wiley plus Chapter 6

Exercise 7-2 (Part Level Submission)

Gruden Company produces golf discs which it normally sells to retailers for $6.90 each. The cost of manufacturing 20,700 golf discs is:

Gruden also incurs 8% sales commission ($0.55) on each disc sold.

   McGee Corporation offers Gruden $5 per disc for 4,700 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $40,572 to $46,294 due to the purchase of a new imprinting machine. No sales commission will result from the special order.

(a)

Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(b) Compute the labor price and quantity variances.

(c) Compute the labor price and quantity variances, assuming the standard is 4.18 hours of direct labor at $12.29 per hour.

Problem 11-1A

Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.

The predetermined manufacturing overhead rate is $10 per direct labor hour ($20.00 ÷ 2.00). It was computed from a master manufacturing overhead budget based on normal production of 11,400 direct labor hours (5,700 units) for the month. The master budget showed total variable costs of $79,800 ($7.00 per hour) and total fixed overhead costs of $34,200 ($3.00 per hour). Actual costs for October in producing 3,100 units were as follows.

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

(a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)

(b) Compute the total overhead variance.

Bracewell Company reported net income of $194,600 for 2014. Bracewell also reported depreciation expense of $40,160 and a gain of $5,580 on disposal of plant assets. The comparative balance sheet shows an increase in accounts receivable of $15,210 for the year, a $17,790 increase in accounts payable, and a $3,400 decrease in prepaid expenses.

Prepare the operating activities section of the statement of cash flows for 2014. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Exercise 13-7

Meera Corporation’s comparative balance sheets are presented below.

Additional information:

(a) Prepare a statement of cash flows for 2014 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).)

(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.

Exercise 14-3

The comparative condensed balance sheets of Garcia Corporation are presented below.

(a) Prepare a horizontal analysis of the balance sheet data for Garcia Corporation using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)