I need help with #19. This is all of the information that I have.

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 = 4,000dlhUNF*$5/dlh=$20,000UNF

WIP/FGct(4,000ctsuits*4dlh/suit*$5/dlh)...........$80,000

DLRVct....................................................$20,000

DLEVct....................................................$20,000

Cash......................................................$125,000

10.Give the journal entries to APPLY overhead FOR BOTH VARIABLE AND FIXED OVERHEAD.Nylon jogging suits used 7000 machine hours and cotton jogging suits used 18000 machine hours (6 pts).

WIP/FGny(3,000nysuits*3mh/suit*$10/mh)....$90,000

MOH-VOH.........................................$90,000

WIP/FGny(3,000nysuits*5dlh/suit*$10/dlh).....$150,000

MOH-FOH........................................$150,000

WIP/FGct(4,000ctsuits*4mh/suit*$10/mh).....$160,000

MOH-VOH........................................$160,000

WIP/FGct(4,000ctsuits*4dlh/suit*$5/dlh).......$80,000

MOH-FOH.......................................$80,000

11.During the year, incurred the following:

Utilities for manufacturing building $300,000

Rent for on manufacturing facility $35,000

Vendors are paid in cash.Give the journal entry to describe this (3 pts).

MOH-FOH........$35,000

MOH-VOH........$300,000

Cash..............$335,000

12.Provide any non-closing adjusting journal entries (4 pts).

MOH-FOH........$10,000

Accumulated Depreciation.........$10,000

COGS......$175,000

MOH-VOH.....$175,000

MOH-FOH.....$185,000

COGS......$185,000

13.CALCULATE ALL APPLICABLE VARIABLE AND FIXED OVERHEAD VARIANCES AND SHOW YOUR WORK (12 pts).

MOH-VOH MOH-FOH

0 90,000 0 150,000

125,000 160,000 35,000 80,000

300,000 10,000

________________________________________________________________________

175,000 185,000

VOSV: ($425,000)/(25,000mh) = $17/mh

Thought it would be $10/mh, actually was $17/mh = $7/mhUNF*25,000mh=$175,000 UNF

VOEVnylon=3,000nysuits*3mh/suit=should have used 9000mh, actually used 7000mh=2,000mhFAV*$10/mh=$20,000FAV

VOEVcotton=4,000ctsuits*4mh/suit=should have used 16,000mh, actually used 18,000mh=2,000mhUNF*$10/mh=$20,000UNF

FOBV = FPDOH has $20,000 estimated FOH, actual FOH was $45,000 = UNF by $25,000

FOPVVnylon = FPDOH estimated 2,600nylon suits, actually made 3,000nylon suits which is favorable by 400suits*5dlh/suit*$1.24/dlh = $2,480FAV

FOPVVcotton=FPDOH estimated 6,800cotton suits, actually made 4,000 cotton suits which is unfavorable by 2,800suits*4dlh/suit*$1.24/dlh=$13,888FAV

14.During the year, Abbott sold 1,500 nylon jogging suits for $150/suit ON ACCOUNT and 2,500 cotton suits at $130/suit CASH.Please give the journal entry. (4 pts).

STANDARD COST SHEETS FOR FINANCIAL REPORTING

NYLON COTTON

DM: 2 yds/suit*$10/yd =$20/suit 3 yds/suit*$20/yd=$60/suit

DL: 5 dlh/suit*$10/dlh =$50/suit 4 dlh/suit*$5/dlh=$20/suit

VOH: 3 mh/suit*$10/mh =$30/suit 4 mh/suit*$10/mh=$40/suit

FOH: 5 dlh/suit*$1.24/dlh =$6.20/suit 4 dlh/suit*$1.24/dlh =$4.96/suit

$106.20/suit $124.96suit

A/R (1,500nysuits*$150/suit).....$225,000

Sales Revenue......................$225,000

COGS(1,500nysuits*$106.20/suit)........$159,300

FGInysuits....................................$159,300

Cash (2,500ctsuits*$130/suit).......$325,000

Sales Revenue.............................$325,000

COGS(2,500ctsuits*124.96/suit)...$312,400

FGIctsuits...............................$312,400

15.Close all variance accounts to the COGS accounts (3 pts).

DMPPVnylon.........$25,000

DMPPVcotton.............................$75,000

DMEVnylon................................$10,000

DMEVcotton................................$40,000

DLRVnylon.............$45,000

DLRVcotton............$20,000

VOSV.....................$175,000

VOEVnylon....................................$20,000

VOEVcotton.............$20,000

FOHBV...................$25,000

FOHPVVnylon................................$2,480

FOHPVVcotton...............................$13,888

COGS...................$148,632

16.Prepare the 2020 income statement (3 pts).

SALES ($225,000 + $425,000) $550,000

COGS ($159,300+ $312,400+$148,632+175,000-185,000) $610,332

GROSS MARGIN -$60,332

PERIOD COSTS $8,000

OPERATING/NET INCOME -$52,332

17.Prepare the 12/31/2020 BALANCE SHEET (8 pts).

CASH $942,000 A/P $650,000

A/R $225,000 CURR.LIABS.$650,000

INV.: LOAN PAY. $200,000

Nylon Suits $159,300 TOTAL LIABS$1,500,000

Cotton Suits $312,400

$471,700

TOTAL CURRENT ASSETS $1,638,700 OWNER'S EQUITY

Con.Capital $2,000,000

EQUIPMENT RetainEarns -$52,332

Acq.Cost $50,000 Total OE. $1,947,668

Acc.Dep. ($10,000)

TOTAL NONCURRENT ASSETS $40,000

TOTAL ASSETS $1,678,700 TOT. LIAB+OE$3,447,668

18.Calculate the 2020 RETURN ON ASSETS (3 pts).

Net Income/ Total Assets = ROA

-$52,332/$1,678,700 = -3.1%

19.Assume the above standards were 100% accurate!Now, also assume the following for the next year:

The sewing machine can ONLY work 10,000 hours or it will BREAK (apparently the 25,000 machine hours from 2020 were a bit too much and the consultants said '10,000 machine or else it will break!)

Annual demand for nylon suits is 2,000 nylon suits and annual demand for cotton suits is also 2,000 cotton suits.

REQUIRED: calculate the OPTIMAL sales mix for the next year in terms of the number of nylon and cotton suits.

REQUIRED Part 2: Assume Giannis Corporation (GC) offers the following equipment rental:

We can rent you a sewing machine for $30,000 for next year (i.e. it could address any capacity issues per the first part of this problem).It will provide your company an extra 10,000 machine hours.However, you MUST rent it for the whole year and the whole $30,000.Should they take the offer?Why or why not and show your work.