Managerial Accounting 4B Test #2 (Ch. 5, 6, 7) Name Part 2. Problems. There are four problems. Each one is worth the score indicated next to the problem number. Show all work for complete credit. You may attach extra pages if you so desire. Please be NEAT when writing your answers. I cannot grade illegible answers. (30 points possible) 1. (10 points) Penny Black Ltd., which has only one product, has provided the following data concerning its most recent month of operations: Selling price. $104 Units in beginning inventory. Units produced Units sold Units in ending inventory 27,000 21,000 6,000 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead.. Variable selling and administrative. $32 $23 $8 S5 .. Fixed costs: .$270,000 S150,000 Fixed selling and administrative. Required a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare an income statement for the month using the contribution format and the variable costing method. Prepare an income statement for the month using the traditional format and the absorption costing method. d. 2.(10 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: $435,000 Sales (15,000 units at S29 per unit).. Less variable costs: 60,000 75,000 45,000 Variable factory overhead. Variable selling and other expenses30,000 210,000 Contribution margin.. 225,000 Less fixed expenses Fixed factory overhead100,000 Fixed selling and other expenses.85.000 185.000 Net operating income $ 40,000 There are no beginning or ending inventories. Required a. b. Compute the company's break-even point in units and sales dollars. What would the company's monthly net operating income be if sales and total variable costs increased by 30% and total fixed factory overhead dropped by $25,000? What total level of sales (in units) must the company achieve in order to earn a target profit of S145,000? c. d. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units. (4 points) Jardon Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system. ctivity Measure Activity Cost Pool Annual Activity Painting. Square meters 30,000 square meters Job support . Other... Jobs None 1,100 jobs Not applicable The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below: Job Painting Support Other Total Total.150,000 S10,000 S75,000 $335,000 Required: a. Compute the activity rates (i.e., cost per unit of activity) for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent. Job Painting Support Activity Rate b. Prepare a Product Margin report for ONE job that involves painting 400 square meters and has direct materials cost of $1,000 and direct labor cost of S1,190. The total sales revenue from this job is $4,600. 4. (4 points) Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense: Month Units ShippedTotal Shipping Expense January February March April May June July 60 40 50 70 80 20 $ 1,800 $ 2,300 $ 1,700 2,000 2,300 $ 2,700 $ 1,200 Required: Using the high-low method, calculate the equation of a cost line for the shipping expense for this company (Y = a + bX) Managerial Accounting 4B Test #2 (Ch. 5, 6, 7) Name Part 2. Problems. There are four problems. Each one is worth the score indicated next to the problem number. Show all work for complete credit. You may attach extra pages if you so desire. Please be NEAT when writing your answers. I cannot grade illegible answers. (30 points possible) 1. (10 points) Penny Black Ltd., which has only one product, has provided the following data concerning its most recent month of operations: Selling price. $104 Units in beginning inventory. Units produced Units sold Units in ending inventory 27,000 21,000 6,000 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead.. Variable selling and administrative. $32 $23 $8 S5 .. Fixed costs: .$270,000 S150,000 Fixed selling and administrative. Required a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare an income statement for the month using the contribution format and the variable costing method. Prepare an income statement for the month using the traditional format and the absorption costing method. d. 2.(10 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: $435,000 Sales (15,000 units at S29 per unit).. Less variable costs: 60,000 75,000 45,000 Variable factory overhead. Variable selling and other expenses30,000 210,000 Contribution margin.. 225,000 Less fixed expenses Fixed factory overhead100,000 Fixed selling and other expenses.85.000 185.000 Net operating income $ 40,000 There are no beginning or ending inventories. Required a. b. Compute the company's break-even point in units and sales dollars. What would the company's monthly net operating income be if sales and total variable costs increased by 30% and total fixed factory overhead dropped by $25,000? What total level of sales (in units) must the company achieve in order to earn a target profit of S145,000? c. d. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units. (4 points) Jardon Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system. ctivity Measure Activity Cost Pool Annual Activity Painting. Square meters 30,000 square meters Job support . Other... Jobs None 1,100 jobs Not applicable The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below: Job Painting Support Other Total Total.150,000 S10,000 S75,000 $335,000 Required: a. Compute the activity rates (i.e., cost per unit of activity) for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent. Job Painting Support Activity Rate b. Prepare a Product Margin report for ONE job that involves painting 400 square meters and has direct materials cost of $1,000 and direct labor cost of S1,190. The total sales revenue from this job is $4,600. 4. (4 points) Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense: Month Units ShippedTotal Shipping Expense January February March April May June July 60 40 50 70 80 20 $ 1,800 $ 2,300 $ 1,700 2,000 2,300 $ 2,700 $ 1,200 Required: Using the high-low method, calculate the equation of a cost line for the shipping expense for this company (Y = a + bX)