Problem 1 (4 marks) Johnson Stores produce and sell face powder called the Success' in cases. Each case is sold for $80. The following information relates to the product in the autumn and summer of 2020: Autumn Summer Sales 23,400 units 35,700 units Production 28,500 units 30,600 units Direct materials $136,800 $146,880 Direct labor S133.950 $143,820 Variable manufacturing overhead $71,250 $76,500 Fixed manufacturing overhead $120,000 $122,000 Fixed selling expenses $25,500 $25,500 Variable selling expenses $42,750 $45,900 Variable administrative expenses are 10% of sales value Fixed administrative expenses are 25% of sales value Normal capacity for the year was 117,600 cases to be produced evenly throughout the year with a budgeted cost of $470,400. Assume that there will be no inventory held on January 1, 2020. Required: (1) Prepare profit statement for each of the two quarters using absorption and variable costing techniques. (2) Compute and reconcile the differences in the operating incomes of both techniques. (3) Comment on the differences in the operating incomes of both techniques. Problem 2 (4 marks) Following is a random-order listing of perspectives, strategic objectives, and performance measures for the balanced scorecard. Perspectives Strategic Objectives Performance Measures Internal business Acquire new customers Percentage of defective-product units process Customer Increase shareholder value Retum on assets Learning and growth Retain customers Number of patents Financial Improve manufacturing quality Employee turnover rate Develop profitable customers Net income Increase proprietary products Customer profitability Increase information system Percentage of processes with real- capabilities time feedback Enhance employee skills Return on sales On-time delivery by suppliers Average job-related training-hours per employee Increase profit generated by each Return on equity salesperson Introduce new products Percentage of on-time deliveries by suppliers Minimize invoice-error rate Product cost per unit Profit per salesperson Percentage of error-free invoices Customer cost per unit Earnings per share Number of new customers Percentage of customers retained Required: (1) For each perspective, select those strategic objectives from the list that best relate to it. (2) For each strategic objective, select the most appropriate performance measure(s) from the list. Problem 3. (5 marks) The Central Valley Company has prepared department overticad budgets for budgeted.volume levels before allocations as follows: Support departe Pend Goalpa Cafeteria penting Total for sport diperont Operating department . Any Tural Springer SR.00 Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support department costs are allocated to operating departments. Bases for allocation are to be selected from the following Sear Direct Pretatuter Theporte Mustering Neler Employees Nem er L Spares Der Building o PB wios of cemes) Gora pa 10 Calama 30 . M. Asembly 2.000 Required: (1) Using the step-down method, allocate support department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate (2) Using the direct method, rework requirement 1 (3) Based on the following information about two jobs. determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Maalarierlag at learn Mabing 17 (4) The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements and 2? Explain
