Reference no: EM132933247
ACC209 Managerial Accounting
Instructions
Question 1
Vincent Company supplies schools with floor mattresses to use in physical education classes. Vincent has received a special order from a large school district to buy 500 mats at $40 each. Acceptance of the special order will not affect fixed costs but will result in $800 of shipping costs.
For the first 6 months of 2020, the company reported the following operating results while operating at 80% capacity:
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Sales (25,000 units)
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$1,250,000
|
|
Cost of goods sold
|
980,000
|
|
Gross profit
|
270,000
|
|
Operating expenses
|
170,000
|
|
Net income
|
$ 100,000
|
Cost of goods sold was 80% variable and 20% fixed; operating expenses were 70% variable and 30% fixed.
Should Vincent Company accept the special order? Justify your answer.
Question 2
Escher Skateboards has been manufacturing its own wheels for its skateboards. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labour cost. The direct materials and direct labour cost per unit to make the wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels per year.
A supplier offers to make the wheels at a price of $4 each. If the skateboard company accepts this offer, all variable manufacturing costs will be eliminated, but the $42,000 of fixed manufacturing overhead currently being charged to the skateboard wheels will have to be absorbed by other products.
Prepare an analysis to determine if Escher Skateboard should make or buy the wheels. [5 marks]
Question 3 (Retain or Replace Equipment)
Kinder Enterprises relies heavily on a copier machine to process its paperwork. Recently the copy clerk has not been able to process all the necessary copies within the regular work week. Management is considering updating the copier machine with a faster model.
|
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Current Copier
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New Model
|
|
Original purchase cost
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$10,000
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$20,000
|
|
Accumulated depreciation
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8,000
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-
|
|
Estimated operating costs (annual)
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7,000
|
2,600
|
|
Useful life
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5 years
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5 years
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If sold now, the current copier would have a salvage value of $1,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after five years.
Prepare an analysis to show whether the company should retain or replace the machine. [5 marks]
Question 4 (Eliminate Unprofitable Segment)
Anheiser has three divisions: Bud, Wise, and ER. The results of May, 2020 are presented below:
|
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Bud
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Wise
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ER
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Total
|
|
Units sold
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5,000
|
7,000
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4,000
|
16,000
|
|
Revenue
|
$80,000
|
$ 60,000
|
$30,000
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$170,000
|
|
Less variable costs
|
37,000
|
42,000
|
14,000
|
93,000
|
|
Less direct fixed costs
|
15,000
|
25,000
|
13,000
|
53,000
|
|
Less allocated fixed costs
|
3,125
|
4,375
|
2,500
|
10,000
|
|
Net income
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$24,875
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($11,375)
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$ 500
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$ 14,000
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All of the allocated costs will continue even if a division is discontinued. Anheiser allocates indirect fixed costs based on the number of units to be sold. Since the Wise Division has a net loss, Anheiser feels that it should be discontinued. Anheiser feels if the division is closed, that sales at the Bud Division will increase by 30%, and that sales at the ER Division will stay the same.
Prepare an analysis showing the effect of discontinuing the Wise Division.
Question 5 (Variable Costing)
Momentum Bikes manufactures a basic road bicycle. Production and sales data for the most recent year are as follows (no beginning inventory):
Variable production costs $85 per bike
Fixed production costs $530,000
Variable selling & administrative costs $17
per bike Fixed selling & administrative costs $480,000
Selling price $195 per bike
Production 21,200 bikes
Sales 19,000 bikes
Prepare a brief income statement using variable costing.
Question 6
Conan Company produces sporting equipment. In 2019, the first year of operations, Conan produced 25,000 units and sold 18,000 units. In 2020, the production and sales results were exactly reversed. In each year, selling price was $100, variable manufacturing costs were $40 per unit, variable selling expenses were $8 per unit, fixed manufacturing costs were $540,000, and fixed administrative expenses were $200,000.
Prepare an income statement for 2019 using absorption costing.
Question 7
Part "A": Sales, Production, & Direct Materials Budget
Oak Creek Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.
• Sales: Sales for the year are expected to total 1 million units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $80 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.
• Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarter's budgeted sales volume.
• Direct materials: Each unit requires 3 kg of raw materials at a cost of $15 per kilogram. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2020 are 500,000 kg.
Instructions
Prepare the sales, production, and direct materials budgets by quarters for 2020.
Part "B": Budgeted Income Statement
Oak Creek Company is preparing its budgeted income statement for 2020. Relevant data pertaining to
its sales, production, and direct materials budgets are found in Part "A" above.
In addition, Oak Creek budgets 0.45 hours of direct labour per unit, labour costs at $12 per hour, and manufacturing overhead at $30 per direct labour hour. Its budgeted selling and administrative expenses for 2020 are $9 million.
Instructions
a) Calculate the budgeted total unit cost.
b) Prepare the budgeted income statement for 2020.
Attachment:- Managerial Accounting.rar