How it works picad an enge ONE QUESTIOIMG.4050 HEC LEARN Upload error. Hmm, that didn't work. Make sure you've selected a valid image format. What your que Chapter 10 Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: Se Standard Standard Standard Quantity/Hours Price/Rate Cost per Bag Direct Materials 20 kilograms $0.40 per kilogram $8.00 Direct Labour 0.1 hours $11 per hour $1.10 Variable Manufacturing Overhead 0.1 hours $4.00 per hour $0.40 The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows: Production of Fastgro: Direct Materials Purchased Direct Labour Used Variable Manufacturing Overhead Incurred Inventory of Direct Materials on January 31 4,000 bags $85,000 kilograms at a cost of $32,300 0 A 4 390 hours at a cost of $4,875 $1,476 DR 3,000 kilograms AR R a. What was the materials price variance for January? b. What was the materials quantity variance for January? c. What was the labour rate variance for January? d. What was the labour efficiency variance for January? e. What was the variable overhead spending variance for January? f. What was the variable overhead efficiency variance for January? g. Provide a brief possible reason for each one of one of the variances computed above. Chapter 4 The following monthly data are available for the Challenger Company and its only product, Product SW: Sales (400 units) Variable expenses Contribution margin Fixed expenses Net income Total $110,000 44,000 $ 66,000 52,800 $ 13,200 Per Unit $275 110 $165 Required: Support your answers with rationale and very detailed computations a) Management is contemplating the use of plastic gearing rather than metal gearing in Product SW. This change would reduce variable costs by $15. The company's marketing manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 350 units per month. Should this change be made? (5 Marks) b) Refer back to the original data. Assume that Challenger Company is currently selling 400 units of Product SW per month. Management wants to increase sales and feels that this can be done by cutting the selling price by $25 per unit and increasing the advertising budget by $20,000 per month. Management believes that these actions will increase unit sales by 50%. Should these changes be made? (5 Marks) c) Refer back to the original data. Assume that Challenger Company is currently selling 400 units of Product SW. Management wants to automate a portion of the production process for Product SW. The new equipment would reduce direct labour costs by S20 per unit but would result in a monthly rental cost for the new robotic equipment of $10,000. Management believes that the new equipment will increase the reliability of Product SW, thus resulting in an increase in monthly sales of 12%. Should these changes be made? (5 Marks) Chapter 5 Rockingham Manufacturing Company builds highly sophisticated engine parts for cars competing in stock racing and drag racing. The company uses a normal costing system that applies manufacturing overhead on the basis of direct labor hours. For 2012, the estimated total manufacturing overhead costs is $256,000 and the estimated direct labour hours are 16,000 hours. The December 1, 2012, balances in inventory accounts are provided below: Material Inventory Work-in-Process Inventory (Y12) Finished Goods Inventory (Z11) $ 54,000 $ 21,000 $108,000 As of December 1, 2012, Job Y12 is the only job in the production lines and Job Zl1 is the only job in the warehouse. The following transactions were noted for the month of December, 2012: (a). Started two new jobs: Job D20 and Job E33. (b). Purchased materials on account, $180,000. Issued $182,000 of raw materials to production; $8,000 of which was for indirect materials. See below the direct materials assigned for each job: Job Y12 $46,000 Job D20 $84,000 Job E33 $44.000 (c). Incurred total payroll cost of $40,920; including the costs for 1,196 direct labour hours at $20 per hour. See below the direct labour cost for each job and other payroll costs and expenses: Job Y12 $12,220 Job D20 $ 8,060 Job E33 $ 3,640 Indirect labor $ 5,000 Selling and administrative salaries $12,000 (d). Recognized deprecation for the month of December, detail amounts are provided below: Manufacturing asset $ 4,400 Selling and administrative asset $ 3,400 (e). Paid advertising expenses $12,000 (f). Incurred factory utility costs $ 5,800 (g). Applied manufacturing overhead to production on the basis of direct labour hours. (h). Completed Job Y12 during the month and transferred it to the finished goods warehouse. (i). Sold Job Z11 on account for $148,000. (). Closed the under or over-applied overhead to cost of goods sold at the end of the month. (k). Did not complete the production of Job D20 and Job E33 by the end of December 31, 2012, Required: (Show all detailed computations) 1. Calculate the company's predetermined manufacturing overhead rate for 2012. (1.5 mark) 2. Calculate the cost of goods manufactured during the month of December, 2012. (5 marks) 3. What is the amount of under or over-applied factory overhead for December, 2012? (4 marks) 4. Calculate the adjusted cost of goods sold for the month of ecember, 2012. (2 marks) 5. Calculate the ending balance for materials inventory as of December 31, 2012. (1.5 mark) 3 SD G H z K C V Chapter 7 The estimated manufacturing overhead costs of Doors and Windows Company (DWC) for 2012 are as follows: Type of Costs Cost Pools Electric power $1,000,000 Work cells $6,000,000 Materials handling $2,000,000 Quality control inspections $3,000,000 For the last five years, the cost accounting department has been applying manufacturing overhead costs using one plantwide overhead rate based on machine hours. The estimated capacity for 2012 is 6,000,000 direct labour hours. John Power, president of DWC, believes that an ABC costing system results in more reliable cost data that, in turn, will give the company an edge in pricing over its competitors. Upon the president's request, the production manager provided the following data regarding expected 2012 activity for the cost drivers of the estimated overhead costs listed earlier. Type of Costs Activity-Based Cost Drivers Electric Power 200,000 kilowatt-hours Work cells 1,200,000 square feet Material handling 500,000 materials moves Quality control inspections 300,000 inspections Mary Lee, the VP of Marketing, received an offer to sell 3,300 windows to a local construction company. Mary asks the head of cost accounting to prepare cost estimates for producing the 3,300 windows. The head of cost accounting accumulated the following data concerning production requirements of 3,300 windows: Direct materials cost $500,000 Direct labour cost $300,000 Machine hours 20,000 MH Direct labour hours 30,000 DLH Electric power - kilowatt hours 2,000 kilowatt-hours Work cells - square feet 16,000 square feet # Of material handling moves 200 materials moves # Of quality control inspections 150 inspections Required: a) What is the manufacturing cost per window under the present cost accounting system (i.e., using a plantwide overhead rate based on direct labour hours)? (5 marks) b) What are the activity rates under the proposed ABC method? (4 marks) c) What is the manufacturing cost per window under the proposed ABC method? (7 marks) d) If the prior two cost systems will result in different cost estimates, which cost accounting system is preferable to use to adopt a pricing policy? Give two reasons to support your answer. (2 marks) 5 Z C V B N Chapter 9 After completion of your managerial accounting course, you have been hired by Lazy Boss Furniture Co. which produces bookcases. Your first assignment was to prepare their budgets for the months of January, February, and March 2013. The following information has been given to you. Sales units, sales dollars, cash collections, and cash disbursements for the first quarter of 2013 are as follows: Sales (units) Sales (dollars) January 8,000 units $73,000 February 5,000 units $59,000 March 9.000 units $105,000 Cash Collections $70,000 $61.000 $101.000 Cash Disbursements $60,000 $80,000 $90,000 The December 31, 2012, balance sheet contains the following balances: Cash, $14.000: Direct Materials Inventory, $6,230; and Finished Goods Inventory, $20,200. The Direct Material Inventory balance represents 2.000 kilograms of scrap iron. Finished Goods Inventory consists of 4,000 bookcases. There are no outstanding loans. Required: Answer the Requirements of Part 1 and Part 2 Independently of each other. Part 1 Refer to the data above. Management of Lazy Boss Furniture Co. wants a minimum cash balance of $8,000 at the end of each month. The company has a policy of borrowing funds at the beginning of the month and repaying borrowed funds at the end of the month. Interest payments are made only for the amount of principal repaid at the rate of 12% per year. a) Prepare the monthly cash budget for Lazy Boss Furniture for the months of January, February, and March 2013. b) Discuss three benefits of budgeting. Part 2 Refer back to the original data. Management of Lazy Boss Furniture Co. wants the ending balance of Finished Goods Inventory to equal 25% of the next month's unit sales. Assume that each bookcase requires three kilograms of scrap iron, which costs $3.10 per kilogram. Beginning in 2013, management wants the ending balance of Direct Materials Inventory to equal 20% of the following month's production needs of scrap. a) Prepare the monthly production budget for the months of January and February 2013 b) Prepare the purchases budget of scrap iron in kilograms and in dollars for the month of January 2013 7 S D F G . K Z C V B B N a M. 1 Option command