I need help in cost and managerial accounting homework. I missed two classes back to back and I am totally…

I need help in cost and managerial accounting homework. I missed two classes back to back and I am totally lost.

Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Bill will rent a garage for $300 per month for production purposes. Utilities will cost $40 per month. Bill has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $300. Bill will rent production equipment at a monthly cost of $800. He estimates the material cost per unit will be $5, and the labor cost will be $3. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays $3,000 per month. Advertising and promotion will cost $900 per month.
Required:
Complete the chart below by placing an “X” under each heading that helps to identify the cost involved. There can be “Xs” placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost and a product cost; there would be an “X” placed under each of these headings opposite the cost.
  
* Between the alternatives of going into business to make the device or not going into business to make the device.

Corio Corporation reports that at an activity level of 3,800 units, its total variable cost is $221,464 and its total fixed cost is $94,848.
Required:
For the activity level of 3,900 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range. 

A number of costs and measures of activity are listed below.
  
Required:
For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it. 

Whitman Corporation, a merchandising company, reported sales of 7,400 units for May at a selling price of $677 per unit. The cost of goods sold (all variable) was $441 per unit and the variable selling expense was $54 per unit. The total fixed selling expense was $155,600. The variable administrative expense was $24 per unit and the total fixed administrative expense was $370,400.
Required:
a. Prepare a contribution format income statement for May.
b. Prepare a traditional format income statement for May. 

Dobrinski Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 13,000 labor-hours. The estimated variable manufacturing overhead was $2.35 per labor-hour and the estimated total fixed manufacturing overhead was $156,130.
Required:
Compute the company’s predetermined overhead rate. 

Hirschman Corporation has provided the following data for the month of April:
  
  
Required:
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form. 

Iron Decor manufactures decorative iron railings. In preparing for next year’s operations, management has developed the following estimates:
  
Required:
Compute the following items:
a. Unit contribution margin.
b. Contribution margin ratio.
c. Break-even in dollar sales.
d. Margin of safety percentage.
e. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?
f. If the per unit variable production costs increase by 15%, and if fixed selling and administrative expenses increase by 12%, what will be the new break-even point in dollar sales? 

Butremovic Corporation’s contribution format income statement for the most recent month follows:
  
Required:
a. Compute the degree of operating leverage to two decimal places.
b. Using the degree of operating leverage, estimate the percentage change in net operating income that should result from an 8% increase in sales. 

Stanger Inc. produces and sells two products. Data concerning those products for the most recent month appear below:
  
Fixed expenses for the entire company were $17,570.
Required:
a. Determine the overall break-even point for the company. Show your work!
b. If the sales mix shifts toward Product N16S with no change in total sales, what will happen to the break-even point for the company? Explain.

ACCOUNTING 386 LATE FALL 2012

NAME: ___________________________________

1. The EG Company produces and sells one product. The following data refer to the year just completed:
  
Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare a contribution format income statement for the year using variable costing.
 

2. Roskam Housecleaning provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system.
  
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Haan family, requested 49 jobs during the year that required a total of 245 hours of housecleaning. For this service, the client was charged $2,500.
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the Haan family. Round off all calculations to the nearest whole cent.

3. Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store’s operations follow:
Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January.
Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
The cost of goods sold is 65% of sales. The company wants to have merchandise inventory of gas of $176,800 on November 30th & $171,600 on December 31st.
Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $21,000.
Monthly depreciation is $16,000.
Ignore taxes.

NOTE: In some of the problems that you have done previously, you started with the number of units that were to be produced and then had to multiply times the unit cost. That is not the case here. You start with the total cost of the merchandise.
  
Required:
a. Prepare a Merchandise Purchases Budget for November and December.
b. Prepare Budgeted Income Statements for November and December.
 

4. Sammartino Clinic uses patient-visits as its measure of activity. The following report compares the planning budget to the actual operating results for the month of November:
  
Required:
Prepare the clinic’s flexible budget performance report for November. Label each variance as favorable (F) or unfavorable (U). 

5. Diamond Company produces a single product. The company has set the following standards for materials and labor:
  
During the past month, the company purchased 7,000 pounds of direct materials at a cost of $17,500. All of this material was used in the production of 1,300 units of product. Direct labor cost totaled $36,750 for the month. The following variances have been computed:
  
Required:
1. For direct materials:
a. Compute the standard price per pound of materials.
b. Compute the standard quantity allowed for materials for the month’s production.
2. For direct labor:
a. Compute the actual direct labor cost per hour for the month.
b. Compute the labor rate variance. 

6. Eckels Wares is a division of a major corporation. The following data are for the latest year of operations:
  
Required:
a. What is the division’s return on investment (ROI)?
b. What is the division’s residual income? 

7. Marcell Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below:
  
Required:
a. Which costs are relevant and which are not relevant in the choice between these two alternatives?
b. What is the differential cost between the two alternatives? 

PROBLEM

materials cost for 500 tons

costs for 500 tons, 30% completed

Inventory in Process, July 1

–

to be assigned costs:

Total

Whole % Material Equiv Units

:

Units

:

Units Added

Beginning Inventory Beginning Inventory
Started & Completed Started & Completed

Transferred Out

Ending Inventory Ending Inventory

Total:

Direct Materials
Conversion Costs

Direct

Materials Conversion Total
Costs Costs Costs

Equivalent unit cost

Equivalent unit cost

The following information is provided for the melting department of Ermoin, Inc,

Inc. for the month of July, 200X:

Inventory in process, July 1, 500 tons:

Direct

3,200

Conversion

4,365

Total

7,565

Direct materials cost for July, 16,000 tons

101,980

Conversion costs for July

468,930

578,475

Goods finished in July (includes units in process

on July 1), 16,100 tons

–

20% completed as to conversion costs

– 0

I. Determine

Units

Beginning Inventory

Started & Completed

Transferred Out

Ending Inventory

II. Determine Equivalent Units:

Whole

% Material

Equiv Units

Direct

Materials

Added

for DM

Conversion

Costs

for Conv Cost

Total:

III. Determine Cost Per Equivalent Unit:

IV. Allocate Costs:

Inventory in process, July 1 balance

Equivalent units for completing the July 1

in-process inventory

Equivalent unit cost

Cost of July 1 in-process inventory transferred to Casting

Total Beginning Inventory

Units started & completed in July

Cost to complete the units started & completed in July

Total Started & Completed

Total Transferred Out:

Equivalent units in ending inventory

Cost of ending inventory

Complete the table & compute the cost of goods finished in July & inventory in process @ 7/31/0X