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1. Buckhorn Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Data for the upcoming year appear below.
Estimated Machine hours: 85,000
Estimated variable manufacturing overhead: 5.55 per machine hour
Estimated total fixed manufacturing overhead: 951,888
Compute the company’s predetermined overhead rate
2. Matuseki Corporation is preparing its cash budget for October. The budgeted beginning cash balance is 17,000. Budgeted cash receipts totals 187,000 and budgeted cash disbursements totals 177,000. The desired ending cash balance is 40,000. The company can borrow up to 120,000 at any time from the local bank, with interest not due until the following month.
Prepare the company’s cash budget for October in good form
3. Bella Lugosi holdings, INC has collected the following operating information below for its current month’s activity. Using the information, prepare a flexible budget analysis to determine how well BLH performed in terms of cost control.
Actual cost incurred Static Budget
Activity level (in units) 5,250 5,178
Variable cost:
Indirect material 24,182 23,476
Utilities 22,356 22,674
Fixed Cost:
Administration 63,450 65,500
Rent 65,317 63,904
4. McMullen Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by the McMullen to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor.
The accounting Department provided the following detail regarding the annual cost to produce electronic hinges.
Direct material: 54,000
Direct labor: 60,000
Variable manufacturing overhead: 36,000
Fixed manufacturing overhead: 90,000
Total cost: 240,000
The procurement department provided the following supplier pricing:
Supplier A price per hinge: 11.00
Supplier B price per hinge: 10.75
Supplier C price per hinge: 10.50
The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet McMullens technical specifications and quality requirements. If McMullen stops producing the part internally, 10% of the manufacturing overhead would be eliminated.
Prepare a make or buy analysis showing the annual advantage or disadvantage of accepting an outside supplier’s offer
5. Topple company produces a singe product. Operating data for the company and its absorption costing income statement for the last year is presented below:
Units in beginning Inventory: 0
Units produced: 9,000
Units sold: 7,000
Sales: 100,000
Less cost of goods sold
Beginning inventory: 0
Add cost of goods manufactured: 54,000
Goods available for sale: 54,000
Less ending inventory: 12,000
Cost of goods sold: 42,000
Gross margin: 58,000
Less selling and admin expenses: 28,000
Net operating income: 30,000
Variable manufacturing cost are 4$ per unit. Fixed factory overhead totals 18,000 for the year. This overhead was applied at a rate of 2$ per unit. Variable selling and administrative expenses were 1$ per until sold.
Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
6. The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year:
Sales: 1,150
Raw Material inventory, beginning: 15
Raw material inventory ending: 40
Purchased of raw material: 150
Direct labor: 250
Manufacturing overhead: 300
Admin expenses: 500
Selling expenses: 300
Work in process inventory, beginning: 100
Work in process inventory, ending: 150
Finished goods Inventory, beginning: 80
Finished goods inventory, ending: 120
Use the above data to prepare (in thousands of dollars) a schedule of cost of goods manufactured and schedule of cost of goods sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?
