McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 25 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost.   Manufacturing overhead for year 1 totaled $885,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following.     Chairs Desks Sales revenue $ 1,341,600   $ 2,392,000   Direct materials   593,000     890,000   Direct labor   210,000     380,000       Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $740,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2?

Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Generators Air Compressors Total $ 4,200,000 (2,940,000) $ 1,260,000 $ 3,000,000 $ 7,200,000 (5,040,000) $ 2,160,000 (610,000) $ 1,550,000 Revenue Cost of goods sold Gross profit Selling and administrative expenses Operating income (2,100,000) $ 900,000 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale…

The service department at Major Motors sold $48,000 in service last month. They had direct costs of $16,500 to pay their technicians. They were not given credit for any parts sales or expenses because that was the responsibility of their separate parts department. They were, however, allocated $29,250 in fixed expenses. What is the gross profit Major Motors earned last month?

As newly appointed Cost Accountant, you find that the selling price of Job No. 9669 has been calculated on the following basis: Particulars Materials Direct Wages – 22 hours at 25GHS per hour Department: GHs' 12.08 5.50 A – 10 hours B- 4 hours C - 8 hours Plus 33% on Prime Cost 17.58 5.86 23.44 An analysis of the previous year's profit and loss account shows the following: Particulars GHs` | Particulars GHs' Materials Used Direct Wages: 77,500 Factory Overheads: 5,000 A 6,000 B 4,000 C A 2,500 B 4,000 1,000 Selling Costs 30,000 You are required to: (a) Draw up a Job Cost Sheet; (b) Calculate and enter the revised costs using the previous year's figures as a basis; (c) Add to the total job cost 10% for profit and give the final selling price.

Records at Hal’s Accounting Services show the following costs for year 1.          Direct materials and supplies $ 40,000   Employee costs   2,900,000   Total overhead   1,300,000      Production was 25,000 billable hours. Fixed overhead was $700,000. Assuming no change in billable hours in year 2, direct materials and supplies costs are expected to increase by 10 percent. Direct labor costs are expected to increase by 5 percent. Variable overhead per billable hour is expected to remain the same, but fixed overhead is expected to increase by 5 percent. b. Determine the total costs per billable hour for year 1 and year 2.

Brown Printing, a small family-owned business, began operations on March 1, manufacturing premium quality books. The owners have expertise in printing but no accounting knowledge or experience. The company’s independent accountant compiled the following data for the month of March. They have also requested an income statement. Sales price $90 per book Number of units produced 15,000 books Number of units sold 10,000 books Direct materials cost $15 per book Direct labor cost $6 per book Variable manufacturing overhead $4 per book Fixed manufacturing overhead $240,000 per month Selling cost $3 per book Administrative expenses $160,000 per month   The owners want to understand these numbers and how they can use the information to run the business.   1a. Calculate the unit cost of goods sold using absorption costing.   1b Prepare the income statement for March using absorption costing.   2a. Identify and describe two advantages of…

Show the solution in good accounting form. Thank you! Seempleylungs Company operates three producing departments – Cutting, Sewing, and Finishing. In November, the Sewing department transferred 6,200 units to Finishing and had 400 units in process at the end of the month. The Sewing department works in process inventory as of October 31 were 1,200 units. These units were one-fourth incomplete as of that date, with a cost of P13,312. Out of this total amount, 40% was materials cost, while the cost of labor was 1/3 of conversion cost. The units started in the Sewing department during November were received from the preceding department at a cost of P47,595.60. For the same month, the sewing department incurred P11,772 for materials, P15,660 for labor, and P2,268 for overhead. As of the end of the month, the department has done one-quarter of the work required to complete the units in the process. Compute for the cost of units transferred to the Finishing department.

16.  At the end of the year, a company finds that it has under-applied factory overhead by $1,000. What would be the most common accounting treatment in this case?  Increase Assets by $1,000 on the Balance Sheet   Increase Profit by $1,000 in the Income Statement   Increase Liabilities by $1,000 on the Balance Sheet              Decrease Cost of Goods Sold by $1,000 in the Income Statement              Increase Cost of Goods Sold by $1,000 in the Income Statement.

Strait Co. manufactures office furniture. During the most productive month of the year, 3,200 desks were manufactured at a total cost of $84,500. In the month of lowest production, the company made 1,170 desks at a cost of $55,500. Using the high-low method of cost estimation, total fixed costs are a.$84,500 b.$55,500 c.$29,000 d.$38,772

Exercise 9-31 (Algo) Reported Costs and Decisions (LO 9-1) McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost.   Manufacturing overhead for year 1 totaled $880,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following.     Chairs Desks Sales revenue $ 1,001,000   $ 2,469,600   Direct materials   598,000     940,000   Direct labor   120,000     430,000       Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks.  a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $790,000. The…