Reference no: EM131220257
Problem 1: CVP analysis
The owners of Cobb's Gym currently are working on their operating plan for the coming year, and they have provided you with the following average membership and cost data for the previous year:
Annual membership fee $400 per member
Number of members 6,000
Variable cost (supplies, instructors, etc.) $130 per member
Fixed costs (equipment, salaries, etc.) $945,000
The owners anticipate that, for the coming year, both total fixed costs and the variable cost per member will remain unchanged from the previous year.
a. Assuming the same number of members as last year, what is Cobb's expected profit for the coming year?
b. How many members must Cobb's Gym have to break even?
c. The owners of Cobb's Gym are considering reducing the annual membership fee by 10%. They believe this will increase membership to 7,500 members for the coming year. What will profit be if the owner's adopt this strategy (note: the membership fee for all members will be reduced by 10%)?
Does this seem like a good option? Support your answer with calculations.
Problem 2: CVP analysis
DeKalb Corporation produces three products, A, B and C. The normal volume is 350 units of A, 140 units of B and 210 units of C. The price per unit is $5, $7, $10, for products A, B, and C, respectively. The variable cost per unit is $2, $3, $4, for products A, B, and C. respectively. The total fixed costs are $2,400.
What is the weighted average contribution margin per unit?
Problem 3: Job costing and overhead allocation methods
Fulton Company's actual manufacturing overhead cost for the month of July was $90,000. The company's predetermined overhead rate was 40% of direct labor cost. Other information pertaining to Fulton's inventories and production for the month of July is as follows:
|
Beginning inventories, July 1:
|
|
|
Direct materials
|
$13,000
|
|
Work in process
|
$40,000
|
|
Finished goods
|
$80,000
|
|
Purchases of direct materials during July
|
$110,000
|
|
Direct labor cost
|
$180,000
|
|
Ending inventories, July 31
|
|
|
Direct materials
|
$16,000
|
|
Work in process
|
$26,000
|
|
Finished goods
|
$75,000
|
a. Determine the amount of direct materials used during July.
b. Determine the underallocated or overallocated overhead for the month.
c. Determine the Cost of Goods Manufactured for the month.
Problem 4: Activity-based costing
Rome, Inc., produces two products, Product A and Product B. If currently allocates overhead costs using direct-labor hours, but the controller has recommended an activity-based costing (ABC) system using the following data:
|
|
|
|
Activity Level
|
|
Activity
|
Cost-Driver Base
|
Cost
|
Product A
|
Product B
|
|
Production setup
|
Number of setups
|
$ 90,000
|
11
|
19
|
|
Materials handling & requisition
|
Number of parts per unit
|
$ 15,000
|
6
|
18
|
|
Packaging & shipping
|
Number of units shipped
|
$ 45,000
|
30,000
|
60,000
|
|
Total overhead
|
|
$150,000
|
|
|
a. Compute the amount of overhead to be allocated to each product using direct-labor hours as the allocation base. Assume that the number of direct-labor hours required to assemble each unit is 0.5 per unit for Product A and 1.0 per unit for Product B. The company produces 30,000 units of Product A and 60,000 units of Product B.
b. Compute the amount of overhead to be allocated to each product under ABC.
c. Should the company follow the controller's recommendation? Explain your answer.
|
Compute the total net liability to be reported
: The following are selected 2014 transactions of Sean Astin Corporation: Purchased inventory from Encino Company on account for $59,150. Astin records purchases gross and uses a periodic inventory system. Compute the total net liability to be reported..
|
|
Interest and penalities on the delinquent taxes
: On July 1, 2017, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $3,200,000. The county estimated that 5% of the taxes levied would be uncollectible. At the end of the fiscal year the county had collected $48,..
|
|
Allocating the service department costs to two subsidiaries
: In Task 1, you will explore the choice of allocation base (Cost Driver) for service departments; in Task 2, you will explore make-or-buy decision on the basis of relevant costs. Explain allocation bases to be used in allocating the service department..
|
|
Design and implement a fuzzy controller
: Design and implement a fuzzy controller (Zero-order Sugeno Fuzzy Inference System) for balancing an inverted pendulum system. A written report detailing your system design and characterisation of its performance must accompany your program submis..
|
|
Determine the amount of direct materials used during july
: Determine the amount of direct materials used during July. Determine the underallocated or overallocated overhead for the month. Determine the Cost of Goods Manufactured for the month.
|
|
Requiring subsequent measurement and ongoing valuation basis
: For INITIAL measurement identify the initial valuation criteria and for SUBSEQUENT measurement identify the situation requiring the subsequent measurement and the ongoing valuation basis. The valid measurement approaches do not include? The necessary..
|
|
Consumer utility maximizing choice
: A consumer has a utility function : u (x1, x2) = (x1)2 + (x2)2 . The consumer has an income m = 10 and can buy goods at the prices (p1, p2) = (2, 1). What is the consumer's utility maximizing choice?
|
|
Make list of arguments that favor convergence
: Consider the question of whether the United States should converge accounting standards with IFRS. Make a list of arguments that favor convergence. Make a list of arguments that favor nonconvergence. Indicate your own conclusion regarding whether the..
|
|
Establish a datum reference frame
: Apply a profile of a surface tolerance all around of .005 relative to primary datum feature A and secondary datum feature B at maximum material condition. In the adjacent view, apply a profi le of a surface tolerance of .005 relative to datum feat..
|