# ACC – Sirrus Phone Company

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## Description

1. #Ex 25-16
Based on the data below, assume that Sirrus Phone Company uses the product cost concept of applying
the cost-plus approach to product pricing.
Variable Costs:
Fixed Costs:
Direct materials 130.00 per unit
Direct labor
50.00
Total
240.00 per unit
a. Determine the total manufacturing costs and the cost amount per unit for the production and sale
of 3500 units for mobile phones.
b. Determine the markup percentage (rounded to two decimal places) for mobile phones.
c. Determine the selling price of mobile phones. Round to the nearest dollar.
#2. T7
1.The sales, income from operations, and invested assets for each division of Winston Company are as
follows:

Sales
\$5,000,000
6,800,000
3,750,000

Division C
Division D
Division E

Income from
Operations
\$630,000
760,000
750,000

Invested
Assets
\$3,900,000
4,300,000
7,250,000

2. Management has established a minimum rate of return for invested assets of 8%.
(a) Determine the residual income for each division.
(b) Based on residual income, which of the divisions is the most profitable?

#3 (T8) answer one of the multiple choice below
The condensed income statement for a business for the past year is presented as follows:
Product
Sales
Less variable costs
Contribution margin
Less fixed costs

F
\$300,000
180,000
\$120,000
50,000

G
\$220,000
190,000
\$ 30,000
50,000

H
\$340,000
220,000
\$120,000
40,000

Total
\$860,000
590,000
\$270,000
140,000

Income (loss) from oper.

\$ 70,000

\$ (20,000)

\$ 80,000

\$130,000

Management is considering the discontinuance of the manufacture and sale of Product G at the
beginning of the current year. The discontinuance would have no effect on the total fixed costs and
expenses or on the sales of Products F and H. What is the amount of change in net income for the
current year that will result from the discontinuance of Product G?
\$20,000 increase
\$30,000 increase
\$20,000 decrease
\$30,000 decrease
#4 (T13)
Pnok Company has been purchasing a component, Part Q, for \$18.90 a unit. Pnok is currently operating
at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of
manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows:
Direct materials
Direct labor
Total

\$11.25
4.50
1.12
3.15
\$20.02

1. Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or
#5 (T14)
FDE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an
extra large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed
costs and expenses are \$112,500 (\$3 per unit at normal plant capacity) and variable costs and expenses
are \$8.25 per unit. The present selling price is \$13.50 per unit. The company has an opportunity to sell
7,500 additional units at \$9.90 per unit to an exporter who plans to market the product under its own
brand name in a foreign market. The additional business is therefore not expected to affect the regular
selling price or quantity of sales of FDE Manufacturing Company.
Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the
special price.

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