Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
Acct 615.DL.Spring 2015 ‐ Assignment Final (2)
May 11, 2015
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E19 ‐1
1
2
3
4
5
6
7
8
9
10
false, financial accounting focuses on providing info to external users
true
false, budget preparation is part of managerial accounting
false, managerial accounting applies to service, merchandising and manufacturing co
true
false, managerial accounting reports are produced on a as needed basis
true
true
false, managerial accounting reports are defined internally
false. managerial accountants should behave ethically
1
2
3
4
5
6
7
8
9
10
direct labor
manufacturing overhead
manufacturing overhead
manufacturing overhead
direct materials
direct labor
manufacturing overhead
manufacturing overhead
manufacturing overhead
direct materials
E19‐2
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E19‐4
(a) manufacturing overhead
Factory utilities
Depreciation on factory equipment
Indirect factory labor
Indirect materials
Factory manager's salary
Property taxes on factory building
Factory repairs
manufacturing overhead
$ 15,500
12,650
48,900
80,800
8,000
2,500
2,000
$ 170,350
(b) product costs
Direct materials used
Direct labor
product costs
$ 137,600
69,100
$ 206,700
(c) period costs
Depreciation on delivery trucks
Sales salaries
Repairs to office equipment
Advertising
Office supplies used
period costs
$ 3,800
46,400
1,300
1,500
26,400
$ 79,400
E19‐5
1
2
3
4
5
6
7
8
9
10
(c) manufacturing overhead
(c) manufacturing overhead
(a) direct materials
(c) manufacturing overhead
(b) direct labor
(d) period costs
(a) direct materials
(b) direct labor
(c) manufacturing overhead
(c) manufacturing overhead
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E19‐12
(a)
CEPEDA CORPORATION
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2014
Work in process, June 1
Direct materials used
Direct labor
Manufacturing overhead
Indirect labor
Factory manager's salary
Indirect materials
Maintenance, factory equipment
Depreciation, factory equipment
Factory utilities
Total manufacturing overhead
Total manufacturing costs
Total cost of work in process
Less: Work in process, June 30
Cost of goods manufactured
(b)
$ 3,000
$ 20,000
40,000
$ 4,500
3,000
2,200
1,800
1,400
400
13,300
73,300
76,300
3,800
$ 72,500
CEPEDA CORPORATION
Income Statement (Partial)
For the Month Ended June 30, 2014
Net sales
Cost of goods sold
Finished goods, June 1
Cost of goods manufactured [from (a)]
Cost of goods available for sale
Less: Finished goods, June 30
Cost of goods sold
Gross profit
$ 92,100
$ 5,000
72,500
77,500
7,500
70,000
$ 22,100
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
P19‐1A
(a)
Cost Item
Rent on factory equipment
Insurance on factory building
Raw materials (plastics, polystyrene, etc.)
Utility costs for factory
Supplies for general office
Wages for assembly line workers
Depreciation on office equipment
Miscellaneous materials (glue, thread, etc.)
Factory manager's salary
Property taxes on factory building
Advertising for helmets
Sales commissions
Depreciation on factory building
Direct Material
cost to produce one helmet =
(total production cost / helmets produced) =
$148,100 / 10,000 = $14.81 per helmet
Period Costs
$ 75,000
900
$ 300
$ 53,000
800
1,100
5,700
400
14,000
10,000
$ 75,000
(b)
Direct materials
Direct labor
Manufacturing overhead
Total production cost
Product Costs
Direct Manufacturing Labor
Overhead
$ 9,000
1,500
$ 75,000
53,000
20,100
$ 148,100
$ 53,000
1,500
$ 20,100
$ 25,100
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
P19‐4A
a)
CLARKSON COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended June 30, 2014
Work in process inventory, July 1, 2013
Direct materials
Raw materials inventory, July 1, 2013
Raw materials purchases
Total raw materials available for use
Less: Raw materials inventory, June 30, 2014
Direct materials used
Direct labor
Manufacturing overhead
Plant manager's salary
Indirect labor
Factory Insurance
Factory machinery depreciation
Factory utilities
Factory property taxes
Factory repairs
Total manufacturing overhead
Total manufacturing costs
Total cost of work in process
Less: Work in process inventory, June 30, 2014
Cost of goods manufactured
$ 19,800
$ 48,000
96,400
144,400
39,600
104,800
139,250
$ 58,000
24,460
4,600
16,000
27,600
9,600
1,400
141,660
385,710
405,510
18,600
$ 386,910
b)
386910
(Partial) Income Statement
For the Year Ended June 30, 2014
Sales revenues
Sales
Less: Sales discounts
Net Sales
Cost of Goods Sold
Finished goods inventory, July 1, 2013
Cost of goods manufactured [per (a)]
Cost of goods available for sale
Less: Finished goods inventory, 6/30/14
Cost of goods sold
Gross profit
$ 534,000
4,200
$ 529,800
96,000
386,910
482,910
75,900
407,010
$ 122,790
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
P19‐4A continued
c)
CLARKSON COMPANY
Balance Sheet (Partial)
June 30, 2014
ASSETS
Current assets
Cash
Accounts receivable
Inventories
$ 32,000
27,000
Raw materials
Finished goods
Work in process
Total current assets
$ 39,600
75,900
18,600 134,100
$ 193,100
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E22‐1
a)
variable costs: costs vary in total directly and proportionately with changes in activity level
fixed costs: costs that remain the same in total regardless of changes in the activity level
mixed costs: costs that contain both a variable and fixed element, these costs change in total but not proportionately with changes in activity level
b)
Direct material
Direct labor
Utilities
Rent
Maintenance
Supervisory salaries
variable
variable
mixed
fixed
mixed
fixed
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E22‐2
a) maintenance cost behavior of Furgee Industries (high‐low method for variable and fixed)
variable cost :
$4,900 ‐ $2,500
=
$2,400
=
$6 per machine hour
fixed cost:
FURGEE INDUSTRIES
Activity Level
High
Low
Total cost
$4,900
$2,500
Less:
Variable costs
700 x $6
4,200
300 x $6
1,800
Total fixed costs
$700
$700
b) maintenance cost behavior
Costs
Hours $5,000
0
300
$4,000
350
400
$3,000
500
690
$2,000
700
Costs
###
###
###
###
###
###
###
$4,900
Variable Cost
$1,000
$700
Fixed Cost
$‐
0
100
200
300
Machine hours
400
500
600
700
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E22‐11
a)
unit contribution margin = fixed costs / breakeven sales in units
breakeven sales in units = (breakeven sales / selling price per unit)
unit contribution margin = $112,000 / ($350,000 / $5) = $1.6
variable cost per unit = unit selling price ‐ unit contribution margin
= $5 ‐ $1.6
= $3.4
contribution margin ratio = unit contribution margin / unit selling price
= $1.6 / $5
= 32%
b)
fixed costs (2014)
= breakeven sales * contribution margin ratio
= $420,000 * 32%
= $134,400
increase fixed costs
= fixed costs(2014) ‐ fixed costs(2013)
= $134,400 ‐ $112,000
= $22,400
P22‐1A
a)
Monthly fixed costs
Barber's salaries
Manager's extra salary
Advertising
Rent
Utilities
Magazines
total monthly fixed
$4,000
500
200
1,100
175
25
$6,000
Variable costs per haircut
Barber commission
$ 4.50
Barber supplies
0.30
Utilities
0.20
total variable costs
$ 5.00
b)
break‐even point (# of haircuts/month) = x
$10.00x = $5.00x + $6,000
$5.00x = $6,000
x = 1,200 haircuts/month to break‐even (units)
break‐even point ($) =(1,200 * $5.00) + $6,000 = $12,000
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
c)
d) assume 1,700 haircuts/month
Net income/month = (haircut cost * # haircuts) ‐ (variable cost * # haircuts) ‐ fixed costs
$17,000 ‐ $8,500 ‐ $6,000
Net income/month = $2,500
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
P22‐5A
a) (1)
Mozena Corporation Net Sales
Variable costs
Selling expenses
Direct materials
Direct labor
Administrative expenses
Manufacturing overhead
Total variable costs
Contribution Margin
1st Year (on 100,000 units)
$ 1,500,000
100,000
511,000
290,000
54,000
245,000
1,200,000
$ 300,000
Contribution Margin (CM) with 10% unit sales growth = CM (projected year) * 1.1 = $330,000
a) (2)
Mozena Corporation Fixed costs
Selling expenses
Administrative expenses
Manufacturing overhead
Total fixed costs
1st Year
(on 100,000 units)
$ 150,000
216,000
105,000
$ 471,000
b) CURRENT YEAR (1st)
Break‐even point in units = fixed costs/unit contribution margin (unit selling price ‐ unit variable cost)
= $471,000 / ($15 ‐ $12) = 157,000
Break‐even point in $ = fixed costs /
contribution margin ratio (unit contribution margin / unit selling price)
= $471,000 / ($3 / $15) = $2,355,000
c) required sales ($) for target net income of $200,000
= (fixed costs + target net income) / contribution margin ratio
= $3,355,000
d)
Margin of safety ratio = (Actual (expected) sales ‐ break‐even sales) / Actual (expected) sales = ($3,355,000 ‐ $2,355,000) / $3,355,000)
= 29.8 %
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
BYP 22‐3
a) variable costs/unit per PERI AND PAUL COMPANY Income Statement year end Dec. 31, 2014
costs of goods sold (*.75/240,000)
$ 2.50
selling expenses (*.42/240,000)
0.49
administrative expenses (*.40/240,000)
0.25
Total variable costs/unit
$ 3.24
break‐even ($) x =
$ .35x =
x =
(variable cost/unit) / cost per unit)x + fixed cost
($3.24/$5.00)x + $452,400
$452,400
$1,292,571
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E24‐15
a)
ROI = Controllable margin / Average operating assets
Controllable margin = sales revenue ‐ variable costs ‐ controllable fixed costs
= $3,000,000 ‐ $1,980,000 ‐ $600,000
= $420,000
ROI = $420,000 / $5,000,000
= 8.4%
b)
1
Contribution margin percent = $1,020,000 /$3,000,000
= 34%
Controllable margin increase = 0.34 * $320,000
= $108,800
ROI = ($420,000 + $108,000) / $5,000,000
10.6%
2
ROI = ($420,000 + $150,000) / $5,000,000
11.4%
3
ROI = $420,000 / ($5,000,000 ‐ $200,000)
8.8%
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
E24‐16
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
P24‐3A
(a)
Monthly budgeted cost formula:
Fixed cost $ 35,000
+ variable cost of $2.75
per unit
HILL COMPANY
Assembling department
Flexible budget Report
For the Month Ended August 31, 2014
(b)
Units
Budget at
58,000 units
Actual Costs
58,000 units
Difference
Favorable F
Unfavorable U
Variable costs
Direct materials
Direct labor
Indirect materials
Indirect labor
Utilities
Maintenance
Total variable $ 46,400
52,200
23,200
17,400
14,500
5,800
159,500
$ 47,000
51,200
24,200
17,500
14,900
6,200
161,000
$ (600)
900
(1,000)
(100)
(400)
(400)
(1,600)
Fixed costs
Rent
Supervision
Depreciation
Total fixed
12,000
17,000
6,000
35,000
12,000
17,000
6,000
35,000
0
0
0
0
Total costs
194,500
196,000
U
F
U
U
U
U
U
(1,600) U
Acct 615.DL.Spring 2015 ‐ Assignment 2
Accounting Principles by Weygandt, Kieso and Kimmel 11th edition
Thomas J. Burke NJIT Student ID# 312‐47‐125
(c )
Units
HILL COMPANY
Assembling department
Flexible budget Report
For the Month Ended September 30, 2014
Difference
Budget at
Actual Costs
Favorable F
64,000 units
64,000 units
Unfavorable U
Variable costs
Direct materials
Direct labor
Indirect materials
Indirect labor
Utilities
Maintenance
Total variable $ 51,200
57,600
25,600
19,200
16,000
6,400
176,000
$ 51,700
56,430
26,620
19,250
16,390
6,820
177,210
$ (500)
1,170
(1,020)
(50)
(390)
(420)
(1,210)
Fixed costs
Rent
Supervision
Depreciation
Total fixed
12,000
17,000
6,000
35,000
12,000
17,000
6,000
35,000
0
0
0
0
Total costs
211,000
212,210
P24‐4B
U
F
U
U
U
U
U
(1,210) U