Cost Accounting - Due in 3 hours

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1. (TCO 1) George Corporation has an estimated monthly sales of 3,200 units for $70 per unit. Variable costs include manufacturing costs of $36 and distribution costs of $14. Fixed costs are $40,000 per month.

Required:
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume

Create a contribution margin-based income statement

2. (TCO 7) Darling Manufacturing Inc. manufactures two products, A and B, from a joint process. A single production costs $5,000 and results in 200 units of A and 800 units of B. To be ready for sale, both products must be processed further, incurring seperable costs of $3 per unit for A and $4 per unit for B. The market price for Product A is $15 and for Product B is $10.

Required: Allocate joint production costs to each product using the physical units method.

3. (TCO 6) Santa Inc. manufactures toys based on the following information.

Standard costs

		Materials (4 ounces at $4)			$16
		Direct labor (1 hour per unit)			$7
		Variable overhead (based on direct labor hours)			$3.50

Fixed overhead budget

$16,000

Actual results and costs

Materials purchased

			Units	10,000
			Cost	$38,500

Materials used in production

			Finished product units	2,200
			Raw material (ounces)	9,500
			Direct labor hours	2,200
			Direct labor cost	$18,000
			Variable overhead costs	$8,400
			Fixed overhead costs	$16,200

Required:

Compute the following variances (show calculations).

a. Materials usage variance

b. Labor rate variance

c. Fixed overhead budget variance

4. (TCO 4) Toshi Company incurred the following costs in manufacturing desk calculators.

Direct materials                                     $14
Indirect materials (variable)                     4
Direct labor                                           8
Indirect labor (variable)                          6
Other variable factory overhead               10
Fixed factory overhead                           28
Variable selling expenses                      20
Fixed selling expenses                          14

During the period, the company produced and sold 1,000 units.
a. What is the inventory cost per unit using absorption costing?
b. What is the inventory cost per unit using variable costing?

5. (TCO 8) Musical Instruments Company manufactures two products (trumpets and trombones). Overhead costs ($66,000) have been divided into three cost pools that use the following activity drivers.

Product	Number of setups	Machine hours	Packing orders
Trumpets	15	250	200
Trombones	15	750	300
Cost per pool	$6,000	$10,000	$50,000

Required (show all calculations)

a. What is the allocation rate for trumpets per setup using activity-based costing?

b. What is the allocation rate for trumpets per machine hours using activity-based costing?

c. What is the allocation rate for trumpets per packing order using activity-based costing?

6. TCO 5) The Baxter Corporation has the following budgeted and actual results.

Budgeted data

Actual results

Unit sales

35,000

Unit sales

36,000

Unit production	35,000		Unit production	37,000
Fixed overhead			Fixed overhead

Supervision	$25,000	Supervision	$23,500
Depreciation	$40,000	Depreciation	$40,000
Rent	$20,000	Rent	$20,000

Variable costs per unit

Variable costs

Direct materials	$25.00	Direct materials	$900,000
Direct labor	$26.00	Direct labor	$950,000
Supplies	$0.25	Supplies	$9,000
Indirect labor	$1.30	Indirect labor	$50,000
Electricity	$0.20	Electricity	$7,500

Required:

Prepare a performance report for all costs, showing flexible budget variances (indicate F or U).

TCO 8) A company keeps 60 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 30 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The non-value-added costs for the company are (Points : 5)

TCO 1) The income statement for Thomas Manufacturing Company for 2011 is as follows.

Sales (10,000 units)                                                 $120,000
Variable expenses                                                   $72,000
Contribution margin                                                 $48,000
Fixed expenses                                                       $36,000
Operating income                                                    $12,000

Which is the contribution margin per unit? (Points : 5)

(TCO 7) Yo Department Store incurred $8,000 of indirect advertising costs for its operations. The following data have been collected for 2013 for its three departments.