1. On Exercise 4-1 identify the variable costs
Answer
Hourly wages of inspectors
Plastic
Packaging
Metal
Electricity costs, 0.10$ per kilowatt hour
Hourly wages of machine operators
Pension cost, $0.75 per employee hour on the job
Computer chip (purchased from a vendor). It has been assumed that this is being used in producing toy robotic helicopters
2. On Exercise 4-1 identify the fixed costs
Answer
Janitorial costs, $5000 per month
Salary of plant manager
Oil used in manufacturing equipment
Property taxes, $210000 per year on factory building and equipment
Property insurance premiums, $2000 per month plus $0.008 for each dollar of property over $1,000,000
Straight line depreciation on the production equipment
3. On Exercise 4-1 identify the mixed costs
Answer
Rent on warehouse, $12000 per month plus $20 per square foot of storage used
4. On Exercise, 4-7a variable cost per unit (enter your answer with commas and no decimal places. For example: 10,000,000).
Answer
Variable costs per unit = (total costs at top production – total costs at lowest production)/ (total units at top production – total units at lowest production)
Variable costs per unit = (920000-700000)/(22500-10000) = $17.6 per unit
5. On Exercise, 4-7a fixed cost (enter your answer with commas and no decimal places. For example: 10,000,000).
Answer
Fixed costs = Total costs – variable costs
Fixed costs = $700000 – 10000 units * $17.6 per unit = $524000
6. On Exercise, 4-7b what the total cost of 14,000 units cost (enter your answer with commas and no decimal places. For example: 10,000,000).
Answer
Total cost for 14000 units = Units * variable costs per unit + fixed costs
Total cost for 14000 units = 14000*17.6 + $524000 = $770400
7. On Exercise 4-9a, what is the contribution margin ratio?
Answer
Contribution margin ratio = Contribution/ sales *100
Contribution margin ratio = ($1,800,000-$1,080,000)/$1,80,000*100 = 40%
8. On Exercise 4-9b, what is the income from operations?
Answer
Income from operations = Sales* contribution margin ratio – fixed costs
Income from operations = $900000*32% - $210000 = $78000
9. On Exercise 4-11a, what is the anticipated break-even sales (units)?
Answer
Anticipated break even sales = Fixed costs/ contribution per unit
Anticipated beak even sales = $740,000/($80-$55) = 29600 units
10. On Exercise 4-11b, what sales (units) are required to realize income form operations of $140,000?
Answer
Units required to realize income from operations of $140000 = (fixed costs + income from operations)/ contribution per unit
Units required = ($740000 + $1400000)/25 = 35200 units
1. On exercise 6-5, what are the total Small Scale units to be produced?
Answer
Total small scale units to be produced = Sales + closing stock – opening stock
Total small scale units to be produced = 60000 + 1100 – 1500 = 59600 units
2. On exercise, 6-5 the total Large Scale units to be produced are $66,500.
Answer
Total large scale units to be produced = Sales + closing stock – opening stock
Total large scale units to be produced = 101000 + 2500 – 2300 = 101200 units
3. On Exercise 6-12 , how many hours are required for production of the Junior racket in the FormingDepartment? (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
No of required for production of the Junior racket in the FormingDepartment = no of units of production * no of hours per unit
No of required for production of the Junior racket = 1400 *0.3 hours = 420 hours
4. On Exercise 6-12 , how many hours are required for production of the Pro Striker in the Assembly Department? (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
No of required for production of the pro striker in the AssemblyDepartment = no of units of production * no of hours per unit
No of required for production of the pro striker= 7100 *0.6 hours = 4260 hours
5. On Exercise 6-12 , how many total hours are required for production in the Forming Department? (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
No of hours required in the forming department = no of units * hours per unit
No of hours required in the forming department = 1400*0.30 + 7100*0.35 = 2905 hours
6. On Exercise 6-12 , the total hours required for production in the Assembly Department = 17,405 hours?
Answer
No of hours required in the assembly department = no of units * hours per unit
No of hours required in the assembly department = 1400*0.40 + 7100*0.60 = 4820 hours
7. On Exercise 6-12 , the total direct labor cost for both the Forming and the Assembly Departments = $ 263,020?
Answer
Total direct labor costs for both the departments = 2905 hours * $18 + 4820 hours *$15
Total direct labor costs for both the departments = $124590
8. On Exercise 6-17 , what are the Total Manufacturing Costs?
Answer
Total manufacturing costs =
9. On Exercise 6-17 , what is the Cost of Goods Manufactured?
10. On exercise 6-17, what is the Cost of Goods Sold?
1. On exercise 7-2, match the item with the unit cost. Potential Matches:
1 : $28.80 2 : $212.50 3 : $4.32 4 : $1.98
Answer
Unit cost = $16 per hour *1.8 hrs per unit + $12.5 per ft * 17 ft + $2.40*1.8 + $1.10*1.8
Unit cost = $247.78
2. On Exercise 7-2 , what is the total cost per unit? (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
Unit cost = $16 per hour *1.8 hrs per unit + $12.5 per ft * 17 ft + $2.40*1.8 + $1.10*1.8
Unit cost = $247.78
3. On Exercise 7-4 a, what is the direct materials price variance? (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
Direct materials price variance = (Actual price – standard price)*Actual quantity
Direct materials price variance = ($2.05 - $2.00)*43100 = 2155 unfavorable
4. On Exercise 7-4 a, what is the direct materials quantity variance?
Answer
Direct materials quantity variance = (Actual quantity– standard quantity)*standard price
Direct materials quantity variance = (43100- 44100)*2= 2000 favorable
5. On Exercise 7-4 a, what is the total direct materials cost variance?
Answer
Total direct materials cost variance = Price variance + quantity variance
Total direct materials cost variance = 2155 unfavorable + 2000 favorable = $155 unfavorable
1. On 8-4 match the service department with the corresponding activity base number shown in this problem.
Potential Matches:
Answer
1 : Number of travel claims – employee travel 2 : Number of computers – computer support 3 : Number of conference attendees - conferences 4 : Number of employees trained - training 5 : Number of sales invoices – accounts receivable 6 : Number of telephone lines - telecommunications 7 : Number of payroll checks - payroll accounting8 : Number of purchase requisitions – central purchasing
2. On exercise 8-5a, the total amount of payroll checks processed for Residential is?
Answer
Total amount of payroll checks processed for residential is = Weekly payroll * no of weeks * monthly payroll * no of months
Total amount of payroll checks processed for residential is = 200*52 + 50*12 = 11000
3. On exercise 8-5a, the total amount of payroll checks processed for Commercial is?
Answer
Total amount of payroll checks processed for residential is = Weekly payroll * no of weeks * monthly payroll * no of months
Total amount of payroll checks processed for residential is = 100*52 + 80*12 = 6160
4. On exercise 8-5a, the total amount of paycheck processed for Government Contractis?
Answer
Total amount of payroll checks processed for residential is = Weekly payroll * no of weeks * monthly payroll * no of months
Total amount of payroll checks processed for residential is = 120*52 + 50*12 = 6840
5. On exercise 8-5 b, match the annual amount of payroll and purchasing costs to each division. (Points : 10)
Potential Matches: 1 : $54,100 2 : $35,380 3 : $34,560
Amount
Payroll costs – residential = 84000/24000*11000 = $38500
Purchasing department costs – residential = 40040/7700*3000 = $15600
Annual amount of costs – residential = $54100
Payroll costs – commercial = 84000/24000*6160 = $21560
Purchasing department costs – commercial = 40040/7700*2500 = $13000
Annual amount of costs – commercial = $34560
Total amount of costs – government contract = $35380
6. Residential’s service department charge is higher than the other two divisions because Residential is a heavy user of service department services?
Answer
Yes
7. On exercise 8-10, what is the rate of return for the Retail division (enter in as a percent without the % sign)
Answer
8. On exercise 8-10, what is the rate of return for the Commercial division (enter in as a percent without the % sign)
9. On exercise 8-10, what is the rate of return for the Internet division (enter in as a percent without the % sign)
10. On exercise 8-10, what division is most profitable?
1. On Exercise 9-3 determine the differential revenue from annual sales of King Cola(enter your answer with commas and no decimal places. For example: 10,000,000).
Answer
Differential revenue from annual sales of King Cola = $235000
2. On Exercise 9-3 determine the Differential variable cost of goods sold of King Cola (enter your answer with commas and no decimal places. For example: 10,000,000)
Answer
Differentialvariable cost of goods sold of King Cola = Cost of goods sold – fixed factory overhead
Differential variable cost of goods sold of King Cola = $110000 - $110000*16%
Differential variable cost of goods sold of King Cola = $92400
3. Exer 9-3 enter the differential fixed costs for King Cola
Answer
Differentialfixed costs of King Cola = Operating expenses – fixed operating costs
Differential fixed costs of King Cola = $144000 - $144000*20%
Differential fixed costs of King Cola = $115200
4. On Exercise 9-3 King Cola should be retained?
Answer
If the product is discontinued, then the company will save loss of $19000 from loss of operations, but will continue have to incur fixed costs of $46400 (110000*16% + 1440000*20%). Net loss would be $46400 - $19000 = $27400
Since the loss on not continuing is higher than the current loss, hence it is advisable to continue the produc
5. On exercise 9-9, the differential income or loss is
Answer
Differential income or loss = ($157000-$100500)*8 – 485000 + 63000 = $30000 income
6. On exercise 9-9, it would be advisable to replace the old machine?
Answer
Yes it is advisable to replace the old machine as it has net income on replacement
7. On exercise 9-10, the differential revenue is?
Answer
Differential revenue is Zero
8. On exercise 9-10, the differential direct labor is?
Answer
Differential direct labor is $65000
9. On exercise 9-10, the differential income is $5,000?
Answer
Differential income = ($160500-$137000)*5 - $125000 = -7500
No the differential income is not $5000
10. On exercise 9-10 the proposal should be accepted?
Answer
No the proposal should not be accepted as it has negative differential income
1. On exercise 10-1, the average rate of return for Testing Equipment is?
Answer
Average rate of return = 24300/90000*100/6 =4.5%
2. On exercise 10-1, the average rate of return for Vehicle is?
Answer
Average rate of return = 15000/25000*100/8 =7.5%
3. On exercise 10-4, the total for year one is? (enter your answer with commas and no decimal places. For example: 10,000,000 or if negative use parentheses (10,000,000))
Answer
Net cash flows for year 1 = $108000 - $177000 = -$69000
Sales / 580000Less - direct labor / 80000
Less - direct materials / 350000
Less - variable factory overhead / 42000
Net cash flow for first year of the project / 108000
4. On exercise 10-4, totals for year 2-9 is? (enter your answer with commas and no decimal places. For example: 10,000,000 or if negative use parentheses (10,000,000))
Answer
Net cash flows for year 2-9 = $108000
5. On exercise 10-4, the total for last year is? (enter your answer with commas and no decimal places. For example: 10,000,000 or if negative use parentheses (10,000,000))
Answer
Net cash flows last year = $108000+$13000 = $121000
6. On exercise 10-6a, liquid soap is recommended due to its longer payback period?
Answer
Liquid soap is not recommended due to longer payback period
7. On exercise 10-6b, body lotion is preferred because it has a longer payback period and can generate cash faster.
Answer
Body lotion is recommended due to shorter payback period
1. On exercise 14-1a match the item with the corresponding percentage.
Potential Matches:
1 : 100% 2 : 55% 3 : 1.8% 4 : 9%
5 : 36%
Answer
Sales for 2012 and 2011= 100/100*100 = 100%
Cost of goods sold for 2011 = 407000/740000*100 = 55%
No matches for 1.8%, 9% or 36%
2. On exercise 14-1b, income tax expense increased 1%.
Answer
3. On exercise 14-3a, match the item with the percentage.
Potential Matches: 1 : 10.5% 2 : 105% 3 : 2.1% 4 : 100% 5 : 3.6%
Answer
1:10.5% = Administrative expenses
2:105% = Sales
3: 2.1% = Other income
4:100% = Net sales
5:3.6% = None
4. On exercise 14-3b, one of the signification relationships is that Shoesmith's cost of goods sold is 6.0% lower than the industry average?
Answer
Yes