5. The Mondelez International Company uses a process cost accounting system and

Question

5. The Mondelez International Company uses a process cost accounting system

and a weighted average cost flow assumption. A production department adds

materials at the beginning of the process and incurs conversion costs

uniformly throughout the process.

Data for the month of May are as follows:

Beginning work in

process inventory, 5/1 10,000 units (20% complete)

Units started into

Production 340,000 units

Ending work in

process inventory, 5/31 25,000 units (60% complete)

Instructions

Answer the following questions and show computations to support your

answers.

a. Prepare a schedule for May showing the physical unit flow and the

units to account for.

b. Compute the equivalent units of production for materials and

conversion costs for the month of May.

6. (9 points)show computations

Vera Bradley Inc. reports the following results for the month of

June:

Sales Revenue (20,000 units) $1,200,000

Variable costs 800,000

Fixed costs 300,000

Net income $ 100,000

Management of Vera Bradley has been assessing possible course of action

and have developed the following independent scenarios to pursue:

1. Reduce variable costs to 70% of sales.

2. Reduce fixed costs by $25,000.

3. Increase selling price by 6% with no change in total variable costs.

Instructions

Vera Bradley would like to select the scenario that would result in the

highest net income. Which scenario would you recommend and why? You must

show computations for each one and then state your conclusion.

Explanation / Answer

Part 1

Part 2

scenario 3 is recommended as it gives higher net income

Physical flow Schedule Units to Account for Units In BWIP (20% complete) 10000 Units Started during the period 340000 Total Units to account for 350000 Units to Account for Units Completed and tranfered out Started and Completed 315000 from beginning WIP 10000 325000 Units in EWIP (60% complete) 25000 Total Units to account for 350000

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