Question
Can you assist with the following 11 questions? ***SHOW ALL COMPUTATIONS OR NO CREDIT GIVEN**** 1.(20 points) Brunswick Corporation sells bowling balls and has developed
Can you assist with the following 11 questions?
***SHOW ALL COMPUTATIONS OR NO CREDIT GIVEN****
1.(20 points)
Brunswick Corporation sells bowling balls and has developed the following
information:
Sales price $70 per unit
Variable cost of goods sold $26 per unit
Fixed cost of goods sold $500,000
Variable operating expenses $950,000
Fixed operating expenses $650,000
For the year ended December 31, 2015, Brunswick Corporation produced and
sold 100,000 bowling balls.
Instructions-show all computations
Prepare a detailed CVP income statement using the contribution
margin format for Brunswick Corporation for 2015.
(b) Compute the contribution margin per unit.
(c) Compute the contribution margin ratio.
(d) Compute the break-even point in dollars.
(e) Compute the margin of safety in dollars.
(f) Compute the margin of safety ratio.
(g) Compute the number of bowling bag to be sold to earn a target
income of $1,500,000.
2. Malibu Boats Inc. uses a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:
Purchased raw materials on account, $160,000.
2. An analysis of the requisitions shows the following: Direct materials
requisitioned during the month:
Job 101 $25,000
Job 102 19,000
Job 103 30,000
$74,000
Factory labor costs incurred were $85,000 of which $71,000 pertained
to factory wages payable and $14,000 pertained to employer payroll taxes payable.
4. An analysis of the time tickets indicated the following: Direct labor
incurred and charged to jobs during the month was:
Job 101 $31,000
Job 102 27,000
Job 103 22,000
$80,000
Incurred manufacturing overhead costs as follows: indirect labor $11,000, indirect materials $6,000, and depreciation $9,000. Also, incurred $65,000 of manufacturing overhead costs on account.
Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 101% of direct labor costs.
Job 101 and Job 103 were completed during the month. (Note: show your work in part b. below.)
Job 101 was sold on account for $107,000.
Instructions:
Prepare journal entries to record the above transactions.
Compute the cost of Job 101, Job 102 and Job 103.
Compute the balance in the Work-in-Process account at the end of the month.
Compute the amount of over/under applied overhead.
3. Callaway Golf Company has two departments and information for each one is shown below. Each department allocates overhead using a different base. NOTE: ALL INFORMATION BELOW IS FOR THE ENTIRE YEAR.
Estimated Actual Estimated Actual
Dept. Activity Base Overhead Overhead Activity Base Act.Base
A Direct labor cost $160,000 $175,000 $ 40,000 $39,000
B Machine hours $100,000 $101,000 10,000hrs 11,000hrs
Instructions (SHOW ALL COMPUTATIONS or no credit given)
(a) Compute the predetermined overhead rate for each department.
(b) Compute the amount of overhead applied for each department for the year.
(c) Compute the amount of under- or over-applied overhead for each department.
(d) Record the journal entry to adjust the amount determined in part (c). for Department *A* ONLY assuming it is adjusted at year-end.
4. General Motors Corporation produces a product which requires several departments. Two of those departments are the (1) Cutting and (2) Assembly departments. The company uses a process cost accounting system. During March the company had the following transactions for these departments:
(a) Manufacturing overhead is applied to the product based on
the following for each department:
Cutting department--200 machine hours at $30 per machine hour.
Assembly department?350 direct labor hours at $20 per hour.
(b) Units costing $80,000 were completed in the Cutting Department
and were transferred to the Assembly Department.
(c) Units costing $58,000 were completed in the Assembly Department
and were transferred to Packaging Department.
Instructions
Prepare the journal entries to record the above transactions (a,b,c) for
General Motors Corporation.
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.
7.(10 points) J.M Smucker Company operates two divisions, the Fruit Preserves Division and the Snack Foods Division. The Fruit Preserves Division manufactures and sells jelly and jams to supermarkets. The Snack Foods Division sells its products to theme parks. The company is considering disposing of the Snack Foods Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2015 are presented below:
Fruit Preserves Snack Foods
Division Division Total
Sales revenue $1,500,000 $500,000 $2,000,000
Cost of goods sold 900,000 350,000 1,250,000
Gross profit 600,000 150,000 750,000
Selling & admin expenses 250,000 180,000 430,000
Net income $ 350,000 $(30,000) $ 320,000
In the Snack Foods Division, 60% of the cost of goods sold are variable costs and 25% of selling and administrative expenses are variable costs. The management of the company feels it can save $60,000 of fixed cost of goods sold and $50,000 of fixed selling expenses if it discontinues operation of the Snack Foods Division.
Instructions
(a) Determine whether the company should discontinue operating the Snack Foods Division. Prepare a schedule which supports your decision.
(b) If the company had discontinued the division for 2015, determine what net income would have been.
8. (6 points) Pfizer Company produced and sold 50,000 units of product and is operating at 75% of plant capacity. Unit information about its product is as follows:
Sales Price $70
Variable manufacturing cost $45
Fixed manufacturing cost ($500,000 50,000) 10 55
Profit per unit $15
The company received a proposal from a foreign company to buy 15,000 units of Pfizer Company's product for $50 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of Pfizer Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.
Instructions
a) Prepare a schedule reflecting an incremental analysis of this special order.
b) Should Pfizer accept/reject this order and why?
9. (8 points) General Electric Company manufactured 6,000 units of a component part that is used in its product and incurred the following costs:
Direct materials $35,000
Direct labor 15,000
Variable manufacturing overhead 10,000
Fixed manufacturing overhead 20,000
$80,000
Another company has offered to sell the same component part to the company for $12 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, General Electric Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $14,000.
Instructions
Prepare an incremental analysis report for this make or buy decision.
Should General Electric make or buy this component part and why?
10. Goodrich Tires manufactures tires for dune buggies and has two different products, nubby tires and smooth tires. The company produces 5,000 nubby tires and 10,000 smooth tires each year and incurs $167,000 of overhead costs. The following information is available:
Activity Total Cost Cost Driver
Materials handling $60,000 Number of requisitions
Machine setups 50,000 Number of setups
Quality inspections 57,000 Number of inspections
For the nubby tires, the company has 400 requisitions, 200 setups, and 200 inspections. The smooth tires require 600 requisitions, 300 setups, and 400 inspections.
Instructions
Determine the overhead rate for each activity.
11. Caterpiller Manufacturing has five activity cost pools and two products (a budget lawnmower and a deluxe lawnmower). Information is presented below:
Cost Drivers by Product
Activity Cost Pool Cost Driver Est. Overhead Budget Deluxe
Ordering and Receiving Orders $ 120,000 600 400
Machine Setup Setups 297,000 500 400
Machining Machine hours 1,000,000 150,000 100,000
Assembly Parts 1,400,000 1,200,000 800,000
Inspection Inspections 300,000 550 450
Instructions
Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. Round your answer to the nearest cent.
Activity Cost Pool |
Cost Driver |
Est. Overhead | Cost Drivers by Product Budget Deluxe |
Overhead Rate | |
Ordering and Receiving |
Orders | $120,000 |
600 |
400 |
$120/order |
Machine Setup |
Setups |
297,000 |
500 |
400 |
$330/setup |
Machining | Machine hours |
1,000,000 |
150,000 | 100,000 |
$4/machine hour |
Assembly |
Parts |
1,400,000 | 1,200,000 |
800,000 |
$0.70/part |
Inspection | Inspections | 300,000 | 550 | 450 | $300/inspection |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started