1) The Skate Company manufactures skateboards. Skate boarding is a very popular sport

in the summer. In 2021, the first year of operations, The Skate Company produced

20,000 units and sold 18,000 units. The selling price for one skateboard is $140,

variable-manufacturing costs were $50 per unit, variable selling expenses were $10 per

unit, fixed manufacturing costs were $500,000, and fixed selling & administrative

expenses were $200,000.

Calculate the net income under variable costing and absorption costing for the year

and reconcile the differences in income from operations under the two costing

approaches.

2) The Yard Corporation is a new company located in Toronto, Ontario. The company is

in the process of setting a selling price for a new product it has just designed. The

company investment to establish the business and product was $2 Million and the

owners expect a 20% return on their investment. The following data relate to this

product for a budgeted volume of 50,000 units:

Per Unit

Total

Direct materials

Direct labour

Variable manufacturing overhead

Fixed manufacturing overhead

Variable selling and administrative expenses

Fixed selling and administrative expenses

$25

35

12

$750,000

10

200.000

Calculate each of the following:

a) Desired RO1 (return on investment) per unit.

b) The mark-up amount per unit when using the variable costing approach.

c) The mark-up amount per unit when using the absorption costing approach.

d) Explain why it is important to Include the ROI in the selling price.

3) The Cash Budget for the Yard Company is developed every month, as they want to

ensure they have enough cash to make payroll. The company has reported the following

Budgeted sales

Budgeted purchases

September October

$260,000

$320,000

$90,000

$120,000

November

$340,000

$130,000

December

$360,000

$150,000

The company had $30,000 cash in the Bank on September 1.

60% of monthly sales are on credit.

Customer amounts on account (the credit sales) are collected 50% in the month

of sale and 50% In the following month.

Cost of goods sold is 40% of sales.

The company purchases and pays for merchandise 60% in the month of

acquisition and 40% in the following month.

Calculate how much cash will the company receive and pay during the month of

November. What suggestion do you have for the company if there was insufficient cash

In their Bank to make the required purchases?

4) The budgeted sales of toasters that sell for $40 each for the Big Toaster Company for

the next four months are as follows:

Month

April

May

June

July

Budget Sales in Units

20,000 units

50,000 units

30,000 units

25,000 unlts

The desired ending inventory of toasters Is equal to 20 percent of the following month's

budgeted sales in units. On March 31, the company had 1,000 completed units on hand.

10 kilograms of plastic are required for each toaster. At the end of each month, the

company s desired inventory level is 20 percent of the following month's production

material needs. At March 31, the company had 20,000 kilograms of plastic on hand. The

material used in production costs $1.00 per kilogram. Each toaster produced requires 2

hours of direct labour.

Calculate the amount of toasters the company should produce during the month of

June. Calculate the beginning inventory in units for the beginning of july,

S) The Yard Company is a manufacturing company located in Toronto, Ontario.

Production for the month can vary between 750 to 1200 unlts. The manufacturing costs

for August when production was 1,000 units is budgeted as follows:

Direct material - $11 per unit, Direct labour - $7,500, Variable manufacturing overhead :

$5,000, Factory depreciation - $9,000, Factory supervisory salarles - $7,800, and Other

fixed factory costs - $2,500.

Calculate the flexible budget for a month when 1,200 units are produced.

6) The Pant Company is located in Toronto, Ontario. The company's static budget at

3,000 units of production includes $10,000 for direct material, $12,000 for direct

labour, $3,000 for utilities (all variable), and total fixed costs of $15,000. Actual

production and sales for the year was 6,000 units, with an actual total cost of $55,000.

Calculate the amount the static budget for The Pant Company is over or under budget

versus the total actual cost. Explain what a company should do with this information.

7) When a company is designing a balanced scorecard approach for their operations,

a company should attempt to link performance measures on a cause and effect basis.

Please indicate if this is true or false and explain your reasoning.

8) Management of the Pop Company would like the Syrup Division to transfer

10,000 contalners of Its final product to the Energy Drink Division for $100 per

container. The Syrup Division sells the product to customers for $150 per unit. The

Syrup Division's variable cost per unit is $75 and its fixed cost per unit is $25. The

Syrup Division has 5,000 units of available capacity.

What Is the minimum transfer price the Syrup Division should accept? Explain why

it is important to consider your capacity.