Reference no: EM133136889
ACCT2002 Financial Reporting - Southern Cross University
PORTFOLIO
Question One
Home Office Inc is a large stationery retail store specializing in office supplies. Anthony Vella, the assistant manager, is in the process of budgeting monthly supplies expense for 2022. He assumes that in some way supplies expense is related to sales, either in units or in dollars. He has collected these data for sales and supplies expenses for January 2020 through to December 2021, and has estimated sales for 2022. These are shown on the next page.
Required:
A. Develop the regression that Anthony should use based on the data, and evaluate the reliability and precision of the regression you have chosen.
B. Using the regression that you have chosen, predict the monthly expenses for 2022.
|
Date
|
Supplies Expense
|
Sales (Units)
|
Sales (Dollars)
|
|
January-20
|
2,310
|
212
|
$ 19,990
|
|
February-20
|
2,573
|
284
|
$ 21,900
|
|
March-20
|
2,487
|
246
|
$ 18,940
|
|
April-20
|
2,484
|
278
|
$ 21,340
|
|
May-20
|
3,384
|
498
|
$ 32,100
|
|
June-20
|
2,945
|
424
|
$ 28,500
|
|
July-20
|
2,758
|
312
|
$ 22,650
|
|
August-20
|
3,394
|
485
|
$ 24,350
|
|
September-20
|
2,199
|
188
|
$ 18,930
|
|
October-20
|
2,763
|
276
|
$ 22,320
|
|
November-20
|
3,245
|
489
|
$ 30,040
|
|
December-20
|
4,576
|
692
|
$ 32,090
|
|
January-21
|
2,103
|
104
|
$ 21,950
|
|
February-21
|
2,056
|
167
|
$ 20,450
|
|
March-21
|
3,874
|
298
|
$ 23,010
|
|
April-21
|
2,784
|
398
|
$ 23,450
|
|
May-21
|
2,345
|
187
|
$ 18,150
|
|
June-21
|
2,912
|
334
|
$ 20,940
|
|
July-21
|
2,093
|
264
|
$ 19,340
|
|
August-21
|
2,873
|
333
|
$ 20,540
|
|
September-21
|
2,254
|
143
|
$ 19,770
|
|
October-21
|
2,384
|
245
|
$ 18,570
|
|
November-21
|
2,476
|
232
|
$ 21,890
|
|
December-21
|
3,364
|
560
|
$ 30,303
|
|
January-22
|
|
180
|
$ 18,500
|
|
February-22
|
|
230
|
$ 20,000
|
|
March-22
|
|
190
|
$ 19,000
|
|
April-22
|
|
450
|
$ 24,000
|
|
May-22
|
|
350
|
$ 21,250
|
|
June-22
|
|
350
|
$ 23,000
|
|
July-22
|
|
450
|
$ 25,000
|
|
August-22
|
|
560
|
$ 30,000
|
|
September-22
|
|
300
|
$ 24,500
|
|
October-22
|
|
300
|
$ 25,000
|
|
November-22
|
|
450
|
$ 32,000
|
|
December-22
|
|
600
|
$ 33,500
|
Question Two
SecretLab, Inc., produces two types of gaming chairs: Overwatch and Cyberpunk. Their biggest seller is the Overwatch, but they have been concerned about the recent decline in their market share for the Overwatch.
SecretLab utilises a simple costing system. The company's simple costing system has two direct cost categories (material and labour) and one indirect cost pool. The simple costing system allocates indirect costs on the basis of machine-hours. Information related to SecretLab's production for the most recent year follows:
|
|
Overwatch
|
Cyberpunk
|
|
Units sold
|
3,200
|
1,800
|
|
Selling price
|
$ 125
|
$ 200
|
|
Direct material cost per unit
|
$ 30
|
$ 45
|
|
Direct manufacturing labour cost per hour
|
$ 16
|
$ 16
|
|
Direct manufacturing labour hours per unit
|
1.50
|
2.25
|
|
Production runs
|
40
|
85
|
|
Material moves
|
72
|
168
|
|
Machine setups
|
45
|
155
|
|
Machine-hours
|
5,500
|
4,500
|
|
Number of inspections
|
250
|
150
|
The owners have heard of other companies in the industry that are now using activity based costing and are curious how ABC would affect their product costing decisions. After analysing the indirect cost pool for SecretLab, the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection and marketing. SecretLab collected the following data related to the indirect cost activities.
|
Activity
|
Activity cost
|
Activity Cost Driver
|
|
Production scheduling
|
$95,000
|
Production runs
|
|
Material handling
|
$45,000
|
Material moves
|
|
Machine setup
|
$25,000
|
Machine setups
|
|
Assembly
|
$60,000
|
Machine hours
|
|
Inspection
|
$8,000
|
Number of inspections
|
Marketing costs were determined to be 3% of the sales revenue for each type of chair.
Required:
A. Calculate the cost of an Overwatch and a Cyberpunk chair under the existing simple costing system (per unit cost).
B. Calculate the cost of an Overwatch and a Cyberpunk chair under an Activity Based Costing system (per unit cost).
C. Compare the costs of the chairs in requirements A and B. Why do the two systems differ in the cost of an Overwatch and a Cyberpunk chair?
D. How can SecretLab use the new cost information from the ABC system to address the declining market share for Overwatch chairs?
Question Three
Nudie Company started operation in 2020. The company manufactures mineral salt for swimming pools that it sells online by the box, at $50 per box. Nudie uses an actual costing system, which means that the actual costs of direct materials, direct labour, and manufacturing overhead are entered into the work-in-process inventory. The actual application rate for manufacturing overhead is computed each year; actual manufacturing overhead is divided by actual production (in units) to compute the application rate.
Information for Nudie's first two years of operation is as follows:
|
|
2020
|
2021
|
|
Sales (in units) .....................................................................
|
2,500
|
2,500
|
|
Production (in units) ...........................................................
|
3,000
|
2,000
|
|
Production costs:
|
|
|
|
Variable manufacturing costs ......................................
|
$21,000
|
$14,000
|
|
Fixed manufacturing overhead ...................................
|
42,000
|
42,000
|
|
Selling and administrative costs:
|
|
|
|
Variable ............................................................................
|
25,000
|
25,000
|
|
Fixed .................................................................................
|
20,000
|
20,000
|
Nudie Company had no beginning or ending work-in-process inventories for either year.
Required:
A. Prepare operating income statements for both years based on absorption costing.
B. Prepare operating income statements for both years based on variable costing.
C. Prepare a numerical reconciliation of the difference in income reported under the two costing methods used in requirements A and B.
Question Four
Hyper Sports Inc. is a manufacturer of sports uniforms. Among the uniforms they produce are jerseys for the girls netball teams of Rockingham and Mandurah. The company uses fabric to create the jerseys and sews on a logo patch purchased from a licensed store.
Details of the teams are as follows:
- Rockingham, with teal jerseys and the Rockingham logo
- Mandurah, with red jerseys and the Mandurah logo
The budgeted direct cost inputs for each product in 2022 are as follows:
|
|
Rockingham
|
Mandurah
|
|
Teal fabric
|
2 metres
|
0
|
|
Red fabric
|
0
|
2.5 metres
|
|
Rockingham logo patches
|
1
|
0
|
|
Mandurah logo patches
|
0
|
1
|
|
Direct manufacturing labour
|
3 hours
|
4 hours
|
Data pertaining to the direct materials for April 2022 are as follows:
|
Actual Beginning Direct Materials Inventory, April 1, 2022
|
|
|
Rockingham
|
Mandurah
|
|
Teal fabric
|
18 metres
|
0
|
|
Red fabric
|
0
|
7 metres
|
|
Rockingham logo patches
|
45
|
0
|
|
Mandurah logo patches
|
0
|
60
|
|
Target Ending Direct Materials Inventory, April 30, 2022
|
|
|
Rockingham
|
Mandurah
|
|
Teal fabric
|
16 metres
|
0
|
|
Red fabric
|
0
|
16 metres
|
|
Rockingham logo patches
|
25
|
0
|
|
Mandurah logo patches
|
0
|
25
|
Unit cost data for direct cost inputs pertaining to March 2022 and April 2022 are as follows:
|
|
March (Actual)
|
April (Budgeted)
|
|
Teal fabric (per metre)
|
$ 9
|
$ 10
|
|
Red fabric (per metre)
|
12
|
11
|
|
Rockingham logo (per patch)
|
7
|
7
|
|
Mandurah logo (per patch)
|
6
|
8
|
|
Manufacturing labour cost per hour
|
26
|
27
|
Manufacturing overhead (both variable and fixed) is allocated to each jersey based on budgeted direct manufacturing labour hours per jersey. The budgeted variable manufacturing overhead rate for April 2022 is $16 per direct manufacturing labour hour. The budgeted fixed manufacturing overhead for April 2022 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods.
Data relating to the finished goods inventory for April 2022 are as follows:
|
|
Rockingham
|
Mandurah
|
|
Beginning inventory, in units
|
12
|
17
|
|
Beginning inventory, in dollars (cost)
|
$ 2,244
|
$ 4,284
|
|
Target ending inventory, in units
|
22
|
27
|
Budgeted sales for April 2022 are 130 units of Rockingham jerseys and 190 units of Mandurah jerseys. The budgeted selling prices per unit in April 2022 are $229 for the Rockingham jerseys and $296 for the Mandurah jerseys. Assume the following in your answer:
• Work-in-process inventories are negligible and ignored.
• Direct materials inventory and finished goods inventory are costed using the FIFO method.
• Unit cost of direct materials purchased and finished goods are constant in April 2022.
Required:
Prepare the following budgets and computations for April 2022:
a. Revenues budget
b. Production budget in units
c. Direct materials usage budget (in units and dollars)
d. Direct materials purchases budget
e. Direct manufacturing labour costs budget
f. Manufacturing overhead costs budget.
g. Fixed manufacturing overhead rate for April 2022.
h. Ending inventories budget (direct materials and finished goods) (in dollars)
i. Cost of goods sold budget
Attachment:- Portfolio Requirements.rar