accounting attached

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. Activity Setting up machines Inspecting components Providing utilities Cost $ 23,520 $ 4,500 $ 9,000 Driver 28 batches 4,500 parts 4,500 machine hours Overhead has been applied to output at a rate of 40% of direct labor costs. The following data pertain to Job 6.15. Direct materials Direct labor Batches Number of parts Machine hours $ 2,200 $ 4,000 5 batches 540 parts 630 machine hours Required: 1. Classify each of its three overhead activities as unit level, batch level, product level, or facility level. Setting up machines Inspecting components Providing utilities 2. What is the total cost of Job 6.15 if Business Solutions applies overhead at 40% of direct labor cost? (Omit the "$" sign in your response.) Total cost $ 3. What is the total cost of Job 6.15 if Business Solutions uses activity-based costing? (Omit the "$" sign in your response.) Total cost $ Business Solutions sells upscale modular desk units and office chairs in the ratio of 4:2 (desk unit:chair). The selling prices are $1,190 per desk unit and $440 per chair. The variable costs are $690 per desk unit and $190 per chair. Fixed costs are $350,000. Required: 1. Compute the selling price per composite unit. (Omit the "$" sign in your response.) Selling price $ 2. Compute the variable costs per composite unit. (Omit the "$" sign in your response.) Variable costs $ 3. Compute the break-even point in composite units. Break-even point composite units 4. Compute the number of units of each product that would be sold at the break-even point. Unit sales Desk units Chairs units Santana Rey expected sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,900) for 2012. The workstations' manufacturing costs include the following. Direct materials Direct labor Variable overhead Fixed overhead $ 740 per unit $ 360 per unit $ 60 per unit $19,200 per year The selling expenses related to these workstations follow. Variable selling expenses Fixed selling expenses $ 30 per unit $ 4,000 per year Santana is considering how many workstations to produce in 2012. She is confident that she will be able to sell any workstations in her 2012 ending inventory during 2013. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Compute Business Solutions' absorption costing income assuming. (Omit the "$" sign in your response.) a. 300 Workstations b. 320 Workstations $ $ 2. Compute Business Solutions' variable costing income assuming. (Omit the "$" sign in your response.) a. 300 Workstations b. 320 Workstations $ $ Santana Rey expects second quarter 2012 sales of her new line of computer furniture to be the same as the first quarter's sales (reported below) without any changes in strategy. Monthly sales averaged 41 desk units (sales price of $1,260) and 21 chairs (sales price of $510). Sales Cost of goods sold $ 187,110 $ 140,160 Gross profit Expenses Sales commissions (10%) Advertising expenses Other fixed expenses Total expenses Net income 46,950 18,711 9,300 18,300 $ 46,311 $ 639 Reflects revenue and expense activity only related to the computer furniture segment. Revenue: (123 desks $1,260) + (63 chairs $510) = $154,980 + $32,130 = $187,110 Cost of goods sold: (123 desks $760) + (63 chairs $260) + $30,300 = $140,160 Santana Rey believes that sales will increase each month for the next three months (April, 49 desks, 33 chairs; May, 53 desks, 36 chairs; June, 57 desks, 39 chairs) if selling prices are reduced to $1,160 for desks and $460 for chairs, and advertising expenses are increased by 10% and remain at that level for all three months. The products' variable cost will remain at $760 for desks and $260 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,100 and other fixed expenses will remain at $6,100 per month. Required: 1. Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month. (Input all amounts as positive values except any net loss which should be indicated by a minus sign. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Budgeted Income Statement For Months of April, May, and June April May $ June $ $ $ $ Expenses Total expenses Net income (loss) $ 2. Recommend whether Santana Rey should implement the proposed changes. Should not implement the proposed changes Should implement the proposed changes Business Solutions' second quarter 2012 fixed budget performance report for its computer furniture operations follows. The $172,960 budgeted expenses include $115,370 in variable expenses for desks and $20,590 in variable expenses for chairs, as well as $37,000 fixed expenses. The actual expenses include $38,500 fixed expenses. Desk sales (in units) Chair sales (in units) Fixed Budget 139 71 Actual Results 145 79 Variances Desk sales (in dollars) Chair sales (in dollars) Total expenses Income from operations $ 175,140 $ 40,470 $ 172,960 $ 42,650 $ 181,250 $ 46,215 $ 182,070 $ 45,395 $ $ $ $ 6,110 F 5,745 F 9,110 U 2,745 F Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) BUSINESS SOLUTIONS Flexible Budget Performance Report For Quarter Ended June 30 Flexible Budget Actual Results Variances $ $ $ $ $ $