Question 6:
Mitchel Corporation manufactures a single product. Last year,variable costing net operating income was $55,000. The fixedmanufacturing overhead costs released from inventory underabsorption costing amounted to $24,000.
Required:
What is the absorption costing net operating income from lastyear?
Materials Conversion
Question 7:
Calder Corporation manufactures and sells one product. Thefollowing information pertains to the company's first year ofoperations:
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 overheadcosts or variable selling and administrative costs. During itsfirst year of operations, the company produced 48,000 units andsold 45,000 units. The company�s only product sells for $258 perunit.
Required:
What is the net operating income?
Question 8:
Mouret Corporation uses the following activity rates from itsactivity-based costing to assign overhead costs to products.
Activity Cost Pools ActivityRate
Setting upbatches $92.68 per batch
Processing customer orders $95.08 per customerorder
Assembling products $3.41per 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 N79Ausing the company's activity-based costing system?
Question 9:
The manufacturing overhead budget of Paparella Corporation isbased on budgeted direct labor-hours. The November direct laborbudget indicates that 6,000 direct labor-hours will be required inthat month. The variable overhead rate is $2.00 per directlabor-hour. The company's budgeted fixed manufacturing overhead is$79,200 per month, which includes depreciation of $21,000. Allother fixed manufacturing overhead costs represent current cashflows.
Required:
A. Determine the cash disbursements for manufacturing overheadfor 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 38,000customers. The company has provided the following data concerningthe formulas it uses in its budgeting:
Fixed element per month Variableelement per month
Revenue�����........� $2.10
Wages and salaries��$25,000 $0.50
Supplies�������$0 $0.30
Insurance������..$6,200 $0.00
Miscellaneousexpense�$2,500 $0.40
Required:
Prepare the company�s planning budget for April. What is the netoperating income?
Question 11:
Shawl Corporation's variable overhead is applied on the basis ofdirect labor-hours. The standard cost card for product F02Especifies 5.5 direct labor-hours per unit of
F02E. The standard variable overhead rate is $6.80 per directlabor-hour. During the most recent month, 1,560 units of productF02E 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 themonth?
B. What was the variable overhead efficiency variance for themonth?
Question 12:
Kingdon Corporation's manufacturing overhead includes $7.10 permachine-hour for variable manufacturing overhead and $207,000 perperiod for fixed manufacturing overhead.
Required:
What is the predetermined overhead rate for the denominatorlevel of activity of 4,600 machine-hours?
Question 13:
Pinkney Corporation has provided the following data concerningits direct labor costs for November:
Standard wage rate $12.20per DLH
Standard hours 5.3DLHs per unit
Actual wage rate $11.20per DLH
Actual hours 39,720DLHs
Actual output 7,900units
Required:
Show the journal entry to record the incurrence of direct laborcosts
Question 14:
Iba Industries is a division of a major corporation. Thefollowing data are for the latest year of operations:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . .$5,820,000
Net operating income . . . . . . . . . . . . . . $436,500
Average operating assets . . . . . . . . . . . $2,000,000
The company�s minimum
Required rate of return . . . . . . . . . . . . . 18%
Required:
What is the division�s residual income?
Question 6:
Mitchel Corporation manufactures a single product. Last year,variable costing net operating income was $55,000. The fixedmanufacturing overhead costs released from inventory underabsorption costing amounted to $24,000.
Required:
What is the absorption costing net operating income from lastyear?
Materials Conversion
Question 7:
Calder Corporation manufactures and sells one product. Thefollowing information pertains to the company's first year ofoperations:
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 overheadcosts or variable selling and administrative costs. During itsfirst year of operations, the company produced 48,000 units andsold 45,000 units. The company�s only product sells for $258 perunit.
Required:
What is the net operating income?
Question 8:
Mouret Corporation uses the following activity rates from itsactivity-based costing to assign overhead costs to products.
Activity Cost Pools ActivityRate
Setting upbatches $92.68 per batch
Processing customer orders $95.08 per customerorder
Assembling products $3.41per 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 N79Ausing the company's activity-based costing system?
Question 9:
The manufacturing overhead budget of Paparella Corporation isbased on budgeted direct labor-hours. The November direct laborbudget indicates that 6,000 direct labor-hours will be required inthat month. The variable overhead rate is $2.00 per directlabor-hour. The company's budgeted fixed manufacturing overhead is$79,200 per month, which includes depreciation of $21,000. Allother fixed manufacturing overhead costs represent current cashflows.
Required:
A. Determine the cash disbursements for manufacturing overheadfor 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 38,000customers. The company has provided the following data concerningthe formulas it uses in its budgeting:
Fixed element per month Variableelement per month
Revenue�����........� $2.10
Wages and salaries��$25,000 $0.50
Supplies�������$0 $0.30
Insurance������..$6,200 $0.00
Miscellaneousexpense�$2,500 $0.40
Required:
Prepare the company�s planning budget for April. What is the netoperating income?
Question 11:
Shawl Corporation's variable overhead is applied on the basis ofdirect labor-hours. The standard cost card for product F02Especifies 5.5 direct labor-hours per unit of
F02E. The standard variable overhead rate is $6.80 per directlabor-hour. During the most recent month, 1,560 units of productF02E 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 themonth?
B. What was the variable overhead efficiency variance for themonth?
Question 12:
Kingdon Corporation's manufacturing overhead includes $7.10 permachine-hour for variable manufacturing overhead and $207,000 perperiod for fixed manufacturing overhead.
Required:
What is the predetermined overhead rate for the denominatorlevel of activity of 4,600 machine-hours?
Question 13:
Pinkney Corporation has provided the following data concerningits direct labor costs for November:
Standard wage rate $12.20per DLH
Standard hours 5.3DLHs per unit
Actual wage rate $11.20per DLH
Actual hours 39,720DLHs
Actual output 7,900units
Required:
Show the journal entry to record the incurrence of direct laborcosts
Question 14:
Iba Industries is a division of a major corporation. Thefollowing data are for the latest year of operations:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . .$5,820,000
Net operating income . . . . . . . . . . . . . . $436,500
Average operating assets . . . . . . . . . . . $2,000,000
The company�s minimum
Required rate of return . . . . . . . . . . . . . 18%
Required:
What is the division�s residual income?
Related questions
Bracey Company manufactures and sells one product. The followinginformation pertains to the companyâs first year of operations:
| Variable cost per unit: | ||
| Direct materials | $ | 31 |
| Fixed costs per year: | ||
| Direct labor | $ | 429,000 |
| Fixed manufacturing overhead | $ | 421,200 |
| Fixed selling and administrative expenses | $ | 72,000 |
The company does not incur any variable manufacturing overheadcosts or variable selling and administrative expenses. During itsfirst year of operations, Bracey produced 26,000 units and sold23,900 units. The selling price of the companyâs product is $70 perunit.
Required:
1. Assume the company uses super-variable costing:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
2. Assume the company uses a variable costing system thatassigns $16.50 of direct labor cost to each unit produced:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
3. Assume the company uses an absorption costing system thatassigns $16.50 of direct labor cost and $16.20 of fixedmanufacturing overhead cost to each unit produced:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
4a. Reconcile the difference between the super-variable costingand variable costing net operating incomes.
4b. Reconcile the difference between the super-variable costingand absorption costing net operating incomes.
Walsh Company manufactures and sells one product. The followinginformation pertains to each of the companyâs first two years ofoperations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 27 |
| Direct labor | $ | 13 |
| Variable manufacturingoverhead | $ | 5 |
| Variable selling andadministrative | $ | 4 |
| Fixed costs per year: | ||
| Fixed manufacturingoverhead | $ | 400,000 |
| Fixed selling and administrativeexpenses | $ | 90,000 |
During its first year of operations, Walsh produced 50,000 unitsand sold 40,000 units. During its second year of operations, itproduced 40,000 units and sold 50,000 units. The selling price ofthe companyâs product is $54 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for year 1 and year 2.
Year 1 __________
Year 2 __________
| b. Prepare an income statement for year 1and year 2. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. Assume the company uses absorption costing:
a. Compute the unit product cost for year 1 and year 2.(Round your answers to 2 decimal places.)
Year 1_____________
Year 2 _____________
b. Prepare an income statement for year 1 and year 2.(Round your intermediate calculations to 2 decimalplaces)
| |||||||||||||||||||||||||
3. Reconcile the difference between variable costing andabsorption costing net operating income in year 1 and year2.
| Year 1 | Year 2 | |
| Variable Costing Net Operating income (loss) | ||
| Absorption Costing Net operating income (loss) |
