Ida Sidha Karya Company is a family owned company located in the village of Gianyar on the island of Bali in Indonesia The company produces a handcrafted balinese mucical instrument called a gamelan that is similer to a xylophone The gamelans are sold fo $850 Selected data for the company's operations last year follow Units in the Beginning 0 Units Produces 250 Units Sold 225 Units in ending Inventory 25 Variable Costs per Unit Direct Materials $100 Direct Labor $320 Variable Manufacturing Overhead $40 Variable Selling and Administrative $20 Fixed Costs Fixed Manufacturing Overhead $60,000 Fixed Selling and Administrative $20,000 Assume that the company uses absorption Costing Compute the unit product cost for one gamelan Assume that the company uses variable costing Compute the unit product cost for one gamelan Exercise 6 4 Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow Revenue and cost information relating to the products follow Product Weedban Greengrow Selling price per unit $6 00 $7 50 Variable Expenses per unit $2 40 $5 25 Traceable Fixed expenses per unit $45,000 $21,000 Comman Fixed Expenses in the company total $33,000 annually Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow I need to prepare a contribution format income statement segmented by product lines Exercise 6 6 Lynch Company Manufactures and sells a single product The following costs were incurred during the company's first year of operations Variable Costs per unit Manufacturing Direct Materials $6 Direct Labor $9 Variable Manufacturing Overhead $3 Variable Selling and Administrative $4 Fixed Costs per year Fixed Manufacturing Overhead $300,000 Fixed Selling and Administrative $190,000 During the year, the company produced 25,000 units and sold 20,000 units The Selling price of the company's product is $50 per unit 1) Assume that the company uses absorption Costing a Compute the unit product cost b I need to prepare an income statement for the year 2) Assume that the company uses variable costing a Compute the unit product cost b I need to prepare an income statement for the year Exercise 6 7 Shannon Comany segments it's income statement into it's north and south divisions The company's overall sales, contribution margin ratio, and net operating income are $500,000, 46 and $10,000, respectively The north Division's contribution margin and contribution margin ratio are $150,000 and 50 , respectively The South Division's segment margin is $300,000 The company has $90,000 of common fixed expenses that cannot be traced in either division I need to prepare a income statement for Shannon Company that uses the contribution format and is segmented by divisions In addition for the company as a whole and for each segment , show each item on the segmented income statement as a percent of Sales Exercise 6 8 Parker Products Inc a manufacturer , reported $123 million in sales and a loss of $18 million in it's annual report to shareholders According to a CVP analysis prepared for management, the company's break even point is $115 million in sales Assuming that the CVP analysis is correct, it is likely that the company's inventory level increased decreased, or remained unchanged during the year Explain Exercise 6 10 Crossfire Company segments its business into two regions East and West The company prepared the contribution format segmented income statement shown below Total Company East West Sales $900,000 $600,000 $300,000 Variable Expenses 675,000 480,000 195,000 Contribution Margin 225,000 120,000 105,000 Traceable Fixed Expenses 141,000 50,000 91,000 Segment Margin 84,000 $70,000 $14,000 Common Fixed Expenses 59,000 Net Operating Income $25,000 Compute the companywide break even point dollar in sales Compute the break even point in dollar sales for the East region Compute the break even point in dollar sales for the West region I need to prepare a new segmented income statement based on the break even dollar sales that I need to compute in requirements 2 and 3 Use the same format as shown above What is Crossfire's net operating income in your new segmented income statement What do I need to think that crossfire should allocate its common fixed expenses to the East and West regions when computing the break even points for each region Why Exercise 6 17 Assume that Minneapolis' sales by major market are Market Minneapolis Medical Dental Sales $300,00 100 $200 K 100 $100 K 100 Variable Expenses 180,000 60 128 K 64 52,000 52 Contribution Margin 120,000 40 72 ,000 36 48,000 48 Traceable Fixed Expenses 33,000 11 12,000 6 21,000 21 Market Segment Margin 87,000 29 $60,000 30 $27,000 27 Common fixed Exp not traceable to Markets 15,000 5 Office Segment Margin $72,000 24 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month The campaign would cost $5,000 Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by $35,000 In which of the markets would you recommend that the company focus its advertising campaign Show computations to support my answer Exercise 9 1 Puget Sound Drivers is a company that provides diving services such as underwater ship repairs to clients in the Puget sound area The company's planning budget for May appears below Puget Sound Divers Planning Budget For the Month Ended May 31 Budgeted diving hours (q) 100 Revenue ($365 00q) $36,500 Expenses Wages and Salaries ($8,000 $125 00q) 20,000 Supplies (3 00q) 300 Equipment Rental ($1,800 $32 00q) 5,000 Insurence ($3,400) 3,400 Miscellanous ($630 $1 80q) 810 Total Expenses 30,010 Net Operating Income $6,490 During May, the Company's activity was actually 105 diving hours Prepare a flexible budget for the level of activity Exercise 9 2 Flight Cafe is a company that prepares in flight meals for airlines in its kitchen located next to the local airport The company's planning budget for July appears below Flight Cafe Planning Budget For the month Ended July 31 Budgeted meals 18,000 Revenue $81,000 Expenses Raw Materials ($2 40) 43,200 Wages and Salaries ($5,200 $0 30) 10,600 Utilities ($2,400 $0 05) 3,300 Facility rent ($4,300) 4,300 Insurance ($2,300) 2,300 Misc ($680 $0 10) 2,480 Total Expense 66,180 Net Operating Income $14,820 In July, 17,800 meals were actually served The company's flexible budget for this level of activity appears below Budgeted meals 17,800 Revenue $80,100 Expenses Raw Materials ($2 40) 42,270 Wages and Salaries ($5,200 $0 30) 10,540 Utilities ($2,400 $0 05) 3,290 Facility rent ($4,300) 4,300 Insurance ($2,300) 2,300 Misc ($680 $0 10) 2,460 Total Expense 65,610 Net Operating Income $14,490 I need to prepare an report showing the company's activity variances for July Which of the activity variances should be of concern to management Explain Exercise 10 1 Bandar Industries Berhad of Malaysia manufacturers sporting equipment One of the company's products, a football helmet for the north American market, requires a special plastic During the quarter ending June 30, the company manufactured 35,000 helmets, using 22,500 Kilograms of plastic The plastic cost the company $171,000 According to the standard cost card, each helmet should require 0 6 Kilograms of plastic, at a cost of $8 per Kilogram According to the standards, what cost for plastic should have been incurred to make 35,000 helmets How much greater or less is this than the cost that was incurred Break down the difference computed in (1) above into a materials price variance and a materials quantity variance Exercise 10 2 SkyChefs, Inc prepares in flight meals for a number of major airlines One of the company's products is grilled salmon is dill sauce with baby new potato's and spring vegetables During the most recent week, the company prepared 4,000 of these meals using 960 direct labor hours The company paid these direct labor workers a total of $9,600 for this work, or $10,000 per hour According to the standard cost card for this meal, it should require 0 25 direct labor hours at a cost of $9 75 per hour According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals How much does this differ from the actual direct labor cost Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance

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Ida Sidha Karya Company is a family- owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces

Ida Sidha Karya Company is a family- owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted balinese mucical instrument called a gamelan that is similer to a xylophone. The gamelans are sold fo $850. Selected data for the company's operations last year follow:

Units in the Beginning: 0

Units Produces: 250

Units Sold: 225

Units in ending Inventory: 25

Variable Costs per Unit:

Direct Materials: $100

Direct Labor: $320

Variable Manufacturing Overhead: $40

Variable Selling and Administrative: $20

Fixed Costs

Fixed Manufacturing Overhead $60,000

Fixed Selling and Administrative $20,000

Assume that the company uses absorption Costing. Compute the unit product cost for one gamelan.
Assume that the company uses variable costing. Compute the unit product cost for one gamelan.

Exercise 6- 4

Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow:

Product

Weedban Greengrow

Selling price per unit $6.00 $7.50

Variable Expenses per unit $2.40 $5.25

Traceable Fixed expenses per unit $45,000 $21,000

Comman Fixed Expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow.

I need to prepare a contribution format income statement segmented by product lines.

Exercise 6- 6

Lynch Company Manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

Variable Costs per unit:

Manufacturing:

Direct Materials $6

Direct Labor $9

Variable Manufacturing Overhead $3

Variable Selling and Administrative $4

Fixed Costs per year:

Fixed Manufacturing Overhead: $300,000

Fixed Selling and Administrative: $190,000

During the year, the company produced 25,000 units and sold 20,000 units. The Selling price of the company's product is $50 per unit.

1) Assume that the company uses absorption Costing

a. Compute the unit product cost

b. I need to prepare an income statement for the year.

2) Assume that the company uses variable costing:

a. Compute the unit product cost.

b. I need to prepare an income statement for the year.

Exercise 6- 7

Shannon Comany segments it's income statement into it's north and south divisions. The company's overall sales, contribution margin ratio, and net operating income are $500,000, 46%. and $10,000, respectively. The north Division's contribution margin and contribution margin ratio are $150,000 and 50%, respectively. The South Division's segment margin is $300,000. The company has $90,000 of common fixed expenses that cannot be traced in either division.

I need to prepare a income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition for the company as a whole and for each segment , show each item on the segmented income statement as a percent of Sales.

Exercise 6- 8

Parker Products Inc. a manufacturer , reported $123 million in sales and a loss of $18 million in it's annual report to shareholders. According to a CVP analysis prepared for management, the company's break- even point is $115 million in sales.

Assuming that the CVP analysis is correct, it is likely that the company's inventory level increased. decreased, or remained unchanged during the year? Explain.

Exercise 6- 10:

Crossfire Company segments its business into two regions- East and West. The company prepared the contribution format segmented income statement shown below:

Total

Company East West

Sales $900,000 $600,000 $300,000

Variable Expenses 675,000 480,000 195,000

Contribution Margin 225,000 120,000 105,000

Traceable Fixed Expenses 141,000 50,000 91,000

Segment Margin 84,000 $70,000 $14,000

Common Fixed Expenses 59,000

Net Operating Income $25,000

Compute the companywide break- even point dollar in sales.
Compute the break- even point in dollar sales for the East region
Compute the break- even point in dollar sales for the West region
I need to prepare a new segmented income statement based on the break- even dollar sales that I need to compute in requirements 2 and 3. Use the same format as shown above. What is Crossfire's net operating income in your new segmented income statement?
What do I need to think that crossfire should allocate its common fixed expenses to the East and West regions when computing the break- even points for each region? Why?

Exercise 6- 17

Assume that Minneapolis' sales by major market are:

Market

Minneapolis Medical Dental

Sales: $300,00 100% $200 K 100% $100 K 100%

Variable Expenses: 180,000 60% 128 K 64% 52,000 52%

Contribution Margin: 120,000 40% 72 ,000 36% 48,000 48%

Traceable Fixed Expenses: 33,000 11% 12,000 6% 21,000 21%

Market Segment Margin: 87,000 29% $60,000 30% $27,000 27%

Common fixed Exp. not traceable to Markets: 15,000 5%

Office Segment Margin: $72,000 24%

The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,000 . Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by $35,000.

In which of the markets would you recommend that the company focus its advertising campaign ? Show computations to support my answer.

Exercise 9- 1

Puget Sound Drivers is a company that provides diving services such as underwater ship repairs to clients in the Puget sound area. The company's planning budget for May appears below:

Puget Sound Divers

Planning Budget

For the Month Ended May 31

Budgeted diving hours (q) 100

Revenue ($365.00q) $36,500

Expenses:

Wages and Salaries ($8,000 + $125.00q) 20,000

Supplies (3.00q) 300

Equipment Rental ($1,800 + $32.00q) 5,000

Insurence ($3,400) 3,400

Miscellanous ($630 + $1.80q) 810

Total Expenses 30,010

Net Operating Income $6,490

During May, the Company's activity was actually 105 diving hours. Prepare a flexible budget for the level of activity.

Exercise 9- 2

Flight Cafe is a company that prepares in- flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:

Flight Cafe

Planning Budget

For the month Ended July 31

Budgeted meals 18,000

Revenue $81,000

Expenses:

Raw Materials ($2.40) 43,200

Wages and Salaries ($5,200 + $0.30) 10,600

Utilities ($2,400 + $0.05) 3,300

Facility rent ($4,300) 4,300

Insurance ($2,300) 2,300

Misc. ($680 + $0.10) 2,480

Total Expense: 66,180

Net Operating Income: $14,820

In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Budgeted meals: 17,800

Revenue $80,100

Expenses:

Raw Materials ($2.40) 42,270

Wages and Salaries ($5,200 + $0.30) 10,540

Utilities ($2,400 + $0.05) 3,290

Facility rent ($4,300) 4,300

Insurance ($2,300) 2,300

Misc. ($680 + $0.10) 2,460

Total Expense: 65,610

Net Operating Income: $14,490

I need to prepare an report showing the company's activity variances for July
Which of the activity variances should be of concern to management? Explain.

Exercise 10- 1

Bandar Industries Berhad of Malaysia manufacturers sporting equipment. One of the company's products, a football helmet for the north American market, requires a special plastic. During the quarter ending June 30, the company manufactured 35,000 helmets, using 22,500 Kilograms of plastic. The plastic cost the company $171,000. According to the standard cost card, each helmet should require 0.6 Kilograms of plastic, at a cost of $8 per Kilogram.

According to the standards, what cost for plastic should have been incurred to make 35,000 helmets? How much greater or less is this than the cost that was incurred?
Break down the difference computed in (1) above into a materials price variance and a materials quantity variance.

Exercise 10- 2

SkyChefs, Inc. prepares in- flight meals for a number of major airlines. One of the company's products is grilled salmon is dill sauce with baby new potato's and spring vegetables. During the most recent week, the company prepared 4,000 of these meals using 960 direct labor- hours. The company paid these direct labor workers a total of $9,600 for this work, or $10,000 per hour.

According to the standard cost card for this meal, it should require 0.25 direct labor- hours at a cost of $9.75 per hour.

According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals? How much does this differ from the actual direct labor cost?
Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance.