Question
5. The Mondelez International Company uses a process cost accounting system and a weighted average cost flow assumption. A production department adds materials at the
5. The Mondelez International Company uses a process cost accounting system
and a weighted average cost flow assumption. A production department adds
materials at the beginning of the process and incurs conversion costs
uniformly throughout the process.
Data for the month of May are as follows:
Beginning work in
process inventory, 5/1 10,000 units (20% complete)
Units started into
Production 340,000 units
Ending work in
process inventory, 5/31 25,000 units (60% complete)
Instructions
Answer the following questions and show computations to support your
answers.
a. Prepare a schedule for May showing the physical unit flow and the
units to account for.
b. Compute the equivalent units of production for materials and
conversion costs for the month of May.
6. (9 points)show computations
Vera Bradley Inc. reports the following results for the month of
June:
Sales Revenue (20,000 units) $1,200,000
Variable costs 800,000
Fixed costs 300,000
Net income $ 100,000
Management of Vera Bradley has been assessing possible course of action
and have developed the following independent scenarios to pursue:
1. Reduce variable costs to 70% of sales.
2. Reduce fixed costs by $25,000.
3. Increase selling price by 6% with no change in total variable costs.
Instructions
Vera Bradley would like to select the scenario that would result in the
highest net income. Which scenario would you recommend and why? You must
show computations for each one and then state your conclusion.
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