1. Boeing Company manufactures batteries and uses job - order costing system. For the current

year, the manager of the company estimated that the company would need 80,000 machine hours

and incur a fixed manufacturing overheard cost $325,000 and a variable manufacturing overhead

cost of $7.5 per machine hour. Boeing Company had beginning inventory as follows :

Raw Material $14,000

Work in Process $12,400

Finished Goods $20,000

The following information relates to operation in the current year. The raw materials purchased include both direct and indirect materials. Assume that all transactions were on account.

Purchase of Raw Materials $1516,000 (70 % Direct and 30% Indirect)

Raw material requisitioned

for the use in production Direct : $1070,000 . Indirect : $230,000

Labor cost Direct : $33.5 per hr. Indirect : $18 per hour

Salary for office employees $40,000

Deprecation on Factory Building $220,000

Depreciation on Corporate Building $180,000

Utility cost $100,000 (65% relates to factory and the rest relates to

corporate)

Factory Machinery Maintenance Cost $15,000

Advertising Expense $20,000

Rent $200,000 (70% relates to factory and the rest relates to

corporate)

Additional Information:

- The direct labors worked a total of 9,300 hours. The indirect labors worked for a total of

11,300 hours.

- Manufacturing overhead was applied to production. The company received lesser than expected

orders during the year for which the machines ran for a total of 70,000 hours.

- During the year, a total of 46,000 units of batteries were manufactured and transferred to finished

goods , out of which 43,000 were sold to customers at the selling price of $70 per battery.

Required :

a. Use the information given above to write the appropriate journal entries for Boeing Company.

b. Calculate whether the manufacturing overhead was over applied or under applied. Write the

appropriate journal entry to record the over/under application.

2. Harmon and Co. manufactures maple syrup and uses process costing system. The company has two departments Mixing Department and Packaging Department. The maple syrups are sold for $20 each.

Information regarding the Mixing Department's April month's operation is as follows :

The department had beginning inventory of 4,300 units (80% completed with respect to material at a cost of $38,700 and 65% completed with respect to conversion at a cost of $48,000). 23,000 units of sent into production in the month of April. During the month a total of 26,000 units of maple syrup were completed a finished goods.

The ending work in process inventories were completed at 65% and 70% , in relation to material and conversion, respectively. The total cost of production added during the month were $507,800 in relation to material cost and $490,000, in relation to conversion cost.

Required:

a. Calculate the cost of the units completed to transfer into the Packaging Department of Harmon

and Co. and the cost of the ending work in process inventory in the first department.

3. ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.

Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.

Required :

a. What should be the product's CM ratio?

b. Calculate the BEP is sales dollars and in units for ABC Company.

c. The manager of ABC company estimates that in the coming year, the company's sales will

increase by $80,000 (from the current sales). How much should the net profit / loss increase/

decrease if the fixed costs remain constant?

d. The manager of ABC company predicts that by spending an additional $80,000 per year on advertising and using higher quality raw material (which will in turn increase the raw material cost per unit by $3), and increasing selling price per unit by 2% (to compensate for the increased costs), unit sales will increase by two- thirds of the current sales units. Should the company go with the manager's proposed plan? Explain your answer. (Assume that in the current year, the company sold 5,600 units of XE-17)

e. (Refer to question no. d). Assume that the company went with the manager's plan, however, the predictions were not correct and the demand for XE-17 decreased by 4,000 units from the estimated units (from question no. d) as selling price per unit was raised by 2%. Now the manager is estimating that by changing the selling price per unit, the current net profit amount can be conveniently maintained. Calculate what should be the new selling price per unit (calculate the approximated value) in order to maintain the net profit that the company is making now after going with the manager's plan from information number . d

Section- B

1. Select a product from a small local store in your area who manufactures their own goods and sell it to customers all through the year. Based on the product that you have selected (can be imaginary as well), discuss the following points :

a. Write down the production process of the mentioned product. You MUST include what kind of raw materials the manufacturers use, what are the direct labors needed to manufacture the product, what can be regarded as the MOH cost for the manufacturer. You must write the details including numerical calculation of Raw Materials, Direct labor, MOH (No need to calculate the predetermined Over head rate or the applied MOH, just give examples of what can be regarded as MOH costs for your product) .

Explain , how the product is manufactured.

b. Based on the nature of the product that you have chosen, suggest to the owner of this

manufacturing company whether they should use job- order costing or process costing system.