Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production...
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Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks) Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks) Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks) Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks) Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks) Furniture Mart manufactures and sells a range of furniture. The company follows a just- in-time production philosophy, which means that it only buys materials on a need basis for production and it does not carry work-in-progress inventory. During the last financial year, Furniture Mart reported the following information: Administrative costs $ 55,950 Advertising and promotion expenses 70,000 Commissions paid to sales personnel 15,000 Cost of finished goods inventory on hand at the start of the year 90,000 Cost of finished goods inventory on hand at the end of the year 115,000 Cost of employee idle time 20,000 Depreciation and other expenses on factory building Direct materials used in production Overtime premiums paid to workers Sales office expenses Indirect salary costs Salary costs of workers (time spent in production activities) 170,000 500,000 10,000 25,000 75,000 250,000 Sales revenue 1,500,000 Furniture Mart's management accountant is particularly worried about what she perceives to be the high cost of administration. She decides to investigate the relationship between the number of invoices (both receivable and payable) processed and the costs of administration. During the last financial year, the following administration costs were incurred: No. of No. of Month Admin cost Month Admin cost invoices invoices Jan 220 $3,150 Jul 440 $4,450 Feb 280 $3,050 Aug 620 $8,150 Mar 330 $3,750 470 $5,150 Sep Oct Apr May 410 $5,050 440 $4,900 440 $4,400 Nov 450 $4,500 $5,900 $3,500 Jun Required: 600 Dec 300 (a) Prepare a schedule of cost of goods manufactured and cost of goods sold. (b) Prepare an income statement. Depreciation and other expenses on factory building ($170,000) includes $20,000 as the cost of electricity and it has been classified as a semi-variable cost by the management accountant. Identify possible reasons for this cost classification by the management accountant. (c) (d) Use the high-low method to estimate the cost function for administrative costs and predict the administrative costs for a month where 300 invoices are processed. (e) Furniture Mart expects number of deliveries to be the cost driver of the company's transportation costs. The results of the regression analysis to estimate transportation costs are as follows: Regression Statistics Multiple R R Square Adjusted R Square 0.789 0.645 0.598 Standard Error 110.514 Observations 9. Coefficients Standard P-value Еrror Intercept 246.15 325.394 0.454 Number of deliveries 2.63 0.647 0.001 Interpret the above regression output, and construct a regression equation to describe the relationship between transportation cost and number of deliveries. Explain how confident you are with the cost equation in estimating future transportation costs. (8 + 4 + 3 + 6 + 4 = 25 marks)
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A Cost of Goods manufactured Direct material used in Production 500000 Salary cost of workers 250000 ... View the full answer
Related Book For
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
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