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2-30 Number of Muffler Replacements

600 700

Total costs:
Fixed costs $56,000 $56,000
Variable costs  24,000  28,000
Total costs $80,000 $84,000

Cost per muffler replacement:


Fixed cost $   93.33 (h) $   80
40.00
Variable cost   40
  
Total cost per muffler replacement $133.33 $120

2-34
Your decision to see the game really cost you $100

2-37
1-a 1340000
-b 267000
-c 557000
-d 1607000
-e 139500
2 7,500 is opportunity cost

2-43

DATA INPUT

Laredo Luggage Company for the year 20x2


Sales revenue $ 475,000
Work-in-process inventory, December 31 15,000
Work-in-process inventory, January 1 20,000
Selling and administrative expenses 75,000
Income tax expense 45,000
Purchase of raw material 90,000
Raw-material inventory, December 31 12,500
Raw-material inventory, January 1 20,000
Direct labor 100,000
Utilities: plant 20,000
Depreciation: plant and equipment 30,000
Finished-goods inventory, December 31 25,000
Finished-goods inventory, January 1 10,000
Indirect material 5,000
Indirect labor 7,500
Other manufacturing overhead 40,000

SOLUTION

1. Schedule of cost of goods manufactured

Direct Material:
Raw-material inventory, January 1 $ 20,000
Add: Purchases of raw material 90,000
Raw material available for use $ 110,000
Deduct: Raw-material inventory, December 31 12,500
Raw material used
Direct Labor
Manufacturing overhead:
Indirect material $ 5,000
Indirect labor 7,500
Utilities: plant 20,000
Depreciation: plant and equipment 30,000
Other 40,000
Total manufacturing overhead
Total manufacturing costs
Add: Work-in-process inventory, January 1
Subtotal
Deduct: Work-in-process inventory, December 31
Cost of goods manufactured

2. Schedule of cost of goods sold

Finished goods inventory, January 1


Add: Cost of goods manufactured
Cost of goods available for sale
Deduct: Finished-goods inventory, December 31
Cost of goods sold

3. Income Statement

Sales revenue
Less: Cost of goods sold
Gross margin
Selling and administrative expenses
Income before taxes
Income tax expense
Net income
ffler Replacements
800

$56,000
 32,000
$88,000

(i) $   70
  40
$110
$ 97,500
100,000

102,500
$ 300,000
20,000
$ 320,000
15,000
$ 305,000

$ 10,000
305,000
$ 315,000
25,000
$ 290,000

$ 475,000
290,000
$ 185,000
75,000
$ 110,000
45,000
$ 65,000
3-31
1 672000 purchases of materials
2 450000 direct labor
3 1472000 COGM
4 1432000 COGS

3-32

DATA INPUT

Crunchem Cereal Company incurred costs


Direct material used $ 412,500
Direct labor 180,000
Manufacturing overhead 378,000

Overhead rate 210%

January 1 inventory balances End of Year


Raw material $ 45,000 $ 45,000
Work in process 58,500 58,500
Finished goods 63,000 63,000

Inventory balances increase over previous year 10%

SOLUTION

1. Schedule of cost of goods manufactured for 20x1

Direct material
Raw-material inventory, January 1 $ 45,000
Add: Purchases of raw material 412,500
Raw material available for use $ 457,500
Deduct: Raw-material inventory, December 31 45,000
Raw material used $ 412,500
Direct labor 180,000
Manufacturing overhead 378,000
Total manufacturing costs $ 970,500
Add: Work-in-process inventory, January 1 58,500
Subtotal $ 1,029,000
Deduct: Work-in-process inventory, December 31 58,500
Cost of goods manufactured $ 970,500

2. Costs of goods sold


Finished-goods inventory, January 1 $ 63,000
Add: Cost of goods manufactured 970,500
Cost of goods available for sale $ 1,033,500
Deduct: Finished-goods inventory, December 31 63,000
Cost of goods sold $ 970,500

3-48
1 3750000 traceable costs
2 28% of traceable costs
3 20% of cost
4 115200 billing
5 utilities, rent, depreciation, etc.

3-55
1 5 per DL hour
2 401000
3 20000
4 85000
5 95000
6 10000
4-20

Direct Material
Conv. Total
Work in process, February 1 $ 43,200     
$ 40,300 $ 83,500
Costs incurred during February 135,000 190,000 325,000
Total costs to account for $178,200 $230,300 $408,500
Equivalent units 16,500     47,000
Costs per equivalent unit $10.80 $4.90 $15.70   

4-25

1   Physical
Physical flow of units:
  Units
Work in process, June 1 40,000
Units started during June 190,000
Total units to account for 230,000
Units completed and
180,000
transferred out during June
Work in process, June 30 50,000
Total units accounted for 230,000

Equivalent Units
Percentage of
Completion with
Physical Units Respect to Conversion
Direct Material

Work in process, June 1 40,000   38%


Units started during June 190,000  
Total units to account for 230,000  
Units completed and
transferred
out during June 180,000   100% 180,000
Work in process, June 30  50,000   55%  50,000
Total units accounted for 230,000  
Total equivalent units 230,000
3
Direct Material
Conversion
Work in process, June 1 $110,500 $ 22,375 $132,875
Costs incurred during June 430,000 320,000 750,000
Total costs to account for $540,500 $342,375 $882,875
Equivalent units 230,000 207,500
Costs per equivalent unit $2.35 $1.65 $4.00

4 goods completed 720000


WIP 162875

4-30
1 direct mats 1390000
conversion costs 575460

2 cost of goods completed 2002000

3 End WIP 257400

4-a No mats added in May


4-b 55% of conversion doen in May

5 zero

4-36

1 53.6 dep I
2 40 dep II
3 143.6
4 215.6
5 305
Equivalent Units

Direct Material
Conversion

180,000   
 27,500   

207,500   
  Total
$132,875
750,000
$882,875

$4.00
6-25

cost formula: 15,000 + 0.125*X

at 34,000 19250

6-32

6-35
7-28
1

2 4.35
3 52.20%

7-38
1 32400
2 4200
3 3600

7-42

1
2 8000000
3 8000000
4 2
5 20000000
6
Amount Percent
Sales revenue $16,000,000 100
Variable expenses 4,000,000 25
Contribution margin $12,000,000 75
Fixed expenses 6,000,000 37.5
Net income $ 6,000,000 37.5

7-44
1-a 175000
1-b 210000
2 311111

7-49
1
Hedge Clippers Line Trimmers
Unit selling price $84 $108
Variable manufacturing cost $39 $ 36
Variable selling cost 15 12
Total variable cost $54 $ 48
Contribution margin per unit $30 $ 60
Unit sales ´ 50,000 ´ 50,000
Total contribution margin $1,500,000 $3,000,000

Fixed manufacturing overhead


Fixed selling and
administrative costs
Total fixed costs
Income before taxes
Income taxes (40%)
Budgeted net income

2 162,500 units

Sales Proportion Total Unit Sales

Hedge Clippers 0.25 162,500


Line Trimmers 0.25 162,500
Leaf Blowers 0.5 162,500
Total

Sales
Unit Contribution
3 Proportion
Hedge Clippers $30 0.2
Line Trimmers* 57 0.2
Leaf Blowers† 36 0.6
Weighted-average unit contribution
margin

Sales Proportions Total Unit Sales

Hedge Clippers 0.2 200,000


Line Trimmers 0.2 200,000
Leaf Blowers 0.6 200,000
Total
Leaf Blowers Total
$144
$ 75
18
$ 93
$ 51
´ 100,000
$5,100,000 $9,600,000

$6,000,000
1,800,000
$7,800,000
$1,800,000
720,000
$1,080,000

Product Line
Sales
40,625  
40,625  
81,250  
162,500  

$ 6.00
11.4
21.6

$39.00

Product Line
Sales
40,000
40,000
120,000
200,000