1. The managerial accountant at Coastal Edge Manufacturing reported the following data: Month New wa thit to account for Beginning werk in New Started in action during Now Total physical for Totalt er Dumnal costs a t January Connon costillanary Total costs a nd during The managerial accountant is required to determine the total cost per equivalent unit at Coastal Edge Manufacturing. Create a Cost of Production Report. 15 points 2. Discuss and compare absorption costing income statements with variable costing income statements. In your discussion, address the following questions: 10 points a. What is the main difference between the two methods? b. Under what circumstances will the operating income under each method be the same? c. What situation will cause the absorption costing income to be higher than the variable costing income? d. What situation will cause the absorption costing income to be lower than the variable costing income? e. Why would a company use absorption costing to prepare its income statements? f. Why would a company use variable costing to prepare its income statements? 3. Label each item below as relevant or irrelevant in making a decision. 10 points a) Cost of roof repair made on rental property last year b) The cost of insurance on a new vehicle when deciding to buy a new vehicle c) Cost of new equipment under evaluation to replace used equipment d) Original cost of old equipment that is being evaluated for replacement e) Cost of previous year's insurance policy on old equipment being evaluated for replacement f) Accumulated depreciation on old equipment being evaluated for replacement 4. Green Pastures golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20 million for the golfing season. About 500,000 golfers are expected each year. Variable costs are about $12 per golfer. Green Pastures golf course is a price-taker and won't be able to charge more than $60 per round because of local competition. What will Green Pasture's expected profit shortfall be if it charges $60/round? (8 points) S. Popping Hubbles produces multicoloredbubble solution used for weddings and other events 20 pts Popping Bubbles' plant capacity is 72,500 kits. If actual volume exceeds 72,500 kits, the company must expand the plant. In that case, salaries will increase by 10% depreciation by 15%, and rent by 57.000 Fixed utilities will be unchanged by any volume increase The company's master budget income statement for October follows. It is based on expected sales volume of 65.000 bubble kits Popping Bubbles INC Master Budget Income Sumt 1001 188,500 78,000 13.000 13,000 Sales Revenue Variable Expenses Cost of Goods Sold Sales Commission Utility Expense Fixed Expenses Salary Expense Depreciation Rent Expense Utility Expense Total Expenses Operating Income 33,000 18.000 11,000 5.000 S171.000 $17.500 Requirements 1. 2. Prepare flexible budget income statements for the company, showing output levels of 65,000, 70,000, and 75,000 kits. Why might Popping Bubbles' managers want to see the graph you prepared in Requirement 2 as well as the columnar format analysis in Requirement 1? What is the disadvantage of the graphic approach? 6. Figaro Company manufactures embroidered jackets. The company uses a standard cost system to control manufacturing costs. The following data represent the standard unit cost of a jacket: 15pts $11.85 18.40 Direct Materials (3sqft $3.95 per Sqft) Direct Labor (2.0 hrs $9.20 per hour) Manufacturing Overhead Variable (2.0 hrs. $0.60 per hour) Fixed (2.0 hrs * $2.30 per hr) Total Standard Cost per jacket $1.20 4.60 5.80 $36.05 Fixed overhead in total was budgeted to be $63,600 for each month. Actual data for November of the current year include the following: a. Actual production was 13,800 jackets. c. d. Actual direct materials usage was 250 square feet per jacket a n actual cost of 54.10 per square foot Actual direct labor usage of 25,400 hours for a total cost of $238.760. Actual fixed overhead cost was $59.202, while actual variable overhead cost was $19.050. Requirements 5. Compute the price and quantity variances for direct materials Compute the rate and efficiency variances for direct labor Compute the rate and efficiency variances for variable overhead. Compute the fixed overhead budget variance and the fixed overhead volume variance Company management intentionally purchased superior materials for November production. How did this decision affect the other cost variances? Overall, was the decision wise? Explain. Journalize the usage of direct materials and the assignment of direct labor, including the related variances 6. 1. The managerial accountant at Coastal Edge Manufacturing reported the following data: Month New wa thit to account for Beginning werk in New Started in action during Now Total physical for Totalt er Dumnal costs a t January Connon costillanary Total costs a nd during The managerial accountant is required to determine the total cost per equivalent unit at Coastal Edge Manufacturing. Create a Cost of Production Report. 15 points 2. Discuss and compare absorption costing income statements with variable costing income statements. In your discussion, address the following questions: 10 points a. What is the main difference between the two methods? b. Under what circumstances will the operating income under each method be the same? c. What situation will cause the absorption costing income to be higher than the variable costing income? d. What situation will cause the absorption costing income to be lower than the variable costing income? e. Why would a company use absorption costing to prepare its income statements? f. Why would a company use variable costing to prepare its income statements? 3. Label each item below as relevant or irrelevant in making a decision. 10 points a) Cost of roof repair made on rental property last year b) The cost of insurance on a new vehicle when deciding to buy a new vehicle c) Cost of new equipment under evaluation to replace used equipment d) Original cost of old equipment that is being evaluated for replacement e) Cost of previous year's insurance policy on old equipment being evaluated for replacement f) Accumulated depreciation on old equipment being evaluated for replacement 4. Green Pastures golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20 million for the golfing season. About 500,000 golfers are expected each year. Variable costs are about $12 per golfer. Green Pastures golf course is a price-taker and won't be able to charge more than $60 per round because of local competition. What will Green Pasture's expected profit shortfall be if it charges $60/round? (8 points) S. Popping Hubbles produces multicoloredbubble solution used for weddings and other events 20 pts Popping Bubbles' plant capacity is 72,500 kits. If actual volume exceeds 72,500 kits, the company must expand the plant. In that case, salaries will increase by 10% depreciation by 15%, and rent by 57.000 Fixed utilities will be unchanged by any volume increase The company's master budget income statement for October follows. It is based on expected sales volume of 65.000 bubble kits Popping Bubbles INC Master Budget Income Sumt 1001 188,500 78,000 13.000 13,000 Sales Revenue Variable Expenses Cost of Goods Sold Sales Commission Utility Expense Fixed Expenses Salary Expense Depreciation Rent Expense Utility Expense Total Expenses Operating Income 33,000 18.000 11,000 5.000 S171.000 $17.500 Requirements 1. 2. Prepare flexible budget income statements for the company, showing output levels of 65,000, 70,000, and 75,000 kits. Why might Popping Bubbles' managers want to see the graph you prepared in Requirement 2 as well as the columnar format analysis in Requirement 1? What is the disadvantage of the graphic approach? 6. Figaro Company manufactures embroidered jackets. The company uses a standard cost system to control manufacturing costs. The following data represent the standard unit cost of a jacket: 15pts $11.85 18.40 Direct Materials (3sqft $3.95 per Sqft) Direct Labor (2.0 hrs $9.20 per hour) Manufacturing Overhead Variable (2.0 hrs. $0.60 per hour) Fixed (2.0 hrs * $2.30 per hr) Total Standard Cost per jacket $1.20 4.60 5.80 $36.05 Fixed overhead in total was budgeted to be $63,600 for each month. Actual data for November of the current year include the following: a. Actual production was 13,800 jackets. c. d. Actual direct materials usage was 250 square feet per jacket a n actual cost of 54.10 per square foot Actual direct labor usage of 25,400 hours for a total cost of $238.760. Actual fixed overhead cost was $59.202, while actual variable overhead cost was $19.050. Requirements 5. Compute the price and quantity variances for direct materials Compute the rate and efficiency variances for direct labor Compute the rate and efficiency variances for variable overhead. Compute the fixed overhead budget variance and the fixed overhead volume variance Company management intentionally purchased superior materials for November production. How did this decision affect the other cost variances? Overall, was the decision wise? Explain. Journalize the usage of direct materials and the assignment of direct labor, including the related variances 6