Reference no: EM133184190
Question 1 - Nadia inc produces a new product this year and has the following information available
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Opening inventory
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0
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Units produced
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24,000
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Units sold
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21,600
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Selling price per unit
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$77
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Direct materials cost per unit
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$16
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Direct labour costs per unit
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$7
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Variable manufacturing overhead cost per unit
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$4
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Sales commission per unit
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$6
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Total fixed manufacturing overhead
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$408,000
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Total fixed marketing and administrative expense
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$300,000
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Fixed manufacturing overhead is allocated to products based on the units produced
Create the following income statement and determine the value of ending inventory under each of the following costs method
Part a: absorption costing
Part b: variable costing
Part a - From your absorption costing income statement provide the following information
What is the gross profit for the year?
What is the operating income for the year?
What is the value of the ending inventory for the year?
Part b - From your variable costing income statement provide the following information
What is the contribution margin for the year?
What is the operating income for the year?
What is the value of the ending inventory for the year?
Question 2 - Gregory enterprises has identified three cost pool to allocate overhead cost. The following estimates are provided for the coming year
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Cost pool
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Overhead cost
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Supervision of direct labour
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$320,000
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Machine maintenance
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$120,000
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Facility rent
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$200,000
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Total overhead cost
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$640,000
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Cost driver
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Activity level
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Direct labour hours
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800,000
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Machine hours
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960,000
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Square meters of area
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100,000
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The accounting record show the Mossman job consumed the following resources
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Cost driver
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Actual level
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Direct labour - hours
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200
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Machine hours
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1,600
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Square meters of area
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50
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If Gregory enterprises uses an abc system then what amount of indirect cost will be allocated to the Mossman job
A. $240
B. $380
C. $160
D. $420
Question 3 - Alexandra inc produces maple flavored jelly
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Liters
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Cost per Litre
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Total cost
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Direct materials
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65.00
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$1.15
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$74.75
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The actual result for the year are:
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Units produced
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70,000
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Direct materials purchased are used (litres)
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4,960,000
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Direct materials cost per litres
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$1.10
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Required - Calculate the direct material price and usage (also called efficiency) variances and use your solution to answer the following question
The amount of direct material price variance is
Indicate if the direct material price variance is favorable (enter the letter F) or unfavorable (enter the letters UF)
The amount of the direct material usage variance (also called efficiency variable)
Indicate if the direct material usage variance is favorable or unfavorable
Question 4 - Glen corporation manufactures two products: toaster ovens and bread machines. The following per unit data are available
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Toaster oven
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Bread machine
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Sale price
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$98
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$112
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Variable cost
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$60
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$76
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Machine hours required for 1 unit
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1
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2
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Total fixed costs are $600,000 and the company can sell a maximum of 25,000 units of each product annually. Machine hour capacity is 30,700 hours per year
How many units of bread machines should the company produce annually to maximize profit?
Question 5 - Bemove inc produces adult jackets and children's jackets. Contribution margin income statement data for the most recent year follow
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Total
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Adult jackets
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Children jacket
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Sales revenue
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$360,000
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$275,000
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$85,000
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Variable expenses
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$207,000
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$165,000
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$42,000
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Contribution margin
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$153,000
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$110,000
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$43,000
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Fixed expenses
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$102,000
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$50,000
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$52,000
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Operating income (loss)
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$51,000
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$60,000
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($9,000)
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The company is considering whether or not to drop the children jacket line. Assume total fixed cost will remain unchanged and the space formerly used to produce children's jackets can be rented for $24,000 per year
1. Indicated whether the company operating income will increase or decrease if it drops the children jacket line.
2. How much is the increase/ decrease.
3. Should the company drop the children jacket line or not.
Question 6 - United tire co. provide installation service for the client
The company developed the following standard for installing 4 tires
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Hours
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Cost per hour
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Total cost
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Direct labour
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0.75
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$90.00
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$67.50
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The actual results for the year are:
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Units produced
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6,200
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Direct labour hours used this year
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4,340
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Actual labour rate per hour
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$94,00
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Calculate the direct labour rate (also called price) and efficiency variance.
The amount of the direct labour rate variance, also called the direct labour price variance is.