Question
Hello! I've added all of the questions leading up to number nine so that you can understand where I'm coming from. I'm done with most
Hello! I've added all of the questions leading up to number nine so that you can understand where I'm coming from. I'm done with most of it but my numbers just aren't adding up and I'm not too sure what I'm doing wrong.
Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits.
On 1/1/20, this was ASC's Balance Sheet
Cash $2,000,000 Accounts payable 0
AR 0 Wages Payable 0
RMI/WIP/FGI 0 Common Stock/APIC $2,000,000
PP&E 0 Retained Earnings 0
Total assets $2,000,000 Liabs. + Owner's Equity $2,000,000
On 1/1/20, Erin Rogers ESTIMATES the following costs:
Rent on MANUFACTURING facility $30,000
Salaries for CEO, cost accountant, administrative staff $10,000
Depreciation for machinery $10,000
Interest Expense $10,000 = $60,000
ABBOTT SUIT CORPORATION USES MACHINE HOURS TO ALLOCATE UTILITIES AND INDIRECT LABOR.
Abbott Suit Corporation direct labor hours to allocate rent on manufacturing facility and depreciation on the machinery.
Erin Rogers, UW-M graduate, creates the following standards for the two jogging suits:
Nylon Jogging Suits
Cotton Jogging Suits
Std.qty/suit
Std.price/input
Std.qty/suit
Std.price/input
Direct Materials
2 yds/suit
$10/yd
3 yds/suit
$20/yd
Direct Labor
5 dlh/suit
$10/dlh
4 dlh/suit
$5/dlh
VOHutilities/janitor wages
3 mh/suit
$10/mh
4 mh/suit
$10/mh
Var Cost/nysuit = $100/nysuitVar Cost/ctsuit = $120/ctsuit
Abbott Suit believes that it can sell Nylon Jogging Suits for $140/suit and Cotton Jogging suits for $140/suit.Abbott Suit has a goal operating income of $100,000 and believe that it will sell 3 times as many Cotton jogging suits as nylon jogging suits (that is, for every nylon jogging suit sold, 3x - or 3 times - that many cotton jogging suits will be sold).
1.Compute how many NYLON and COTTON jogging suits must be sold in order to achieve the goal operating income of $100,000 (SHOW YOUR WORK). (5 pts.).
Xnylon*($140-$100)+Xcotton($140-$120) - 60,000 = $100,000
3*Xnylon = Xcotton
Xnylon*($40)+3Xnylon($20) = $160,000
Xnylon*($40)+Xnlon($60) = $160,000
Xnylon*($100) = $160,000
Xnylon = 1,600 nylon suits
Xcotton = 4,800 cotton suits
2.On 1/1/20, ASC has the following balances:
Cotton Jogging Suits: 0 suits
Nylon Jogging Suits 0 suits
And ASC BUDGETS the following balances for 12/31/20:
Cotton Jogging Suits 2000 suits
Nylon Jogging Suits 1000 suits
REQUIRED: indicate how many cotton and nylon jogging suits ASC is budgeted to make in 2020 (3 pts).
X = 2,600 Nylon Suits
Y = 6,800 Cotton Suits
3.Calculate the predetermined FIXED overhead rate (3 pts).
FPDOH = $50,000/ (2,600nysuits*5dlh/nysuit + 6,800ctsuits*4dlh/ctsuit)
FPDOH = $50,000 / (13,000dlh+27,200dlh)
FPDOH = $50,000 / 40,200dlh
FPDOH = $1.24/dlh
ACTUAL RESULTS FOR THE YEAR/JOURNAL ENTRIES
4.On 1/1/20, ASC purchased - on account - 20,000 yards of nylon for $225,000 and 25,000 yards of cotton for $425,000 - on account.Please give the journal entry to record this transaction (4 pts).
RMInylon (20,000yds*$10/yd)....................................$200,000
DMPPVny(est=$10/yd, actual $11.25/yd=$1.25/ydUNF)....$25,000
Accounts Payable....................................................$225,000
RMIcotton (25,000yds*$20/yd)...........................$500,000
DMPPVct(est=$20/yd, actual $17/yd=$3/ydFAV)....................$75,000
Accounts Payable..................................................$425,000
5.1/1/20 ASC purchased - in cash - a sewing machine for $50,000.It has a zero salvage value and a useful life of 5 years.Give the journal entry (3 pts).
PP&E........$50,000
Cash...........$50,000
6.ASC, takes out a 10-year loan for $200,000.It has an annual interest rate of 5% and the interest payments are NOT due until the beginning of 2013.Please give the journal entry (3pts)
Cash.........$200,000
Loan Payable......$200,000
7.During the year, ASC nylon jogging suit workers requisition out 5,000 yards of nylon and made 3,000 nylon jogging suits.Give the journal entry to describe this transaction (3 pts).
Should have taken (3,000nysuits*2yds/suit) or 6,000 yds, actually took 5,000yds = 1,000yds FAV
WIP/FGny (3,000nysuits*2yds/nysuit*$10/yd).........$60,000
DMEVnylon (1,000ydsFAV*$10/yd)..................................$10,000
RMIny (5,000yds*$10/yd)..........................................$50,000
8.During the year, ASC cotton jogging suit workers requisitioned out 10,000 yards of cotton and made 4,000 cotton jogging suits.Give the journal entry (4 pts).
Should have taken (4,000ctsuits*3yds/ctsuit) = 12,000yds, actually took 10,000yds = 2,000yds FAV
WIP/FGct (4,000ctsuits*3yds/suit*$20/yd)........$240,000
DMEVct (2,000ydsFAV*$20/yd).............................$40,000
RMIct (10,000yds*$20/yd)................................$200,000
9.During the year, ALC paid the following to its workers:
Administrative Salaries to CEO, accountant, etc.. $8,000
Nylon jogging suit workers for direct labor (9000 dlh * $11/dlh) $99,000
Cotton jogging suit workers (20000 dlh * $4/dlh) $80,000
Janitor wages $125,000
These were paid for in CASH.Please give the journal entry (4 pts).
MOH-VOH......$125,000
Cash........$125,000
Period Cost.......$8,000
Cash...........$8,000
DLRVny=thought we would pay $10/dlh, actually paid $11/dlh=$5UNF*9,000dlh=$45,000UNF
DLEVny=made 3,000nysuits*5dlh/suit or 15,000dlh, actually used 9,000dlh=3,000dlhFAV*$10/dlh=$30,000FAV
WIP/FGny (3,000nysuits*5dlh/suit*$10/dlh).......$150,000
DLRVny.....................................................$45,000
DLEVny..............................................................$30,000
Cash..........................................................$99,000
DLRVct=thought we would pay $5/dlh, actually paid $4/dlh = $1/dlhUNF*20,000dlh = $20,000UNF
DLEVct=4,000ctsuist*4dlh/suit=16,000dlh, actually used 20,000dlh = 7,000dlhUNF*$5/dlh=$35,000UNF
WIP/FGct(4,000ctsuits*4dlh/suit*$5/dlh)...........$80,000
DLRVct....................................................$20,000
DLEVct....................................................$25,000
Cash......................................................$125,000
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