## Description

__Problem
1__

Using the following information find the

unknown amounts. Assume each set of information is an independent case.

a. Merchandise Inventory Purchases $210,000

Cost

of goods sold 223,000

Beginning

balance 41,000

Ending

balance ?

b. Direct Materials Beginning balance $ 7,000

Ending

balance 14,000

Purchases 48,000

Direct

materials used ?

c. Work-in-process Inventory Ending balance $ 22,000

Cost

of goods manufactured 21,000

Beginning

balance 8,000

Current

manufacturing costs ?

d. Finished Goods Inventory Cost of goods manufactured $62,000

Ending

balance 20,000

Cost

of goods sold 61,000

Beginning

balance ?

__Problem 2__

Sprint Manufacturing Company produces two

products, X and Y. The following information is presented for both products:

__X__ __Y__

Selling price per unit $30 $20

Variable cost per unit 20 5

Total fixed

costs are $292,500.

**Required:**

a. Calculate the contribution margin for each

product.

b. Calculate breakeven point in units of both X

and Y if the sales mix is 3 units of X for every unit of Y.

c. Calculate breakeven volume in total dollars

if the sales mix is 2 units of X for every 3 units of Y.

__Problem 3__

Rachel’s

Pet Supply Corporation manufactures two models of grooming stations, a standard

and a deluxe model. The following activity and cost information has been

compiled:

** Number of Number of Number of**

__Product__** Setups Components Direct Labor Hours**

Standard 3 30 650

Deluxe 7 50 150

Overhead costs $40,000 $120,000

Assume

a traditional costing system applies the $160,000 of overhead costs based on

direct labor hours.

a. What

is the total amount of overhead costs assigned to the standard model?

b. What

is the total amount of overhead costs assigned to the deluxe model?

Assume an activity-based costing system

is used and that the number of setups and the number of components are

identified as the activity-cost drivers for overhead.

c. What

is the total amount of overhead costs assigned to the standard model?

d. What

is the total amount of overhead costs assigned to the deluxe model?

__Problem 4__

Clothes,

Inc., has an average annual demand for red, medium polo shirts of 25,000 units.

The cost of placing an order is $80 and the cost of carrying one unit in

inventory for one year is $25.

**Required:
**

a. Use

the economic-order-quantity model to determine the optimal order size.

b. Determine

the reorder point assuming a lead time of 10 days and a work year of 250 days.

c. Determine

the safety stock required to prevent stockouts assuming the maximum lead time

is 20 days and the maximum daily demand is 125 units.

__Problem 5__

The

following data are available for Ruggles Company for the year ended September

30, 2011.

Sales: 24,000

units at $50 each

Expected and actual production: 30,000 units

Manufacturing costs incurred:

Variable: $525,000

Fixed: $372,000

Nonmanufacturing costs incurred:

Variable: $144,800

Fixed: $77,400

Beginning inventories: none

**Required:
**

a. Determine

operating income using the variable-costing approach.

b. Determine

operating income using the absorption-costing approach.

__Problem 6__

Jerry’s

TV and Appliance Store is a small company that has hired you to perform some

management advisory services. The following information pertains to 2011

operations.

Sales (1,000

televisions) $ 900,000

Cost of goods sold 400,000

Store manager’s salary

per year 70,000

Operating costs per year 157,000

Advertising and

promotion per year 15,000

Commissions (4% of

sales) 36,000

** Part 1**. What was the

variable cost per unit sold for 2011?

A)

$36

B)

$436

C)

$678

D)

$400

** Part 2**What were total

fixed costs for 2011?

A)

$678,000

B)

$436,000

C)

$242,000

D)

$227,000

** Part 3** What are the

estimated total costs if Penny’s expects to sell 3,000 units next year?

A)

$1,550,000

B)

$1,332,000

C)

$1,671,000

D)

$1,453,000

** Part 4**Which cost

estimation method is being used by Jerry’s TV and Appliance Store?

A)

the industrial engineering method

B)

the conference method

C)

the account analysis method

D)

the quantitative analysis method

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