Hello!
Can someone please check my answers that IDO have and help me with the rest? Please include excel formulas with answers.
Thank you!
Purpose: Apply real world analysis to a problem faced by a local company using the skills learned in the class. Apple Hilly Farms Ned Hilly was an investment banker and worked in San Francisco at a large bank. As retirement got closer his wife, Sally, and him decided to spend their retirement up in the Sierra Nevada foothills by buying an apple farm in Apple Hill. All their kids were grown and their youngest daughter, Nikki, was finishing an accounting degree at Sac State, whom they were hoping would help them out with the books once she was done. A few years go by and the farm life is bustling. They had a U-Pick your own apples at the farm which cut down costs of running the farm, though they ended up with more apples than they could sell that first year. The second year, Sally came up with the idea of opening a bakery on the farm. She was an excellent baker; she makes the best apple pie west of the Mississippi, at least her family thought so. The bakery was a success that year, more so than expected. Sally made homemade apple pies and caramel apples with her special caramel sauce. In the following year, they expanded bakery operations to include more staff and an extra space for baking. Ned wasn't too sure if the expansion was going to be profitable, he had an idea of the costs involved with apple pie and caramel apple production, but he couldn't pinpoint the details. Since Apple Hill is a seasonal business he wanted to know how well his business did in the peak season to ensure that it made enough to cover the costs in the off-season. Luckily, Nikki just graduated in May and she would be able to work with Ned to work out the details and come up with some possible advice and solutions to his questions. Nikki started by talking with her parents about some of the estimated sales and costs that they thought would incur for the month of September. Here are some of those estimates: Additionally, Sally informed her that the farm received a special order to sell their apple pies and caramel apples at the local county fair in September. Sally wanted to sell 3.500 pies and 4.500 caramel apples for a discounted price of $20.00 and $7.50, respectively. With, the number of staff and the size of the bakery, Nikki determined that the maximum capacity for the bakery is 3,800 labor hours a month. At the current projected sale amounts she expects that theyll need 3,205 hours to meet their regular sales volume. After review of the salaries of all the staff, Nikki determined that the average hourly wage was $15.00. Ned was also concerned about how much it cost to keep apple pie inventory on hand at the end of the month, caramel apples should be sold within a couple days, so no inventory is left at the end of the month. Since there is a limited shelf life for the apple pies, Ned and Sally try and keep the ending inventories in line with next month's expectations. They estimated that they'd have to start 8,000 apple pies in order to have 1,000 apple pies in-process at the end of the month and 500 finished pies. At the end of August there were 500 pies that were in-process and no finished pies. The variable costs associated with these inventories were as follows: And the conversion cost for the in-process pies is 50% completed and 100% for direct materials. (Use the expected for September Apple Pie Sales for determining units started and units completed and transferred out) September was a success for the bakery! They didn't complete the special order but foctsed on normal sales and with some overtime baked a few more pies. Here were the results for the actual sales and costs at the end of the month. (The actuals as presented below are only to be use for Problem 6.) Problems 1. For Apple Pies only, compute the variable manufacturing costs per unit, full unit cost per unit, variable cost per unit, full absorption cost per unit, prime cost per unit, conversion cost per unit, profit margin per unit, contribution margin per unit, and gross margin per unit. 2. Calculate the total profit expected for September, compute the weighted average contribution margin, and compute the breakeven in units. 3. Calculate the labor hours needed for the special onder, calculate the incremental profit/(loss) for the special order, calculate the capacity available for regular orders, compute the contribution margin per hour for regular orders, compute the contribution margin lost from regular sales orders, calculate the total contribution margin including the special order. 4. Prepare the journal entries as given on the excel workbook. 5. Using the Weighted-Average method create the Production Cost Report for Apple Pies only, to include computing the total Apple Pies to be accounted for, computing the total Apple Pie costs to be accounted for, and calculating any necessary adjustments. 6. Create a Budget Analysis Report for the month of September, to include creating a Master Budget, and calculating the variance analyses between Actuals versus the Flexible Budget and versus the Master Budget. Note those variances as either being Favorable (F) or Unfavorable (U). Problem Analysis 1. What costs are excluded from the Gross Margin calculation? Why would we exclude these costs? 2. What does the mix of the weighted-average contribution margin tell us about the impact to profits of each product? 3. Should Apple Hilly Farms complete the Special Order? Explain your answer by using pricing terms from the textbook. 4. Was manufacturing overhead under or over applied? What does over or under applied overhead mean? 5. Why would Apple Hilly Farms use standard costing since actual costing gives the actual cost? Why would they not want to wait until the actual costs are known? 6. Explain the variances calculated for Apple Hilly Farms. Why was September a good or bad month for them? a. Computations for 7,500 Apple Pies 1. 2. 3. 5. 6. 7. 8. Apple Hilly Farms a. Total Profit for the month of September b. Compute the weighted average contribution margin per unit Weights: Weighted-average contribution margin per unit c. Compute breakeven: Apple Hilly Farms a. Labor hours required for special order Product Apple Pies Catramel Apples b. Incremental profit(loss) on special order I labor hours for the additional 8,000 units combined, then rogular production will nood to be roduced for the product with the lowest contribution margin c. Compute contribution margin per hour for regular orders d. Compute contribution margin lost froen regular sales 0. Total contribution margin with speclal order a. Purchased 554,310 of materials on account. b. Issued $3,400 of supplies in materials inventory into production department. c. Paid for materials purchased in (a) d. lssued $43,650 in direct materiaks to the production department. e. Incurred total wage costs of $89,000 of which $15,100 was withheld for parroli takes, to be paid next month. f. Analyzed the Payroll fxpense aceount and determined that 605 represented direct labor, 30N indirect labor, and 10% adminstrative and marketing costs. For this entry you will need to compute the amounts to be debited. g. Applied overhead on the basis of 175% of direct labor costs. For this entry you will need to compute the amounts to be debited and credited. h. Paid for utilities, power, equipment maintenance, and other miscellaneous items for the bakery totalling $41,300 1. Recognized depreciation of $16,250 on the bakery property, plant and equipment. j. Book the over/under for manulacturing overhead to coGs. For this entry you will need to compute the ameunts to be debited and credited. Apple Hilly Farms Production Cost Report a. Compute total Apple Pie units to be accounted for b. Compute total Apple Pie costs to be accounted for Budget Analysis a. Prepare Master Budget for September Analysis for Problems 1 - 6 3 4 5 6
