The total monthly sales revenue required to break-even is $ (Rounded) (b) The total monthly sales revenue required to earn an operating income of $135,000 is $_ departments Departments responsibility (c) The company's margin of safety at a monthly sales level of $2,500,000 is $ Common Income from (d) If monthly fixed costs increase by $10,000, the break-even point, expressed in sales dollars, will increase to $ Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. month at Direct labor Direct Materials Variable overhead Total fixed overhead (a) The average cost per unit at the 4,000-unit-per-month production level is $_ per unit. (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is Harding is considering an month from January month. At the same while keeping costs steady. Required: 5. Harding Company expected sales to be 50,000 units in February, 45,000 in March, and 55,000 units in April. Each unit sells for $18.00 each. The following costs pertain to each unit: 6. Using a responsibility income statement Contribution margin Fixed costs traceable to fixed costs margins operations On the basis of operations that (a) Spending Equipment (b) Closing the Department Department traceable to Shown below is the current monthly income statement of Metro Video, by profit centers: (A.) What will operating income be in each of the three months before the advertising campaign? (B.) If Harding goes ahead with the advertising campaign, how much would operating income increase or decrease each month? Would you advise them to go ahead with the campaign? Sales Dollars $560,000 (268,800) $291,200 Metro (67,200) $224.000 (61,600) $162,400 Income by Profit Centers For the Month Ended April 30, 20 $5,000 per month Department Sales. Variable expenses Traceable fixed costs. Average total Video Income Capital Turnover ROI Estimated Estimated Estimated due in METRO VIDEO Statement to March and time Harding 9.Capital budgeting % 100 (48) 7. Responsibility income statement (a) Contribution margin: (b) Contribution margin (c) Responsibility (d) Increase in from a 10% increase Mason for each proposal: assets of the branch Dollars $280,000 (198,800) 52 $ 81,200 (12) (25.200) 40 29 Sales Cost of Sales Operating Expenses Operating Earnings Average Invested Capital Minimum Residual $5.00 $3.00 $1.75 $45,000 a month Acceptable Return Initial investment cost useful life... this information, compute the increase in monthly income from may be expected to result from each of the following actions: in advertising is expected to increase sales in the by 35%. $_ Equipment Sales Department to expand is expected to increase by $105,000 per the Video Rentals margin: $_ Expenses Depreciation annual responsibility Incremental revenue.. Incremental advertising campaign which will cost $15,000 per is expected to increase sales by 8% a will reduce sales prices to $17.00 per unit Classico's Pizza, a chain of pizza parlors, views investment center. The local branch reported current year: expenses: Equipment Compute the answers for items A-D. other than $56,000 salvage value. annual net income. All revenue and cash. Compute month. This action also Department by $40,000 $ ratio: Incremental net income.. for (a) Annual net cash flow: (b) Payback period (in years): (c) Average investment: (d) Return on average investment: present value: (e) Net in sales volume: $ Segments (09) Sales % Dollars 100 $280,000 71) (70,000) 29 $210,000 20 and depreciation. (straight-line basis). $254,000 $179,000 $101,000 $38,360 $92,720 7,580 35 29,000 Compute the following measures for this investment center: Plastic Wooden Frames Frames Selling Contribution Price Margin $16 $9 $40 $30 $1 5 at $1 due in at 12%.. years, discounted 6 years, discounted $1 received annually years, discounted $1 received annually for 5 at 6 years, discounted at the $53,360 107,420 12%... allowing the revenue of $ 756,000 $ 315,000 $ 252,000 A expenses other the following $1,890,000 12% B с D $168,000 8. The following information is available for the Hancock Company. 65 59,000 10. Flynn Corporation is debating production system. The system year life with a salvage value of $70,000. The the new production system are as follows: Video Rentals (42,000) (15) _% the is expected Co. is evaluating two alternative investment proposals. Below are data 12%.. 12%.. each per month. $_ The following information was taken from present value tables: Proposal A $ 120,750 405,000 535,500 803,250 $1,864,500 Video the margin that would be expected to result % 100 (25) 75 $ following $84,000 the following for each proposal (round payback year and round return on average investment 5 years $ 4,000 $ 8,200 will cost $450,000, All revenue and expenses other than depreciation will be received and paid in cash. The company uses a discount rate of 12% in evaluating all capital investments. Compute tenth of a of a percent): 60 branch location as an results the whether to purchase Rentals Video Rentals to increase fixed costs Proposal A $ (a) Annual net cash flow: $ (b) Payback period: (c) Return on average investment: (d) Net present value, discounted at an due in 10 years, discounted at 6%, is 0.558; present annually for 10 years, discounted at 6%, is 7.360): $_ $3,600,000 $2,970,000 $270,000 $1,440,000 a and estimated (f) Based on your analysis, which proposal appears to be the best investment? than for this proposal: (rounded) % for Proposal B $96,000 6 years -0- $ 8,000 Present Value .567 .507 3.605 4.111 period to the nearest to the nearest tenth $ $85,000 38,000 Proposal B $ $ new computerized have % an estimated 10- operating results from $180,000 depreciation will be received and paid in (123,000) $57,000 annual rate of 6% (present value of $1 of $1 received value
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