Managerial Accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

Managerial vs Financial Accounting

Page 120: Brief Exercises 3-7 and 3-9

Page 123: Exercise 3-7

Pages 164-165: Brief Exercise 4-2, and 4-8

Page 170: Exercise 4-8

Page 209: Brief Exercises 5-1, 5-2, 5-4

Pages 260-261: Exercises 6-2, 6-5, 6-7

Page 298: Brief Exercises 7-1, 7-2

Pages 300-301: Exercises 7-1, 7-4

Page 303: Exercise 7-9

BE 3-7 Trek Company has the following production data for April: units transferred

out 40,000, and ending work in process 5,000 units that are 100% complete for

materials, and 40% complete for conversion costs. If unit materials cost $4 and unit

conversion cost is $7, determine the costs to be assigned to the units transferred out

and the units in ending work in process.

BE3-9 Data for Hollins Company are given in BE3-8. Production records indicate

that 18,000 units were transferred out, and 2,000 units in ending work in process were

50% complete as to conversion costs and 100% complete as to materials. Prepare a

cost reconciliation schedule

E3-7 The Sanding Department of Quick Furniture Company has the following production and manufacturing cost data for March 2017, the first month of operation.

Production:7,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials  and 20% complete as to conversion costs.

Manufacturing costs: Materials $33,000;labor $21,000; and overhead $36,000.

Instructions: Prepare a production cost report.

E4-2 Finney Inc. has conducted an analysis of overhead costs related to one of its product lines using a traditional costing system(volume-based) and an activicty based costing system. Here are its results.

                                                     Traditional Costing                                   ABC

Sales revenue                           $600,000                                                        $6000,000

Overhead costs:

 Product RX3                               $34,000                                                        $50,000

Product Y12                                   36,000                                                           20,000

                                                      $70,000                                                          $70,000

Explain how a difference in the over head costs between the two systems may have occurred.

 

BE4-8 Rich Novelty Company identified the following activities in its production and support operations. Classify each of these activities as either value-added or non-value-added.

 

(a) Machine setup.

(b) Design engineering.

(c) Storing inventory.

(d) Moving work in process.

(e) Inspecting and testing.

(f) Painting and packing.

E4-8 Wilmington Inc. manufactures five models of kitchen appliances. The company is installing activity-based costing and has identified the following activities performed at its Mesa plant.

Designing new models

Purchasing raw materials and parts.

Storing and managing inventory

Receiving and inspecting raw materials and parts

Interviewing and hiring new personnel

Machine forming sheet steel into appliance parts

Manually assembling parts into appliances

Training all employees of the company

Insuring all tangible fixed assets

Supervising production

Maintaining and repairing machinery and equipment

Painting and packaging finished appliances

 

Having analyzed its Mesa plant operations for purposes of installing activity-based-costing, Wilmington, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead to Wilmington’s five products.

Instructions: Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Wilmington’s five products.

 

E5-1 Monthly production costs in Dilts Company for two levels of production are as follows.

Cost                             2,000 Units                                    4,000 units

Indirect labor                   $10,000                                             $20,000

Supervisory salaries           5,000                                                     5,000

Maintenance                           4,000                                                 6,000

Indicate which costs are variable, fixed, and mixed, and give the reason for each answer.

 

E5-2 For Lodes Companythe relevant range  of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Diagram the behavior of each cost within the relevant range assuming the behavior is linear.

 

E5-4 Bruno Company accumulates the following data concerning a mixed cost, using miles as the activicty level.

                             Miles Driven                    Total Cost           Miles Driven              Total Cost

Jan.                       8,000                              $14,150        March     8,500                      $15,000

Feb.                      7,500                                 13,500       April       8,200                      14,490

E6-2 In the month of June, Jose Hebert's Beauty Salon gave 4,000 haircuts, shampoos, and permanents at an average price of $30. During the month, fixed costs were $16,800 and variable costs were 75% of sales.

Instructions

a) Determine the contribution margin in dollars, per unit and as a ratio.

b) Using the contribution margin technique, compute the break-even point in dollars and in units.

c) Compute the margin of safety in dollars and as a ratio

E6-5 Carey Company had sales in 2016 of $1,560,000 on 60,000 units. Variable costs totaled $900,000, and fixed costs totaled $500,000.

A new raw material is available that will decrease the variable costs per unit by 20% (or $3). However, to process the new raw material, fixed operating costs will increase by $100,000. Management feels that one-half of the declines in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold.

 

Instructions

Prepare a projected CVP income statement for 2017

(a) Assuming the changes have not been made,

(b) Assuming that changes are made as described.

E6-7 PDQ repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change-related services represent 70% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 30% of its sales and provides a 40% contribution margin ratio. The company’s fixed costs are $15,600,000(that is $78,000 per service outlet).

Instructions (a) Calculate the dollar amount of each type of service that the company must provide in order to break even (b) The company has a desired net income of $52,000 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet?

References