I need help with these accounting problems

1.) T Account Analysis with Unknowns

Flagstaff Enterprises makes flagpoles. Dan Dal ripple, the company’s new controller, can find only the following partial information for the past two months:

Account/Transaction	May	June
Beginning Materials Inventory	$ 36,240	$ e
Beginning Work in Process Inventory	56,480	f
Beginning Finished Goods Inventory	44,260	g
Materials purchased	a	96,120
Direct materials requested	82,320	h
Direct labor costs	b	72,250
Overhead applied	53,200	i
Cost of units completed	c	221,400
Cost of Goods Sold	209,050	j
Ending Materials Inventory	38,910	41,950
Ending Work in Process Inventory	d	k
Ending Finished Goods Inventory	47,940	51,180

The current year’s predetermined overhead rate is 80 percent of direct labor cost.

Required

Using the data provided and T accounts, compute the unknown values.

2.) Time and Materials Pricing in a Service Business

P 3. Ace Maintenance, Inc., repairs heavy construction equipment and vehicles. Recently, the Shanti Construction Company had one of its giant earthmovers overhauled and its tires replaced. Repair work for a vehicle of that size usually takes from one week to ten days. The vehicle must be lifted up so that maintenance workers can gain access to the engine. Parts are normally so large that a crane must be used to put them into place.

The company uses the time and materials pricing system and data from the previous year to compute markup percentages for overhead related to parts and materials and overhead related to direct labor. It adds markups of 130 percent to the cost of materials and parts and 140 percent to the cost of direct labor to cover overhead and profit. The following materials, parts, and direct labor are needed to repair the giant earthmover:

Quantity	Unit Price	Hours	Hourly Rate
Materials and parts		Direct labor
24 Spark plugs	$ 3.40	42 Mechanic hours	$18.20
20 Oil, quarts	2.90	54 Assistant mechanic	12.00
12 Hoses	11.60	hours
1 Water pump	764.00
30 Coolant, quarts	6.50
18 Clamps	5.90
1 Distributor cap	128.40
1 Carburetor	214.10
4 Tires	820.00

Required

Prepare a complete billing for this job. Include itemized amounts for each type of materials, parts, and direct labor. Follow the time and materials pricing approach, and show the total price for the job.

3.) Time and Materials Pricing in a Service Business

Ace maintenance Inc. repairs heavy construction equipment and vehicles. Recently, the Shanti Construction Company had one of its giant earthmovers overhauled and its tires replaced. Repair work for a vehicle of that size usually takes from one week to ten days. The vehicle must be lifted up so that maintenance workers can gain access to the engine. Parts are normally so large that a crane must be used to put them into place. The company uses the time and materials pricing system and data from the previous year to compute markup percentages for overhead related to parts and materials and overhead related to direct labor. It adds markups of 130 percent to the cost of materials and parts and 140 percent to the cost of direct labor to cover overhead and profit. The following materials, parts, and direct labor are needed to repair the giant earthmover:

QUANTITY UNIT PRICE HOURS HOURLY RATE

Materials/parts Direct Labor

24 spark plugs $3.40 42 Mechanic hours $18.20

20 oil quarts $2.90 54 Assistant mechanic hrs $12.00

12 hoses $11.60

1 Water pump $764

30 Coolant quarts $6.50

18 Clamps $5.90

1 Distributor cap $128.40

1 Carburetor $214.10

4 Tires $820.00

Prepare a complete billing for this job. Include itemized amounts for each type of materials, parts, and direct labor. Follow the time and materials pricing approach, and show the total price for the job.

4.) Minimum Rate of Return

P 1. Capital investment analysis is the main responsibility of Ginny Weiss, the special assistant to the controller of Nazzaro Manufacturing Company. During the previous 12-month period, the company’s capital mix and the respective costs were as follows:

	Percentage of Total Financing	Cost of Capital
Debt financing	25%	7%
Preferred stock	15	9
Common stock	50	12
Retained earnings	10	12

Plans for the current year call for a 10 percent shift in total financing from common stock financing to debt financing. Also, the cost of debt financing is expected to increase to 8 percent, although the cost of the other types of financing will remain the same.

Weiss has already analyzed several proposed capital investments. Those projects and their projected rates of return are as follows: Project M, 9.5 percent; Equipment Item N, 8.5 percent; Product Line O, 15.0 percent; Project P, 6.9 percent; Product Line Q, 10.5 percent; Equipment Item R, 11.9 percent; and Project S, 11.0 percent.

Required

1. Using the expected adjustments to cost and capital mix, compute the weighted-average cost of capital for the current year.

2. Identify the proposed capital investments that should be implemented based on the cost of capital calculated in requirement 1.

5.) ELIMINATION OF UNPROFITABLE SEGMENT DECISION

E4B. Guld’s Glass, Inc., has three divisions: Commercial, Nonprofit, and Residential. The segmented income statement for last year revealed the following:

Guld’s Glass, Inc. Divisional Profit Summary and Decision Analysis

Commercial Division Nonprofit division residential div. Total Company

Sales $290,000 533,000 837,000 1,660,000

Less variable costs 147,000 435,000 472,000 1,054,000

Contribution margin 143,000 98,000 365,000 606,000

Less direct fixed costs 124,000 106,000 139,000 369,000

Segment margin 19,000 8,000 226,000 237,000

Less common fixed costs 168,000

Operating income 69,000

1. How will Guld’s Glass be affected if the Nonprofit Division is dropped?

2. Assume the elimination of the Nonprofit Division causes the sales of the Residential Division to decrease by 10 percent. How will Guld’s Glass be affected if the Non-

profit Division is dropped?

6.) Use of Process Costing Information

Tom’s Bakery makes a variety of cakes, cookies, and pies for distribution to five major chains of grocery stores in the area. The company uses a standard manufacturing process for all items except special-order cakes. It currently uses a process costing system. Tom, the owner of the company, has some urgent questions, which are listed at the top of the next page. Which of these questions can be answered using information from a process costing system? Which can be best answered using information from a job order costing system? Explain your answers.

1. How much does it cost to make one chocolate cheesecake?

2. Did the cost of making special-order cakes exceed the cost budgeted for this month?

3. What is the value of the pie inventory at the end of June?

4. What were the costs of the cookies sold during June?

5. At what price should Tom’s Bakery sell its famous brownies to the grocery store chains?

6. Were the planned production costs of $3,000 for making pies in June exceeded?

7.) Process costing:FIFO Costing and Average Costing Methods

Lightning Industries specializes in making Flash, a high-moisture, low-alkaline wax used to protect and preserve skis. The company began producing a new, improved brand of Flash on January 1. Materials are introduced at the beginning of the production process. During January, 15,300 pounds were used at a cost of $46,665. Direct labor of $17,136 and overhead costs of $25,704 were incurred uniformly throughout the month. By January 31, 13,600 pounds of Flash had been completed and transferred to the finished goods inventory (1 pound of input equals 1 pound of output). Since no spoilage occurred, the leftover materials remained in production and were 40 percent complete on average.

1. Using the FIFO costing method, prepare a process cost report for January.

2. From the information in the process cost report, identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred.

3. Repeat 1 and 2 using the average costing method.