With the following transactions, determine the Cost of Good Sold for a Manufacturing plant. A $7000 loan was obtained and deposited in cash. Another loan was obtained for the purchase of new equipment for the amount of 7473 with 5 years of life. The equipment is depreciated for the first year. Direct Labor is paid for the amount of 482. Packaging employees are paid for 853. 200 materials were invoiced at 4 each for the inventory. 150 materials were used in production. The 150 units were sold at $4.00 each and they are invoiced. Sales and distribution expenses for $1000 were paid.
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- St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?With the following transactions, determine the Cost of Good Sold for a Manufacturing plant. 1. A $7000 loan was obtained and deposited in cash. 2. Another loan was obtained for the purchase of new equipment for the amount of 5539 with 5 years of life. 3. The equipment is depreciated for the first year. 4. Direct Labor is paid for the amount of 322. 5. Packaging employees are paid for 997. 6. 200 materials were invoiced at 2 each for the inventory. 7. 150 materials were used in production. 8. The 150 units were sold at $4.00 each and they are invoiced. 9. Sales and distribution expenses for $1000 were paid.
- ABC company pays $262,500 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment:1.During the second year of the equipment’s life, $21,000 cash is paid for for a new component expected to increase the equipment’s productivity by 10% a year.2. During the 3rd year ,$5,250 cash is paid for normal repairs necessary to keep the equipment in good working order.3. During the 4th year, $13,950 is paid for repairs expected to increase the useful life of the equipment from 4 to 5 years.Oki Company pays $294,100 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $24,600 cash for a new component that increased the equipment's productivity. 2. Paid $6,150 cash for minor repairs necessary to keep the equipment working well. 3. Paid $17,550 cash for significant repairs to increase the useful life of the equipment from four to seven years. View transaction list Journal entry worksheet < A B C Record the betterment cost of $24,600 paid in cash. Note: Enter debits before credits. Transaction General Journal Debit Credit 7On January 2, Gannon Co. purchases and installs a new machine costing $312,000 with a five-year life and an estimated $28,000 salvage value. Management estimates the machine will produce 1,136,000 units of product during its life. Actual production of units is as follows: year 1: 245,600; year 2: 230,400; year 3: 227,000; year 4: 232,600; and year 5: 211,200. The total number of units produced by the end of year 5 exceeds the original estimate – this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) Compute depreciation for each year (and total depreciation for all years combined) for the machine under straight-line and units-of-production depreciation methods. You will use the form for Problem 9 and then upload the form to this problem. Note: You do not have to use the area for calculating the units of production. This is just a work area. If you do use it, make sure that your final answers are put into the table with…
- Oki Company pays $283,500 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $20,250 cash for a new component that increased the equipment's productivity. 2. Paid $5,063 cash for minor repairs necessary to keep the equipment working well. 3. Paid $13,200 cash for significant repairs to increase the useful life of the equipment from four to seven years. View transaction list Journal entry worksheet > Record the betterment cost of $20,250 paid in cash. Note: Enter debits before credits. Debit Credit Transaction General Journal 1 MacBook AirOkl Company pays $283,000 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $14,150 cash for a new component that increased the equipment's productivity. 2. Paid $3,538 cash for minor repairs necessary to keep the equipment working well. 3. Paid $7,100 cash for significant repairs to increase the useful life of the equipment from four View transaction list Journal entry worksheet seven years. Journal entry worksheet Journal entry worksheetOki Company pays $285,200 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $20,000 cash for a new component that increased the equipment's productivity. 2. Paid $5,000 cash for minor repairs necessary to keep the equipment working well. 3. Paid $12,950 cash for significant repairs to increase the useful life of the equipment from four to seven years. View transaction list Journal entry worksheet в с A Record the betterment cost of $20,000 paid in cash. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View generaOki Company pays $264,000 for equipment expected to last four years and have a $29,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. Paid $22,000 cash for a new component that increased the equipment’s productivity. 2. Paid $6,250 cash for minor repairs necessary to keep the equipment working well. 3. Paid $14,870 cash for significant repairs to increase the useful life of the equipment from four to seven years.On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4, and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required: Prepare a table Units-of-production: Year Number of Units Depreciation per Unit Depreciation Expense 1 2 3 4 5 Totals Double-declining-balance: Year Beginning Book Value Annual Depreciation (40% of book value) Accumulated Depreciation at Year-End Ending Book Value ($324,000 Cost less Accumulated Depreciation) 1 2…Oki Company pays $294,500 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. Paid $19,350 cash for a new component that increased the equipment’s productivity. Paid $4,838 cash for minor repairs necessary to keep the equipment working well. Paid $12,300 cash for significant repairs to increase the useful life of the equipment from four to seven years. Note: Enter debits before credits. Transaction General Journal Debit Credit 1SEE MORE QUESTIONS