Problem 3-11 High-Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company thatproduces a single product. The company keeps meticulous records of manufacturing activities from which the followinginformation has been extracted: March-Low June-High Number of units produced 6,030 9, 045 Cost of goodsmanufactured $ 173,040 $ 267, 500 Work in process inventory, beginning $ 11,700 $ 41,600 Work in process inventory,ending $ 19,500 $ 27,300 Direct materials cost per unit $ 6 6 Direct labour cost per unit $ 10 10 Manufacturingoverhead cost, total? ? The company's manufacturing overhead cost consists of both variable and fixed cost elements.To have data available for planning, management wants to determine how much of the overhead cost varies with thenumber of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate theamount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formulafor manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goodsmanufactured? Assume that work in process inventories do not change.

High-low Method:> High-low method is used to determine the fixed cost and variable cost for…

number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing overhead cost added to production. 2. Using the high-low method, estimate a cost formula for manufacturing overhead. 3. If 7,030 units are produced during a month, what would be the cost of goods manufactured? Assume that work in process inventories do not change.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter18: Activity-Based Costing

Section: Chapter Questions

Problem 18.3TIF: Communication The controller of New Wave Sounds Inc. prepared the following product profitability...

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Problem 3-11 High–Low Method; Cost of Goods Manufactured [LO2] Sarnia Ltd. is a manufacturing company that produces a single product. The company keeps meticulous records of manufacturing activities from which the following information has been extracted: March—Low June—High Number of units produced 6,040 9,060 Cost of goods manufactured $ 174,720 $ 271,000 Work in process inventory, beginning $ 12,600 $ 44,800 Work in process inventory, ending $ 21,000 $ 29,400 Direct materials cost per unit $ 6 6 Direct labour cost per unit $ 10 10 Manufacturing overhead cost, total ? ? The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost varies with the number of units produced versus how much is fixed per month. Required: 1. For both March and June, estimate the amount of manufacturing…
PROBLEM 2–21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2, LO3, LO4, LO5, LO6] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries $110,000 Purchases of raw materials $290,000 Direct labor Advertising expense Manufacturing overhead 8 80,000 $270,000 $ 50,000 Sales commissions Inventory balances at the beginning and end of the year were as follows: Beginning of the Year End of the Year Raw materials $ 40,000 $ 10,000 Work in process. Finished goods ? $35,000 $ 50,000 ? The total manufacturing costs for the year were $683,000; the goods available for sale totaled $740,000; and the cost of goods sold totaled $660,000. Required: 1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company's income statement for the year. 2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Compute…
PROBLEM 2-24 Income Statement; Schedule of Cost of Goods Manufactured [LO1, LO2, LO3, LO4]. Visic Corporation, a manufacturing company, produces a single product. The following informa- tion has been taken from the company's production, sales, and cost records for the just com- pleted year. xis Production in units. Sales in units. Ending finished goods inventory in units Sales in dollars Costs: Direct labor.. Raw materials purchased Manufacturing overhead Selling and administrative expenses 29,000 $1,300,000 $90,000 $480,000 $300,000 $380,000 Beginning of the Year End of the Year Inventories: Raw materials Work in process Finished goods $20,000 $50,000 $0 $30,000 $40,000 ? The finished goods inventory is being carried at the average unit production cost for the year. The selling price of the product is $50 per unit. Required: 1. Prepare a schedule of cost of goods manufactured for the year. 2. Compute the following: The number of units in the finished goods inventory at the end of the…
Question 3 of 7 Cost Pool Product assembly Machine setup and calibration Product inspection Raw materials storage Overhead rate ype here to search Expected Cost $ 595,000 336.600 IT 64,860 56,000 (a) Calculate the company's traditional overhead rate based on machine hours. $ 1,052,460 Expected Activities 42,500 machine hours 5,100 setups 1,410 batches 280,000 pounds /MH Address
nit 1 Chapter 1 Assignment i 1 t 1 of 15 S Print Period Ccb Home | barti.... 22 my.post.edu... 2 2 W Total product cost S Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Okay 3 E $ D Required information [The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: 4 Saved $ 150,000 & LL Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.) F 5 T Question 1 -... G C 6 Y G what is the h.. H Help D Save & Exit Average Cost per Unit $7.00 $ 4.50 $ 1.40 $ 4.00 $ 4.00 $ 2.10 $ 1.10 $ 0.55 You N M 8 - I Init 1 - C. Check my work K I Submit O 11 ct ? 0 delete return shift
PROBLEM 3–13 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement LO3-3 Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $140,000 Purchases of raw materials . $290,000 Direct labor. Administrative expenses. $100,000 Manufacturing overhead applied to work in process. $285,000 Actual manufacturing overhead cost. $270,000 Inventory balances at the beginning and end of the year were as follows: Beginning Ending Raw materials. $40,000 $10,000 Work in process. ? $35,000 Finished goods.. $50,000 ? The total manufacturing costs added to production for the year were $683,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $660,000; and the net operating income was $30,000. The company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured…
Question 3 Beta Company manufactures a single product. The Company keeps its records of manufacturing activities from which the following information has been extracted: Number of units produced Cost of goods manufactured Work in process, beginning Work in process, ending Direct materials cost per unit Direct labor cost per unit Manufacturing overhead cost, Total Level of Activity March-Low June-High 6,000 9,000 $168,000 $257,000 $9,000 $32,000 $15,000 $21,000 $6.00 $6.00 $10.00 $10.00 ? ? The company's manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the overhead cost is variable with units produced and how much of it is fixed per month. Required: a. For both March and June, estimate the amount of manufacturing overhead cost added to production. The company had no under- or overapplied overhead in either month. (20 marks) b. Using the high-low method, develop a cost estimated…
Assignment Ch 4 еBook Print Item Activity-Based Costing and Product Cost Distortion Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows: Assembly Department $186,000 Test and Pack Department 120,000 Total $306,000 The direct labor information for the production of 7,500 units of each product is as follows: Assembly Department Test and Pack Department Blender 750 dlh 2,250 dlh Toaster oven 2,250 750 Total 3,000 dlh 3,000 dlh Four Finger Appliance used direct labor hours to allocate production department factory overhead to products. The management of Four Finger Appliance Company has asked you to use activity-based costing to allocate factory overhead costs to the two products. You have determined that $81,000 of factory overhead from each of the production departments can be…
Exercise 5-4 (Algo) Assigning Costs to Units-Weighted-Average Method [LO 5-4] Data concerning a recent period's activity in the Prep Department, the first processing department in a company that uses process costing, appear below: Materials. 2,090 $14.16 A total of 21,200 units were completed and transferred to the next processing department during the period. Required: 1. Compute the cost of ending work in process inventory for materials, conversion, and in total. 2. Compute the cost of the units completed and transferred out for materials, conversion, and in total. (For all requirements, round your final answers to the nearest whole dollar amount.) Equivalent units in ending work in process inventory Cost per equivalent unit 1. Cost of ending work in process inventory 2. Cost of units transferred out Materials Conversion 840 $4.73 Conversion Total
Exercise 4-5 (Algo) Cost Reconciliation Report—Weighted-Average Method [LO4-5] Maria Am Corporation uses the weighted-average method in its process costing system. The Baking Department is one of the processing departments in its strudel manufacturing facility. In June in the Baking Department, the cost of beginning work in process inventory was $4,880, the cost of ending work in process inventory was $1,120, and the cost added to production was $25,300. Required: Prepare a cost reconciliation report for the Baking Department for June.
Exercise 4-3 Compute ABC Product Costs [LO4-3] Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Labor-related $ 7.00 per direct labor-hour Machine-related $ 3.00 per machine-hour Machine setups $ 40.00 per setup Production orders $ 160.00 per order Shipments $ 120.00 per shipment General factory $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: J78 B52 Direct materials cost per unit $ 6.50 $ 31.00 Direct labor cost per unit $ 3.75 $ 6.00 Number of units produced per year 4,000 100 Total ExpectedActivity J78 B52 Direct labor-hours 1,000 40 Machine-hours 3,200 30 Machine setups 5 1 Production orders 5 1 Shipments 10 1 Required:…
Construct and interpret a product profitability report, allocating selling and administrative expenses Naper Inc. manufactures power equipment. Naper has two primary productsgenerators and air compressors. The following report was prepared by the controller for Napers senior marketing management for the year ended December 31: Generators Air Compressors Total Revenue 4,200,000 3,000,000 7,200,000 Cost of goods sold 2,940,000 2,100,000 5,040,000 Gross profit 1,260,000 900,000 2,160,000 Selling and administrative expenses 610,000 Income from operations 1,550,000 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as follows: Activity Activity Base Activity Rate Sales order processing Sales orders 65 per sales order Post-sale customer service Service requests 200 per customer service request The controller determined the following activity-base usage information about each product: Generators Air Compressors Number of sales orders 3,000 4,000 Number of service requests 225 550 A. Determine the activity cost of each product for sales order processing and post-sale customer service activities. B. Use the information in (A) to prepare a complete product profitability report dated for the year ended December 31. Compute the gross profit to sales and the income from operations to sales percentages for each product. (Round to two decimal places.) C. Interpret the product profitability report. How should management respond to the report?