ACCG70011

Finance and Managerial Accounting

Assignment #2

Chapter 02

Veekay Company was incorporate on November 1 of the previous year. After 7 months of start up losses, management had expected to earn a profit in June, the most recent month. Management was disappointed, however, when the income statement for June showed a loss. June income statement was as follows:

Sales$600,000

Less operating expenses:

Selling and administrative salaries$39,000

Rent of facilities40,000

Purchases of raw materials209,000

Insurance 10,000

Depreciation, sales equipment11,000

Utilities cost55,000

Indirect labour119,000

Direct labour99,000

Depreciation, factory equipment13,000

Maintenance, factory8,000

Advertising88,000 691,000

Operating loss$-31,000

Other information

Inventory balances at the beginning and end of June are as follows:

June 1June 30

Raw materials$19,000$46,000

Work in process77,00094,000

Finished goods22,00066,000

Required

Need a schedule of the cost of goods manufactured for June.

Chapter 03

House of Pianos, Inc. purchases pianos from a well-known manufacturer and sells them at the retail level. The pianos sell, on the average, for $2,600 each. The average cost of a piano from the manufacturer is $1,750.

House of Pianos, Inc. has always kept careful records of its costs. The costs that the company incurs in a typical month are presented below:

Costs

Cost Formula

Selling:

Advertising

$1,750.00

per month

Delivery of Pianos

$80.00

per piano sold

Sales Salaries and Commissions

$3,500.00

per month, plus 3% of sales

Utilities

$800.00

per month

Depreciation of Sales Facilities

$4,600.00

per month

Administrative:

Executive Salaries

$16,500.00

per month

Depreciation of Office Equipment

$700.00

per month

Clerical

$2,900.00

per month, plus $50 per piano sold

Insurance

$750.00

per month

During November, the company sold and delivered 95 pianos.

1. Need a Contribution Format income statement for November with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin. - 12 marks

1. For the information below, use the high-low method to determine the mixed cost equation. You must use both data for the high point, and the low point. You must show the equation (for both the high point and low point - meaning, you must to have TWO equations), not just what the variable cost is. - 4 marks

Units

Cost

26

2400

40

3100

28

2600

36

3000

24

2300

Chapter 4

"You Rang?" manufactures and sells boomerangs. The company's contribution format income statement for the month of September is given below. The company is looking to make a profit of $8000 for the month.

Total

Per Unit

Sales (800 units)

$16,000

$20.00

Less Variable Expenses

$9,600

$12.00

Contribution Margin

$6,400

$8.00

Less Fixed Expenses

$3,400

Operating Income

$3,000

Compute the following:

1. The Contribution Margin Ratio for "You Rang?" - 1 Mark
2. The company's break-even point in both units and sales dollars. - 3 Marks
3. The Target Operating Profit for "You Rang?"in both units and sales dollars. - 3 Marks
4. The company's Margin of Safety expressed in units, sales dollars, and as a percentage. - 3 Marks

Make sure to show ALL work! A majority of the marks are based on the work, not the final answer. To receive full credit for each question, you must show your work, and round your final answers to 2 decimal points correctly.