管理会计作业1

Assignment 1 1 Contribution Format versus Traditional Income Statement Marwick s Pianos Inc purchases pianos from a large manufacturer and sells them at the retail level The pianos cost on the average 125 each from the manufacturer Marwick s Pianos Inc sells the pianos to its customers at an average price of 250 each The selling and administrative costs that the company incurs in a typical month are presented below CostsCost Formula Selling Advertising 800 per month Sales salaries and commissions 1 200 per month plus 10 of sales Delivery of pianos to customers 15 per piano sold Utilities 500 per month Depreciation of sales facilities 750 per month Administrative Executive salaries 2 000 per month Insurance 250 per month Clerical 700 per month plus 5 per piano sold Depreciation of office equipment 400 per month During June Marwick s Pianos Inc sold and delivered 100 pianos Required 1 Prepare an income statement for Marwick s Pianos Inc for June Use the traditional format with costs organized by function 2 Redo 1 above this time using the contribution format with costs organized by behavior Show costs and revenues on both a total and a per unit basis down through contribution margin 3 Refer to the income statement you prepared in 2 above Why might it be misleading to show the fixed costs on a per unit basis 2 Sales Mix Break Even Analysis Margin of Safety Island Novelties Inc of Palau makes two products Hawaiian Fantasy and Tahitian Joy Present revenue cost and sales data for the two products follow Hawaiian Fantasy Tahitian Joy Selling price per unit 20 00 25 00 Variable expenses per unit 14 00 10 00 Number of units sold annually 25 00010 000 Fixed expenses total 270 000 per year The Republic of Palau uses the U S dollar as its currency Required 1 Assuming the sales mix given above do the following a Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole b Compute the break even point in dollars for the company as a whole and the margin of safety in both dollars and percent 2 The company has just developed a new product to be called Samoan Delight Assume that the company could sell 12 000 units at 17 50 each The variable expenses would be 14 00 each The company s fixed expenses would not change a Prepare another contribution format income statement including sales of the Samoan Delight sales of the other two products would not change b Compute the company s new break even point in dollars and the new margin of safety in both dollars and percent 3 The president of the company examines your figures and says There s something strange here Our fixed costs haven t changed and you show greater total contribution margin if we add the new product but you also show our break even point going up With greater contribution margin the break even point should go down not up You ve made a mistake somewhere Explain to the president what has happened 3 Changes in Fixed and Variable Costs Break Even and Target Profit Analysis Neptune Company produces toys and other items for use in beach and resort areas A small inflatable toy has come onto the market that the company is anxious to produce and sell The new toy will sell for 5 50 per unit Enough capacity exists in the company s plant to produce 20 000 units of the toy each month Variable costs to manufacture and sell one unit would be 2 75 and fixed costs associated with the toy would total 70 000 per month The company s Marketing Department predicts that demand for the new toy will exceed the 20 000 units that the company is able to produce Additional manufacturing space can be rented from another company at a fixed cost of 5 000 per month Variable costs in the rented facility would total 3 00 per unit due to somewhat less efficient operations than in the main plant Required 1 Compute the monthly break even point for the new toy in units and in total dollar sales Show all computations in good form 2 How many units must be sold each month to make a monthly profit of 3 000 3 If the sales manager receives a bonus of 5 cents for each unit sold in excess of the break even point how many units must be sold each month to earn a return of 4 9 on the monthly investment in fixed costs 4 Schedule of Cost of Goods Manufactured Income Statement Cost Behavior Selected account balances for the year ended December 31 are provided below for Superior Company Selling and administrative salaries 80 000 Insurance factory 4 500 Utilities factory 20 000 Purchases of raw materials 155 000 Indirect labor 36 000 Direct labor Advertising expense 32 000 Cleaning supplies factory 3 000 Sales commissions 60 000 Rent factory building 100 000 Maintenance factory 25 000 Inventory balances at the beginning and end of the year were as follows Beginning of End of the Yearthe Year Raw materials 13 000 18 000 Work in process 21 500 Finished goods 31 000 The total manufacturing costs for the year were 399 500 the goods available for sale totaled 434 000 and the cost of goods sold totaled 405 600 Required 1 Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company s income statement for the year 2 The company produced the equivalent of 25 000 units during the year Compute the average cost per unit for direct materials used and the average cost per unit for rent on the factory building 3 In the following year the company expects to produce 20 000 units What average cost per unit and total cost would you expect to be incurred for direct materials For rent on the factory building Assume that direct materials is a variable cost and that rent is a fixed cost 4 Explain to the president the reason for any difference in the average cost per unit between 2 and 3 above 5 High Low Method Cost of Goods Manufactured Carlyle Company manufactures a single product The company keeps careful records of manufacturing activities from which the following information has been extracted Level of Activity January LowApril High Number of units produced 7 2009 000 Cost of goods manufactured 225 000 270 000 Work in process inventory beginning 4 500 14 400 Work in process inventory ending 5 400 8 100 Direct materials cost per unit 3 60 3 60 Direct labor cost per unit 7 50 7 50 Manufacturing overhead cost total The company s manufacturing overhead cost consists of both variable and fixed cost elements To have data available for planning management wants to determine how much of the overhead cost is variable with units produced and how much of it is fixed per month Required 1 For both January and April estimate the amount of manufacturing overhead cost added to production The company had no underapplied or overapplied overhead in either month Hint A useful way to proceed might be to construct a schedule of cost of goods manufactured 2 Using the high low method estimate a cost formula for manufacturing overhead Express the variable portion of the formula in terms of a variable rate per unit of product 3 If 8 400 units are produced during a month what would the cost of goods manufactured be Assume that work in process inventories do not change and that overhead cost is neither underapplied nor overapplied for the month 6 High Low Analysis and Predicting Cost Prospero Corporation s total overhead costs at various levels of activity are presented below Month Machine Hours Total Overhead Costs August 8 000 119 400 September12 000 142 800 October 16 000 166 200 November4 000 93 120 Assume that the total overhead costs above consist of utilities supervisory salaries and maintenance The breakdown of these costs at the 4 000 machine hour level of activity is Utilities variable 11 520 Supervisory salaries fixed 15 600 Maintenance mixed 66 000 Total overhead costs 93 120 Prospero Corporation s management wants to break down the maintenance cost into its basic variable and fixed cost elements Required 1 Estimate how much of the 166 200 of overhead cost in October was maintenance cost Hint to do this it may be helpful to first determine how much of the 166 200 consisted of utilities and supervisory salaries Think about the behavior of variable and fixed costs 2 Using the high low method estimate a cost formula for maintenance 3 Express the company s total overhead costs in the linear equation form Y a bX 4 What total overhead costs would you expect to be incurred at an operating activity level of 15 000 machine hours 7 High Low Method Predicting Cost Susumi Corporation of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor hours worked in the factory Total factory overhead costs in Japanese yen denoted by at high and low levels of activity for recent years are given below Level of Activity LowHigh Direct labor hours 5 0006 000 Total factory overhead costs 14 000 000 15 150 000 The factory overhead costs above consist of indirect materials rent and maintenance The company has analyzed these costs at the 5 000 hour level of activity as follows Indirect materials variable 2 500 000 Rent fixed 7 000 000 Maintenance mixed 4 500 000 Total factory overhead costs 14 000 000 To have data available for planning the company wants to break down the maintenance cost into its variable and fixed cost elements Required 1 Estimate how much of the 15 150 000 factory overhead cost at the high level of activity consists of maintenance cost Hint To do this it may be helpful to first determine how much of the 15 150 000 consists of indirect materials and rent Think about the behavior of variable and fixed costs 2 Using the high low method estimate a cost formula for maintenance 3 What total factory overhead costs would you expect the company to incur at an operating level of 5 200 direct labor hours 8 Gold Nest Company of Guandong China is a family owned enterprise that makes birdcages for the South China market A popular pastime among older Chinese men is to take their pet birds on daily excursions to teahouses and public parks where they meet with other bird owners to talk and play mahjong A great deal of attention is lavished on these birds and the birdcages are often elaborately constructed from exotic woods and contain porcelain feeding bowls and silver roosts Gold Nest Company makes a broad range of birdcages that it sells through an extensive network of street vendors who receive commissions on their sales The Chinese currency is the renminbi which is denoted by Rmb All of the company s transactions with customers employees and suppliers are conducted in cash there is no credit The company uses a job order costing system in which overhead is applied to jobs on the basis of direct labor cost At the beginning of the year it was estimated that the total direct labor cost for the year would be Rmb110 000 and the total manufacturing overhead cost would be Rmb275 000 At the beginning of the year the inventory balances were as follows Raw materials Rmb13 000 Work in process Rmb30 000 Finished goods Rmb65 000 During the year the following transactions were completed a Raw materials purchased for cash Rmb150 000 b Raw materials requisitioned for use in production Rmb158 000 Materials costing Rmb135 000 were charged directly to jobs the remaining materials were indirect c Costs for employee services were incurred as follows Direct labor Rmb100 000 Indirect labor Rmb40 000 Sales commissions Rmb22 000 Administrative salaries Rmb35 000 d Rent for the year was Rmb36 000 Rmb30 000 of this amount related to factory operations and the remainder related to selling and administrative activities e Utility costs incurred in the factory Rmb90 000 f Advertising costs incurred Rmb88 000 g Depreciation recorded on equipment Rmb80 000 Rmb66 000 of this amount was on equipment used in factory operations the remaining Rmb14 000 was on equipment used in selling and administrative activities h Manufacturing overhead cost was applied to jobs Rmb i Goods that cost Rmb490 000 to manufacture according to their job cost sheets were completed during the year j Sales for the year totaled Rmb995 000 The total cost to manufacture these goods according to their job cost sheets was Rmb550 000 Required 1 Prepare journal entries to record the transactions for the year 2 Prepare T accounts for inventories Manufacturing Overhead and Cost of Goods Sold Post relevant data from your journal entries to these T accounts Don t forget to enter the beginning balances in your inventory accounts Compute an ending balance in each account 3 Is Manufacturing Overhead underapplied or overapplied for the year Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold 4 Prepare an income statement for the year Do not prepare a schedule of cost of goods manufactured all of the information needed for the income statement is available in the journal entries and T accounts you have prepared 9 Harwood Company is a manufacturer that operates a job order costing system Overhead costs are applied to jobs on the basis of machine hours At the beginning of the year management estimated that the company would incur 380 000 in manufacturing overhead costs and work 47 500 machine hours Required 1 Compute the company s predetermined overhead rate 2 Assume that during the year the company works only 45 000 machine hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts Manufacturing OverheadWork in Process Maintenance 47 000 Direct materials 980 000 Indirect materials 20 000 Direct labor 170 000 Indirect labor 105 000 Overhead Utilities 77 500 Insurance 26 000 Depreciation 91 500 Copy the data in the T accounts above onto your answer sheet Compute the amount of overhead cost that would be applied to Work in Process for the year and make the entry in your T accounts 3 Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T account Prepare a journal entry to close out the balance in this account to Cost of Goods Sold 4 Explain why the manufacturing overhead was underapplied or overapplied for the year 10 Contrasting ABC and Conventional Product Costs Siegel Corporation manufactures a product that is available in both a deluxe and a regular model The company has made the regular model for years the deluxe model was introduced several years ago to tap a new segment of the market Since introduction of the deluxe model the company s profits have steadily declined Sales of the deluxe model have been increasing rapidly Overhead is applied to products on the basis of direct labor hours At the beginning of the current year management estimated that 3 080 000 in overhead costs would be incurred and the company would produce and sell 10 000 units of the deluxe model and 50 000 units of the regular model The deluxe model requires 2 0 hours of direct labor time per unit and the regular model requires 1 0 hours Materials and labor costs per unit are given below DeluxeRegular Direct materials cost per unit 50 00 30 00 Direct labor cost per unit 30 00 15 00 Required 1 Compute the predetermined overhead rate using direct labor hours as the basis for allocating overhead costs to products Compute the unit product cost for one unit of each model 2 An intern suggested that the company use activity based costing to cost its products A team was formed to investigate this idea It came back with the recommendation that four activity cost pools be used These cost pools and their associated activities are listed below Estimated OverheadActivity Activity Cost Pool and Activity MeasureCostDeluxe RegularTotal Purchase orders number of orders 60 0005001 0001 500 Rework requests number of requests 280 0008002 0002 800 Product testing number of tests 240 0007 0003 00010 000 Machine related machine hours 2 500 0004 5008 00012 500 3 080 000 Compute the activity rate i e predetermined overhead rate for each of the activity cost pools 3 Assume that actual activity is as expected for the year Using activity based costing do the following a Determine the total amount of overhead that would be applied to each model for the year b Compute the unit product cost for one unit of each model 4 Can you identify a possible explanation for the company s declining profits If so what is it 11 Cost flows and Unit Product Costs in Activity Based Costing Hunter Corporation uses activity based costing to determine product costs for external financial reports At the beginning of the year management made the following estimates of cost and activity in the company s five activity cost pools Activity Cost PoolActivity Measure Estimated Overhead CostExpected Activity Labor related Direct labor hours 200 00020 000DLHs Production orders Number of orders 110 0005 000orders Material receipts Number of receipts 108 0001 800receipts Relay assembly Number of relays 960 00012 000relays General factory Machine hours 1 260 00070 000MHs Required 1 Compute the activity rate i e predetermined overhead rate for each of the activity cost pools 2 During the year actual overhead cost and activity were recorded as follows Activity Cost Pool Actual Overhead CostActual Activity Labor related 205 00022 000DLHs Production orders 107 0004 500orders Material receipts 112 0002 000receipts Relay assembly 980 00013 000relays General factory 1 300 00073 000MHs Total overhead cost 2 704 000 a Prepare a journal entry to record the incurrence of actual manufacturing overhead cost for the year credit Accounts Payable Post the entry to the company s Manufacturing Overhead T account b Determine the amount of overhead cost applied to production during the year c Prepare a journal entry to record the application of manufacturing overhead cost to Work in Process for the year Post the entry to the company s Manufacturing Overhead T account d Determine the amount of underapplied or overapplied man