Personal Resilience in Project Management 2 - TV Edit 1a.pdf
Running head group case 1
1. Running head: GROUP CASE 1
1
GROUP CASE 1
2
Part A:
a. Schedule of Cost of Goods Manufactured
Direct Materials -
Begining materials inventory
$26,000
Add: Purchases of Raw materials
50,000
Raw materials available for use
76,000
Deduct: Ending raw materials inventory
35,000
Raw materials used in production
$41,000
Direct Labor
2. 23,000
Manufacturing Overhead
59,000
Total Manufacturing Costs
123,000
Add: Begining work in process inventory
18,000
141,000
Deduct: Ending work in process inventory
22,000
Cost of goods manufactured
$119,000
Part A:
b. Income Statement
3. Sales
$22,000
Cost of goods sold
Begining finished goods inventory
$42,000
Add: Cost of Goods Manufactured
119,000
Goods Available for Sale
161,000
Deduct: Ending finished goods inventory
29,000
132,000
Gross Margin
88,000
Selling and Administrative Expenses:
Selling Expenses
18,000
4. Administrative Expenses
43,000
61,000
Net Operating Income
$27,000
Part B:
a. Predetermined overhead rates will be 1,710,000/ 95,000 = 18/
machine hour.
Overhead applied will be 75,000*18 = 1,350,000.
Overhead under applied will be 1,687,500 – 1,350,000 =
337,500.
b. Cost of Goods Sold (COGS) allocated to the amount of under
applied overheads if the allocation is full is in the COGS will be
337,500. COGS allocated to the amount of under applied
overheads if the allocation is full is in the right accounts will be
337,500*759,375/ 1,350,000 = 189,843.75 and this means the
difference in the net income will be 337,500 – 189,843.75 =
147,656.25.
Part C:
a. Materials Conversion
Transferred to next department 22,200 22,200.
Ending work in process:
Materials: 1,000 units × 80% 800
Conversion: 1,000 units × 60% 600
Equivalent units of production 23,000 22,800
b. Materials Conversion
Work in process, beginning $ 8,400 $ 7,200
Cost added during the month 97,400 129,600
Total cost (a) $105,800 $136,800
Equivalent units (above) (b) 23,000 22,800
Cost per equivalent unit (a) ÷ (b) $4.60 $6.00
c. Materials Conversion Total
Units transferred out 22,200 22,200
5. Cost per equivalent unit $4.60 $6.00
Cost transferred out $102,120 $133,200
$235,320
d. Materials Conversion Total
Equivalent units of production:
ending work in process 800 600
Cost per equivalent unit $4.60 $6.00
Cost of ending work in process $3,680 $3,600 $7,280
Part D:
Cost of ending work in progress inventory:
(No. of equivalent units * cost per equivalent unit)
= (330 * 9.5) +(264 * 20.40)
= 3135 +5385.60
= 8520.60
Cost of ending work in progress inventory = $ 8520.60
Cost of units transferred out:
Beginning inventory cost= $1920
Beginning inventory equivalent unit= (360 * 9.5) +(140 * 20.4)
= $ 6276
Equivalent unit cost = 9.5+20.4 = $29.9
Units started can completed= $3130
cost of units transferred out=1920+6276+ (3130 * 29.9)
= 1920+6276+93587
cost of units transferred out =$101,783
Part E:
A. Predetermined rate = 1464480 -24000=61.02 per DLH
6. H16Z
p25p
Direct labor hours
.4
1.2
Predetermined cost overhead per DLH
61.02
61.02
Manufacturing cost overhead per unit
24.41
73.22
B.
Estimated overhead costs
Total expected activity
Activity rate
Supporting Direct labor
5,52,000
24000
23
Setting up machines
1,32,48
1104
120
Parts administration
780000
1560
500
9. ACC 601 Managerial Accounting
Group Case 2 (100 points)
Instructions:
1. As a group, complete the following activities in good form.
Use excel or
word only. Provide all supporting calculations to show how you
arrived at
your numbers
2. Add only the names of group members who participated in
the completion
of this assignment.
3. Submit only one copy of your completed work via Moodle.
Do not send it to
me by email.
4. Due: No later than the last day of Module 4. Please note that
your professor
has the right to change the due date of this assignment.
Part A: Fixed and Variable Cost
Stuart Manufacturing produces metal picture frames. The
company's income statements for the last two
years are given below:
Last year This year
Units sold ................................................... 50,000 70,000
10. Sales ........................................................... $800,000
$1,120,000
Cost of goods sold ..................................... 550,000
710,000
Gross margin ............................................. 250,000 410,000
Selling and administrative expense ........... 150,000
190,000
Net operating income ................................ $100,000 $
220,000
The company has no beginning or ending inventories.
Required:
a. Estimate the company's total variable cost per unit and its
total fixed costs per year.
(Remember that this is a manufacturing firm.)
b. Compute the company's contribution margin for this year.
Part B: Cost-Volume-Profit Analysis
Belli-Pitt, Inc, produces a single product. The results of the
11. company's operations for a typical month are
summarized in contribution format as follows:
Sales ................................... $540,000
Variable expenses .............. 360,000
Contribution margin .......... 180,000
Fixed expenses .................. 120,000
Net operating income ........ $ 60,000
The company produced and sold 120,000 kilograms of product
during the month. There were no
beginning or ending inventories.
Required:
a. Given the present situation, compute
1. The break-even sales in kilograms.
2. The break-even sales in dollars.
3. The sales in kilograms that would be required to produce net
operating income of
$90,000.
4. The margin of safety in dollars.
b. An important part of processing is performed by a machine
that is currently being leased for
$20,000 per month. Belli-Pitt has been offered an arrangement
whereby it would pay $0.10
royalty per kilogram processed by the machine rather than the
12. monthly lease.
1. Should the company choose the lease or the royalty plan?
2. Under the royalty plan compute break-even point in
kilograms.
3. Under the royalty plan compute break-even point in dollars.
4. Under the royalty plan determine the sales in kilograms that
would be required to
produce net operating income of $90,000.
Part C: Relevant Cost/Special Order
Gottshall Inc. makes a range of products. The company's
predetermined overhead rate is $19 per direct
labor-hour, which was calculated using the following budgeted
data:
Variable manufacturing overhead ....... $225,000
Fixed manufacturing overhead ............ $630,000
Direct labor-hours ................................ 45,000
Component P0 is used in one of the company’s products. The
unit cost of the component
according to the company’s cost accounting system is
determined as follows:
13. Direct materials ......................................... $21.00
Direct labor ................................................ 40.80
Manufacturing overhead applied ............... 32.30
Unit product cost ....................................... $94.10
An outside supplier has offered to supply component P0 for
$78 each. The outside supplier is
known for quality and reliability. Assume that direct labor is a
variable cost, variable
manufacturing overhead is really driven by direct labor-hours,
and total fixed manufacturing
overhead would not be affected by this decision. Gottshall
chronically has idle capacity.
Required:
Is the offer from the outside supplier financially attractive?
Why?
14. Part D: Relevant Cost/Make or Buy Decision
Part U67 is used in one of Broce Corporation's products. The
company's Accounting Department reports
the following costs of producing the 7,000 units of the part that
are needed every year.
Per Unit
Direct materials .......................................... $8.70
Direct labor ................................................ $2.70
Variable overhead ...................................... $3.30
Supervisor’s salary ..................................... $1.90
Depreciation of special equipment ............ $1.80
Allocated general overhead........................ $5.50
An outside supplier has offered to make the part and sell it to
the company for $21.40 each. If
this offer is accepted, the supervisor's salary and all of the
variable costs, including direct labor,
can be avoided. The special equipment used to make the part
was purchased many years ago
and has no salvage value or other use. The allocated general
overhead represents fixed costs of
the entire company. If the outside supplier's offer were
accepted, only $6,000 of these allocated
general overhead costs would be avoided.
15. Required:
a. Prepare a report that shows the effect on the company's total
net operating income of
buying part U67 from the supplier rather than continuing to
make it inside the company.
b. Which alternative should the company choose?
Part E: Relevant Cost/Sell or Process Further
Farrugia Corporation produces two intermediate products, A and
B, from a common input. Intermediate
product A can be further processed into end product X.
Intermediate product B can be further
processed into end product Y. The common input is purchased
16. in batches that cost $36 each and
the cost of processing a batch to produce intermediate products
A and B is $15. Intermediate
product A can be sold as is for $21 or processed further for $14
to make end product X that is
sold for $32. Intermediate product B can be sold as is for $44 or
processed further for $28 to
make end product Y that is sold for $64.
Required:
a. Assuming that no other costs are involved in processing
potatoes or in selling products, how
much money does the company make from processing one batch
of the common input into
the end products X and Y? Show your work!
b. Should each of the intermediate products, A and B, be sold as
is or processed further into an
end product? Explain.
Part F: Relevant Cost/Dropping a Product
The management of Woznick Corporation has been concerned
for some time with the financial
performance of its product V86O and has considered
discontinuing it on several occasions. Data from
17. the company's accounting system appear below:
Sales ................................................................ $150,000
Variable expenses ............................................ $72,000
Fixed manufacturing expenses ........................ $50,000
Fixed selling and administrative expenses ...... $33,000
In the company's accounting system all fixed expenses of the
company are fully allocated to products.
Further investigation has revealed that $30,000 of the fixed
manufacturing expenses and $13,000 of the
fixed selling and administrative expenses are avoidable if
product V86O is discontinued.
A. According to the company's accounting system, what is the
net operating income earned by product
V86O?
B. What would be the effect on the company's overall net
operating income if product V86O were
dropped?