Managerial Accounting Assignment

2.
value:
4.00 points

E13-8 Product costing-manufacturing overhead [LO 5]

Winners, Inc.,
manufactures women’s boating shoes. Manufacturing overhead is assigned to
production on a machine-hour basis. For 2010, it was estimated that
manufacturing overhead would total $353,730 and that 29,460 machine hours
would be used.

Required:

(a)

Calculate the
predetermined overhead application rate that will be used for absorption
costing purposes during 2010. (Round your
answer to 2 decimal places. Omit the “$” sign in your response.)

Predetermined
overhead application rate

$

(b)

During May, 3,700
pairs of shoes were made. Raw materials costing $6,770 were used, and direct
labor costs totaled $9,350. A total of 770 machine hours were worked during
the month of May. Calculate the cost per pair of shoes made during May. (Round your intermediate calculations and final answer
to 2 decimal places. Omit the “$” sign in your response.)

Cost
per pair of shoes

$

(c)

At the end of May,
1,310 pairs of shoes were in ending inventory. Calculate the cost of the
ending inventory and the cost of the shoes sold during May. (Round your intermediate calculations and final answer
to 2 decimal places. Omit the “$” sign in your response.)

Cost
of shoes in inventory

$

Cost
of shoes sold

$

3.
value:
10.00 points

P13-22 Cost of goods manufactured, cost of goods sold, and
income statement [LO 4, 5, 7]

Big
Thunder Co. incurred the following costs during April:

Raw
materials purchased

$

40,130

Direct
labor ($13 per hour)

56,810

Manufacturing
overhead (actual)

90,440

Selling
expenses

31,560

Administrative
expenses

14,490

Interest
expense

6,455

Manufacturing
overhead is applied on the basis of $22 per direct labor hour. Assume that
overapplied or underapplied overhead is transferred to cost of goods sold
only at the end of the year. During the month, 4,060 units of product were
manufactured and 4,420 units of product were sold. On April 1 and April 30,
Big Thunder Co. carried the following inventory balances:

April 1

April 30

Raw
materials

$

19,200

$

17,700

Work
in process

52,800

56,600

Finished
goods

41,800

24,884

Requirement
1:

(a)

Prepare a statement
of cost of goods manufactured for the month of April. (Amounts to be deducted should be indicated with minus
sign. Omit the “$” sign in your response.)

BigThunder Co.
Statement of Cost of Goods Manufactured
For the month of April

Raw
materials:

(Click to
select)Work-in-process, April 1Direct labor cost incurredManufacturing
overhead appliedInventory, April 30Inventory, April 1

$

(Click to select)Inventory,
April 30Manufacturing overhead appliedWork-in-process, April 1Purchases
during AprilDirect labor cost incurred

Raw
materials available for use

(Click to select)Less:
Inventory, April 30Add: Work-in-process, April 1Add: Inventory, April
30Direct labor cost incurredLess: Work-in-process, April 30

Cost
of raw materials used

$

(Click to
select)Purchases during AprilAdd: Work-in-process, April 1Inventory, April
1Direct labor cost incurredLess: Work-in-process, April 30

(Click to
select)Purchases during AprilLess: Work-in-process, April 30Manufacturing
overhead appliedInventory, April 1Add: Work-in-process, April 1

Total
manufacturing costs, April

$

(Click to select)Add:
Work-in-process, April 1Less: Inventory, April 30Inventory, April 1Purchases
during AprilLess: Work-in-process, April 1

(Click to select)Less:
Inventory, April 30Inventory, April 1Add: Work-in-process, April 30Less:
Work-in-process, April 30Purchases during April

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 your
response.)

Cost
per unit

$

Requirement
2:

Calculate
the cost of goods sold during April. (Do not
round your intermediate calculations. Round your answer to the nearest dollar
amount. Omit the “$” sign in your response.)

Cost
of goods sold

$

Requirement
3:

(a)

Calculate the
difference between cost of goods manufactured and cost of goods sold. (Do not round your intermediate 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 finished goods inventory account on the balance sheet.The
difference between cost of goods manufactured and cost of goods 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 raw material account
on the balance sheet.

Requirement
4:

Prepare a
traditional (absorption) income statement for Big Thunder Co. for the month
of April. Assume that sales for the month were $284,500 and the company’s
effective income tax rate was 40%. (Amounts to
be deducted should be indicated with minus sign. Do not round your
intermediate calculations. Round your answer to the nearest dollar amount.
Omit the “$” sign in your response.)

BigThunder Co.
Absorption Income Statement
For the month of April

(Click to
select)Interest expenseCost of goods soldSelling and administrative
expensesIncome tax expenseSales

$

(Click to select)Cost of
goods soldIncome tax expenseSalesSelling and administrative expensesInterest
expense

(Click to select)Gross
profitGross loss

$

(Click to select)Selling
and administrative expensesInterest expenseWages payableAdvertising
expensesIncome tax expense

(Click to
select)Operating lossOperating income

$

(Click to
select)Advertising expensesUnearned revenueInterest expenseSelling and
administrative expensesWages expenses

(Click to
select)Advertising expensesWages expensesIncome before taxesUnearned
revenueSelling and administrative expenses

$

(Click to select)Income
tax expenseSelling and administrative expensesWages expensesUnearned
revenueAdvertising expenses

(Click to select)Net
lossNet income

$

4.
value:
6.00 points

P13-16 Activity-based costing versus traditional overhead
allocation methods [LO 9]

Galvaset Indutries
manufactures and sells custom-made windows. Its job costing system was
designed using an activity-based costing approach. Direct materials and
direct labor costs are accumulated separately, along with information
concerning three manufacturing overhead cost drivers (activities). Assume
that the direct labor rate is $19 per hour and that there were no beginning
inventories. The following information was available for 2010, based on an
expected production level of 53,500 units for the year, which will require
218,000 direct labor hours:

Activity
(Cost Driver)

Budgeted
Costs for 2010

Cost Driver Used
as Allocation Base

Cost
Allocation Rate

Materials
handling

$

261,600

Number
of parts used

$

0.28

per
part

Cutting
and lathe work

1,700,400

Number
of parts used

1.45

per
part

Assembly
and inspection

4,578,000

Direct
labor hours

21.00

per
hour

The following
production, costs, and activities occurred during the month of March:

Units
Produced

Direct
Materials Costs

Number
of Parts Used

Direct
Labor Hours

3,250

$111,600

43,756

14,000

Required:

(a)

Calculate the total
manufacturing costs and the cost per unit of the windows produced during the
month of March (using the activity-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 activity-based costing system previously
described). Calculate the total manufacturing cost and the cost per unit of
the windows produced during the month of March. (Hint: You will need
to calculate the predetermined overhead application rate using the total
budgeted overhead costs for 2010.) (Do not
round your intermediate calculations. 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

$

(c)

Which approach do
you think provides better information for manufacturing managers?

(Click
to select)Activity based costingDirect labor hours basis

5.
value:
4.00 points

E13-14 Variable versus absorption costing [LO 8]

Conolly, Inc.,
manufactures pocket calculators. Costs incurred in making 9,450 calculators
in April included $29,500 of fixed manufacturing overhead. The total
absorption cost per calculator was $9.5.

Required:

(a)

Calculate the
variable cost per calculator. (Do not round
your intermediate calculations. Round your answer to 2 decimal places. Omit
the “$” sign in your response.)

Variable
cost per calculator

$

(b)

The ending
inventory of pocket calculators was 900 units higher at the end of the month
than at the beginning of the month. By how much and in what direction (higher
or lower) would operating income for the month of April be different under
variable costing than under absorption costing? (Do
not round your intermediate calculations. Omit the “$” sign in your
response.)

Operating
income under variable costing will be $ ,(Click to select)higherlower than
under
absorption costing.

(c)

Express the pocket
calculator cost in a cost formula. (Do not
round your intermediate calculations. Round your answers to 2 decimal places.
Omit the “$” sign in your response.)

Total
cost = $ + ($ / calculator × number of calculators)

value:
20.00 points

P14-18 Sales, production, purchases, and cash budgets [LO 4, 5,
8]

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 $50 per unit. The estimated sales volume for the
next six months is as follows:

September

11,700 units

October

10,800 units

November

12,600 units

December

18,000 units

January

8,100 units

February

9,000 units

•

All sales are on
account. The company’s collection experience has been that 30% of a month’s
sales are collected in the month of sale, 68% are collected in the month
following the sale, and 2% are uncollectible. It is expected that the net
realizable value of accounts receivable (i.e., accounts receivable less
allowance for uncollectible accounts) will be $397,800 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 budgeted sales. 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 at the end of each month to equal 40% of the
next month’s estimated usage. The raw materials inventory is expected to be
18,144 pounds on September 30, 2010.

•

The cost per pound
of raw material is $5, and 70% of all purchases are paid for in the month of
purchase; the remainder is paid in the following month. The accounts payable
for raw material purchases is expected to be $68,364 on September 30, 2010.

Required:

(a)

Prepare a sales
budget in units and dollars, by month and in total, for the fourth quarter
(October, November, and December) of 2010.
(Omit the “$” sign in your response.)

October

November

December

Total

Expected
sales in units

Selling
price per unit

$

$

$

$

Total
sales

$

$

$

$

(b)

Prepare a schedule
of cash collections from sales, by month and in total, for the fourth quarter
of 2010. (Omit the “$” sign in your
response.)

Cash
collections from:

October

November

December

Total

September
sales

$

$

October
sales

$

November
sales

$

December
sales

Total
cash collections

$

$

$

$

(c)

Prepare a
production budget in units, by month and in total, for the fourth quarter of
2010. (Amounts to be deducted should be
indicated with minus sign.)

October

November

December

Total

Beginning
inventory of finished goods

Units
to be produced

Goods
available for sale

Desired
ending inventory of finished
goods
(30% of next month’s
budgeted
sales)

Quantity
of goods sold

(d)

Prepare a materials
purchases budget in pounds, by month and in total, for the fourth quarter of
2010. (Amounts to be deducted should be
indicated with minus sign.)

October

November

December

Total

Beginning
inventory of raw materials

Purchases
of raw materials

Raw
materials available for use

Desired
ending inventory of raw
materials (40%
of next month’s
estimated
usage)

Quantity
of raw materials to be
used
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 to the
nearest dollar amount. Omit the “$” sign in your response.)

Cash
payments for:

October

November

December

Total

September
purchases

$

$

October
purchases

$

November
purchases

$

December
purchases

Total
cash payments

$

$

$

$

E13-10 Manufacturing overhead-over/underapplied [LO 5, 6]
[The
following information applies to the questions displayed below.]

Halte Co. makes
specialty table lamps. Manufacturing overhead is applied to production on a
direct labor hours basis. During November, the first month of the company’s
fiscal year, $56,460 of manufacturing overhead was applied to Work in Process
Inventory using the predetermined overhead application rate of $7.17 per
direct labor hour.

7.
value:
1.00 points

E13-10 Part a

Required:

(a)

Calculate the
number of hours of direct labor used during November. (Round your answer to nearest whole number.)

Direct
labor hours

8. 
value:
1.00 points

E13-10 Part b

(b)

Actual
manufacturing overhead costs incurred during November totaled $45,930.
Calculate the amount of over- or underapplied overhead for November. (Input the amount as positive value. Omit the
“$” sign in your response.)

(Click to
select)Overapplied overheadUnderapplied overhead

$