1. You have been asked to assist Brandon Manufacturing Inc. prepare for an upcoming end-of-year meeting, since its accountant quit without notice. The following information for the year ended December 31, 2020 was prepared by the Presidents secretary, who, trying to be helpful, has alphabetized the list:

Administrative staff salaries 52,000

Advertising and promotion 31,000

Bad debt expense 4,000

Commission expense - salespersons 88,000

Depreciation - factory buildings 16,850

Depreciation - sales office 7,700

Finished goods inventory - start of year 8,500

Finished goods inventory - end of year 6,100

Indirect materials used 4,800

Insurance expense factory buildings 3,400

Insurance expense sales vehicles 6,300

Property taxes - factory 21,900

Property taxes - sales office 4,100

Purchases - raw materials 87,000

Raw materials inventory - start of year 5,000

Raw materials inventory - end of year 3,500

Rent - production equipment 26,070

Repairs & maintenance - factory equipment 2,800

Repairs & maintenance - sales office equipment 3,060

Salaries - factory supervisor 92,000

Travel and entertainment expenses 112,000

Utilities factory 14,600

Utilities sales office 9,850

Wages and benefits - factory workers 169,000

Work-in-process inventory - start of year 14,200

Work-in-process inventory - end of year 18,900

Required:

12 a) Prepare EITHER a combined schedule of cost of goods manufactured and cost of goods sold for the year ended December 31, 2020 OR separate schedules for cost of goods manufactured and cost of goods sold, in good form. Use actual manufacturing overhead costs incurred.

4 b) What would the cost of goods manufactured be if manufacturing overhead was applied using a predetermined overhead rate of $11.75 per machine hour, and total machine hours were 16,000 during the year? Prepare the journal entry to dispose of the over- or under-applied overhead, assuming it is all allocated to Cost of Goods Sold and two separate T accounts are used for Manufacturing overhead.

1 c) What would the ending work-in-process inventory be if cost of goods manufactured was $180,000 and all other information remained the same?

Sales revenue	$540,000
Variable expenses	360,000
Contribution margin	180,000
Fixed costs	100,000
Operating income	$ 80,000

2. Bradjoli Inc. produces a single product. The results of operations for a typical month are as follows:

The company produced and sold 120,000 kgs of product during the month, and there were no beginning or ending inventories. Bradjoli pays income tax at a rate of 25%.

Required:

a) At the typical sales volume, calculate:

3 i) the breakeven point is units sold and in sales dollars.

2 ii) the margin of safety as a percentage.

3 iii) the operating leverage. Using the operating leverage, determine the operating profit that Bradjoli would report if sales were to increase 40%.

4 b) Compute the target sales in units and sales dollars if Bradjoli wants to earn an after-tax profit of $162,000.

1 i) At this sales volume, what is the operating leverage?

1 ii) At this sales volume, determine the operating profit that Bradjoli would report if sales were to increase 40%.

4 c) Using the typical months operating results as the starting point, calculate the breakeven point if Bradjoli plans to invest in automation with a monthly fixed cost of $25,000 and expects this will reduce variable expenses by $0.50 per unit. Do you recommend the company undertake this investment? Why or why not?