Test III. Cost to purchased raw materials JENNY Processing Company expects in 2019 to increase by 10% the products sold the previous year totaling 40,000 units. At the start of 2019, the company has finished goods of 6,000 units and plans to maintain an inventory of 8,000 at the end of 2019. To produce one finished product, the company required 3 units of raw materials OP and 4 units of materials QR, One unit of raw materials OP and one unit of raw materials QR cost P4 and P7, respectively. The inventory level of the raw materials is as follows: January 1 (actual) December 31 (target) Material OP 4,000 5,000 Material QR 3,000 4,000 Required: Determine the estimated cost to purchased the total raw materials requirement.

Test III. Cost to purchased raw materials JENNY Processing Company expects in 2019 to increase by 10% the products sold the previous year totaling 40,000 units. At the start of 2019, the company has finished goods of 6,000 units and plans to maintain an inventory of 8,000 at the end of 2019. To produce one finished product, the company required 3 units of raw materials OP and 4 units of materials QR, One unit of raw materials OP and one unit of raw materials QR cost P4 and P7, respectively. The inventory level of the raw materials is as follows: January 1 (actual) December 31 (target) Material OP 4,000 5,000 Material QR 3,000 4,000 Required: Determine the estimated cost to purchased the total raw materials requirement.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 7P: Self-Construction Olson Machine Company manufactures small and large milling machines. Selling...

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Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.
If the sales forecast estimates that 50,000 units of product will be sold during the following year, should the factory plan on manufacturing 50,000 units in the coming year? Explain.
Jaka Corporation manufactures and sells concrete blocks for the residential and commercial building. Jaka expects the following sales unit, the price per unit and desired ending inventory for the year 2021. Inventories for both 1st January 2021 and 1st January 2022 are expected to be 100,000 blocks. The raw materials and direct labour required for each concrete block are as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales unit 2,000,000 6,000,000 6,000,000 2,000,000 Price/unit ($) 0.70 0.70 0.80 0.80 Ending Inventory 500,000 500,000 100,000 100,000 Units Raw materials 26kg Direct labour 0.015 hour Cost $0.01/kg $14/hour Jaka's policy is to have 5 million kg of raw materials in ending inventory for the third and fourth quarters and 8 million kg of the materials in ending inventory for the first and second quarters. Required: Prepare the following…
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Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2019. The workstations’ manufacturing costs include the following. Direct materials $ 750 per unit Direct labor $ 400 per unit Variable overhead $ 60 per unit Fixed overhead $ 24,000 per year The selling expenses related to these workstations follow. Variable selling expenses $ 45 per unit Fixed selling expenses $ 3,500 per year Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.Required:1. Complete the following income statements using absorption costing.2. Complete the following income statements using variable costing.
Assume that Laptop parts assembly company producing 650 laptops during 2019. The management has drawn up a standard cost plan as follows: The standard quantity of direct material is 30 parts, natural loss of parts 3%, damaged parts 1%, the standard price is $ 8/part. While the actual units used are 14,560 parts, each part $ 6. The standard direct labor time is 8 hours, and the standard number of workers is 10. Standard damaged rate is 5%, standard production stops 5%, standard work break is 1.5 hour, standard direct labor wage is 3 plus 1 as a bonus. While in fact, the direct labor hour is 31,325, the actual wage is the same as the standard price but without the bonus. The application standard rate is direct material quantity. And the application standard rate is $ 4/ part. While in actuality, the total overhead cost is $43,000. Requirements; (a) Calculate the standard and actual costs (b) Analyze the deviation for each element and provide a comment in the result of deviation.
You are required show ALL supportingworkings where necessary and state any assumption(s) made. _C-V-P AnalysisGreek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00Required: a. Using the equation method calculate the normal capacity of the business b.Assuming sales equal to the normal capacity calculated in (a) above, prepare a contribution margin income…
Assume that Laptop parts assembly company producing 350 laptops during 2019. The management has drawn up a standard cost plan as follows: The standard quantity of direct material is 30 parts, natural loss of parts 3%, damaged parts 1%, the standard price is $ 8/part. While the actual units used are 14,560 parts, each part $ 6. The standard direct labor time is 8 hours, and the standard number of workers is 10. Standard damaged rate is 5%, standard production stops 5%, standard work break is 1.5 hour, standard direct labor wage is 3 plus 1 as a bonus. While in fact, the direct labor hour is 31,325, the actual wage is the same as the standard price but without the bonus. The application standard rate is direct material quantity. And the application standard rate is $ 4/ part. While in actuality, the total overhead cost is $43,000. Requirements; 1- Calculate the standard and actual costs 2- Analyze the deviation for each element and provide a comment in the result of deviation.
TikTokElectronics manufactures an aluminium fibre tripod model“TRI-X” which sells for $1,600.The production cost computed per unit under traditional costing for each model in 2019was as follows: Traditional Costing TRIX Direct Materials $700 Direct Labour($20/hour) $120 Manufacturing overhead($38 per DLH) $228 Total per unit cost $1,048 In 2019, TikTokElectronics manufactured 26,000units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRI-X as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTokElectronics management accountant to prepare an analysis using activity-based costing (ABC). The management accountant accumulates the following information…
At the end of 2018, Diatomic Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2019, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows: 2018 2019 Output 45,000 54,000 Output prices $10.00 $10.00 Materials (Ibs.) 22,500 22,950 Materials unit price $3.00 $4.00 Labor (hrs.) 18,000 16,875 Labor rate per hour $5.00 $5.00 Power (kwh) 11,250 14,625 Price per kwh $2.00 $3.00 How much profit was generated in 2019? Oa. $540,000 Оь. 8270,000 c. $319,950 Od. $220,050 se . Which of the following is true of non-value-added activities? a. These activities are a source of waste in the value stream of a product. b. These activities are identified only after the finished goods reaches final customers. Oc. These activities ensure that no rework is required as the final product has zero-defects. Od. These…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for $1,600. The production cost computed per unit under traditional costing for each model in 2019 was as follows:Traditional CostingTRIXDirect Materials$700Direct Labour ($20/hour)$120Manufacturing overhead ($38 per DLH)$228Total per unit cost$1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRI-X as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an3analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.Activity Cost PoolsCost DriversEstimated OverheadExpected Use of Cost DriversPurchasingNumber of orders$1,200,00040,000Machine setupsNumber of…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for $1,600. The production cost computed per unit under traditional costing for each model in 2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Purchasing Number of orders $1,200,000 40,000 Machine setups Number of…