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1. Lindex Company uses a process costing system. The following data are available for one department for October: Percent Completed Units Materials Conversion Work in process, October 1 50,000 90% 60% Work in process, October 31 40,000 67% 53% The department started 399,000 units into production during the month and transferred 409,000 completed units to the next department. Required: Compute the equivalent units of production for October, assuming that the company uses the weighted- average method of accounting for units and costs. Materials Conversion Equivalent units of production 2. Solex Company produces a high-quality insulation material that passes through two production processes. Data for June for the first process follow: Completion Completion with Respect with Respect Units to Materials to Conversion Work in process inventory, June 1 71,000 65% 30% Work in process inventory, June 30 51,000 40% 20% Materials cost in work in process inventory, June 1 $ 56,700 Conversion cost in work in process inventory, June 1 $ 16,800 Units started into production 260,600 Units transferred to the next process 280,600 Materials cost added during June $ 385,770 Conversion cost added during June $ 242,012 Required: 1. Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for June for the first process. Materials Conversion Equivalent units of production 2. Compute the costs per equivalent unit for June for the first process. (Round your answers to 2 decimal places.) Materials Conversion Cost per equivalent unit $ $ 3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in June. (Round your intermediate calculations to 2 decimal places. Round your final answer to whole dollar amount.) Total Cost of ending work in process inventory $ Cost of units transferred to the next process $ 3. Data concerning a recent period's activity in the Prep Department, the first processing department in a company that uses process costing, appear below: Materials Conversion Equivalent units of production in ending work in process 500 240 Cost per equivalent unit $31.84 $9.25 A total of 2,000 units were completed and transferred to the next processing department during the period. Required: Compute the cost of the units transferred to the next department during the period and the cost of ending work in process inventory. (Round your final answers to the nearest dollar amount.) Materials Conversion Total Cost of units transferred out $ $ $ Cost of ending work in process inventory $ $ $ Data for Herron Corporation are shown below: Percent Per Unit of Sales Selling price $70 100% Variable expenses 49 70% Contribution margin $ 21 30% Fixed expenses are $75,000 per month and the company is selling 4,200 units per month. (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) 4. Required: 1a. The marketing manager believes that an $8,200 increase in the monthly advertising budget would increase monthly sales by $15,400. Calculate the increase or decrease in net operating income. Net operating income (Click to select) : by $ 1b. Should the advertising budget be increased ? No Yes 5. 2a. Management is considering using higher-quality components that would increase the variable cost by $4 per unit. The marketing manager believes that the higher-quality product would increase sales by 19% per month. Calculate the change in total contribution margin. Total contribution margin (Click to select) $ by $ 2b. Should the higher-quality components be used? Yes No 6. Required: 1. Using the equation method, determine the unit sales that are required to earn a target profit of $8,836. Unit sales 7. 2. Using the formula method, determine the dollar sales that are required to earn a target profit of $10,348. Dollar sales $ 8. Maxson Products distributes a single product, a woven basket whose selling price is $16 and whose variable cost is $13.12 per unit. The company's monthly fixed expense is $5,760. Required: 1. Compute for the company's break-even point in unit sales using the equation method. Break-even point in unit sales baskets 2. Compute for the company's break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places.) CM ratio Break-even point in dollar sales $ 3. Compute for the company's break-even point in unit sales using the formula method. Break-even point in unit sales baskets 4. Compute for the company's break-even point in sales dollars using formula method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places.) CM ratio Break-even point in dollar sales $ High Tension Transformers, Inc., manufactures heavy-duty transformers for electrical switching stations. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government The company has provided the following data: Year 1 Year 2 Year 3 Inventories: Beginning (units) 213 157 186 Ending (units) 157 186 234 Variable costing net operating income $294,000 $272,900 $257,800 The company's fixed manufacturing overhead per unit was constant at $550 for all three years. 9. Required: 1. Determine each year's absorption costing net operating income. (Amounts to be deducted should be indicated with a minus sign.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income $ $ $ Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing Absorption costing net operating income $ $ $ 10. 2. In Year 4, the company's variable costing net operating income was $249,600 and its absorption costing net operating income was $266,600. a. Did inventories increase or decrease during Year 4? Increased Decreased b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Fixed manufacturing overhead cost (Click to select) $ inventory during Year 4 $ 11. Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below: Sales $ 1,536,000 Variable expenses 595,560 Contribution margin 940,440 Fixed expenses 1,034,000 Net operating loss $ (93,560) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following data: Geographic Market South Central North Sales $356,000 $630,000 $550,000 Variable expenses as a percentage of sales 46% 31% 43% Traceable fixed expenses $261,000 $335,000 $194,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as desired by the president. (Input all amounts as positive values except losses which should be indicated by a minus sign.)

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