Looking for help with the remaining questions 4-6..

Thanks!

-Matt

Problem 1 \"Blast it!\" said David Wilson, president of Teledex Company. \"We've just lost the bid on the Koopers job by $2,000. It seems we're either too high to get the job or too low to make any money on half the jobs we bid.\" Teledex Company manufactures products to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labor cost. The following estimates were made at the beginning of the year: Department _______________________________________________________________________ Fabricating Direct labor Manufacturing overhead $200,000 $350,000 Machining Assembly Total Plant $100,000 $400,000 $300,000 $ 90,000 $600,000 $840,000 Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows: Department ______________________________________________________________________ Direct materials Direct labor Manufacturing overhead Fabricating Machining $3,000 $2,800 ? $200 $500 ? Assembly $1,400 $6,200 ? Total Plant $4,600 $9,500 ? The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. REQUIRED: 1. Assuming use of a plantwide overhead rate: a. Compute the rate for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 2. Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overhead rate in each department. Under these conditions: a. Compute the rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 3. Explain the difference between the manufacturing overhead that would have been applied to the Koopers job using the plantwide rate in question 1 (b) above and using the departmental rates in question 2 (b). 4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What was the company's bid price on the Koopers job? What would the bid price have been if departmental overhead rates had been used to apply overhead cost? 5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year. Department _______________________________________________________________________ Direct materials Direct labor Manufacturing overhead Fabricating Machining Assembly Total Plant $190,000 $210,000 $360,000 $ 16,000 $108,000 $420,000 $114,000 $262,000 $ 84,000 $320,000 $580,000 $864,000 Compute the under- or overapplied overhead for the year (a) assuming that a plantwide overhead rate is used, and (b) assuming that departmental overhead rates are used. Problem 2 Selected ledger accounts of Moore Company are given below for the just completed year: Raw Materials Manufacturing Overhead _________________________________________________________ _______________________________________________________ Bal. 1/1 Debits Debits 15,000 120,000 Credits ? 230,000 Credits ? -------------------------------------------------------------------------------------- Bal. 12/31 25,000 Work in Process Factory Wages Payable _________________________________________________________ Bal. 1/1 20,000 Credits 470,000 Direct materials 90,000 Direct labor 150,000 Overhead 240,000 -------------------------------------------------------Bal. 12/31 ? ________________________________________________________ Debits 185,000 Bal. 1/1 Credits 9,000 180,000 ------------------------------------------------------------------------------------- Bal. 12/31 4,000 Finished Goods Cost of Goods Sold ________________________________________________________ ________________________________________________________ Bal. l/1 Debits 40,000 Credits ? ? Debits ? ------------------------------------------------------------------------------------ Bal. 12/31 60,000 REQUIRED: 1. What was the cost of raw materials put into production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of goods manufactured for the year? 5. What was the cost of goods sold for the year (before considering under- or overapplied overhead)? 6. If overhead is applied to production on the basis of direct labor cost, what rate was in effect during the year? 7. Was manufacturing overhead under- or overapplied? By how much? 8. Compute the ending balance in the Work in Process inventory account. Assume that this balance consists entirely of goods started during the year. If $8,000 of this balance is direct labor cost, how much of it is direct materials cost? Manufacturing overhead cost? Problem 3 Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3 per unit. Enough capacity exists in the company's plant to produce 16,000 units of the toy each month. Variable costs to manufacture and sell one unit would be $1.25, and fixed costs associated with the toy would total $35,000 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 16,000 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed cost of $1,000 per month. Variable costs in the rented facility would total $1.40 per unit, due to somewhat less efficient operations than in the main plant. REQUIRED: 1. Compute the monthly break-even point for the new toy in units and in total sales dollars. Show all computations in good form. 2. How many units must be sold each month to make a monthly profit of $12,000? 3. If the sales manager receives a bonus of 10 cents for each unit sold in excess of the breakeven point, how many units must be sold each month to earn a return of 25% on the monthly investment in fixed costs? Note that because the costs are not linear, standard formulas may not apply! Problem 4 Consider the decision by National Airlines, Inc. regarding the number of flights to operate per day on the air shuttle route between New York and Boston. Its advertising, personnel, and other expenditures to support the operation in New York and Boston amount to $24,000 per day. Flying crew, fuel, and other flight-related expenditures amount to $3,000 per round-trip flight. Landing and airport gate fees are $1,800 per round-trip flight. In addition, ground support personnel cost $2,000 per round-trip flight as company policy seeks to maintain quality service even as volume increases. National pays a commission of 5% to travel agents on a round-trip fare of $200 per passenger. A full flight carries 100 passengers. 1. How many flights in a day must National Airlines operate to make 25% profit margin if it expects the average load factor (number of passengers to the seating capacity) to be 70% per flight? 2. Suppose the load factor for National Airlines is not expected to equal 70% for each flight. Instead, the load factor is expected to be 90% for the first round-trip flight of the day and is expected to decline by 10% for each additional round-trip flight introduced in the same day. How many round-trip flights per day should National Airlines operate to maximize profit? Hint: This problem is analogous to a bank/retailer deciding on the number of branches/stores in a geographical area. You need to think about how total revenue, total costs and profits change with the addition of flights. You can either use Excel or a math model to solve it. Problem 5 Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $28 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customersparticularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (costs of idle capacity and organization-sustaining costs) Activity Measure Activity for the Year Square feet cleaned (00s) Miles driven Number of jobs 20,000 hundred square feet 60,000 miles 2,000 jobs None Not applicable The total cost of operating the company for the year is $430,000, which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $150,000 40,000 20,000 80,000 60,000 80,000 $430,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 70% 100% 80% 0% 0% 0% Travel to Jobs 20% 0% 0% 60% 0% 0% Job Support Other 0% 0% 0% 0% 45% 40% 10% 0% 20% 40% 55% 60% Total 100% 100% 100% 100% 100% 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. REQUIRED: 1. Prepare the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 5 hundred square foot carpet-cleaning job at the Flying N rancha 75-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. 4. The revenue from the Flying N ranch was $140 (5 hundred square feet @ $28 per hundred square feet). Prepare a report showing the margin from this job. 5. What do you conclude concerning the profitability of the Flying N ranch job? Explain. 6. What advice would you give the president concerning pricing jobs in the future? Problem 6 Barney Toy Company manufactures large and small stuffed animals. The following cost information is available for large and small stuffed animals: Item Price per unit Variable costs per units: Direct material Direct labor Support Fixed mfg. costs per unit Fixed S&A cost per unit Total unit costs Total monthly demand Large Small $32 $21 $12 6 2 3 4 $27 $10 3 1 3 6 $23 15,000 25,000 Production occurs in batches of 100 large or 200 small stuffed animals. Each batch takes a total of 100 labor hours to manufacture. The monthly capacity of 30,000 labor hours cannot be increased for at least another year. Required a. Determine which size is more profitable to produce. How many units should Barney produce of each size? Because of an unexpected high demand for stuffed dinosaurs, a discount store chain has requested an order of 5000 large stuffed dinosaurs. It is willing to pay $37 for this special order. b. What is the opportunity cost for this special order? Should the order be accepted? Show calculations and explain. c. Now assume that the company can increase the capacity by making its employees work overtime. What is the maximum overtime premium that can be paid to the workers if the special order is accepted. Hello, We agreed on 50 as question price and 125 as tip. I get 0.40 of price and 0.80 of tip So I was expecting (0.40*50)+(0.80*125)=120 In the first project I got (50*0.40)+(50*0.80)=60 In the second project just the question price is (30*0.40)=12 Got 72 so far. The system allows max tip of 100% I guess. Didn't knew earlier Maximum tip you can pay is 30 I will get (30*0.80)=24 Total =72+24=96 Shortfall = 12-96=24 Please have a look. It really took me a lot of work to do the work and suggest what can be best done. Write your suggestion as a word document and not type in question reply option This math is getting very complicated... Are you sure there is a max tip...it doesn't sound like you are. I don't believe I ever had an issue tipping larger than the question price. I suggest we finish the transaction with all remaining solutions and I'll tip you 60. If my math is correct, this will bring you up to your expectation of 120. Hello, We agreed on 50 as question price and 125 as tip. I get 0.40 of price and 0.80 of tip So I was expecting (0.40*50)+(0.80*125)=120 In the first project I got (50*0.40)+(50*0.80)=60 In the second project just the question price is (30*0.40)=12 Got 72 so far. The system allows max tip of 100% I guess. Didn't knew earlier Maximum tip you can pay is 30 I will get (30*0.80)=24 Total =72+24=96 Shortfall = 12-96=24 Please have a look. It really took me a lot of work to do the work and suggest what can be best done. Write your suggestion as a word document and not type in question reply option