2.(TCO D) Lindon Company uses 4,500 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $69,000 as follows: Direct materials | $16,000 | Direct labor | 18,000 | Variable manufacturing overhead | 10,000 | Fixed manufacturing overhead | 25,000 | Total costs | $69,000 |
An outside supplier has offered to provide Part X at a price of $11 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer.(Points : 30)
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3.(TCO E) Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below: Units in beginning inventory | 0 | Units produced | 9,000 | Units sold | 7,000 | Sales | $100,000 |
Less cost of goods sold: Beginning inventory | 0 | Add cost of goods manufactured | 54,000 | Goods available for sale | 54,000 | Less ending inventory | 12,000 | Cost of goods sold | 42,000 | Gross margin | 58,000 | Less selling and admin. expenses | 28,000 | Net operating income | $30,000 |
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements. (Points : 30)
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4.(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year. Sales | 1,150 | Raw materials inventory, beginning | 15 | Raw materials inventory, ending | 40 | Purchases of raw materials | 150 | Direct labor | 250 | Manufacturing overhead | 300 | Administrative expenses | 500 | Selling expenses | 300 | Work in process inventory, beginning | 100 | Work in process inventory, ending | 150 | Finished goods inventory, beginning | 80 | Finished goods inventory, ending | 120 |
Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?(Points : 25)
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1.(TCO F) Carter Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below. Work in process, beginning: Units in beginning work-in-process inventory | 400 | Materials costs | $6,900 | Conversion costs | $2,500 | Percentage complete for materials | 80% | Percentage complete for conversion | 15% | Units started into production during the month | 6,000 | Units transferred to the next department during the month | 5,800 | Materials costs added during the month | $112,500 | Conversion costs added during the month | $210,300 |
Ending work in process: Units in ending work-in-process inventory | 1,400 | Percentage complete for materials | 70% | Percentage complete for conversion | 40% |
Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department.(Points : 25)
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Solution: acct505 final_29 June_Solution
Solution: acct505 final exam