Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Textbook Question
Chapter 10, Problem 10.5.1P
Flow of costs and income statement
R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 20Y8. For the first six months of 20Y8, the company spent $1,000,000 on a media campaign for Cyclone Panic and $175,000 in legal costs. The CD production began on April 1, 20Y8. R-Tunes uses a
The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 3,600 CDs per hour.
After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.37 per CD.
The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $30 per record store. In addition, shipping costs average $0.28 per CD.
Total completed production was 500,000 CDs during the year. Other information is as follows:
Instructions
Prepare an annual income statement for the Cyclone Panic CD, including supporting calculations, from the information above.
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Maggie's Music has three product lines: Vinyl Records, CD's, and 8-Track Tapes.Departmental operating income data for the second quarter are as follows:Maggie's MusicIncome StatementFor the Year Ending December 31, 2020
Vinyl
CD
8-Track
Total
Sales
$60,200
$105,400
$38,000
$203,600
Variable Costs
$34,700
$73,500
$24,900
$133,100
Contribution Margin
$25,500
$31,900
$13,100
$70,500
Fixed Costs
$17,800
$19,900
$33,700
$71,400
Operating Income (Loss)
$7,700
$12,000
($20,600)
($900)
1. Managers are concerned by operating losses. They are considering dropping the 8-Track Tape product line. Fixed costs assigned to each department include only fixed costs of that department. Total Fixed cost will not change if the company stops selling 8-Track Tapes.Would you recommend the elimination of 8-Track Tapes? Give supporting computations. 8-Track Tapes
Expected change in Revenue
Expected change in total Variable Costs
Expected change in Operating Income…
Allocating indirect costs and computing income, service company
Pacific, Inc. is a technology consulting firm focused on website development and
integration of Internet business applications. The president of the company expects to
incur $775,000 of indirect costs this year, and she expects her firm to work 5,000 direct
labor hours. Pacific's systems consultants provide direct labor at a rate of $310 per hour.
Clients are billed at 160% of direct labor cost. Last month, Pacific's consultants spent 150
hours on Crockett's engagement.
Requirements
1. Compute Pacific's predetermined overhead allocation rate per direct labor hour.
2. Compute the total cost assigned to the Crockett engagement.
3. Compute the operating income from the Crockett engagement.
Coverall Inc. produces and sells a unique type of case for a standard-size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just opened a new plant to manufacture these cases, and the following cost and revenue data have been provided for the first month of the plant’s operation in the form of a worksheet:
Beginning inventory
$
0
Units produced
38,000
Units sold
24,000
Selling price per unit
$
95
Selling and administrative expenses:
Variable per unit
$
11
Fixed (total)
$
672,000
Manufacturing costs:
Direct materials cost per unit
$
16
Direct labour cost per unit
$
12
Variable manufacturing overhead cost per unit
$
6
Fixed manufacturing overhead cost (total)
$
1,064,000
Since the new case is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the…
Chapter 10 Solutions
Survey of Accounting (Accounting I)
Ch. 10 - Which 01 the following is not considered a cost of...Ch. 10 - Which of the following costs would be included as...Ch. 10 - A company estimated $420,000 of factory overhead...Ch. 10 - If the factory overhead account has a negative...Ch. 10 - When using job order costing for a professional...Ch. 10 - List three differences in how managerial...Ch. 10 - For a company that produces desktop computers,...Ch. 10 - How is product cost information used by managers?Ch. 10 - a.Name two principal types of cost accounting...Ch. 10 - What kind of firm would use a job order cost...
Ch. 10 - Prob. 6CDQCh. 10 - Prob. 7CDQCh. 10 - Describe the Source 01 the data for increasing...Ch. 10 - Prob. 9CDQCh. 10 - a.How is a predetermined factory overhead rate...Ch. 10 - a.What is (1) overapplied factory overhead and (2)...Ch. 10 - At the end of the fiscal year, there s a...Ch. 10 - What is the difference between a product cost and...Ch. 10 - Prob. 14CDQCh. 10 - Prob. 15CDQCh. 10 - How can activity based costing be used in service...Ch. 10 - Classifying costs as materials, labor, or factory...Ch. 10 - Classifying costs as materials, labor, or factory...Ch. 10 - Classifying costs as factory overhead Which of the...Ch. 10 - Classifying costs as product or period costs For...Ch. 10 - Prob. 10.5ECh. 10 - Transactions in a job order cost system Five...Ch. 10 - Cost flow relationships The following information...Ch. 10 - Cost of materials issuances An incomplete...Ch. 10 - Recording issuing of materials Materials issued...Ch. 10 - Amounts for materials Big Timber Furniture Company...Ch. 10 - Prob. 10.11ECh. 10 - Recording factory labor costs The weekly time...Ch. 10 - Recording direct labor and factory overhead...Ch. 10 - Factory overhead rates and account balances...Ch. 10 - Predetermined factory overhead rate Novus Engine...Ch. 10 - Predetermined factory overhead rate Mt Ellis...Ch. 10 - Recording jobs completed The following account...Ch. 10 - Determining manufacturing costs Wagner Printing...Ch. 10 - Financial statements of a manufacturing firm The...Ch. 10 - Job order cost accounting entries for a service...Ch. 10 - Prob. 10.21ECh. 10 - Prob. 10.22ECh. 10 - Just-in-time principles Jupiter Shirt Company...Ch. 10 - Activity-based costing for a hospital Deer Lodge...Ch. 10 - Activity-based costing in an insurance company...Ch. 10 - Classifying costs The following is a list of costs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Job cost sheet Hallmark Furniture Company...Ch. 10 - Job cost sheet Hallmark Furniture Company...Ch. 10 - Analyzing manufacturing cost accounts Summer...Ch. 10 - Analyzing manufacturing cost accounts Summer...Ch. 10 - Flow of costs and income statement R-Tunes Inc. is...Ch. 10 - Flow of costs and income statement R-Tunes Inc. is...Ch. 10 - Unit cost analysis The management of Colfax...Ch. 10 - Prob. 10.2MBACh. 10 - Prob. 10.3MBACh. 10 - Prob. 10.4MBACh. 10 - Prob. 10.1CCh. 10 - Prob. 10.2CCh. 10 - Prob. 10.3.1CCh. 10 - Classifying costs Reboot Inc. provides computer...Ch. 10 - Prob. 10.4.1CCh. 10 - Factory overhead rate Fabricator Inc., a...Ch. 10 - Factory overhead rate Fabricator Inc., a...Ch. 10 - Prob. 10.5CCh. 10 - Just-in-time principles Warm Space Inc....
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