Can you please help me answer the questions highlighted in yellow in the attached document. Problems 19-21, I cant seem to figure these questions out.

3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Waterways Continuing Problem 15 (Part Level Submission) Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private homes. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that provides installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, provide rapid and responsible service, and serve the community and the employees who represent them in each community. The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products. Waterways was founded by Will Winkman who is the company president and chief executive officer (CEO). Working with him from the company's inception was Will's brother, Ben, whose sprinkler designs and ideas about the installation of proper systems have been a major basis of the company's success. Ben is the vice president who oversees all aspects of design and production in the company. The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Hector Hines. The installation and training division is overseen by vice president Henry Writer, who supervises the managers of the six local installation operations. Each of these local managers hires his or her own local service people. These service employees are trained by the home office under Henry Writer's direction because of the uniqueness of the company's products. There is a small Human Resources department under the direction of Sally Fenton, a vice president who handles the employee paperwork, though hiring is actually performed by the separate departments. Sam Totter is the vice president who heads the sales and marketing area he oversees 10 welltrained salespeople. The accounting and finance division of the company is headed by Abe Headman, who is the chief financial officer (CFO) and a company vice president he is a member of the Institute of Management Accountants and holds a certificate in management accounting. He has a small staff of Certified Public Accountants, including a controller and a treasurer, and a staff of accounting input operators who maintain the financial records. A partial list of Waterways' accounts and their balances for the month of November 2012 follows. Accounts Receivable Advertising Expenses Cash DepreciationFactory Equipment DepreciationOffice Equipment $275,000 54,000 260,000 16,800 2,400 Direct Labor 42,000 Factory Supplies Used 16,800 Factory Utilities 10,200 Finished Goods Inventory, November 30 68,800 Finished Goods Inventory, October 31 72,550 Indirect Labor 48,000 Office Supplies Expense 1,600 Other Administrative Expenses 72,000 Prepaid Expenses 42,150 Raw Materials Inventory, November 30 52,700 Raw Materials Inventory, October 31 Raw Materials Purchases RentFactory Equipment RepairsFactory Equipment Salaries Sales 38,000 184,500 47,000 4,500 325,000 1,350,000 Sales Commissions 40,500 Work In Process Inventory October 31 52,700 Work In Process Inventory, November 30 42,000 http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 1/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Waterways Continuing Problem 15 (Part Level Submission) A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule. WATERWAYS CORPORATION Cost of Goods Manufactured Schedule For the Month of November, 2012 $ $ : $ : $ Waterways Continuing Problem 15 (Part Level Submission) A list of accounts and their values are given above. From this information, prepare an income statement. WATERWAYS CORPORATION Income Statement For the Month of November, 2012 $ $ : http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 2/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false $ $ Waterways Continuing Problem 15 (Part Level Submission) A list of accounts and their values are given above. From this information, prepare the current assets section of the balance sheet for Waterways Corporation for the month of November 2012. (List Current assets in order of liquidity.) WATERWAYS CORPORATION Balance Sheet (partial) November 30, 2012 Assets $ $ $ Waterways Continuing Problem 16 (Part Level Submission) http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 3/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Waterways has two major publicpark projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain which will require specialorder sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December 2012. Raw materials were requisitioned from the company's inventory on December 2 for $5,061 on December 8 for $1,059 and on December 14 for $3,459. In each instance, twothirds (2/3) of these materials were for J57 and the rest for K52. Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $16.50 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, twothirds (2/3) for J57 and the rest for K52. The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,112 hours, and the anticipated overhead costs are $840,576 for the year. The machine were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 237 sprinkler heads for J57 and 142 sprinkler heads for K52. Additional job order activities during this period of time included: Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,200. Dec. 2 Issued $40,000 of direct materials from the company's inventory to jobs other than K52 and J57 and $3,000 of indirect materials. Dec. 12 Paid Waterways' factory salaries and wages in the amount of $65,000. Dec. 13 Paid the factory's water bill of $9,000. Dec. 18 Transferred $50,000 of costs from other completed jobs to finished goods. Dec. 21 Paid the factory's electric bill of $12,000 for Waterways' factory. Dec. 31 Made adjusting entries for the factory that included accrued property taxes of $12,000, prepaid insurance of $8,800, and accumulated depreciation of $16,000. Waterways Continuing Problem 16 (Part Level Submission) Set up the job cost sheets for Job No. J57 and Job No. K52. Determine the total cost for each manufacturing special order for these jobs. (Round unit costs to 2 decimal places, e.g. 12.25.) Job No. J57 Total Cost Unit Cost Job No. K52 $ $ $ $ Waterways Continuing Problem 16 (Part Level Submission) Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that occurred during this period of time. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (Purchase of raw materials on account) (To assign materials to jobs J57 & K52) 12/2 (To assign materials and overheads to http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 4/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false other jobs) (To assign labor to jobs J57 & K52) (To assign overhead to jobs J57 & K52) (To assign materials to jobs J57 & K52) (To assign labor to jobs J57 & K52) (To assign overhead to jobs J57 & K52) (To record factory labor costs and payment) (To record payment of factory water bill) (To assign materials to jobs J57 & K52) (To assign labor to jobs J57 & K52) (To assign overhead to jobs J57 & K52) (To record completion of jobs J57 & K52) (To record completion of other jobs) http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 5/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false (To record payment of factory electric bill) (To record overhead costs) Waterways Continuing Problem 16 (Part Level Submission) Assuming that Manufacturing Overhead has a debit balance of $3,600, determine whether overhead has been under/over applied and make the adjusting entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 12/31 Waterways Continuing Problem 16 (Part Level Submission) Why would Waterways choose machine hours as the cost driver for the overhead rather than direct labor cost? What would Waterways be likely to choose as the cost driver for the overhead for the job of installing the irrigation system and why? Since production involved the use of using that required minimal , as the cost driver for producing the sprinkler heads would more accurately reflect the overhead costs than would . When the irrigation system is installed, this would require a great deal of and minimal . Therefore, the cost driver for overhead costs would more likely be . Waterways Continuing Problem 17 (Part Level Submission) Because most of the parts for its irrigation systems are standard, Waterways handles the majority of its manufacturing as a process cost system. There are multiple process departments. Three of these departments are the Molding, Cutting, and Welding departments. All items eventually end up in the Package department which prepares items for sale in kits or individually. The following information is available for the Molding department for January. Work in process beginning: Units in process 22,000 Stage of completion for materials 80% Stage of completion for labor and overhead 30% Costs in work in process inventory: Materials $168,360 Labor 67,564 Overhead 17,270 Total costs in beginning work in process $253,194 Units started into production in January 60,000 http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 6/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Units completed and transferred in January 58,000 Costs added to production: Materials $264,940 Labor 289,468 Overhead 60,578 Total costs added into production in January $614,986 Work in process ending: Units in process 24,000 Stage of completion for materials 50% Stage of completion for labor and overhead 10% Waterways Continuing Problem 17 (Part Level Submission) Prepare a production cost report for Waterways using the weightedaverage method. (Round unit costs to 2 decimal places, e.g. 2.25.) WATERWAYS CORPORATION Molding Department Production Report For the month of January, 2013 Equivalent Units Quantities Physical Units Materials Conversion Costs Materials Conversion Costs Units to be accounted for Work in process, Jan. 1 Started into production Total units Units accounted for Transferred out Work in process, Jan 31 Total units Costs Total Unit costs Costs in January $ $ $ $ $ $ Equivalent units Unit costs Costs to be accounted for Work in process, Jan. 1 $ Started into production $ Total costs Cost http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 7/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Reconciliation Schedule Costs accounted for $ Transferred out Work in process, Jan. 31 Materials Conversion costs $ Total costs Waterways Continuing Problem 17 (Part Level Submission) Show the equivalent units for materials and conversion costs if Waterways used FIFO instead of weightedaverage. Equivalent Units Physical Units Materials Conversion Units accounted for Completed and transferred out Work in process, Jan. 1 Started and completed in Jan. Work in process, Jan. 31 Total units Waterways Continuing Problem 18 (Part Level Submission) Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activitybased costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. Waterways Continuing Problem 18 (Part Level Submission) For each of these cost pools, what would be the likely activity cost driver? Assembling Billing Digging trenches Janitorial Machine maintenance Machine setups Molding Packaging Payroll http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 8/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Plant supervision Product design Purchasing materials Selling Testing Welding Waterways Continuing Problem 18 (Part Level Submission) Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways. (Round answers to 2 decimal places, e.g. 12.25.) WATERWAYS CORPORATION Activity Cost Pools Expected Use of Cost Drivers per Activity Cost Drivers Estimated Overhead Actual Use of Drivers Irrigation installation Labor cost $1,998,432 12,960 12,941 Machining (all machine use) Machine hours 1,670,400 33,408,000 33,409,000 Customer orders Number of orders 30,636 2,553 2,520 Design Cost per design 820 8 7 Selling Number of sales calls 350,400 21,900 22,100 WATERWAYS CORPORATION Activity Based Overhead Rates Activity Cost Pools Irrigation installation $ Actual Cost Assigned $ Machining (all machine use) Customer orders Design Selling Waterways Continuing Problem 18 (Part Level Submission) How would you classify each of the following activities by levelunit level, batch level, product level, or facility level? Testing of products (if all items are tested) Testing of products (if all items are not tested) Designing new products Packaging Molding Assembling Depreciation Machine maintenance Advertising http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 9/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Equipment setups Electricity required to run equipment Requisitioning materials Waterways Continuing Problem 19 (Part Level Submission) Vice President for Sales and Marketing Sam Totter is trying to plan for the coming year in terms of production needs to meet the sales demand. He is also trying to determine ways in which the company's profits might be increased in the coming year. Waterways Continuing Problem 19 (Part Level Submission) Waterways markets a simple water control and timer that it massproduces. During 2013, the company sold 696,000 units at an average selling price of per solution $4.20 per unit. The variable expenses were $1,900,080, and the fixed expenses were $683,256. What is the product's contribution margin ratio? (Round ratio to 0 decimal places, e.g. 25%.) The contribution margin ratio is % Waterways Continuing Problem 19 (Part Level Submission) What is the company's breakeven point in units and in dollars for this product? Breakeven point in units Breakeven point in dollars units $ Waterways Continuing Problem 19 (Part Level Submission) What is the margin of safety, both in dollars and as a ratio? (Round ratio to 0 decimal places, e.g. 25%.) Margin of safety in dollars $ Margin of safety ratio % Waterways Continuing Problem 19 (Part Level Submission) If management wanted to increase its income from this product by 10%, how many additional units would have to be sold to reach this income level? Waterways would have to sell an additional units Waterways Continuing Problem 19 (Part Level Submission) If sales increase by 51,000 units and the cost behaviors do not change, how much will income increase on this product? Income will increase by $ Waterways Continuing Problem 19 (Part Level Submission) Waterways is thinking of massproducing one of its specialorder sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 491,740 sprinkler units at an average selling price of $26.50. The manufacturing costs are $6,863,512 variable and $2,050,140 fixed. Selling and administrative costs are $2,651,657 variable and $794,950 fixed. If Waterways begins massproducing its specialorder sprinklers, how would this affect the company? (Round ratio to 0 decimal places, e.g. 5% and Net income to 2 decimal places, e.g. 2,520.25.) http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 10/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Contribution margin ratio by Net income by % $ Waterways Continuing Problem 19 (Part Level Submission) If the average sales price per sprinkler unit did not increase when the company began massproducing the specialorder sprinkler, what would be the effect on the company? (Round answers to 0 decimal places, e.g. 5% or 2,520.25.) Contribution margin ratio by Profit by % $ Waterways Continuing Problem 20 (Part 1) (Part Level Submission) Waterways has a sales mix of sprinklers, valves, and controllers as follows. Annual expected sales: Sale of sprinklers 460,000 units at $26.50 Sale of valves 1,480,000 units at $11.20 Sale of controllers 60,000 units at $42.50 Variable manufacturing cost per unit Sprinklers $13.96 Valves $7.95 Controllers $29.75 Fixed manufacturing overhead cost (total) $760,000 Variable selling and administrative expenses per unit: Sprinklers $1.30 Valves $0.50 Controllers $3.41 Fixed selling and administrative expenses (total) $1,600,000 Waterways Continuing Problem 20 (Part 1) (Part Level Submission) Determine the sales mix based on unit sales for each product. (Round answers to 0 decimal places, e.g. 25%.) Sprinklers Sales mix Valves % Controllers % % Waterways Continuing Problem 20 (Part 1) (Part Level Submission) Using the annual expected sales for these products, determine the weightedaverage unit contribution margin for these three products. (Round answer to two decimal places, e.g. 5.25.) WeightedAverage Unit Contribution Margin $ Waterways Continuing Problem 20 (Part 1) (Part Level Submission) Assuming the sales mix remains the same, what is the breakeven point in units for these products? (Round answer to 0 decimal places, e.g. 2,520.) Breakeven Point in Units units Waterways Continuing Problem 20 (Part 2) Waterways packages some of its products into sets for home installations. One set (small) sells for $77 with http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 11/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false variable costs of production for the set at $50. Another set (large) sells for $152 with variable costs of $100. The parts for the $77 set take 9 machine hours to produce. The parts for the $150 set take 20 machine hours to produce. Given the information above, and assuming all of the package sets produced can be sold each month, illustrate the best use of machine hours. (Round answers to 2 decimal places, e.g. 5.25.) Small Set Contribution margin per unit of limited resource The Large Set $ $ is the best use of a limited resource. Waterways Continuing Problem 20 (Part 3) The section of Waterways that produces controllers for the company provided the following information. Sales for month of February 4,000 Variable manufacturing cost per unit $9.75 Sales price per unit $42.50 Fixed manufacturing overhead cost (per month for controllers) $81,000 Variable selling and administrative expenses per unit Fixed selling and administrative expenses (per month for controllers) $3.00 $13,122 Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the breakeven point in dollars, and the margin of safety ratio for Waterways Corporation on this product. Contribution Margin Ratio (Round to 0 decimal places, e.g. 25%.) % Degree of Operating Leverage (Round to 2 decimal places, e.g. 5.25.) Breakeven Point in Dollars $ Margin of Safety Ratio (Round to 1 decimal place, e.g. 5.2%.) % Waterways Continuing Problem 21 (Part 1) (Part Level Submission) Waterways massproduces a special connector unit that it normally sells for $3.90. It sells approximately 35,000 of these units each year. The variable costs for each unit are $2.30. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 15,000 of these units at $2.60 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit. An irrigation company has asked for a special order of 2,000 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit. Waterways Continuing Problem 21 (Part 1) (Part Level Submission) What are the consequences of Waterways agreeing to provide the 15,000 units to the Canadian company? Would this be a wise \"special order\" to accept? Waterways accept the special order because net income by $ . Waterways Continuing Problem 21 (Part 1) (Part Level Submission) Should Waterways accept the special order from the irrigation company? http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/13 3/1/2015 Print Assignment: Term Project II: Cont. Prob. Ch 1521 ::false Waterways accept the special order because net income by $ . Waterways Continuing Problem 21 (Part 1) (Part Level Submission) What would be the consequences of accepting both special orders? Accepting both special orders would net income by $ . Waterways Continuing Problem 21 (Part 2) (Part Level Submission) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.82 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 460,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 500 of these units each year. The cost of the unit is $12.66. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,345, and the cost of producing the units would be $9.90 a unit. Waterways Continuing Problem 21 (Part 2) (Part Level Submission) Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should the fitting. Incremental cost / (savings) will be $ Waterways Continuing Problem 21 (Part 2) (Part Level Submission) What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is $ Waterways Continuing Problem 21 (Part 2) (Part Level Submission) Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should small fittings and the timing units. Waterways Continuing Problem 21 (Part 3) Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50 units per day at a cost of $6.50 per unit, whereas other similar machines are producing twice that much. The units sell for $8.50. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $55,000 and have a 2year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a of $ . Waterways keep the old machine. http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?titleType=false 13/13