2. Ratchford Clocks manufactures alarm clocks and wall clocks, and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks:

Per Unit Hours:

Assembly

Finishing

Calibrating

Alarm clocks

3

1

1

Wall clocks

2

3

2

Totals

5

4

3

The budget includes the following factory overhead by department:

Assembly Department

$595,000

Finishing Department

200,000

Calibrating Department

140,000

Total

$935,000

Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.

(a)Determine the total number of hours that will be needed by department.

(b)Determine the factory overhead rate by department using the multiple production department factory overhead rate method.

(c)Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks.

(d)Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks.

3.On October 31, the end of the first month of operations, Morristown & Co. prepared the following

income statement based on absorption costing:

Morristown & Co.

Income Statement

For Month Ended October 31, 20-

Sales (2,600 units)

$104,000

Cost of goods sold:

Cost of goods manufactured

$85,500

Less ending inventory (400 units)

11,400

Cost of goods sold

74,100

Gross profit

$ 29,900

Selling and administrative expenses

21,500

Income from operations

$8,400

========

If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses

were $14,600, prepare an income statement in accordance with the variable costing concept.

4.For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost

of $70, and a unit selling price of $105.

(a)

Compute the anticipated break-even sales (units).

(b)

Compute the sales (units) required to realize an operating profit of $8,000.

5. The following data are taken from the balance sheet at the end of the current year.

Cash

$154,000

Accounts receivable

210,000

Inventory

240,000

Prepaid expenses

15,000

Temporary investments

350,000

Property, plant, and

equipment

375,000

Accounts payable

245,000

Accrued liabilities

4,000

Income tax payable

10,000

Notes payable, short-term

85,000

Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Round ratios to

one decimal place.

6. The following data are available for Martin Solutions, Inc. Determine for each year: (a) Inventory

Turnover and (b) the number of days' sales in inventory (Round to one decimal place.

Year 2

Year 1

Sales

$1,139,600

$1,192,320

Beginning inventory

80,000

64,000

Cost of goods sold

500,800

606,000

Ending inventory

72,000

80,000