I have several other questions I can send it as a word document...the yellow is where the professor wants the answers typed....thanks...let me know what you can do... Sharon Ragusa 228-860-3328

Unit 2 Assignment Sharon Ragusa Managerial Finance & Accounting MT425-02/1005B Instructor: Terry Dowdy November 20, 2010 Exercise 1-10 Cost Terms (LO 5) -Identify each of the following statements with fixed costs or variable costs by writing \"fixed\" or \"variable\" in the space provided. ___V___ A. A cost that varies in total with changes in the activity level. ___F____B. A cost that varies on a per unit basis with changes in the activity level. ___F____C. A Cost that remains fixed per unit with changes in the activity level. ___V____D. A cost that remains fixed in total with changes in the activity level. Unit 2 Assignment Case 1-2 Page 33 - Using the concept of incremental analysis; expand on Nick's response o \"Why do you want to know?\" What cost information would be relevant to a decision to drop the product that would not be relevant to a decision to increase a production run by 100 units. Answer: The marginal or differential analysis is used to analyze the financial information needed for decision making. It identifies the relevant revenues and/or costs of each alternative and the expected impact of the alternative on future income. So the costs of the D45 valve is the important factor here, if the sale of this product has increased production at the costs given, then why change it? If current sales were going to be impacted by the decision of the costs of the D45valve, then the lost contribution margin would be considered an opportunity cost for this alternative. Problem 1-2 Incremental Analysis (LO5,6) Consider the production cost information for Santiago's Salsa in Problem 1-1. The company is currently producing and selling $325,000 jars of salsa annually. The jars sell for $5.00 each. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 375,00 jars. Required: A. What is the incremental cost associated with producing an extra 50,000 jars of salsa? B. What is the incremental revenue associated with the price reduction of $0.40 per jar? C. Should Santiago's lower the price of its salsa? Chapter 2: Exercises 2-4 - Product costing Systems (LO-4) For the list of product manufacturers below, indicate whether a job-cost system (J) or a process cost system (P) would be most appropriate. __J__A. chemicals processor _J___B. Paint manufacturer _J___C. Law Firm __P__D. Producer of molds used by other manufacturing firms to shape their products _P___E. Dog food producer _P___F. Custom home builder Exercise 2-10 - Overhead Allocation Bases (L) 7) Lawler manufacturing company expects annual manufacturing overhead to be $900,000. The company also expects 60,000 direct labor hours costing $1,800,000 and machine run time of 30,000 hours. Required: Calculate overhead allocation rates based on direct labor hours, direct labor cost, and machine time. Exercise 2-12 Allocating Manufacturing Overhead to Jobs (LO 6,7) Webber Fabricating estimated the following annual costs. Expected annual direct labor hours 40,000 Unit 2 Assignment Expected annual direct labor cost Expected machine hours Expected material cost for the year Expected manufacturing overhead $625,000 20,000 $800,000 $1,000,000 Required: A. Calculate overhead allocation rates using each of the four possible allocation bases provided. B. Determine the cost of the following job (number 253) using each of the four overhead allocation rates Job 253 Direct materials $3,000 Direct labor (150 hrs @ $12/hr) Machine hours used 150 $1,800 Problem 2-10 ________________________________________________Materials Redfern Wedding $ 400 Miller Wedding $800 Walker Wedding $500 DeSilva Wedding $1,700 Estes Wedding $600 Labor Hours 25 40 20 90 30 The overhead allocation base is labor hours with an estimated 1,000 hours per year, and billings are at 120 percent of job cost. Overhead allocations and markups ae rounded to the nearest dollar. Required A. Prepare job cost sheets for each of the five catering jobs. B. Calculate income for the month of June. Problem2-11 Recording Inventory -Related Costs (LO3,6) Fill in the missing information Raw Materials Beginning Balance 25,000 Purchases 35,000 _________ Ending Balance 10,000 (a) Work in Process Unit 2 Assignment Beginning Balance 70,000 DM (a) DL 40,000 OH 60,000 ___________ Ending Balance 80,000 (b) Manufacturing Overhead 65,000 60,000 (d) Finished Good Beginning Balance 90,000 (b) _________________ Ending Balance 110,000 ( C) Cost of Goods Sold (C) (d) Problem 2-19 - Service Company use of Predetermined Overhead Rate (LO 6,7,9) Southwest Community Hospital uses a job-order costing system to track charges for each patient. The following charges relate to Candice O'Dea, who had laparoscopic knew surgery: Pharmacy $250 Sterile Supply 1,000 Supplies, other 4,000 Operating room service (nursing staff) 4,000 Anesthesia 1,000 Anesthesiologist 3,000 Southwest charges patients for the use of the operating room based on a predetermined over-head rate. The estimated overhead costs of the operating room are $5,000,000 and the activity base is available hours of 2,000. Required A. Calculate the predetermined overhead rate for the operating room, and determine the charge to Candice. Assume that her surgery took 3 hours in the operating room. B. Calculate the total cost for the knee surgery