2 Mixed cost at different levels of activity LO 11-1 Veasy Corporation paid one

Question

2 Mixed cost at different levels of activity LO 11-1

Veasy Corporation paid one of its sales representatives $8,500 during the month of March. The rep is paid a base salary plus $12 per unit of product sold. During March, the rep sold 130 units.

Calculate the total monthly cost of the sales representative’s salary for each of the following months:

MONTH APRIL MAY JUNE JULY

NUMBER OF UNITS SOLD 170 80 180 90

TOTAL VARIABLE COST ______ _______ ________ __________

TOTAL FIXED COST ______ ________ _________ _________

TOTAL SALARY COST $_______ $_______ $________ $_________

7 Using JIT to minimize waste and lost opportunity LO 10-4

Kate Connor, a teacher at Meadow Middle School, is in charge of ordering the T-shirts to be sold for the school’s annual fund-raising project. The T-shirts are printed with a special Meadow School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $14 each. Ms. Connor has decided to order 790 shirts.

If the school receives actual sales orders for 735 shirts, what amount of profit will the school earn? What is the cost of waste due to excess inventory?

PROFIT ( )

WASTE DUE TO EXCESS INVENTORY ( )

6   Upstream and downstream costs LO 10-2

During 2014, Welch Manufacturing Company incurred $44,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in 2014. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $268 per unit. Packaging, shipping, and sales commissions are expected to be $54 per unit. Welch expects to sell 1,100,000 batteries before new research renders the battery design technologically obsolete. During 2014, Welch made 446,000 batteries and sold 393,000 of them.

Determine the 2014 amount of cost of goods sold and the ending inventory balance.

COSTS OF GOODS SOLD ( )

ENDING INVENTORY ( )

Determine the sales price assuming that Welch desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and distributing the batteries. (Round your answer to 2 decimal places.)

SALES PRICE ( )

Prepare an income statement for 2014. Use the sales price developed in Requirement c. (Round your intermediate calculations to 2 decimal places.)

WELCH'S MANUFACTURING COMPANY

INCOME STATEMENT

(COMPOSE A INCOME STATEMENT USING THE WORDS LISTED BELOW PLEASE)

Cost of goods sold

Research and development

Sales revenue

Selling expenses

Net income or loss

9 Double-declining-balance and units-of-production depreciation: gain or loss on disposal LO 6-3, 6-4

[The following information applies to the questions displayed below.]

Graphics Service Co. purchased a new color copier at the beginning of 2014 for $35,150. The copier is expected to have a five-year useful life and a $6,270 salvage value. The expected copy production was estimated at 2,000,000 copies. Actual copy production for the five years was as follows:

9 Exercise 6-10 Part a

Compute the depreciation expense for each of the five years, using double-declining-balance depreciation. (Round your intermediate calculations and final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required.)

DOUBLE-DECLINING BALANCE

2014 ___________________________

2015 ___________________________

2016 ___________________________

2017 ___________________________

10 Exercise 6-10 Part b

Compute the depreciation expense for each of the five years, using units-of-production depreciation.(Round intermediate calculations to 3 decimal places. Round your final answers to nearest dollar amount.)

UNITS OF PRODUCTION

2014 _______________________

2015 ________________________

2016 ________________________

2017 _________________________

11 Exercise 6-10 Part c

Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods.

DEPRECIATION METHODS AMOUNT EFFECT

DOUBLE DECLINING BALANCE _________ _________

UNITS OF PRODUCTION _________ __________

7 Computing and recording straight-line versus double-declining-balance depreciation LO 6-3

   

At the beginning of 2014, Metal Manufacturing purchased a new computerized drill press for $210,000. It is expected to have a five-year life and a $30,000 salvage value.

7 Exercise 6-9 Part a

Double-Declining-Balance depreciation. (Round your answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required.)

DOUBLE-DECLINING BALANCE

YEAR 1 __________________________   

YEAR 2 ___________________________

YEAR 3 __________________________

YEAR 4 ____________________________

YEAR

Veasy Corporation paid one of its sales representatives $8,500 during the month of March. The rep is paid a base salary plus $12 per unit of product sold. During March, the rep sold 130 units.

Explanation / Answer

Answer (2)

Working Note (Calculation of Fixed cost)

Answer (7)

ANswer (6)

(i)

(ii)

(iii)

Particulars Per Unit April May June July No of Units Sold 170 80 180 90 Total Variable Cost (A) 12 2040 960 2160 1080 Total Fixed Cost (B) 6940 6940 6940 6940 Total Salary Cost (A+B) 8980 7900 9100 8020

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