1. Brigg Enterprises produces miniature parasols. Each parasol consists of $1.20 of variable costs and $.90 of fixed costs and sells for $4.50. A French wholesaler offers to buy 8,000 units at $1.40 each, of which Pederson has the capacity to produce. Brigg will incur extra shipping costs of $.12 per parasol.

Instructions

Determine the incremental income or loss that Brigg Enterprises would realize by accepting the special order.

2. R&R Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for R&R for $270 each. R&R needs 1,500 clocks annually. R&R has provided the following unit costs for its commercial clocks:

Direct materials	$100
Direct labor	110
Variable overhead	30
Fixed overhead (70% avoidable)	150

Instructions

Prepare an incremental analysis, which shows the effect of the make-or-buy decision.

3. The current sections of Donny Inc.'s balance sheets at December 31, 2013 and 2014, are presented here.

Donny's net income for 2014 was $203,000. Depreciation expense was $25,000.

		2014	2013
	Current assets
	Cash	$115,000	$99,000
	Accounts receivable	105,000	89,000
	Inventory	154,000	172,000
	Prepaid expense	27,000	21,000
	Total current assets	$401,000	$381,000
	Current liabilities
	Accrued expenses payable	$ 15,000	$ 5,000
	Accounts payable	85,000	93,000
	Total current liabilities	$100,000	$ 98,000

Instructions

Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2014, using the indirect method.

4. Nona Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. Prepare journal entries to record the following transactions during the month of June.

June	1		Purchased raw materials for $22,000 on account.
	8		Raw materials requisitioned by production:
				Direct materials		$8,500
				Indirect materials		1,500
	15		Paid factory utilities, $2,400 and repairs for factory equipment, $7,500.
	25		Incurred $98,000 of factory labor.
	25		Time tickets indicated the following:
				Direct Labor	(6,000 hrs. @ $13 per hr.)		=	$78,000
				Indirect Labor	(2,500 hrs. @ $8 per hr.)		=	20,000
								$98,000
	25		Applied manufacturing overhead to production based on a predetermined overhead rate of $8 per direct labor hour worked.
	28		Goods costing $20,000 were completed in the factory and were transferred to finished goods.
	30		Goods costing $16,000 were sold for $23,000 on account.

5. Meyer Manufacturing Company uses a process cost system. The Molding Department adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Work in process on May 1 was 75% complete and work in process on May 31 was 40% complete.

Instructions

Complete the Production Cost Report for the Molding Department for the month of May using the above information and the information below.

EQUIVALENT UNITS

QUANTITIES

Unites to be accounted for Physical Units Materials Conversion Costs

Worked in process, May 1 7,000

Started into production 28,000

Total Units 35,000

Units accounted for

Transferred out 30,000

Work in process, May 31 5,000

Total units 35,000

COSTS

Unit cost Materials Conversion Costs Total

Costs in May $140,000 $160,000 $300,000

Equiv. units

Unit costs

Costs to be accounted for

Work in process, May 1 $60,000

Started into production $240,000

Total Costs $300,000

Costs Reconcilation Schedule

Costs accounted for

Transferred out

Work in process, May 31 $

Materials $

Conversion costs _______ ________

Total costs $300,000

6. Data concerning manufacturing overhead for Analina Industries are presented below. The Mixing Department is a cost center.

An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the Mixing Department and that 50% of supervisory costs are controllable at the department level.

The flexible budget formula and the cost and activity for the months of June and July are as follows:

Flexible Budget Per

Direct Labor Hour Actual Costs and Activity

Direct labor hours June July

Overhead costs 6,000 7,000

Variable

Indirect materials $3.50 $20,500 $$25,100

Indirect labor 6.00 39,500 40,700

Factory Supplies 1.00 7,600 8,200 Fixed

Depreciation $20,000 15,000 15,000

Supervision 25,000 24,000 26,000

Property Taxes 10,000 12,000 12,000

Total Costs $118,600 $127,000

Instructions

(a)

Prepare the responsibility reports for the Mixing Department for each month.

(b)	Comment on the manager's performance in controlling costs during the two-month period.