Auckland Teddy Bears Manufacturers manufactures stuffed teddy bears being sold locally and internationally. The company currently...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Auckland Teddy Bears Manufacturers manufactures stuffed teddy bears being sold locally and internationally. The company currently makes use of an absorption costing system on a First-in-first-out basis. At the last board meeting the Board asked questions about the difference between a Direct and an absorption costing system. You were requested to discuss these differences at the next board meeting at the end of the month (April 2020); using actual figures. The following actual information was drawn from the company's accounting system: ● Finished goods produced: Month April 2020 May 2020 Units 50 000 60 000 Opening stock - Finished goods: Month Units April 2020 May 2020 June 2020 March 2020 April 2020 • Closing stock - Work-in-process: Month Units Item Linen Stuffing 5 000 6 000 5 500 April 2020 June 2020 All material needed during production is added at the beginning of the process; while conversion cost incurs evenly throughout the manufacturing process. Variable cost represents 80% of the total value of the Work-in-process inventory. • Direct material: Actual usage for April 2020 37 500 meter 25 tons Item Value (R) 12 300 15 000 13 500 5 000 102 125 2 500 49 500 Linen Stuffing Value (R) Linen Stuffing Stage of completion in process The standard usage per Kiwi teddy bear is 1.25 meter of linen and 500 gram of stuffing. • Opening stock - Direct material: Month Actual purchase price 75% 25% R85.00 per meter R35.00 per kilogram Units 3 550 meter 2 600 kilogram 4 200 meter 2 850 kilogram Value (R) 377 800 45 500 ? 5/8 ? Direct labour: The actual direct labour cost totalled to R1 024 000 for the month of April 2020 for an actual quantity of 51 200 direct labour hours worked. The company budgets one direct labour hour to complete one Kiwi teddy bear from start to finish. The company planned to pay his direct labourers R20.00 per hour. • Manufacturing overhead: It is the company's policy to allocate manufacturing overhead using direct labour hours worked as an allocation base. The cost formula used for the allocation of manufacturing overhead is as follows: Y = R85 000 + 5X Actual manufacturing overhead totalled to R355 000 for the month of April 2020, of which R265 000 is variable. • Production cost: Fixed cost and variable cost per unit remained constant for the three months (April, May and June 2020) for the finished goods produced. Sales and administration cost: The cost to company for the accountants and administrative clerks is R78 000 for the month of April 2020. The sales personnel work on a commission only basis and receives a commission of 10% on sales. The sales price for the second quarter of 2020 (April to June 2020) was agreed upon at R250 per Kiwi teddy bear. a) prepare a statement of comprehensive income for the month using absorption costing method. round of to two decimal places where necessary b) prepare a statement of comprehensive income for the month using direct costing method. round of to two decimal places where necessary Auckland Teddy Bears Manufacturers manufactures stuffed teddy bears being sold locally and internationally. The company currently makes use of an absorption costing system on a First-in-first-out basis. At the last board meeting the Board asked questions about the difference between a Direct and an absorption costing system. You were requested to discuss these differences at the next board meeting at the end of the month (April 2020); using actual figures. The following actual information was drawn from the company's accounting system: ● Finished goods produced: Month April 2020 May 2020 Units 50 000 60 000 Opening stock - Finished goods: Month Units April 2020 May 2020 June 2020 March 2020 April 2020 • Closing stock - Work-in-process: Month Units Item Linen Stuffing 5 000 6 000 5 500 April 2020 June 2020 All material needed during production is added at the beginning of the process; while conversion cost incurs evenly throughout the manufacturing process. Variable cost represents 80% of the total value of the Work-in-process inventory. • Direct material: Actual usage for April 2020 37 500 meter 25 tons Item Value (R) 12 300 15 000 13 500 5 000 102 125 2 500 49 500 Linen Stuffing Value (R) Linen Stuffing Stage of completion in process The standard usage per Kiwi teddy bear is 1.25 meter of linen and 500 gram of stuffing. • Opening stock - Direct material: Month Actual purchase price 75% 25% R85.00 per meter R35.00 per kilogram Units 3 550 meter 2 600 kilogram 4 200 meter 2 850 kilogram Value (R) 377 800 45 500 ? 5/8 ? Direct labour: The actual direct labour cost totalled to R1 024 000 for the month of April 2020 for an actual quantity of 51 200 direct labour hours worked. The company budgets one direct labour hour to complete one Kiwi teddy bear from start to finish. The company planned to pay his direct labourers R20.00 per hour. • Manufacturing overhead: It is the company's policy to allocate manufacturing overhead using direct labour hours worked as an allocation base. The cost formula used for the allocation of manufacturing overhead is as follows: Y = R85 000 + 5X Actual manufacturing overhead totalled to R355 000 for the month of April 2020, of which R265 000 is variable. • Production cost: Fixed cost and variable cost per unit remained constant for the three months (April, May and June 2020) for the finished goods produced. Sales and administration cost: The cost to company for the accountants and administrative clerks is R78 000 for the month of April 2020. The sales personnel work on a commission only basis and receives a commission of 10% on sales. The sales price for the second quarter of 2020 (April to June 2020) was agreed upon at R250 per Kiwi teddy bear. a) prepare a statement of comprehensive income for the month using absorption costing method. round of to two decimal places where necessary b) prepare a statement of comprehensive income for the month using direct costing method. round of to two decimal places where necessary
Expert Answer:
Answer rating: 100% (QA)
a Auckland Teddy Bears Manufacturers Statement of Comprehensive Income For the Month ... View the full answer
Related Book For
Managerial Decision Modeling with Spreadsheets
ISBN: 978-0136115830
3rd edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair
Posted Date:
Students also viewed these accounting questions
-
You were requested to personally deliver your auditors report to the board of directors of Sebal Manufacturing Corporation and answer questions posed about the financial statements. While reading the...
-
JYD Corporation uses an absorption costing system for internal reporting purposes. At present, however, it is considering to use the variable costing system. Following are some data regarding JYD...
-
The Mavis Company uses an absorption costing system based on standard costs. Total variable manufacturing cost, including direct material cost, is $3 per unit; the standard production rate is 10...
-
Conduct an internal and external analysis of yourself in the current business industry. examples: you are an accounting major so your environment is the cpa job market. you are a finance major so...
-
You have been asked to account for a plant asset exchange on the books of the Ecara Video Game Company. On January 1, 2010, Ecara acquired a plastic extruding machine at a cost of $ 260,000. This...
-
Which of F 2 (g) and I 2 (g) is likely to have the higher standard molar entropy at 298K?
-
1. Can one person really understand all of the legal issues mentioned at the beginning of this chapter? For example, can a business executive know about insider trading and employment law and...
-
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2014, were as follows: a. Issued 15,000 shares of $20 par common stock at $30, receiving cash. b....
-
Victoria Company, Lid.'s statement of financial position at December 31, 2016, is presented below. Search ... VICTORIA COMPANY, LTD. Statement of Financial Position December 31, 2016 Inventory E...
-
Three-Month Project NOTE! Templates needed Ampersand, Inc., is a small business that operates in Somerset, VT The company is located at 732 Appalachian Way, Somerset, VT 05363. Its federal Employer...
-
Mr. Amer started his Car Repair Business in Muscat in June 2020. During the month of June, the following transactions occurred: June I Amer opened the business by investing OMR 300,000. June 2...
-
Fill in the Blank. The vibration of a system under external forces is called __________ vibration.
-
Fill in the Blank. The vibration of a system under initial conditions only is called __________ vibration.
-
Researchers studying the STAR data report anecdotal evidence that school principals were pressured by some parents to place their children in the small classes. Suppose some principals succumbed to...
-
Fill in the Blank. The equations of motion of a two-degree-of-freedom system are uncoupled only when the two masses are not __________ connected.
-
In his study of the effect of incarceration on crime rates, suppose Levitt had used the number of lawyers per capita as an instrument. Would this instrument be relevant? Would it be exogenous? Would...
-
The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the...
-
How can you tell from the vertex form y = a(x - h) 2 + k whether a quadratic function has no real zeros?
-
A small trucking company is determining the com-position of its next trucking job. The load master has his choice of seven different types of cargo, which may be loaded in full or in part. The...
-
Solve the following LP problem by using the graphical procedure and by using Excel: Minimize cost = 4X + 7 Y subject to the constraints 2X + 3y > 60 4X + 2y > 80 X <24 x,y >0
-
How do computers aid in solving LP problems today?
-
From the following balance sheets and further information you are to draw up a consolidated balance sheet as at 31 December \(19 \times 8\). P Balance Sheet as at 31 December 19X8 Fixed assets...
-
A From the following balance sheets and supplementary information you are to draw up a consolidated balance sheet as at 31 December 19X5. P Consolidated Balance Sheet as at 31 December 19X5...
-
\(\quad\) B Balance Sheet as at 31 December \(19 \times 7\) Investment in S: 60,000 shares bought on 31.12.19X6 121,000 Fixed assets 90,000 Less Depreciation for year 24,000 66,000 Current assets...
Study smarter with the SolutionInn App