Accounting Questions

PROBLEM 1 STATEMENT OF COST OF GOODS MANUFACTURED AND INCOME STATEMENT

Information from the records of the Valley Manufacturing Company for August 2014 follows:

Sales                                                          $210,000
Selling and administrative expenses             85,000
Purchase of raw materials                             30,000
Direct Labor                                                  20,000
Manufacturing overhead                               37,000

                                                    Inventories
                                            August 1      August 31
Raw  materials                    $  8,000         $  5,000
Work-in-process                   14,000           11,000
Finished goods                      15,000           19,000

Required:

Prepare a statement of cost of goods manufactured and an income statement for August 2014.

(Do so on separate sheet or sheets of paper via Word document or Excel spreadsheet.)

PROBLEM 2  CONTINUOUS IMPROVEMENT (KAIZEN) COSTING 

Patel Company does contract manufacturing of compact video cameras.  At the Pacific plant, cost control has become a concern of management.  The actual costs per unit for the years 2013 and 2014 were as follows:

                                                                        2013                                              2014                           

             Direct Materials:                                
                Plastic case                            $   4.50                                           $   4.40 
                Lens set                                       17.00                                            17.20
                Electrical component set             6.00                                            5.70
               Film track                                  11.00                                          10.00
             Direct Labor                                32.00  (1.6 hours)                       30.00  (1.5 hours)
             Indirect manufacturing costs
                Variable                                      7.50                                            7.10
                Fixed                                                3.00  (100,000 unit base)           2.85  (120,000 unit base)                     

Required:

1.  If continuous improvement (Kaizen) costing sets a first-year target of a 5 percent reduction of the 2013 base, how
     successful was the company in meeting 2014 per unit cost reduction target?  Support your answer with appropriate computations.  (You may do computations on separate sheet of paper via Word document or Excel spreadsheet.)

2.  Evaluate and discuss Patel’s use of Kaizen costing.

PROBLEM 3  CASH BUDGET 

Wilson’s Retail Company is planning a cash budget for the next three months.  Estimated sales revenue is as follows:

Month           Sales Revenue

January            $300,000
February           250,000

March               200,000
April                 150,000

All sales are on credit: 60 percent is collected during the month of sale, and 40 percent is collected during the next month.  Cost of goods sold is 80 percent of sales.  Payments for merchandise sold are made in the month following the month of sale.  Operating expenses total $42,000 per month and are paid during the month incurred.  The cash balance on February 1 is estimated to be $30,000.

Required:
Prepare monthly cash budgets for February, March, and April.
(Do so on separate sheet or sheets of paper via Word document or Excel spreadsheet.)

PROBLEM 4  NPV AND IRR: EQUAL ANNUAL NET CASH INFLOWS 

Snow Devil Company is evaluating a capital expenditure proposal that requires an initial investment of $32,312, has
predicted  cash inflows of $8,000 per year for seven years, and has no salvage value.

Required: (Do so on separate sheet or sheets of paper via Word document or Excel spreadsheet.) 
1.  Using a discountrate of 10 percent, determine the net present value of the investment proposal.

2.  Determine the proposal’s internal rate of return.