ACCT B18-21


Question Description:

39

I need assistance on the following problems:

Problem # I-18.03

Problem # B-18.02

Problem # B-19.01

Problem # B-19.04

Problem # B-20.08

Problem # B-21.02

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B-18.02 Fixed and variable cost calculations
True Flight Golf manufacturers a popular shaft for golf clubs. Its trade secret is a unique process for weaving
high-tension wire into the center of the shaft such that energy is accumulated during the swing and released
at impact. A specialized machine costing $3,000,000 is utilized in the manufacturing process. The machine has
a 3-year life and no salvage value. True Flight uses straight-line depreciation. During the year, 25,000 shafts
were produced, and the company was operating at full capacity. $700,000 of wire was used during the year.
(a) Is machinery depreciation fixed or variable? Is wire fixed or variable? (b) For the two noted cost items, how much was total variable cost and total fixed cost? (c) For the two noted cost items, how much was variable cost per unit and how much was fixed cost
per unit? B-19.01 Review of foundational cost flow concepts
Alaska Launch, a private-sector aerospace company, provided the following aggregated data for satellite
construction jobs during a recent period:
Direct materials
Direct labor
Applied (and actual) factory overhead $13,442,769
21,889,554
8,223,454 Beginning work in process
Ending work in process (a) 14,550,098
17,559,000 How much is cost of goods manufactured? Is this necessarily the same as cost of goods sold? Why
or why not? B-19.04 Determining and evaluating applied overhead
Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber
is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is
the job cost sheet for an incinerator manufactured for Benzate Corporation: Ekpro
Job: Job Cost Sheet Benzate
Direct Labor
Hours Rate Total Direct Material
Qty. Unit
Cost Total Applied Overhead
Qty. Rate Total Total May 8, 20X7
Rod Burner 9 $25 $225 $225 Sandy Sharp 1 $12 $ 12 $ 12 Steel 10 $80 $800 $800 May 9, 20X7
Sandy Sharp 2 $12 $ 24 $ 24 Applied Overhead ?
12.00 (b) $261 $800 ? $360 $360 $360 $1,421 Ekpro is considering installation of a robotic machine that will do all welding operations. How
might this decision impact the total overhead and the application method? B-20.07 Critical thinking about process cost flows
Barksdale Corporation produces hair care products. ShineOnOne is a one-step shampoo and conditioner
that is produced in a three-step process. The three phases of production consist of mixing, blending, and
bottling. Below is a partial schedule of June’s costs for each phase of production. Complete the schedule
and respond to the questions that follow. Beginning
Balance
Mixing June
Costs Cost
Transfers $      88,100
2 $    1,444,424 $    (1,019,087) Blending 316,700 ? Bottling 454,900 954,000 $   ?                 $
4,709,991 Ending
Balance
$ ?
? ? ? (a) Which department experienced a decrease in work in process during June? (b) How much was transferred to finished goods inventory?                 ? (3,378,909) $
(4,155,676) ? $   ?                 x B-20.08 Basic activity-based costing concepts
Four of the following eight statements are patently false. Find the four false statements. The other statements
are true. For the false statements, mark the words that make the statement false.
1. A simplified explanation of ABC is that it attempts to divide production into its core activities, define
the costs for those activities, and then allocate those costs to products based on how much of a
particular activity is needed to produce a product. 2. ABC maintains the traditional division between product and period costs. 3. ABC charges products with the costs of manufacturing and nonmanufacturing activities, and some
manufacturing costs are not attached to products. 4. Under ABC, idle capacity is typically isolated and allocated to products and services. 5. ABC is suitable for public reporting. 6. With ABC, the "cost objects" are broadened to include not only products/services, but other objects
like customers, markets, and so on. 7. The first step in implementing ABC is a detailed study of all business processes and costs. 8. The normal steps in an ABC implementation are (1) study processes and costs, (2) identify activities,
(3) identify traceable costs, (4) assign remaining costs to activities, (5) apply costs to objects, and (6)
determine per-activity allocation rates. B-21.02 Scheduling anticipated cash collections
Logan Township acquired its water system from a private company on June 1. No receivables were acquired
with the purchase. Therefore, total accounts receivable on June 1 had a zero balance.
Logan plans to bill customers in the month following the month of sale, and 70% of the resulting billings
will be collected during the billing month. In the next following month, 90% of the remaining balance
should be collectable. The remaining uncollectible amounts will relate to citizens who have moved away.
Such amounts are never expected to be collected and will be written off.
Water sales during June are estimated at $3,000,000, and expected to increase 30% in July. August sales will
be 10% less than July sales.
(a) For each dollar of sales, how much is expected to be collected? (b) Estimate the monthly cash collections for June, July, August, and September. B-21.08 Budgeting for SG&A and volume fluctuation Review the following SG&A budget that was prepared at the beginning of the current year. The economy
appears to be slowing, and sales are now expected to run only 90% of plan. How much can now be expected to result for total SG&A?
The only fixed cost that can be reduced relates to the advertising campaign. What are the possible impacts
of attempting to save money by cutting a portion of the advertising budget?
Spreadsheet
fx
A B C D E F G 1
2 Selling, General, and Administrative Budget 3 For the Year Ending December 31, 20X5 4
5 Estimated units sold 6 X Per unit variable SG&A $   4.00 7 Total variable SG&A $200,000 8 Fixed SG&A
Salaries 9
10 Advertising 12 Other $275,000 Office 11 50,000 60,000
175,000
25,000 13 Total fixed SG&A $535,000 14 Total budgeted SG&A $735,000 15 Sales Production Materials Labor Factory Overhead Finished Goods SG&A Cash Income
I-18.03 Break-even and related analysis
Anderson Metals manufactures and sells #3 steel rebar that is used in the construction of slabs and driveways.
The steel bar not only strengthens the finished concrete product, but it also has unique properties such that
its temperature related expansion and contraction matches that of concrete. The product is manufactured
and sold in 20′ long "sticks." The product is generally produced and sold to match customer demand, and
there is not a significant amount of finished goods inventory at any point in time. Summary information for
20X6 is as follows: Sales were $20,000,000, consisting of 5,000,000 sticks.
Total variable costs were $11,000,000.
Total fixed costs were $8,000,000.
Net income was $1,000,000. The general economic conditions appear to be deteriorating heading into 20X7, and there is some concern
about a reduction in sales volume. The following questions should each be answered independent of one
another. (a) What is the company’s break-even point in "sticks?" Can the company sustain a 30% reduction in
total volume, and remain profitable? (b) The company’s sole shareholder, Doug Anderson, generally lives off of dividends paid by the
business. The business typically declares and pays a dividend equal to 25% of net income. If Doug
needs to receive $100,000 in dividends for normal living expenses, what total revenues must
Anderson Metals produce in 20X7?

Answer

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