It was the end of the third quarter for Marigold Industries. There had been some discussion in prior quarters about best practices related to carrying ending inventory of its key DM, acetic acid, for making vinegar. Per established standards, 7.1 ounces of acetic acid at a budgeted price of $0.30 per ounce were needed for each gallon of vinegar (128 ounces). The new production manager wants to follow lean practices and buy only what is needed for production, while the former production manager preferred to keep some inventory on hand for emergencies. For the third quarter, 316,800 ounces of acetic acid were purchased on account and used to make 44,000 gallons of vinegar. The purchase price was $88,704. 4

It was the end of the third quarter for Marigold Industries. There had been some discussion in prior quarters about best practices related to carrying ending inventory of its key DM, acetic acid, for making vinegar. Per established standards, 7.1 ounces of acetic acid at a budgeted price of $0.30 per ounce were needed for each gallon of vinegar (128 ounces). The new production manager wants to follow lean practices and buy only what is needed for production, while the former production manager preferred to keep some inventory on hand for emergencies. For the third quarter, 316,800 ounces of acetic acid were purchased on account and used to make 44,000 gallons of vinegar. The purchase price was $88,704. 4

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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(18 pts) 2. Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, “ said Kim Clark, president of Martell Company. “ Our $18,000 overall manufacturing cost variance is only 1.5 % of the standard $1,200,000 standard cost of products sold during the year. That’s well within the 3 % parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.” The company produces and sells a single product. A standard cost card for the product follows: Standard Cost Card - Per Unit of Product Direct materials, 2 feet at $8.45 ……………… $16.90 Direct labor, 1.4 hours at $8 ………………… 11.20 Variable overhead, 1.4 hours at $2.50 ……….. 3.50 Fixed overhead, 1.4 hours at $6 ……………… 8.40 Standard cost per unit………………… $ 40.00…
6. Person X has managed a downtown store in a major metropolitan city for several years. The firm has ten stores in varying locations. In the past, senior management noticed Person X's work and he has received very good annual evaluations for his management of the store. \\nThis year his store has generated steady growth in sales, but earnings have been deteriorating. After examining the monthly performance report generated by the company budgeting department, he noticed that increasing fixed costs is causing the decrease in earnings. \\nAdministrative corporate costs, primarily fixed costs, are allocated to individual stores each month based on actual sales for that month. Two of these stores are currently growing at a rapid pace, while four other stores are having operating difficulties. \\n\\nRequired:\\nFrom the information presented, what do you think is the cause of Person X's reported decrease in earnings? How can this be corrected?
y It was the end of the third quarter for Marigold Industries. There had been some discussion in prior quarters about best practices. related to carrying ending inventory of its key DM, acetic acid, for making vinegar. Per established standards, 7.1 ounces of acetic acid at a budgeted price of $0.30 per ounce were needed for each gallon of vinegar (128 ounces). The new production manager wants to follow lean practices and buy only what is needed for production, while the former production manager preferred to keep some inventory on hand for emergencies. For the third quarter, 316,800 ounces of acetic acid were purchased on account and used to make 44,000 gallons of vinegar. The purchase price was $88,704. (a1) Determine the DM price and efficiency variances for the third quarter based on the information above. DM price variance $ Your answer is correct. DM efficiency variance $ eTextbook and Media 4 R F V % 5 -T G B $ 6 O Search & 4- 7 YU H J N * 6336 1320 00 8 3 T ( K Favorable…
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity.
Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is $4,076, 100, for work-in-process is $6,888,000, and for finished goods is $2,994,000. This year's cost of goods sold will be about $30,108,000. Assume that there are 52 business weeks per year. a. Express total inventory as weeks of supply. The weeks of supply is weeks. (Enter your response rounded to one decimal place.) 27 **
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Felch Tacos is a drive-thru restaurant in a coastal town with significant seasonal changes in business. The owners are trying to decide whether to remain open during the fourth quarter of the year (October through December) given the reduced business. They estimate that the number of meals sold in the fourth quarter will only be 40 percent of those sold in the third quarter. The number of meals sold in the third quarter was 37,000 at an average price of $7.50. The owners plan to offer a somewhat smaller menu during the fourth quarter and expect the average meal to sell for $6. The variable meal costs and the marketing cost per meal are not expected to change. The fixed meal costs will decline by 10 percent and the administrative costs will decline by 20 percent as the restaurant will be open fewer hours. The following cost information is available for third quarter: Meal costs Food costs (variable) $ 24,600 Labor (variable) 68,700 Other meal costs (variable) 19,000 Fixed…
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company’s performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company’s total fixed costs would be reduced by 20 percent. Segmented income statements appear as follows. Product Original Strawberry Orange Sales $ 65,200 $ 85,600 $ 102,400 Variable costs 44,000 77,200 80,200 Contribution margin $ 21,200 $ 8,400 $ 22,200 Fixed costs allocated to each product line 9,400 12,000 14,200 Operating profit (loss) $ 11,800 $ (3,600 ) $ 8,000 Required: a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is…
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The Fantasy Gifts Company, a maker of Holiday novelties, needs your help immediately. The company's accountant resigned without leaving adequate records or explanations for what she did. In reviewing the records, you find the following information for May: Materials Purchased Materials Used 36,000 units 23,000 units You find a copy of the budget which shows that materials were budgeted at $0.60 per unit. You know that the materials price variance is recorded at the time of purchase and you find some handwritten notes among the accountants work papers, which indicate the following: Materials price variance Materials efficiency variance $ 360 F $ 1,400 F What was the total actual cost of the direct materials purchased during May? Multiple Cholce $13,800 $21,240 $21.600