I need help with question number 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 AR 0 RMI/WIP/FGI 0 PP&E 0 Total assets $2,000,000 Accounts payable Wages Payable Common Stock/APIC Retained Earnings Liabs. + Owner's Equity 0 0 $2,000,000 0 $2,000,000 On 1/1/20, Erin Rogers ESTIMATES the following costs: Rent on MANUFACTURING facility Salaries for CEO, cost accountant, administrative staff Depreciation for machinery Interest Expense $30,000 $10,000 $10,000 $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, WW.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 VOH utilities/janitor 3 mh/suit $10/mh 4 mh/suit $10/mh wages Var Costysuit = $100ysuit Var Cost/etsuit = $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 * Xnylon = Xcotton Xnylon*($40)+3Xnylon($20) = $160,000 Xnylon* ($40)+Xnlon($60) = $160,000 L 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: O 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). Nylon Cotton X=? y=? 1,600 4,800 1,000 2,000 X= 2,600 Nylon Suits Y= 6,800 Cotton Suits 3. Calculate the predetermined FIXED overhead rate (3 pts). FPDOH = $50,000 / (2,600nysuits *5dlhysuit + 6,800ctsuits*4dlh/ctsuit) FPDOH = $50,000/(13,000d1h+27,200 dih) 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/vduNF)...$25,000 Accounts Payable..... .$225,000 .$500,000 RMIcotton (25,000yds*$20/yd)... DMPPVct(est=$20/yd, actual $17/yd=$3/vdFAV). ...$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/EGny (3,000nysuits *2ydsysuit*$10/yd)........ $60,000 DMEVnylon (1,000ydsFAV*$10/yd). RMIny (5,000yds*$10/yd). wiu .$10,000 .$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 (4,000etsuits *3yds/etsuit) = 12,000yds, actually took 10,000yds = 2,000yds FAV WIP/FGct (4,000ctsuits *3yds/suit* $20/yd). DMEVct (2,000ydsFAV*$20/yd). RMIct (10,000yds* $20/yd)... ..$240,000 ... $40,000 ..$200,000 www 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 w 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 DLEVnx ..$30,000 Cash.. .$99,000 w DLRVct=thought we would pay $5/dlh, actually paid $4/dlh = $1/dlhUNF*20,000dlh = $20,000UNF DLEVct=4,000etsuist*4dlh/suit=16,000dlh, actually used 20,000dlh = 4,000dlhUNF*$5/dlh=$20,000UNF WIP/FGct(4,000etsuits *4dlh/suit*$5/dlh). DLRVct. DLEVct. Cash ..$80,000 .$20,000 .$ 20,000 .$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/EGny(3,000nysuits *5dlh/suit*$10/dlh).....$150,000 MOH-FOH .$150,000 w WIP/FGct(4,000etsuits *4mh/suit* $10/mh).....$160,000 MOH-VOH ..$160,000 WIP/EGct(4,000etsuits*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 0 90,000 MOH-FOH 0 150,000 80,000 160,000 125,000 300,000 35,000 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 Omh, actually used VOEVnylon=3,000nysuits*3mh/suit=should have used 7000mh=2,000mhFAV*$10/mh=$20,000FAV VOEV cotton=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 FOPWnylon = FPDOH estimated 2,600 nylon suits, actually made 3,000nylon suits which is favorable by 400 suits *5dlh/suit*$1.24/dlh = $2,480 FAV FOPVV cotton=FPDOH estimated 6,800 cotton suits, actually made 4,000 cotton suits which is unfavorable by 2,800 suits*4dlh/suit*$1.24/dlh=$13,888 FAV 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 $124.96 suit VOO woos voo A/R (1,500nysuits *$150/suit).....$225,000 Sales Revenue... ..$225,000 L 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 FGItsuits. .$312,400 15. Close all variance accounts to the COGS accounts (3 pts). .$25,000 .$75,000 ..$10,000 ..$40,000 DMPPVnvlon, DMPPVcotton. DMEVnylon. DMEVcotton. DLRVnylon. DLRVcotton. VOSV VOEVnylon. VOEVcotton. ..$45,000 $20,000 .$175,000 ..$20,000 www w FOHBV ..$20,000 ..$25,000 FOHPVVnylon FOHPVVcotton. COGS. ..$2,480 ..$13,888 ..$148,632 16. Prepare the 2020 income statement (3 pts). SALES ($225,000+ $425,000) COGS ($159,300+ $312,400+ $148,632+175,000-185,000) GROSS MARGIN PERIOD COSTS OPERATING/NET INCOME $550,000 $610,332 -$60,332 $8,000 -$52,332 17. Prepare the 12/31/2020 BALANCE SHEET (8 pts). CASH $942,000 A/P $650,000 AR $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 RetainEarns -$52,332 Total OE. $1,947,668 EQUIPMENT Acq.Cost $50,000 AccDep. ($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. (8 pts)
