Question 6:

Mitchel Corporation manufactures a single product. Last year, variable costing net operating income was $55,000. The fixed manufacturing overhead costs released from inventory under absorption costing amounted to $24,000.

Required:

What is the absorption costing net operating income from last year?

Materials Conversion

Question 7:

Calder Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:

Variable costs per unit:

Direct Materials.. $92

Fixed costs per year:

Direct Labor $720,000

Fixed manufacturing overhead $3,264,000

Fixed selling and administrative.. $1,935,000

The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 48,000 units and sold 45,000 units. The companys only product sells for $258 per unit.

Required:

What is the net operating income?

Question 8:

Mouret Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.

Activity Cost Pools Activity Rate

Setting up batches $92.68 per batch

Processing customer orders $95.08 per customer order

Assembling products $3.41 per assembly hour

Last year, Product N79A required 28 batches, 6 customer orders, and 712 assembly hours.

Required:

How much total overhead cost would be assigned to Product N79A using the company's activity-based costing system?

Question 9:

The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours. The November direct labor budget indicates that 6,000 direct labor-hours will be required in that month. The variable overhead rate is $2.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $79,200 per month, which includes depreciation of $21,000. All other fixed manufacturing overhead costs represent current cash flows.

Required:

A. Determine the cash disbursements for manufacturing overhead for November.

B. Determine the predetermined overhead rate for November.

Question 10:

Sund Corporation bases its budgets on the activity measure customers served. During April, the company plans to serve 38,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:

Fixed element per month Variable element per month

Revenue........ $2.10

Wages and salaries $25,000 $0.50

Supplies $0 $0.30

Insurance.. $6,200 $0.00

Miscellaneous expense$2,500 $0.40

Required:

Prepare the companys planning budget for April. What is the net operating income?

Question 11:

Shawl Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product F02E specifies 5.5 direct labor-hours per unit of

F02E. The standard variable overhead rate is $6.80 per direct labor-hour. During the most recent month, 1,560 units of product F02E were made and 8,700 direct labor hours were worked.

The actual variable overhead incurred was $52,635.

Required:

A. What was the variable overhead rate variance for the month?

B. What was the variable overhead efficiency variance for the month?

Question 12:

Kingdon Corporation's manufacturing overhead includes $7.10 per machine-hour for variable manufacturing overhead and $207,000 per period for fixed manufacturing overhead.

Required:

What is the predetermined overhead rate for the denominator level of activity of 4,600 machine-hours?

Question 13:

Pinkney Corporation has provided the following data concerning its direct labor costs for November:

Standard wage rate $12.20 per DLH

Standard hours 5.3 DLHs per unit

Actual wage rate $11.20 per DLH

Actual hours 39,720 DLHs

Actual output 7,900 units

Required:

Show the journal entry to record the incurrence of direct labor costs

Question 14:

Iba Industries is a division of a major corporation. The following data are for the latest year of operations:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . $5,820,000

Net operating income . . . . . . . . . . . . . . $436,500

Average operating assets . . . . . . . . . . . $2,000,000

The companys minimum

Required rate of return . . . . . . . . . . . . . 18%

Required:

What is the divisions residual income?