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ACC 560 ENTIRE COURSE

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ACC 560 ENTIRE COURSE

 

ACC 560 Week 1 Homework Chapter 1

 

E1-5

E1-5 Gala Company is a manufacturer of laptop computers. Various costs and expenses associated with its operations are as follows.

  1. Property taxes on the factory building.
  2. Production superintendents’ salaries.
  3. Memory boards and chips used in assembling computers.
  4. Depreciation on the factory equipment.
  5. Salaries for assembly-line quality control inspectors.
  6. Sales commissions paid to sell laptop computers.
  7. Electrical components used in assembling computers.
  8. Wages of workers assembling laptop computers.
  9. Soldering materials used on factory assembly lines.
  10. Salaries for the night security guards for the factory building.

The company intends to classify these costs and expenses into the following categories:

(a) Direct materials,

(b) Direct labor,

(c) Manufacturing overhead,

(d) Period costs.

List the items (1) through (10). For each item, indicate the cost category to which it belongs.

E1-9

E1-9 An incomplete cost of goods manufactured schedule is presented below.

Complete the cost of goods manufactured schedule for Hobbit Company.

 E1-10

E1-10 Manufacturing cost data for Copa Company arc presented below.

Case A             Case B             Case C

Direct materials used               $ (a)    $68,400           $130,000

Direct labor                              57,000 86,000                        (g)

Manufacturing overhead          46,500 81,600                        102,000

Total manufacturing costs        195,650 (d)                 253,700

 Work in process 1/1/17           (b)       16,500                        (h)

Total cost of work in proems   221,500 (c)                 337,000

Work in process 12/31/17        (c)        11,000             70,000

Cost of goods manufactured    185,275 (f)                  (i)

Instructions

Indicate the missing amount for each letter (a) through (i).

E1-2A

E1, 2A Bell Company, a manufacturer of audio systems, started its production in October, 2018. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory.

 Raw materials cast for an audio system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amount to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.

 Factory janitorial casts arc $1,300 monthly. Advertising costs for the audio system will be $9,500 per month. The factory building depreciation expense is $7,800 per year. Property taxes on the factory building will be $9,000 per year.

Instructions

 (a) Prepare an answer sheet with the following column headings. Assuming that Bell manufactures, on average, 1,500 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.

(b) Compute the cost to produce one audio system.

 

 

ACC 560 Week 2 Homework Chapter 2 and Chapter 3

 

Chapter 2: Job Order Costing and Chapter 3: Process Costing

 

E2-5

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $300,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Instructions

(a) Compute the manufacturing overhead rate for the year

(b) What is the amount of under- or over applied overhead at December 31?

 (c) Prepare the adjusting entry to assign the under- or over applied overhead for the year to cost of goods sold.

E2-7

Crawford Corporation incurred the following transactions.

  1. purchased raw materials on account $46,300.
  2. Raw materials of $36.000 were requisitioned to the factory. An analysis of the materials
  3. Factory labor costs incurred were $59,900, of which $51,000 pertained to factory wages payable and $8,900 pertained to employer payroll taxes payable.
  4. Time tickets indicated that $54,000 was direct labor and $5,900 was indirect labor.
  5. Manufacturing overhead costs incurred on account were $80,500.
  6. Depreciation on the company's office building was $8,100.
  7. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
  8. Goods costing $88,000 were completed and transferred to finished goods.
  9. Finished goods costing $75,000 to manufacture were sold on account for $103,000.

Instructions

Journalize the transactions.

E2-13

Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.

Estimated overhead $960,000 Actual overhead $982,800 Estimated decorator hours 40,000 Actual decorator hours 40,500

The company uses Operating Overhead in place of Manufacturing Overhead.

Instructions

 (a) Compute the predetermined overhead rate.

(b) Prepare the entry to apply the overhead for the year.

 (c) Determine whether the overhead was under- or over applied and by how much.

P2-4A

Agassi Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct lab(); cost in Department D, direct labor hours in Department E, and machine hours in Department K. In establishing the predetermined overhead rates for 2018, the following estimates were made for the year.

During January, the job cost sheets showed the following costs and production data.

Instructions

 (a) Compute the predetermined overhead rate for each department.

(b) Compute the total manufacturing costs assigned to jobs in January in each department.

 (c) Compute the under- or over applied overhead for each department at January 31.

E3-3

the ledger of American Company has the following work in process account.

Production records show that there were 400 units in the beginning inventory, 30% complete, 1,600 units started, and 1,700 units transferred out. The beginning work in process had materials cost of $2,040 and conversion costs of $1,550. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

Instructions

(a) How many units are in process at May 31?

 (b) What is the unit materials cost for May?

(c) What is the unit conversion cost for May?

 (d) What is the total cost of units transferred out in May?

(e) What is the cost of the May 31 inventory?

E3-7

 The Sanding Department of Quik Furniture Company has the following production and manufacturing cost data for March 2018, the first month of operation.

Production: 7,000 units finished and transferred out; 3,000 units started that arc 100% complete as to materials and 20% complete as to conversion costs.

Manufacturing costs: Materials $33,000; labor $21,000; and overhead $36,000.

Instructions

Prepare a production cost report.

E3-8

The Blending Department of Luongo Company has the following cost and produc-tion data for the month of April.

Costs: Work in process, April 1 Direct materials: 100% complete $100,000 Conversion costs: 20% complete 70,000 Cost of work in process, April 1 $170,000 Costs incurred during production in April Direct materials $ 800,000 Conversion costs 365,000 Costs incurred in April $1,165,000

Units transferred out totaled 17,000. Ending work in process was 1,000 units that are 100% complete as to materials and 40% complete as to conversion costs.

Instructions

(a) Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April.

(b) Compute the unit costs for the month.

(c) Determine the costs to be assigned to the units transferred out and in ending work in process.

P3-2A

 

 Rosenthal Company manufactures bowling balls through two processes: Molding and Packaging. In the Molding Department, the urethane, rubber, plastics, and other materials are molded into bowling balls. In the Packaging Department, the balls are placed in cartons and sent to the finished goods warehouse. All materials are entered at the begin-ning of each process. Labor and manufacturing overhead are incurred uniformly through-out each process. Production and cost data for the Molding Department during June 2018 are presented below.

Instructions

 (a) Prepare a schedule showing physical units of production.

 (b) Determine the equivalent units of production for materials and conversion costs.

(c) Compute the unit costs of production.

(d) Transferred out 5340,000 WIP 24,400

(d) Determine the costs to be assigned to the units transferred out and in process for June.

(e) Prepare a production cost report for the Molding Department for the month of June.

 

 

ACC 560 Week 2 Quiz 1

 

Question 1

 

A manufacturing company calculates cost of goods sold as follows:

Question 2

 

Dolan Company's accounting records reflect the following inventories:
Dec. 31, 2018 Dec. 31, 2016
Raw materials inventory $310,000 $260,000
Work in process inventory 300,000 160,000
Finished goods inventory 190,000 150,000
 
During 2018, $800,000 of raw materials were purchased, direct labor costs amounted to $670,000, and manufacturing overhead incurred was $640,000.
The total raw materials available for use during 2018 for Dolan Company is

Question 3

 

Product costs are also called

Question 4

 

As current technology changes manufacturing processes, it is likely that direct

Question 5

 

Sales commissions are classified as

Question 6

 

Dolan Company's accounting records reflect the following inventories:

 

Dec. 31, 2018 Dec. 31, 2016
Raw materials inventory $310,000 $260,000
Work in process inventory 300,000 160,000
Finished goods inventory 190,000 150,000
During 2018, $800,000 of raw materials were purchased, direct labor costs amounted to $670,000, and manufacturing overhead incurred was $640,000.
If Dolan Company's cost of goods manufactured for 2018 amounted to $1,890,000, its cost of goods sold for the year is

 

Question 7

 

Property taxes on a manufacturing plant are an element of a
Product Cost Period Cost

Question 8

 

Benson Inc.'s accounting records reflect the following inventories:
Dec. 31, 2016Dec. 31, 2018
Raw materials inventory $ 80,000 $ 64,000
Work in process inventory 104,000 116,000
Finished goods inventory 100,000 92,000
 
During 2018, Benson purchased $1,450,000 of raw materials, incurred direct labor costs of $250,000, and incurred manufacturing overhead totaling $160,000.
Assume Benson’s cost of goods manufactured for 2018 amounted to $1,660,000. How much would it report as cost of goods sold for the year?

Question 9

 

On the costs of goods manufactured schedule, the item raw materials inventory (ending) appears as a(n)

Question 10

 

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to

 

 

ACC 560 Week 3 Assignment 1 Activity-based Costing (ABC) in Service Industries

 

Research a U.S. company in the service industry with e-commerce activities.

 

Write a five to six (5-6) page paper in which you:

  1. Describe the company you researched in one to two (1-2) paragraphs.
  2. Discuss how a time driven ABC cost system can be implemented in the company you researched and the benefits that the use will yield to the business performance.
  3. Assess how using an ABC system can provide a competitive advantage to the company in the market space it operates and the resulting impact to the business performance.
  4. Examine the potential impact of time-driven ABC costing on services provided online with those provided through traditional channels, considering how this knowledge will impact decisions made by management about these services.
  5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.

 

Your assignment must follow these formatting requirements:

 Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.·

 Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.·

 

 

ACC 560 Week 3 Homework Chapter 4

 

 

Chapter 4: Activity-Based Costing

 

ACC 560 WEEK 3 Chapter 4 Brief Exercises 7 and 12; Exercises 1, 6, and 14

 

BE4-7

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2018.

Activity Cost Pools                Estimated Overhead                         Expected Use of Cost Drivers per Activity

Ordering and receiving                                   $84,000                                   12,000 orders

Food processing                                  480,000                                   60,000 machine hours

Packaging                                            1,760,000                                440,000 labor hours

 

For 2018, the company had 11,000 orders and used 50,000 machine hours, and labor hours totaled 500,000. What is the total overhead applied?

 

BE4-12

Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $40,000, design $300,000, and construction oversight $100,000. The cost drivers and expected use are as follows.

Activities                                 Cost Drivers                           Expected Use of Cost Drivers per Activity

                  20   Initial concept formation        Number of project changes    

Design                                     Square feet                                                      150,000

                                100  Construction oversight            Number of months     

 

(a) Compute the predetermined overhead rate for each activity.

 

(b) Classify each of these activities as unit-level, batch-level, product-level, or facility-level.

 

E4-1

 Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plant wide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations.

                                    Standard                     Custom

Direct labor costs        $50,000                       $100,000

Machine hours                         1,000                           1,000

Setup hours                 100                              400

Total estimated overhead costs are $240,000. Overhead cost allocated to the machining activity cost pool is $140,000, and $100,000 is allocated to the machine setup activity cost pool.

Instructions:

  1. Compute the overhead rate using the traditional (plant wide) approach.
  2. Compute the overhead rates using the activity-based costing approach.
  3. Determine the difference in allocation between the two approaches.

 

E4-6

 Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter's operations.

Machine setup, indirect materials                   4,000

Inspections                                                      16,000

Tests                                                                4,000

Insurance, plant                                               110,000

Engineering design                                         140,000

Depreciation, machinery                                 520,000

Machine setup, indirect labor                          20,000

Property taxes                                                             29,000

Oil, heating                                                     19,000

Electricity, plant lighting                                21,000

Engineering prototypes                                   60,000

Depreciation, plant                                          210,000

Electricity, machinery                                     36,000

Machine maintenance wages                          19,000

 

Instructions

Classify the above costs of Santana Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, and maintenance. Next, identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.

 

E4-14

 Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year.

The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed:

Activity Cost Pools                Estimated Overhead                         Cost Drivers

Scheduling and travel                         $85,000                                   Hours of travel

90,000                                   Number of setups Setup time                              

60,000                                   Direct labor cost Supervision                            

Expected Use of Cost Drivers per Product

                                                            Commercial               Residential

Scheduling and travel                                                 750                              500

Setup time                                                       350                              250

Instructions

  1. Compute the activity-based overhead rates for each of the three cost pools, and determine the overhead cost assigned to each product line.
  2. Compute the operating income for each product line, using the activity-based overhead rates.
  3. What do you believe Peggy Kingman should do?

 

 

ACC 560 Week 4 Homework Chapter 5 and Chapter 6

 

Chapter 5: Cost-Volume-Profit and Chapter 6: CVP Analysis Additional Issues

 

 

 

ACC 560 Week 4 Chapter 5

 

E5-6

 PCB Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units. The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively.

Instructions

  1. Identify the above costs as variable, fixed, or mixed.
  2. Calculate the expected costs when production is 5,000 units.

 

E5-9

The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows.

Salaries            $5,900 per month        FIXED COST

Utilities            $1,100 per month        FIXED COST

Depreciation    $1,000 per month        FIXED COST

Maintenance    $100 per month                      FIXED COST

             VARIABLE Maid service    $14 per room

             VARIABLE Other costs       $28 per room

 

Instructions:   Determine the inn's break-even point in

(a) number of rented rooms per month and

 (b) dollars.

 

E5-13

 Billings Company has the following information available for September 2018.

400 Unit selling price of video game consoles        $

280 Unit variable costs                                           $

Total fixed costs                                              $54,000

Units sold                                                        600

 

Instructions

  1. Compute the unit contribution margin.
  2. Prepare a CVP income statement that shows both total and per unit amounts.
  3. Compute Billings' break-even point in units.
  4. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

 

E6-2

 In the month of June, Jose Hebert's Beauty Salon gave 4,000 haircuts, shampoos, and permanents at an average price of $30. During the month, fixed costs were $16,800 and variable costs were 75% of sales.

Instructions

  1. Determine the contribution margin in dollars, per unit and as a ratio.
  2. Using the contribution margin technique, compute the break-even point in dollars and in units.
  3. Compute the margin of safety in dollars and as a ratio.

 

E6-7

 PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change–related services represent 70% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 30% of its sales and provides a 40% contribution margin ratio. The company's fixed costs are $15,600,000 (that is, $78,000 per service outlet).

Instructions

  1. Calculate the dollar amount of each type of service that the company must provide in order
  2. The company has a desired net income of $52,000 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet?

 

E6-12

Dalton Inc. produces and sells three products. Unit data concerning each product is shown below.

                                    Product

                                    D         E          F

Selling price                 $200    $300    $250

Direct labor costs         30        80        35

Other variable costs     95        80        145

The company has 2,000 hours of labor available to build inventory in anticipation of the company's peak season. Management is trying to decide which product should be produced. The direct labor hourly rate is $10.

Instructions

  1. Determine the number of direct labor hours per unit.
  2. Determine the contribution margin per direct labor hour.
  3. Determine which product should be produced and the total contribution margin for that product.

 

 

ACC 560 Week 4 Quiz 2

 

Question 1

Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso’s total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminum Total Cost
Assembly 500 mach. hours 500 mach. hours $60,000
Inspections 350 150 $100,000
2,100 labor hours 1,900 labor hours
 
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much assembly cost is assigned to titanium racquets

Question 2

 

Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is:
Regular Supreme
Direct labor hours 10,000 15,000
Machine hours 10,000 30,000
Number of parts 90,000 160,000
Overhead applied to Regular using activity-based costing is

 

Question 3

Which best describes the flow of overhead costs in an activity-based costing system?

Question 4

An activity-based overhead rate is computed as follows:

 

Question 5

Estimated costs for activity cost pools and other item(s) are as follows:
Machining $500,000
Assembling 200,000
Advertising 450,000
Inspecting and testing 175,000
Total estimated overhead is

 

Question 6

The presence of any of the following factors would suggest a switch to ABC except when

 

Question 7

Use of activity-based costing will result in the development of

Question 8

An example of an activity cost pool is

Question 9

Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true?

(1) Direct labor constitutes a significant part of total product cost.
(2) A high correlation exists between direct labor and changes in the amount of overhead costs.

Question 10

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

 

 

ACC 560 Week 5 Homework Chapter 7 and chapter 8

 

 

ACC 560 Week 5 Quiz 3

 

Question 1

 

A company with a higher contribution margin ratio is

Question 2

 

The contribution margin ratio is

Question 3

 

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2018. What is Teller’s break-even point in sales dollars for 2018?

Question 4

 

Sales mix is

Question 5

 

The margin of safety ratio

Question 6

 

To which function of management is CVP analysis most applicable?

Question 7

 

Frazier Manufacturing Company collected the following production data for the past month:
Units Produced Total Cost
1,600 $66,000
1,300 57,000
1,500 67,500
1,100 49,500
If the high-low method is used, what is the monthly total cost equation?

Question 8

 

Weatherspoon Company has a product with a selling price per unit of $200, the unit variable cost is $110, and the total monthly fixed costs are $300,000. How much is Weatherspoon’s contribution margin ratio?

Question 9

 

Two costs at Bradshaw Company appear below for specific months of operation.
Month Amount Units Produced
Delivery costs September $ 40,000 40,000
October 55,000 60,000
Utilities September $ 84,000 40,000
October 126,000 60,000
Which type of costs are these?

Question 10

 

The equation which reflects a CVP income statement is

 

 

ACC 560 Week 6 Homework Chapter 9 and Chapter 10

 

Chapter 9: Budgetary Planning and Chapter 10: Budgetary Control and Responsibility Accounting

 

E9-3

Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2018). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Auditing

2,300

1,600

2,000

2,400

Tax

3,000

2,200

2,000

2,500

Consulting

1,500

1,500

1,500

1,500

Average hourly billing rates are auditing $80, tax $90, and consulting $110.

Instructions

Prepare the service revenue (sales) budget for 2018 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Prepare quarterly production budgets.

 

E9-8

Fuqua Company's sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2016.

Instructions

  1. Prepare a production budget for January and February 2018.
  2. Prepare a direct materials budget for January 2018.

 

Prepare a direct labor budget.

 

E9-15

 Deitz Corporation is projecting a cash balance of $30,000 in its December 31, 2016, balance sheet. Deitz's schedule of expected collections from customers for the first quarter of 2018 shows total collections of $185,000. The schedule of expected payments for direct materials for the first quarter of 2018 shows total payments of $43,000. Other information gathered for the first quarter of 2018 is sale of equipment $3,000, direct labor $70,000, manufacturing overhead $35,000, selling and administrative expenses $45,000, and purchase of securities $14,000. Deitz wants to maintain a balance of at least $25,000 cash at the end of each quarter.

Instructions

Prepare a cash budget for the first quarter.

Prepare cash budget for a month.

 

P9-5A

the budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2018.

  1.     Sales for May are expected to be $800,000. Sales in June and July are expected to be 5% higher than the preceding month.
  2. Cost of goods sold is expected to be 75% of sales.
  3. Company policy is to maintain ending merchandise inventory at 10% of the following month's cost of goods sold.
  4. Operating expenses are estimated to be as follows:

 

Question 5

Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes.

Instructions

  1. Prepare the merchandise purchases budget for each month in columnar form.
  2. Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold.

Prepare budgeted cost of goods sold, income statement, retained earnings, and balance sheet.

 

E10-3

 Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Indirect labor

$1.00

Indirect materials

0.70

Utilities

0.40

Fixed overhead costs per month are supervision $4,000, depreciation $1,200, and property taxes $800. The company believes it will normally operate in a range of 7,000–10,000 direct labor hours per month.

Instructions

Prepare a monthly manufacturing overhead flexible budget for 2018 for the expected range of activity, using increments of 1,000 direct labor hours.

Prepare flexible budget reports for manufacturing overhead costs, and comment on findings.

 

E10-5

 Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, traveling 3%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,000, depreciation on delivery equipment $7,000, and insurance on delivery equipment $1,000.

Instructions

Prepare a monthly flexible budget for each $10,000 increment of sales within the relevant range for the year ending December 31, 2018.

Prepare flexible budget reports for selling expenses.

 

E10-17

 The South Division of Wiig Company reported the following data for the current year.

Sales

$3,000,000

Variable costs

1,950,000

Controllable fixed costs

600,000

Average operating assets

5,000,000

Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action.

  1. Increase sales by $300,000 with no change in the contribution margin percentage.
  2. Reduce variable costs by $150,000.
  3. Reduce average operating assets by 4%.

Instructions

  1. Compute the return on investment (ROI) for the current year.
  2. Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round to one decimal.)

Prepare a responsibility report for an investment center.

 

P10-5A

 Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2018, and relevant budget data are as follows.

 

Actual

Comparison with Budget

Sales

$1,400,000

$100,000 favorable

Variable cost of goods sold

665,000

45,000 unfavorable  

Variable selling and administrative expenses

125,000

25,000 unfavorable  

Controllable fixed cost of goods sold

170,000

On target

Controllable fixed selling and administrative expenses

80,000

On target

Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.

Instructions

  1. Prepare a responsibility report (in thousands of dollars) for the Home Division.
  2. Evaluate the manager's performance. Which items will likely be investigated by top management?
  3. Compute the expected ROI in 2018 for the Home Division, assuming the following independent changes to actual data.
  4. Variable cost of goods sold is decreased by 5%.
  5. Average operating assets are decreased by 10%.
  6. Sales are increased by $200,000, and this increase is expected to increase contribution margin by $80,000.

Prepare reports for cost centers under responsibility accounting, and comment on performance of managers.

 

 

ACC 560 Week 6 Quiz 4

 

ACC 560 Week 7 Homework Chapter 11

 

Chapter 11: Standard Costs and Balanced Scorecard

 

E11-3

 Stefani Company has gathered the following information about its product. Direct materials. Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $5 per pound, but Stefani always takes the 2% cash discount all of its suppliers offer. Freight costs average $0.25 per pound. Direct labor. Each unit requires 2 hours of labor. Setup, cleanup, and downtime average 0.4 hours per unit. The average hourly pay rate of Stefani's employees is $12. Payroll taxes and fringe benefits are an additional $3 per hour. Manufacturing overhead. Overhead is applied at a rate of $7 per direct labor hour.

Instructions

  1. Compute Stefani's total standard cost per unit.

 

E11-6

Lewis Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,600 hours of labor are incurred at a cost of $12.15 per hour to produce 10,000 units of Product DD.

Instructions

  1. Compute the total labor variance.
  2. Compute the labor price and quantity variances.
  3. Repeat (b), assuming the standard is 4.1 hours of direct labor at $12.25 per hour.

 

E11-12

 Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $850,000 comprised of $250,000 of variable costs and $600,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours.

During the current year, Byrd produced 95,000 putters, worked 94,000 direct labor hours, and incurred variable overhead costs of $256,000 and fixed overhead costs of $600,000.

Instructions

  1. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.
  2. Compute the applied overhead for Byrd for the year.
  3. Compute the total overhead variance.

 

P11-2A

Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2018.

Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.

Instructions

  1. Compute all of the variances for (1) direct materials and (2) direct labor.
  2. Compute the total overhead variance.

 

 

ACC 560 Week 7 Quiz 5

 

ACC 560 Week 8 Homework Chapter 12

 

Chapter 12: Planning for Capital Investments

E12-3

 Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $250,000. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7:

Year 1             $390,000

2          400,000

3          411,000

4          426,000

5          434,000

6          435,000

7          436,000

The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $400,000. This new equipment would require maintenance costs of $100,000 at the end of the fifth year. The cost of capital is 9%.

Instructions

Use the net present value method to determine whether Hillsong should purchase the new machine to replace the existing machine, and state the reason for your conclusion.

 

E12-5

 Bruno Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $430,000. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $101,000 for the next 6 years. Management requires a 10% rate of return on all new investments.

 

Instructions

 

Calculate the internal rate of return on this new machine. Should the investment be accepted?

 

E12-8

 Pierre's Hair Salon is considering opening a new location in French Lick, California. The cost of building a new salon is $300,000. A new salon will normally generate annual revenues of $70,000, with annual expenses (including depreciation) of $41,500. At the end of 15 years the salon will have a salvage value of $80,000.

 

Instructions

 

Calculate the annual rate of return on the project.

 

 

ACC 560 Week 9 Assignment 2 Johnson Controls Capital Investments

 

Visit the Website of Johnson Controls Inc., located at http://www.johnsoncontrols.com, and review its 2012 financial forecasts. According to the forecasts, Johnson Controls will increase capital investments to approximately $1.7 billion. More than 70% of the company's capital expenditures in 2012 are associated with growth and margin expansion opportunities.

Write a five to six (5-6) page paper in which you:

1.Suggest a methodology to supplement the traditional methods for evaluating the capital investments of Johnson Controls in the emerging markets to reduce risk providing a rationale of how risk will be reduced.
2.Assess the potential impact of inflation on planned capital investments in China and examine approaches for an accurate evaluation of the investments. Suggest how this knowledge may impact management’s decisions.
•Contrast the modifications you would make in evaluating the projects to increase internal capacity in North America to evaluating expansion projects in the global market and how this information will impact the decisions made related to expansion.
4.Examine the benefits of using sensitivity analysis in evaluating the projects for Johnson Controls and how this approach can provide a competitive advantage for the company.
5.Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:

•Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
•Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:

•Plan and evaluate capital investments.
•Use technology and information resources to research issues in managerial accounting.
•Write clearly and concisely about managerial accounting using proper writing mechanics.
Click here to view the grading rubric.

 

 

ACC 560 Week 9 Homework Chapter 13

 

ACC 560 Week 9 Chapter 13 Exercises 4, 6, and 7; Problem 1

E13-4

 Gutierrez Company reported net income of $225,000 for 2018. Gutierrez also reported depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.

Instructions

Prepare the operating activities section of the statement of cash flows for 2018. Use the indirect method.

 

E13-6

 the three accounts shown below appear in the general ledger of Herrick Corp. during 2018.

Equipment

                                                                  Debit               Credit              Balance     Date

Jan.      1          Balance                                                                                                160,000

July      31        Purchase of equipment                                    70,000                                                 230,000

Sept.    2          Cost of equipment constructed                        53,000                                                 283,000

Nov.    10        Cost of equipment sold                                                            49,000                         234,000

Accumulated Depreciation—Equipment

                                                                              Debit   Credit     Date              Balance

Jan.      1          Balance                                                                                                71,000

Nov.    10        Accumulated depreciation on equipment sold             30,000                                     41,000

Dec.     31        Depreciation for year                                                   28,000                         69,000

Retained Earnings

                                                                              Debit   Credit              Balance     Date

Jan.      1          Balance                                                                                                105,000

Aug.     23        Dividends (cash)                                              14,000                                     91,000

Dec.     31        Net income                                                                  77,000                         168,000

 

Instructions

 

From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $7,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.

 

E13-7

 Rojas Corporation's comparative balance sheets are presented below.

ROJAS CORPORATION

Comparative Balance Sheets

December 31

                                                                                                            2018                2016

          $10,700 Cash                                                                                                    $14,300

            23,400 Accounts receivable                                                                            21,200

            26,000 Land                                                                                                    20,000

            70,000 Buildings                                                                                             70,000

                                              (15,000)           (10,000) Accumulated depreciation—buildings            

                                                                                                            ________        _________

Total                                                                                                    $110,500         $120,100

          $31,100 Accounts payable                                                                                $12,370

            69,000 Common stock                                                                                                75,000

            20,000 Retained earnings                                                                                23,130

                                                                                                            _________      _________

Total                                                                                                    $110,500        $120,100 

 

Instructions

 

  1. Prepare a statement of cash flows for 2018 using the indirect method.
  2. Compute free cash flow.

 

P13-1A

 You are provided with the following transactions that took place during a recent fiscal year.

                                   

(a)        Recorded depreciation expense on the plant assets.                

(b)        Recorded and paid interest expense.                           

(c)        Recorded cash proceeds from a disposal of plant assets.        

(d)        Acquired land by issuing common stock.                               

(e)        Paid a cash dividend to preferred stockholders.                      

(f)        Paid a cash dividend to common stockholders.                      

(g)        Recorded cash sales.                                                   

(h)        Recorded sales on account.                                        

(i)         Purchased inventory for cash.                                                

(j)         Purchased inventory on account.                                

 

Instructions

 

Complete the table indicating whether each item (1) affects operating (O) activities, investing (I) activities, financing (F) activities, or is a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.

 

 

ACC 560 Week 10 Homework Chapter 14

 

ACC 560 Week 10 Quiz

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