Five Accounting questions
1 (TCO D) Data for December concerning Dinnocenzo Corporation's two major business segments-Fibers and Feedstocks-appear below:
|
Sales revenues, Fibers |
$870,000 |
|
Sales revenues, Feedstocks |
$820,000 |
|
Variable expenses, Fibers |
$426,000 |
|
Variable expenses, Feedstocks |
$344,000 |
|
Traceable fixed expenses, Fibers |
$148,000 |
|
Traceable fixed expenses, Feedstocks |
S156,000 |
Common
fixed expenses totaled $314,000 and were allocated as follows: $129,000 to the
Fibers business segment and $185,000 to the Feedstocks business segment.
Required:
Prepare a segmented income statement in the contribution format for the
company. Omit percentages; show only dollar amounts.
2.(TCO D) Eber Wares is a division of a major corporation. The following data are for the latest year of operations.
|
Sales |
$30,000,000 |
|
Net Operating income |
$1,170,000 |
|
Average operating assets |
$8,000,000 |
|
The company's minimum required rate of return |
18% |
Required:
i. What is the division's margin?
ii. What is the division's turnover?
iii. What is the division's ROI?
iv. What is the division's residual income? (Points : 15)
3.(TCOD) The management of Thews Corporation is considering dropping product E28I. Data from the company's accounting system appear below.
|
Sales |
$480,000 |
|
Variable Expenses |
$202,000 |
|
Fixed Manufacturing Expenses |
$158,000 |
|
Fixed Selling and Administrative Expenses |
$130,000 |
All fixed expenses of the company are fully allocated to products in the
company's accounting system. Further investigation has revealed that $86,000 of
the fixed manufacturing expenses and $67,000 of the fixed selling and
administrative expenses are avoidable if product E28I is discontinued.
4.(TCO D) Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows.
|
Direct Materials |
$15.70 |
|
Direct Labor |
$17.50 |
|
Variable Manufacturing Overhead |
$4.50 |
|
Fixed Manufacturing Overhead |
$14.60 |
|
Unit Product Cost |
$52.30 |
An outside supplier has offered to sell the company all of these parts it needs
for $51.90 a unit. If the company accepts this offer, the facilities now being
used to make the part could be used to make more units of a product that is in
high demand. The additional contribution margin on this other product would be
$219,000 per year.
If the part were purchased from the outside supplier, all of the direct labor
cost of the part would be avoided. However, $6.20 of the fixed manufacturing
overhead cost being applied to the part would continue even if the part were
purchased from the outside supplier. This fixed manufacturing overhead cost
would be applied to the company's remaining products.
Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of
whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the
part rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside
supplier per unit for the part if the supplier commits to supplying all 30,000
units required each year? (Points : 15)
Required:
i. What is the net operating income earned by product E28I according to the
company's accounting system? Show your work!
ii. What would be the effect on the company's overall net operating income of
dropping product E28I? Should the product be dropped? Show your work! (Points : 15)
|
Question 5. 5.(TCO D) A customer has asked
Clougherty Corporation to supply 4,000 units of product M97, with some
modifications, for $40.10 each. The normal selling price of this product is
$48.00 each. The normal unit product cost of product M97 is computed as
follows.
|
-
Rating:
/5
Solution: Five Accounting questions