Reference no: EM133111581
Question - Limited Labrador Corporation (LLC for short) is an emerging company that manufactures and sells peanut butter treats for dogs. The treats include two ingredients: peanut butter, and added nutrient powder. The ratio of Peanut Butter to nutrient powder is 2:1. The treats are packaged in 1.5 oz single-serve cups. Jen is the chef of LLC and her sole role is to make the treats, which she does in a commercial kitchen that LLC rents for a contracted 25 days a year. That rent includes the utilities and use of the food processor and packaging equipment. The kitchen facility will also store any packaged treats and ingredients for free.
LLC did its first production run in 2019, and a second in 2020. At the end of the run in 2020, Jen got a bunch of accounting students to close her books. The ending balance at the end of 2020 was as follows:
|
Item
|
Percent Completed
|
|
Peanut Butter
|
60%
|
|
Nutrient Powder
|
45%
|
|
1.5 Oz Cups (with lids)
|
100%
|
|
Direct Labor
|
20%
|
|
Overhead (allocated on DL hrs)
|
20%
|
|
Treats in Process
|
1,000 units
|
Curious about how well the students did, Jen went to inspect the Work In Process stores, and found an extra package of in-process peanut butter that the students had overlooked, and thus was not factored into their ending balance calculations.
Required -
Q1. What was the percentage completion of the units LLC sold in 2020?
Q2. What would finding this extra peanut butter do to the percent completion assumptions for the Peanut Butter WIP inventory?
a: Increase the % completion of Peanut Butter
b: Decrease the % completion of Peanut Butter
c: No effect on the % completion of Peanut Butter
Q3. What would finding this extra peanut butter do to the number of equivalent units of Peanut Butter in the WIP inventory?
a: Increase the number of equivalent units of peanut butter
b: Decrease the number of equivalent units of peanut butter
c: No effect on the number of equivalent units of peanut butter
Q4. What would finding this extra peanut butter do to the percent completion assumptions for the Nutrient Powder WIP inventory?
a: Increase the % completion of Nutrient Powder
b: Decrease the % completion of Nutrient Powder
c: No effect on the % completion of Nutrient Powder
Q5. What would this extra peanut butter do to the WIP balance?
a: Increase the WIP balance
b: Decrease the WIP balance
c: No effect on the WIP balance
Q6. What would finding this extra peanut butter do to the percentage completion for the Overhead account?
a: Increase the % completion of Overhead
b: Decrease the % completion of Overhead
c: No change in the % completion of Overhead
Q7. If Overhead were allocated on the basis of direct material dollars instead of direct labor, what would the extra peanut butter do to the percentage completion assumption for overhead?
a: Increase the % completion of Overhead
b: Decrease the % completion of Overhead
c: No change in the % completion of Overhead