Instructions would (a) Analyze and explain why profit has declined in spite 1 What plan, if any, could Sun Company adopt during December to imp your answer. pain and illustrate how Sun Company could use a different internal cost reporting procedure that would in the confusing effect of the procedure it currently uses. (adapted from CMA Canada, now CPA Proble -p8-361 Sp new plant to he company's (SO 1,2,3) of goods Prepare income state SA The Daniels Tool & Die Corporation has been in existence for a little over three years. The com nufactures dies to its customers specife have been increasing each year as it builds a reputation. The company and therefore uses a job-order cost system. Factory overhead is applied to the jobs based on direct labour absorption-costing (full) method. Overapplied or underapplied overhead is treated as an a c ent to cost of The company's income statements and other data for the last two years are casting and absorption costing and reconcile the differences when sales and production levels change discuss the usefulness of absorption costing versus variable costing. 2016 $1.015.000 The be Instru (a) A DANIELS TOOL & DIE CORPORATION 2015-2016 Comparative Income Statements 2015 $840.000 Sales Cost of goods sold 25.000 Finished goods, January 1 548,000 Cost of goods manufactured 573,000 Total available 18,000 Finished goods, December 31 Cost of goods sold before overhead adjustment 555,000 Underapplied factory overhead 36,000 Cost of goods sold 591.000 Gross profit 249,000 Selling expenses 82,000 Administrative expenses 70,000 Total operating expenses 152,000 Operating income $ 97,000 Daniels Tool & Die Corporation Inventory Balances January 1, 2015 December 31, 2016 Raw material $22,000 $30,000 Work in process $40,000 $48,000 Direct labour hours 1,335 1,600 (used in WIP) Finished goods $25,000 $18,000 Direct labour hours 1,450 1,050 (used in FG) 18,000 657,600 675,600 14,000 661,600 14,400 676,000 339,000 95,000 75,000 170,000 $ 169,000 December 31, 2016 $10,000 $64,000 2,100 $14,000 820 Problems: Set B 343 Daniels used the same predetermined overhead rate in applying overhead to its production or 2016. The rate was based on the following estimates: Fixed factory overhead $ 25,000 Variable factory overhead $155,000 Direct labour hours 25,000 Direct labour costs $150,000 In 2015 and 2016, the actual direct labour hours used were 20,000 and 23,000, respectively. Raw materials put into production were $292,000 in 2015 and $370,000 in 2016. The actual fixed overhead was $42,300 for 2015 and 537A00 for 2016, and the planned direct labour rate was the direct labour achieved. For both years, all of the administrative costs were fixed. The variable portion of the selling expenses results from a 5% commission that is paid as a percentage of the sales revenue. Instructions (a) For the year ended December 31, 2016, prepare a revised income statement for Daniels Tool & Die Corporation using (a) Operating income $168.730 the variable-costing method. (b) Reconcile the difference in operating income between Daniels Tool & Die Corporation's 2016 absorption-costing income statement and the revised 2016 income statement prepared under variable costing. c) Describe both the advantages and disadvantages of using variable costing. (adapted from CMA Canada, now CPA Canada) Problems: Set Berita perlu unter er factures and sells a variety of swimming products. Recently, the company opened a (SO 1.2.5) les data for 2016 are shown below: Calculate the product cost; prepare imme statements Instructions would (a) Analyze and explain why profit has declined in spite 1 What plan, if any, could Sun Company adopt during December to imp your answer. pain and illustrate how Sun Company could use a different internal cost reporting procedure that would in the confusing effect of the procedure it currently uses. (adapted from CMA Canada, now CPA Proble -p8-361 Sp new plant to he company's (SO 1,2,3) of goods Prepare income state SA The Daniels Tool & Die Corporation has been in existence for a little over three years. The com nufactures dies to its customers specife have been increasing each year as it builds a reputation. The company and therefore uses a job-order cost system. Factory overhead is applied to the jobs based on direct labour absorption-costing (full) method. Overapplied or underapplied overhead is treated as an a c ent to cost of The company's income statements and other data for the last two years are casting and absorption costing and reconcile the differences when sales and production levels change discuss the usefulness of absorption costing versus variable costing. 2016 $1.015.000 The be Instru (a) A DANIELS TOOL & DIE CORPORATION 2015-2016 Comparative Income Statements 2015 $840.000 Sales Cost of goods sold 25.000 Finished goods, January 1 548,000 Cost of goods manufactured 573,000 Total available 18,000 Finished goods, December 31 Cost of goods sold before overhead adjustment 555,000 Underapplied factory overhead 36,000 Cost of goods sold 591.000 Gross profit 249,000 Selling expenses 82,000 Administrative expenses 70,000 Total operating expenses 152,000 Operating income $ 97,000 Daniels Tool & Die Corporation Inventory Balances January 1, 2015 December 31, 2016 Raw material $22,000 $30,000 Work in process $40,000 $48,000 Direct labour hours 1,335 1,600 (used in WIP) Finished goods $25,000 $18,000 Direct labour hours 1,450 1,050 (used in FG) 18,000 657,600 675,600 14,000 661,600 14,400 676,000 339,000 95,000 75,000 170,000 $ 169,000 December 31, 2016 $10,000 $64,000 2,100 $14,000 820 Problems: Set B 343 Daniels used the same predetermined overhead rate in applying overhead to its production or 2016. The rate was based on the following estimates: Fixed factory overhead $ 25,000 Variable factory overhead $155,000 Direct labour hours 25,000 Direct labour costs $150,000 In 2015 and 2016, the actual direct labour hours used were 20,000 and 23,000, respectively. Raw materials put into production were $292,000 in 2015 and $370,000 in 2016. The actual fixed overhead was $42,300 for 2015 and 537A00 for 2016, and the planned direct labour rate was the direct labour achieved. For both years, all of the administrative costs were fixed. The variable portion of the selling expenses results from a 5% commission that is paid as a percentage of the sales revenue. Instructions (a) For the year ended December 31, 2016, prepare a revised income statement for Daniels Tool & Die Corporation using (a) Operating income $168.730 the variable-costing method. (b) Reconcile the difference in operating income between Daniels Tool & Die Corporation's 2016 absorption-costing income statement and the revised 2016 income statement prepared under variable costing. c) Describe both the advantages and disadvantages of using variable costing. (adapted from CMA Canada, now CPA Canada) Problems: Set Berita perlu unter er factures and sells a variety of swimming products. Recently, the company opened a (SO 1.2.5) les data for 2016 are shown below: Calculate the product cost; prepare imme statements