Question 1

pillow inc manufactures and sells cushions. The company produces 20,500 cushions each year and sell them at $10.6 per unit. The company is considering whether it should further process these cushions and make them into deluxe cushions for an additional processing cost of $97,000 and sell them at $16.0 each

• Using the incremental analysis for sell as is or process further, compute the total net benefit of processing all cushions into the deluxe cushion

Question 2

Flowering company manufacturers and sells flower pot stands. The company's normal selling price is $28 per unit.

A breakdown of manufacturing cost per unit is provided below

Direct material $6.00

Direct labor $6.50

Variable manufacturing overhead: $1.50

Fixed manufacturing cost $4.00

Total manufacturing costs $18

The company receives a special order at $16 per unit for 5,000 units and needs to decide whether to accept this special order or not. Assume the company has excess capacity and regular sales will remain the same with or without this special order

1. Indicate whether the company will increase or decrease if it accepts the special order
2. How much is the increase/decrease
3. Should the company accept this special order or not

Question 3

Here is some basic data for wharton company

Cost of materials purchase on account	$75,0000
Cost of material requisitioned (includes $2,000 of indirect)	43,000
Direct labour cost inccred	75,000
Manufacturing overhead costs incurred, including indirect materials	95,000
Cost of goods completed	226,750
Cost of goods sold	138,000
Beginning raw materials inventory	15,000
Beginning work in process inventory	32,000
Beginning finished goods inventory	31,000
Predetermined manufactured overhead rate (as % of direct labour cost)	125%

For wharton company, the journal entry to record the cost of direct material placed into production involves a

• Debit to work in process inventory for 43,000
• Debit to work in process inventory for 41,000
• Credit to manufacturing overhead for $2,000
• Debit to manufacturing overhead for $41,000

Question 4

Tamara inc plans to sell 6,800 units of new product at a selling price of $70 each, unit variable costs is $49, including direct materials, direct labour, variable overhead, and variable selling expense. The company estimated that $22,000 of fixed manufacturing overhead and $52,000 of fixed selling administrative expenses will be incurred

• What is the number of units the company must sell in order to break even?

Question 5

Peter manufactures snowboards. It cost of making 3,000 bindings is as follows

Direct material $32,000

Direct labour $4,500

Variable manufacturing overhead $6,200

Fixed manufacturing overhead $13,000

Total manufacturing cost $56,000

The company may also to choose to purchase the binding from a supplier at $14 each. It will pay $1.50 per unit to transport the binding to its manufacturing plant and then add its own logo at a cost of $0.50 per binding. Purchasing the binding form outside will enable the company to avoid $6,000 of fixed overhead

1. Using the incremental analysis for outsourcing decisions, how much is the total cost difference of buying binding from outside vs making it on site
2. Which option should the company choose, making the binding or buying the binding

Question 6

Flowering company manufacturer and sells flower pot stands. The company's normal selling price is $28 per unit. A breakdown of manufacturing cost per unit is provided below:

Direct materials $6

Direct labour $6.50

Variable manufacturing overhead $1.50

Fixed manufacturing overhead $4

Total manufacturing cost $18

The company receives a special order at $16 per unit for 5,000 units and needs to decide whether to accept this special order or not. Assume the company has excess capacity and regular sales will remain the same with or without this special order

1. Indicate whether the company operating income will increase or decrease if it accepts the special order
2. How much is the increase/decrease
3. Should the company accept this special order or not

please explain steps. Thank you