Set\u00a02\t\u00a0\t1.\u00a0(TCO\u00a0C)\u00a0Madlem,\u00a0Inc.,\u00a0produces\u00a0and\u00a0sells\u00a0a\u00a0single\u00a0product\u00a0whose\u00a0selling\u00a0price\u00a0is\u00a0$120.00\u00a0per\u00a0unit\u00a0and\u00a0whose\u00a0variable\u00a0expense\u00a0is\u00a0$46.20\u00a0per\u00a0unit.\u00a0The\u00a0company’s\u00a0fixed\u00a0expense\u00a0is\u00a0$405,900\u00a0per\u00a0month.\t\u00a0\tRequired:\u00a0Determine\u00a0the\u00a0monthly\u00a0breakeven\u00a0in\u00a0either\u00a0unit\u00a0or\u00a0total\u00a0dollar\u00a0sales.\u00a0Show\u00a0your\u00a0work!\u00a0(Points\u00a0:\u00a025)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a02.2.\u00a0(TCO\u00a0B)\u00a0Industrial\u00a0Supply\u00a0Corporation\u00a0uses\u00a0the\u00a0weighted-average\u00a0method\u00a0in\u00a0its\u00a0process\u00a0costing\u00a0system.\u00a0Data\u00a0concerning\u00a0the\u00a0first\u00a0processing\u00a0department\u00a0for\u00a0the\u00a0most\u00a0recent\u00a0month\u00a0are\u00a0listed\u00a0below.\tWork\u00a0in\u00a0process,\u00a0beginning: \u00a0\t\u00a0\u00a0Units\u00a0in\u00a0beginning\u00a0work\u00a0in\u00a0process\u00a0inventory 400\t\u00a0\u00a0Materials\u00a0costs $6,900\t\u00a0\u00a0Conversion\u00a0costs $2,500\t\u00a0\u00a0Percent\u00a0complete\u00a0for\u00a0materials 80%\t\u00a0\u00a0Percent\u00a0complete\u00a0for\u00a0conversion 15%\t\u00a0\u00a0Units\u00a0started\u00a0into\u00a0production\u00a0during\u00a0the\u00a0month 6,000\t\u00a0\u00a0Units\u00a0transferred\u00a0to\u00a0the\u00a0next\u00a0department\u00a0during\u00a0the\u00a0month 5,200\t\u00a0\u00a0Materials\u00a0costs\u00a0added\u00a0during\u00a0the\u00a0month $112,500\t\u00a0\u00a0Conversion\u00a0costs\u00a0added\u00a0during\u00a0the\u00a0month $210,300\t\u00a0 \u00a0\t\u00a0 \u00a0\tEnding\u00a0work\u00a0in\u00a0process: \u00a0\t\u00a0\u00a0Units\u00a0in\u00a0ending\u00a0work-in-process\u00a0inventory 1,200\t\u00a0\u00a0Percentage\u00a0complete\u00a0for\u00a0materials 75%\t\u00a0\u00a0Percentage\u00a0complete\u00a0for\u00a0conversion 30%\t\u00a0\tRequired:\u00a0Calculate\u00a0the\u00a0equivalent\u00a0units\u00a0for\u00a0conversion\u00a0for\u00a0the\u00a0month\u00a0in\u00a0the\u00a0first\u00a0processing\u00a0department.\u00a0(Points\u00a0:\u00a025)\t \ufffd\u00a0\t \ufffd\u00a0\t\u00a0\t\u00a0\t\u00a0\t\u00a0\t\u00a0\tQuestion\u00a01.1.\u00a0(TCO\u00a0D)\u00a0The\u00a0following\u00a0absorption\u00a0costing\u00a0income\u00a0statement\u00a0and\u00a0additional\u00a0data\u00a0are\u00a0available\u00a0from\u00a0the\u00a0accounting\u00a0records\u00a0of\u00a0Bernon\u00a0Co.\u00a0for\u00a0the\u00a0month\u00a0ended\u00a0May\u00a031,\u00a0XXXX.\u00a0During\u00a0the\u00a0accounting\u00a0period,\u00a017,000\u00a0units\u00a0were\u00a0manufactured\u00a0and\u00a0sold\u00a0at\u00a0a\u00a0price\u00a0of\u00a0$60\u00a0per\u00a0unit.\u00a0There\u00a0were\u00a0no\u00a0beginning\u00a0inventories.\tBernon\u00a0Co.\tAbsorption\u00a0Costing\u00a0Income\u00a0Statement\tfor\u00a0the\u00a0Month\u00a0Ended\u00a0May\u00a031,\u00a0XXXX\tSales\u00a0(17,000\u00a0@\u00a0$60) $1,020,000 \u00a0\tCost\u00a0of\u00a0goods\u00a0sold \u00a0\u00a0\u00a0\u00a0612,000 \u00a0\tGross\u00a0profit $\u00a0408,000 \u00a0\tSelling\u00a0and\u00a0administrative\u00a0expenses \ufffd66,000 \u00a0\tIncome\u00a0from\u00a0operations $\u00a0342,000 \u00a0\t\u00a0\tAdditional\u00a0Information:\tCost Total\u00a0Cost Number\u00a0of\u00a0Units Unit\u00a0Cost \u00a0\tManufacturing\u00a0costs: \u00a0 \u00a0 \u00a0 \u00a0\t\u00a0\u00a0Variable $442,000 17,000 $26 \u00a0\t\u00a0\u00a0Fixed \u00a0\u00a0170,000 17,000 \u00a0\u00a010 \u00a0\t\u00a0\u00a0Total $612,000 \u00a0 $36 \u00a0\t\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\tSelling\u00a0and\u00a0administrative\u00a0expenses: \u00a0\t\u00a0\u00a0Variable\u00a0($2\u00a0per\u00a0unit\u00a0sold) $34,000\t\u00a0\u00a0Fixed \u00a0\u00a032,000\t\u00a0\u00a0Total $66,000\t\u00a0\t\u00a0\tRequired:\u00a0Prepare\u00a0a\u00a0new\u00a0income\u00a0statement\u00a0for\u00a0the\u00a0year\u00a0using\u00a0variable\u00a0costing.\u00a0Comment\u00a0on\u00a0the\u00a0differences,\u00a0if\u00a0any,\u00a0between\u00a0the\u00a0absorption\u00a0costing\u00a0and\u00a0the\u00a0variable\u00a0costing\u00a0income\u00a0statements.\u00a0(Points\u00a0:\u00a030)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a02.2.\u00a0(TCO\u00a0I)\u00a0(Ignore\u00a0income\u00a0taxes\u00a0in\u00a0this\u00a0problem.)\u00a0Simpson\u00a0Beauty\u00a0Products\u00a0Corporation\u00a0is\u00a0considering\u00a0the\u00a0production\u00a0of\u00a0a\u00a0new\u00a0conditioning\u00a0shampoo\u00a0that\u00a0will\u00a0require\u00a0the\u00a0purchase\u00a0of\u00a0new\u00a0mixing\u00a0machinery.\u00a0The\u00a0machinery\u00a0will\u00a0cost\u00a0$700,000,\u00a0is\u00a0expected\u00a0to\u00a0have\u00a0a\u00a0useful\u00a0life\u00a0of\u00a010\u00a0years,\u00a0and\u00a0is\u00a0expected\u00a0to\u00a0have\u00a0a\u00a0salvage\u00a0value\u00a0of\u00a0$70,000\u00a0at\u00a0the\u00a0end\u00a0of\u00a010\u00a0years.\u00a0The\u00a0machinery\u00a0will\u00a0also\u00a0need\u00a0a\u00a0$45,000\u00a0overhaul\u00a0at\u00a0the\u00a0end\u00a0of\u00a0Year\u00a05.\u00a0A\u00a0$60,000\u00a0increase\u00a0in\u00a0working\u00a0capital\u00a0will\u00a0be\u00a0needed\u00a0for\u00a0this\u00a0investment\u00a0project.\u00a0The\u00a0working\u00a0capital\u00a0will\u00a0be\u00a0released\u00a0at\u00a0the\u00a0end\u00a0of\u00a0the\u00a010\u00a0years.\u00a0The\u00a0new\u00a0shampoo\u00a0is\u00a0expected\u00a0to\u00a0generate\u00a0net\u00a0cash\u00a0inflows\u00a0of\u00a0$150,000\u00a0per\u00a0year\u00a0for\u00a0each\u00a0of\u00a0the\u00a010\u00a0years.\u00a0Simpson’s\u00a0discount\u00a0rate\u00a0is\u00a018%.\u00a0\tItems Year(s) Amount 18%\u00a0Factor Present\u00a0Value \u00a0\tCost\u00a0of\u00a0machinery Now ($700,000) 1 ($700,000) \u00a0\tWorking\u00a0capital\u00a0increase Now ($60,000) 1 ($60,000) \u00a0\tAnnual\u00a0cash\u00a0inflows 1″\ufffd10 $150,000 4.494 674,100 \u00a0\tOverhaul 5 ($45,000) 0.437 ($19,665) \u00a0\tSalvage\u00a0value 10 $70,000 0.191 13,370 \u00a0\tWorking\u00a0capital\u00a0release 10 $60,000 0.191 11,460 \u00a0\tNet\u00a0present\u00a0value \u00a0 \u00a0 ($80,735)\t\u00a0\tRequired:\t(a)\u00a0What\u00a0is\u00a0the\u00a0net\u00a0present\u00a0value\u00a0of\u00a0this\u00a0investment\u00a0opportunity?\t(b)\u00a0Based\u00a0on\u00a0your\u00a0answer\u00a0to\u00a0(a)\u00a0above,\u00a0should\u00a0Simpson\u00a0go\u00a0ahead\u00a0with\u00a0the\u00a0new\u00a0conditioning\u00a0shampoo?\u00a0(Points\u00a0:\u00a030)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a03.3.\u00a0(TCO\u00a0A)\u00a0The\u00a0following\u00a0data\u00a0(in\u00a0thousands\u00a0of\u00a0dollars)\u00a0have\u00a0been\u00a0taken\u00a0from\u00a0the\u00a0accounting\u00a0records\u00a0of\u00a0the\u00a0Maroon\u00a0Corporation\u00a0for\u00a0the\u00a0just-completed\u00a0year.\tSales 1,700\tRaw\u00a0materials\u00a0inventory,\u00a0beginning 50\tRaw\u00a0materials\u00a0inventory,\u00a0ending 25\tPurchases\u00a0of\u00a0raw\u00a0materials 210\tDirect\u00a0labor 360\tManufacturing\u00a0overhead 330\tAdministrative\u00a0expenses 400\tSelling\u00a0expenses 200\tWork-in-process\u00a0inventory,\u00a0beginning 120\tWork-in-process\u00a0inventory,\u00a0ending 150\tFinished\u00a0goods\u00a0inventory,\u00a0beginning 80\tFinished\u00a0goods\u00a0inventory,\u00a0ending 120\t\u00a0\t\u00a0\tUse\u00a0the\u00a0above\u00a0data\u00a0to\u00a0prepare\u00a0(in\u00a0thousands\u00a0of\u00a0dollars)\u00a0a\u00a0schedule\u00a0of\u00a0Cost\u00a0of\u00a0Goods\u00a0Manufactured\u00a0and\u00a0a\u00a0Schedule\u00a0of\u00a0Cost\u00a0of\u00a0Goods\u00a0Sold\u00a0for\u00a0the\u00a0year.\u00a0In\u00a0addition,\u00a0what\u00a0is\u00a0the\u00a0impact\u00a0on\u00a0the\u00a0financial\u00a0statements\u00a0if\u00a0the\u00a0ending\u00a0finished\u00a0goods\u00a0inventory\u00a0is\u00a0overstated\u00a0or\u00a0understated?\u00a0(Points\u00a0:\u00a025)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a04.4.\u00a0(TCO\u00a0F)\u00a0Walker\u00a0Corporation\u00a0is\u00a0preparing\u00a0its\u00a0cash\u00a0budget\u00a0for\u00a0November.\u00a0The\u00a0budgeted\u00a0beginning\u00a0cash\u00a0balance\u00a0is\u00a0$43,000.\u00a0Budgeted\u00a0cash\u00a0receipts\u00a0total\u00a0$117,000\u00a0and\u00a0budgeted\u00a0cash\u00a0disbursements\u00a0total\u00a0$122,000.\u00a0The\u00a0desired\u00a0ending\u00a0cash\u00a0balance\u00a0is\u00a0$55,000.\u00a0The\u00a0company\u00a0can\u00a0borrow\u00a0up\u00a0to\u00a0$100,000\u00a0at\u00a0any\u00a0time\u00a0from\u00a0a\u00a0local\u00a0bank,\u00a0with\u00a0interest\u00a0not\u00a0due\u00a0until\u00a0the\u00a0following\u00a0month.\t\u00a0\tRequired:\t\u00a0\tPrepare\u00a0the\u00a0company’s\u00a0cash\u00a0budget\u00a0for\u00a0November\u00a0in\u00a0good\u00a0form.\u00a0Make\u00a0sure\u00a0to\u00a0indicate\u00a0what\u00a0borrowing,\u00a0if\u00a0any,\u00a0would\u00a0be\u00a0needed\u00a0to\u00a0attain\u00a0the\u00a0desired\u00a0ending\u00a0cash\u00a0balance(Points\u00a0:\u00a025)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a05.5.\u00a0(TCO\u00a0F)\u00a0The\u00a0following\u00a0overhead\u00a0data\u00a0are\u00a0for\u00a0a\u00a0department\u00a0of\u00a0a\u00a0large\u00a0company.\t\u00a0 Actual\u00a0Costs\u00a0Incurred Static\u00a0Budget\tActivity\u00a0level\u00a0(in\u00a0units) 360 340\t\u00a0 \u00a0 \u00a0\tVariable\u00a0costs: \u00a0 \u00a0\t \ufffdIndirect\u00a0materials $4,182 $4,148\t \ufffdElectricity $2,536 $2,414\tFixed\u00a0costs:\u00a0 \u00a0 \u00a0\t \ufffdAdministration $6,540 $6,500\t \ufffdRent $6,310 $6,400\t\u00a0\tRequired:\u00a0Construct\u00a0a\u00a0flexible\u00a0budget\u00a0performance\u00a0report\u00a0that\u00a0would\u00a0be\u00a0useful\u00a0in\u00a0assessing\u00a0how\u00a0well\u00a0costs\u00a0were\u00a0controlled\u00a0in\u00a0this\u00a0department.\u00a0(Points\u00a0:\u00a025)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a06.6.\u00a0(TCO\u00a0H)\u00a0McMullen\u00a0Co.\u00a0uses\u00a010,000\u00a0units\u00a0of\u00a0Part\u00a0X\u00a0each\u00a0year\u00a0as\u00a0a\u00a0component\u00a0in\u00a0the\u00a0assembly\u00a0of\u00a0one\u00a0of\u00a0its\u00a0products.\u00a0The\u00a0company\u00a0is\u00a0presently\u00a0producing\u00a0Part\u00a0X\u00a0internally\u00a0at\u00a0a\u00a0total\u00a0cost\u00a0of\u00a0$125,000\u00a0as\u00a0follows.\t\u00a0\u00a0\tDirect\u00a0materials $40,000\tDirect\u00a0labor 30,000\tVariable\u00a0manufacturing\u00a0overhead 25,000\tFixed\u00a0manufacturing\u00a0overhead 30,000\tTotal\u00a0costs $125,000\t\u00a0\tAn\u00a0outside\u00a0supplier\u00a0has\u00a0offered\u00a0to\u00a0provide\u00a0Part\u00a0X\u00a0at\u00a0a\u00a0price\u00a0of\u00a0$10\u00a0per\u00a0unit.\u00a0If\u00a0McMullen\u00a0stops\u00a0producing\u00a0the\u00a0part\u00a0internally,\u00a0one\u00a0third\u00a0of\u00a0the\u00a0fixed\u00a0manufacturing\u00a0overhead\u00a0would\u00a0be\u00a0eliminated.\t\u00a0\tRequired:\u00a0Prepare\u00a0a\u00a0make-or-buy\u00a0analysis\u00a0showing\u00a0the\u00a0annual\u00a0advantage\u00a0or\u00a0disadvantage\u00a0of\u00a0accepting\u00a0the\u00a0outside\u00a0supplier’s\u00a0offer.\u00a0Please\u00a0state\u00a0clearly\u00a0whether\u00a0the\u00a0part\u00a0should\u00a0be\u00a0made\u00a0or\u00a0bought\u00a0and\u00a0share\u00a0your\u00a0work.\u00a0(Points\u00a0:\u00a030)\t \ufffd\u00a0\t \ufffd\u00a0\u00a0\u00a0\t\u00a0\tQuestion\u00a07.7.\u00a0(TCO\u00a0B)\u00a0Buckhorn\u00a0Corporation\u00a0bases\u00a0its\u00a0predetermined\u00a0overhead\u00a0rate\u00a0on\u00a0the\u00a0estimated\u00a0machine\u00a0hours\u00a0for\u00a0the\u00a0upcoming\u00a0year.\u00a0Data\u00a0for\u00a0the\u00a0upcoming\u00a0year\u00a0appear\u00a0below.\tEstimated\u00a0machine\u00a0hours 37,000\tEstimated\u00a0variable\u00a0manufacturing\u00a0overhead $7.77\u00a0per\u00a0machine\u00a0hour\tEstimated\u00a0total\u00a0fixed\u00a0manufacturing\u00a0overhead $888,000\t\u00a0\tThe\u00a0actual\u00a0machine\u00a0hours\u00a0for\u00a0the\u00a0year\u00a0turned\u00a0out\u00a0to\u00a0be\u00a035,000.\t\u00a0\tRequired:\u00a0Compute\u00a0the\u00a0company’s\u00a0predetermined\u00a0overhead\u00a0rate.\u00a0(Points\u00a0:\u00a025)<\/p>\n","protected":false},"excerpt":{"rendered":"
Set\u00a02 \u00a0 1.\u00a0(TCO\u00a0C)\u00a0Madlem,\u00a0Inc.,\u00a0produces\u00a0and\u00a0sells\u00a0a\u00a0single\u00a0product\u00a0whose\u00a0selling\u00a0price\u00a0is\u00a0$120.00\u00a0per\u00a0unit\u00a0and\u00a0whose\u00a0variable\u00a0expense\u00a0is\u00a0$46.20\u00a0per\u00a0unit.\u00a0The\u00a0company’s\u00a0fixed\u00a0expense\u00a0is\u00a0$405,900\u00a0per\u00a0month. \u00a0 Required:\u00a0Determine\u00a0the\u00a0monthly\u00a0breakeven\u00a0in\u00a0either\u00a0unit\u00a0or\u00a0total\u00a0dollar\u00a0sales.\u00a0Show\u00a0your\u00a0work!\u00a0(Points\u00a0:\u00a025) \ufffd\u00a0 \ufffd\u00a0\u00a0\u00a0 \u00a0 Question\u00a02.2.\u00a0(TCO\u00a0B)\u00a0Industrial\u00a0Supply\u00a0Corporation\u00a0uses\u00a0the\u00a0weighted-average\u00a0method\u00a0in\u00a0its\u00a0process\u00a0costing\u00a0system.\u00a0Data\u00a0concerning\u00a0the\u00a0first\u00a0processing\u00a0department\u00a0for\u00a0the\u00a0most\u00a0recent\u00a0month\u00a0are\u00a0listed\u00a0below. Work\u00a0in\u00a0process,\u00a0beginning: \u00a0 \u00a0\u00a0Units\u00a0in\u00a0beginning\u00a0work\u00a0in\u00a0process\u00a0inventory 400 \u00a0\u00a0Materials\u00a0costs $6,900 \u00a0\u00a0Conversion\u00a0costs $2,500 \u00a0\u00a0Percent\u00a0complete\u00a0for\u00a0materials 80% \u00a0\u00a0Percent\u00a0complete\u00a0for\u00a0conversion 15% \u00a0\u00a0Units\u00a0started\u00a0into\u00a0production\u00a0during\u00a0the\u00a0month 6,000 \u00a0\u00a0Units\u00a0transferred\u00a0to\u00a0the\u00a0next\u00a0department\u00a0during\u00a0the\u00a0month 5,200 \u00a0\u00a0Materials\u00a0costs\u00a0added\u00a0during\u00a0the\u00a0month $112,500 \u00a0\u00a0Conversion\u00a0costs\u00a0added\u00a0during\u00a0the\u00a0month $210,300 \u00a0 \u00a0 \u00a0 \u00a0 Ending\u00a0work\u00a0in\u00a0process: \u00a0 \u00a0\u00a0Units\u00a0in\u00a0ending\u00a0work-in-process\u00a0inventory 1,200 \u00a0\u00a0Percentage\u00a0complete\u00a0for\u00a0materials 75% \u00a0\u00a0Percentage\u00a0complete\u00a0for\u00a0conversion Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-201283","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/201283","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=201283"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/201283\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=201283"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=201283"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=201283"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}