Accounting Assignment 7 Problems

1. Heros, Inc., manufactures women’s boating shoes. Manufacturing overhead is assigned toproduction on a machine-hour basis. For 2010, it was estimated that manufacturing overheadwould total $352,570 and that 24,770 machine hours would be used.Required:(Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2010. (Round youraanswer to 2 decimal places. Omit the "$" sign in your response.))Predetermined overhead application rate(b)During May, 3,500 pairs of shoes were made. Raw materials costing $6,640 were used, and direct labor costs totaled $9,750. A totalof 730 machine hours were worked during the month of May. Calculate the cost per pair of shoes made during May. (Round yourintermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)Cost per pair of shoes(c)$$At the end of May, 1,300 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoessold during May. (Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in yourresponse.)Cost of shoes in inventoryCost of shoes sold$$2. Big Thunder Co. incurred the following costs during April:Raw materialspurchasedDirect labor ($13per hour)Manufacturingoverhead (actual)Selling expensesAdministrativeexpensesInterest expense$40,61057,85090,20031,97014,1406,310Manufacturing overhead is applied on the basis of $22 per direct labor hour. Assume that overapplied or underapplied overhead istransferred to cost of goods sold only at the end of the year. During the month, 4,150 units of product were manufactured and 4,410 unitsof product were sold. On April 1 and April 30, Big Thunder Co. carried the following inventory balances:April 1RawmaterialsWorkinprocessFinishedgoods$April 3019,500$17,10053,40057,00041,30029,073Requirement 1:(Prepare a statement of cost of goods manufactured for the month of April. (Amounts to be deducted should be indicated withaminus sign. Omit the "$" sign in your response.))BigThunder Co.Statement of Cost of Goods ManufacturedFor the month of AprilRaw materials:(Click to select)Inventory, April30Direct labor cost incurredInventory,April 1Manufacturing overheadappliedWork-in-process, April 1(Click to select)Work-in-process,April 1Inventory, April 30Direct laborcost incurredPurchases duringAprilManufacturing overhead applied$Raw materials available for use(Click to select)Less: Inventory,April 30Less: Work-in-process, April30Add: Inventory, April 30Add: Workin-process, April 1Direct labor costincurredCost of raw materials used(Click to select)Add: Work-in-process,April 1Purchases during AprilInventory,April 1Less: Work-in-process, April30Direct labor cost incurred(Click to select)Less: Work-in-process,April 30Manufacturing overheadappliedPurchases during AprilAdd:Work-in-process, April 1Inventory,April 1$Total manufacturing costs, April(Click to select)Less: Work-in-process,April 1Inventory, April 1Less:Inventory, April 30Purchases duringAprilAdd: Work-in-process, April 1(Click to select)Add: Work-in-process,April 30Purchases during AprilLess:Inventory, April 30Inventory, April1Less: Work-in-process, April 30$Cost of goods manufactured, April$(b)Calculate the average cost per unit of product manufactured. (Round your answer to 2 decimal places. Omit the "$" sign in yourresponse.)Cost per unit$Requirement 2:Calculate the cost of goods sold during April. (Do not round your intermediate calculations. Round your answer to the nearestdollar amount. Omit the "$" sign in your response.)Cost of goods sold$Requirement 3:(Calculate the difference between cost of goods manufactured and cost of goods sold. (Do not round your intermediatea calculations. Round your answer to the nearest dollar amount. Input the amount as positive value. Omit the "$" sign in your)response.)Difference$(b How will this amount be reported in the financial statements?)(Click to select)The difference between cost of goods manufactured and cost of goods sold is in the raw material account on the balance sheet.The difference between cost of gogoods sold is in the work in progress account on the balance sheet.The difference between cost of goods manufactured and cost of goods sold is in the finished goods inventory aRequirement 4:Prepare a traditional (absorption) income statement for Big Thunder Co. for the month of April. Assume that sales for the month were$285,100 and the company’s effective income tax rate was 35%. (Amounts to be deducted should be indicated with minus sign. Donot round your intermediate calculations. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)BigThunder Co.Absorption Income StatementFor the month of April(Click to select)Income tax expenseSalesCost ofgoods soldSelling and administrativeexpensesInterest expense(Click to select)Interest expenseSalesSelling andadministrative expensesCost of goods soldIncometax expense$(Click to select)Gross profitGross loss(Click to select)Interest expenseIncome taxexpenseSelling and administrativeexpensesAdvertising expensesWages payable$(Click to select)Operating lossOperating income(Click to select)Unearned revenueInterestexpenseAdvertising expensesWagesexpensesSelling and administrative expenses$(Click to select)Selling and administrativeexpensesIncome before taxesUnearnedrevenueAdvertising expensesWages expenses(Click to select)Selling and administrativeexpensesUnearned revenueWages expensesIncometax expenseAdvertising expenses(Click to select)Net incomeNet loss$$3. Halte Co. makes specialty table lamps. Manufacturing overhead is applied to production on adirect labor hours basis. During November, the first month of the companys fiscal year, $59,270of manufacturing overhead was applied to Work in Process Inventory using the predeterminedoverhead application rate of $5.52 per direct labor hour.Required:(a Calculate the number of hours of direct labor used during November. (Round your answer to nearest whole number.))Direct labor hours(b)Actual manufacturing overhead costs incurred during November totaled $47,720. Calculate the amount of over- or underappliedoverhead for November. (Input the amount as positive value. Omit the "$" sign in your response.)(Click to select)OverappliedoverheadUnderapplied overhead$4. Galvaset Indutries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costingapproach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturingoverhead cost drivers (activities). Assume that the direct labor rate is $12 per hour and that there were no beginning inventories. Thefollowing information was available for 2010, based on an expected production level of 53,100 units for the year, which will require226,000 direct labor hours:Activity(Cost Driver)Cost DriverUsedas AllocationBaseBudgetedCosts for2010MaterialshandlingCutting andlathe workAssemblyandinspection$CostAllocation RateNumber ofparts usedNumber ofparts used262,1601,771,840$per part1.35per part20.00Direct laborhours4,520,0000.23per hourThe following production, costs, and activities occurred during the month of March:UnitsProduced3,080DirectMaterials Costs$102,200Numberof Parts Used53,794DirectLabor Hours13,700Required:(Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of March (using the activitya based costing approach). (Round "cost per unit produced" to 2 decimal places and the rest to the nearest dollar amount. Omit)the "$" sign in your response.)Total manufacturing cost$Cost per unit produced(b)$Assume instead that Galvaset Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activitybased costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows producedduring the month of March. (Hint: You will need to calculate the predetermined overhead application rate using the total budgetedoverhead costs for 2010.) (Do not round your intermediate calculations. Round "cost per unit produced" to 2 decimal placesand the rest to the nearest dollar amount. Omit the "$" sign in your response.)Total manufacturing costCost per unit produced$$5. Conolly, Inc., manufactures pocket calculators. Costs incurred in making 9,530 calculators in April included $29,600 of fixedmanufacturing overhead. The total absorption cost per calculator was $10.1.Required:(Calculate the variable cost per calculator. (Do not round your intermediate calculations. Round your answer to 2 decimalaplaces. Omit the "$" sign in your response.))Variable cost per calculator(b)$The ending inventory of pocket calculators was 740 units higher at the end of the month than at the beginning of the month. By howmuch and in what direction (higher or lower) would operating income for the month of April be different under variable costing thanunder absorption costing? (Do not round your intermediate calculations. Omit the "$" sign in your response.)Operating income under variable costing will be $ , (Click to select)lowerhigher thanunder absorption costing.(c)Express the pocket calculator cost in a cost formula. (Do not round your intermediate calculations. Round your answers to 2decimal places. Omit the "$" sign in your response.)Total cost = $ + ($ / calculator number of calculators):6. Rolen, Inc., is in the process of preparing the fourth quarter budget for 2010, and the following data have been assembled:The company sells a single product at a price of $51 per unit. The estimated sales volume for the next six months is as follows:SeptemberOctoberNovemberDecemberJanuaryFebruary11,700 units10,800 units12,600 units18,000 units8,100 units9,000 unitsAll sales are on account. The company’s collection experience has been that 30% of a month’s sales are collected in the month ofsale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value ofaccounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $405,756 on September 30, 2010.Management’s policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month’s budgetedsales. The finished goods inventory on September 30, 2010, is expected to be 3,240 units.To make one unit of finished product, 4 pounds of materials are required. Management’s policy is to have enough materials on hand atthe end of each month to equal 40% of the next month’s estimated usage. The raw materials inventory is expected to be 18,144pounds on September 30, 2010.The cost per pound of raw material is $4, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in thefollowing month. The accounts payable for raw material purchases is expected to be $54,691 on September 30, 2010.Required:(Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2010.a(Omit the "$" sign in your response.))OctoberExpected sales inunitsSelling price per unitTotal salesNovemberDecemberTotal10800126001800041400$ 51.00$ 51.00$ 51.00$ 51.00$ 550,800.00$ 642,600.00$ 918,000.00$ 2,111,400.00(b)Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2010. (Omit the "$" sign in yourresponse.)Cash collections from:September salesOctober salesNovember salesDecember salesTotal cash collections(c)October$ 405,756.00165,240.00$ 570,996.00November$ 374,544.00192,780.00$ 567,324.00December$ 436,968.00275,400.00Total$ 405,756.00539,784.00629,748.00275,400.00$ 712,368.00$ 1,850,688.00Prepare a production budget in units, by month and in total, for the fourth quarter of 2010. (Amounts to be deducted should beindicated with minus sign.)OctoberBeginning inventory offinished goodsUnits to be producedGoods available forsaleDesired endinginventory of finishedgoods (30% of nextmonth’sbudgeted sales)Quantity of goods soldNovemberDecemberTotal(d)Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2010. (Amounts to be deductedshould be indicated with minus sign.)OctoberNovemberDecemberTotalBeginning inventory ofraw materialsPurchases of rawmaterialsRaw materialsavailable for useDesired endinginventory of rawmaterials (40% of nextmonth’sestimated usage)Quantity of rawmaterials to beused in production(e)Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter of 2010. (Round your answers tothe nearest dollar amount. Omit the "$" sign in your response.)Cash payments for:September purchasesOctober purchasesNovember purchasesDecember purchasesOctoberNovemberDecemberTotal$$$$Total cash payments05-11-2011