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ceruleancamel525Lv1

28 Sep 2019

I am hoping for a step-by-step solution for this problem. (Horngren's Cost Accounting 16th Edition - Chapter 2, number 45)

Atlanta Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2017. Costs incurred for 2017 are as followed (V=variable, F=fixed):

Direct marterials used - 140,000 V
Direct manfacturing labor costs - 22,000 V
Plant Energy Costs - 5,000 V
Indirect Manufacturing labor costs - 18,000 V & 14,000 F
Other indirect manufacturing costs - 8,000 V & 26,000 F
Marketing & distribution costs - 120,000 V & 43,000 F
Admin costs - 54,000 F

Inventory data:
Direct materials: beg inv = 0, end inv = 2,300 lbs
Work in process: beg inv = 0, end inv = 0 units
Finished goods: beg inv = 0, end inv = ?

Production in 2017 was 100,000 units. 2 pounds of direct materials are used for 1 unit. Revenues were 473,200. Selling price and purchase price remained stable throughout the year. Ending inventory of finished goods is carried at average unit manufacturing cost for 2017. Finished goods inventory at December 31, 2017 was 20,970.

1. Calculate direct materials inventory, total cost, December 31, 2017
2. Calculate finished goods inventory, total cost, December 31, 2017
3. Calculate selling price in 2017
4. Calculate operating income for 2017

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Deanna HettingerLv2

28 Sep 2019

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Related questions

Lamonda Corp. uses a job order cost system. On April 1, the accounts had balances as shown in the T-accounts below:

The following transactions occurred during April:

(a) Purchased materials on account at a cost of $233,270.
(b) Requisitioned materials at a cost of $111,800, of which $15,200 was for general factory use.
(c) Recorded factory labor of $225,300, of which $43,775 was indirect.
(d) Incurred other costs:

Selling expense $ 35,000
Factory utilities 22,900
Administrative expenses 51,050
Factory rent 11,900
Factory depreciation 19,200

(e) Applied overhead at a rate equal to 135 percent of direct labor cost.
(f) Completed jobs costing $263,450.
(g) Sold jobs costing $323,070.
(h) Recorded sales revenue of $514,000.

Required:
1. & 2. Post the April transactions to the T-accounts and compute the balance in the accounts at the end of April. (Round your answers to 2 decimal places.)

Raw Materials Inventory		Work in Process Inventory
Beg. Bal.	29,500.00	Beg. Bal.	19,000.00


End. Bal.	29,500.00

		End. Bal.	19,000.00

Finished Goods Inventory		Manufacturing Overhead
Beg. Bal.	124,200.00	Beg. Bal.


End. Bal.	124,200.00


		End. Bal.		0.00

Cost of Goods Sold		Sales Revenue
Beg. Bal.		Beg. Bal.


End. Bal.	0.00	End. Bal.		0.00

Selling and Administrative Expenses
Beg. Bal.


End. Bal.	0.00

3-a. Compute over- or underapplied manufacturing overhead. (Round your answer to 2 decimal places.)

Manufacturing Overhead

3-b. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease?
a.Decrease

b.Increase

4. Prepare Lamondaâs cost of goods manufactured report for April. (Round your answers to 2 decimal places.)

LAMONDA CORP.
Cost of Goods Manufactured Report
For the Month of April




Direct Materials Used



Total Current Manufacturing Costs	$0.00


Cost of Goods Manufactured

5. Prepare Lamondaâs April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead. (Round your answers to 2 decimal places.)

LAMONDA CORP.
Income Statement
For the Month of April

Cost of Goods Sold



Unadjusted Cost of Goods Sold

Adjusted Cost of Goods Sold


Net Income (Loss) from Operations

You want to sell 10,000 units in April, 15,000 in May, 8,000 units in June at $20 each.

Business Development

You know that our competitor is struggling with manufacturing and supply is low, and your POV is that demand will increase by 10% in April and May

Manufacturing Supervisor

You have seen that raw material supply shipments are being delayed - and you want to keep 15% of next months production needs on hand- also you would like 15% of raw material needs on hand for production of product for next month. You know it takes .5 hours standard to make each unit.

Human Resources

Has settled the labors union by guaranteeing 40 hours minimum a week at $12/hour, but no OT. You expect 5500 direct labor hours standard per month. Based on our payroll system you can expect 1/2 the direct labor to be paid in the month it was incurred and the second 1/2 in the following month.

Purchasing Agent

Your POV is that Supply of raw material is plentiful and you agree with the Manufacturing Supervisor that in fact shipments are slow do to trucking constraints, you want to keep 10% of raw material on hand for next months production needs. The price of wood is not expected fluctuate in the next 3 months at $1/lb standar rate. You know each unit manufactured requires a standard 4lb of wood.

Accounts Receivable Manager

Based on historical data you know that 50% of the current month sales are collected in month while 45% are collected the following month, 5% are never collected.

Treasure

Your goal is to keep $40,000 in the bank as a balance. We have a line of credit we can borrow from- when we fall short

Accountant

Has calculated fixed Manufacturing Overhead as follows (each month)

Variable Manufacturing Overhead at

Utilities

$.5 per unit produced

Controller

Your goal is to help guide and lead the team, and increase profit share over the next quarter, while keeping costs under control. Last years sales goal for the same 3 months was set at 32,000 units which we met. We did that with only keeping 10% of units produced on hand.

Accounts Payable

You know that 50% of our purchases (VE) are paid the same month incurred and the reminder paid the following month. However our expenses (FE) are paid for in the month we incur them. While utilities are paid the 10th of the following month of production.

We manufacture and sell baseball bats, attached is the cross functional working team that has been assigned to come up with a plan for next quarter.

Work with the knowledge you are given to present a plan (budgets) to the board.

Add desired ending Inventory

Material to be purchased

Direct Labor Hours per unit

Total direct labor cost

Total cash collection

Cash Disbursement Budget

April

May

June

Purchases Raw Material

Variable Manufacturing OH

$5,000

Fixed Manufacturing OH

Total Cash Disbursements

Beginning cash Balance

How did you decide on how many units to sell over the next 3 months?

How did the sales goal affect your production budget?

Assume Actual purchases for May of Direct Material were 2% less than budged and Actual price paid for material was $.90/ lb. Calculate the Direct material price variance. Is this a favorable or unfavorable variance?

Assume actual direct labor hours for April were 5,300 with an actual average rate of $12.50, calculate the direct labor rate variance, and determine if this is a favorable or unfavorable variance.

For May actual fixed overhead totaled $34,000, calculate the fixed overhead budget variance, is the favorable or unfavorable?

1. Sydney's Barbecue reported the following information:

Sydney's Barbecue
Period Ending December 31, 20XX

Manufacturing costs	$5,400,000
Units manufactured	$54,000
Beginning inventory in Units	$ 0

Note: 45,600 units sold during year at $300 per unit

What is the amount of ending finished goods inventory for theperiod ending December 31, 20XX?

	$860,000
	$830,000
	$840,000
	$850,000
	$820,000

2.Net income reported under absorption costing will exceed netincome reported under variable costing for a given period if

production equals sales for thatperiod.

variable overhead exceeds fixedoverhead for that period.

production exceeds sales for thatperiod.

sales exceed production for that period.

A company manufactures wallets. Last month's costs were aslisted below:

Direct materials	$246,000
Direct labor	$175,000
Manufacturing Overhead	$73,000

What were the conversion costs for the month?

$248,000

$494,000

$421,000

$246,000

4. Which of the following are classified as manufacturingoverhead?

Indirect labor and indirectmaterials

Direct materials and directlabor

Factory rent and direct labor

All materials

5.Baxter Company produces Frisbees using a three-step sequentialprocess that includes molding, coloring, and finishing. At whatstage would the sets be allocated Manufacturing Overhead?

When the Frisbees are in WIPInventory-Coloring

When the Frisbees are in WIPInventory-Finishing

When the Frisbees are in WIPInventory-Molding

All of the above

6.Which method are managers using when they use their judgmentto classify costs as variable, fixed, or mixed?

Low-high method

Regression analysis

Account analysis

High-low method

7.Which of the following is not a way in which management canuse job cost information?

Determining the balance in rawmaterials inventory

Preparing the financialstatements

Assessing and comparing theprofitability of each product type

Using the cost information in determining the bid price forcustom orders

8.A factory janitor's wages would be classified as _________when determining the cost of a manufactured product.

an indirect cost

a period cost

a direct cost

none of the above

Tall Timbers reports the following data for its first year ofoperation:

Work in process inventory, beginning	$ 0
Work in process inventory, ending	$50,200
Manufacturing overhead	$25,400
Direct materials used	$7,700
Direct Labor	$60,000
Finished goods inventory, beginning	$ 0
Finished goods inventory, ending	$20,000
Cost of goods manufactured	$42,900

What is the cost of goods sold?

$22,900

$76,000

$73,100

$42,900

10.

A deodorant manufacturer offers the following information:

WIP Inventory, January 1	0 units
Units started	33,600 units
Units completed and transferred out	11,200 units
WIP Inventory, December 31	22,400 units
Direct materials	$276,480
Direct labor	$585,000
Manufacturing Overhead	$328,920

The units in ending WIP Inventory were 60% complete formaterials and 40% complete for conversion costs.

On December 31, what are the total equivalent units for directmaterials?

47,040

33,600

20,160

24,640

11. How is the cost of indirect materials used in the factoryrecorded?

Credit to Raw Materials Inventoryaccount

Credit to Manufacturing Overheadaccount

Credit to Direct Materials Expenseaccount

Credit to Work-in-Process Inventory account

12. XYZ uses job costing. Actual manufacturing overhead for theperiod is $20,300 while allocated manufacturing overhead is$18,200. What entry will close the manufacturing overheadbalance?

	Debit the Cost of Goods Soldaccount and credit the Finished Goods Inventory account for$2,100.
	Debit the Manufacturing Overheadaccount and credit the Work-in-Process account for $2,100.
	Debit the Cost of Goods Soldaccount and credit the Manufacturing Overhead account for$2,100.
	Debit the Manufacturing Overhead account and credit the Cost ofGoods Sold account for $2,100.

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