APPLICATION PROBLEMS: (10 points each) All work must be shown to


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Please look at attached file and answer word problems. word problems.doc APPLICATION PROBLEMS: (10 points each) All work must be shown to receive any credit Question 26: Learned Corporation recorded the following transactions for the just completed month. a. b. c. d. $80,000 in raw materials were purchased on account. $71,000 in raw materials was requisitioned for use in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials. Total labor wages of $112,000 were incurred. Of this amount, $101,000 was for direct labor and the remainder was for indirect labor. Additional manufacturing overhead costs of $175,000 were incurred. Required: Record the above transactions in journal entries. Question 27: Midwest Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 50,000 units next year and Product L is expected to sell 10,000 units. A unit of either product requires 0.2 direct labor hours. The company’s total manufacturing overhead for the years is expected to be $1,920,000. Required: 1. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this is followed, how much overhead cost would be applied to each product? Compute both the overhead cost per unit and the total amount of overhead cost that would be applied to each product. (In other words, how much overhead cost is applied 657-1 to a unit of Product H? Product L? How much overhead cost is applied in total to all the units of Product H? Product L?) 2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $960,000 assigned to Product H and $960,000 assigned to Product L. If this is followed, how much overhead cost per unit would be applied to each product? 3. Explain the impact on unit product costs of the switch in costing systems. Question 28: Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses processing costs, appear below. Material Equivalent units of production in ending work in process Cost per equivalent unit Conversion 2,000 $13.86 800 $4.43 A total of 20,100 units were completed and transferred to the next processing department during the period. Required: Compute the cost of the units transferred to the next department during the period and the cost of the ending work in process inventory. Question 29: Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below: 30,000 Total Costs: Variable costs $180,000 Fixed costs 300,000 Units Produced and Sold 40,000 50,000 ? ? ? ? ? ? ? ? ? ? ? ? Total cost per unit ? ? ? Total Costs Cost per unit: Variable cost Fixed cost 657-2 Required: 1. Complete the schedule of the company’s total and unit costs above. 2. Assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. Prepare a contribution format Income Statement for the year. Question 30: Whirly Corporation’s most recent Income Statement is shown below: Total Per Unit Sales (10,000 units) Variable expenses Contribution Margin Fixed expenses Net Operating income Required: Prepare a new contribution format Income Statement under each of the following conditions (consider each case independently): 1. The sales volume increases by 100 units. 2. The sales volume decreases by 100 units. 3. The sales volume is 9,000 units. Question 31: Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak

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