1.Inc. had the following inventory balances at the beginning and end of the year:

January 1December 31

Raw material$50,000$35,000

Work in process130,000170,000

Finished goods280,000255,000

During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.

Required:

A. Calculate cost of goods manufactured.

B. Calculate cost of goods sold.

C. Determine net income.

2.The Cafe produces one of the best meat products in north Texas. The company's controller compiled the following information by analyzing the accounting records:

a.Meat costs the company $3.25 per pound of sausage produced.

b.Compensation of production employees is $2.25 per pound of sausage produced.

c.Supervisory salaries total $23,000 per month.

d.The company incurs utility costs of $9,000 per month plus $0.35 per pound of sausage produced.

e.Insurance and property taxes average $6,400 per month.

Required:

A. Classify each cost as variable, fixed, or semivariable.

B. Create formula to express the behavior of the firm's production costs. (Use the form Y = a + bX, where X denotes the quantity of sausage produced.)

3.Corporation uses the high-low method to analyze cost behavior. You as controller have determined that machine hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

Month Utilities Machine Hours

January $8,700 800

February 8,360 720

March 8,950 810

April 9,360 920

May 9,625 950

June 9,150 900

a.Determine the cost equation.

b.What is the variable cost per unit?

c.What are the total fixed costs?

d.If there are 980 machine hours, what will utility costs be projected to be?