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Brown, Inc., a builder, has a material-handling department which has studied its cost for the past year and has determined the following Month January February March April Activity Level (pellets Material Handling of material) Department Ca 4,750 $11,700 4,200 11,500 4,050 12,200 3,000 10.002 May 5.900 13,300 Junie 5,800 13,600 July 5,400 12.000 August 4,600 11.400 September 6400 12,500 October 3,100 10.038 November 3,400 LL.200 December 3,900 11.350 Required: Show all work. (See point allocation below; total 9 points) 1. Construct an Excel spreadsheet to perform a least-squares regression to estimate the material- handling department's cost behavior. (4 points) 2. Provide an equation to express the results of tus estimation method. (1 point) 3. Use your Excel spreadsheet from requirement (2) to compute the value for the regression. What does this R' meat? (2 points) 4 Predict the department's material-handling costs for a month when 8,500 units of activity are recorded. Use your cost equations to make the prediction. (2 points) PROBLEM 2 (10 points) Prepare the journal entry for each transaction in good form. The Company's fiscal year ends December 31st. (2 points each) 1. Purchased a building by paying $100,000 down, giving the seller 1,000 shares of the company's $3 par value common stock which was actively trading on the market at $10.50 per share, and taking out a $500,000 mortgage. 2. In November, received $2,000 of office supplies. The vendor requires payment in 30 days. 3. Provided services in December and mailed the client an invoice for $75,000 due in January. 4. Paid for the supplies received in November. 5. Received utility bill for $3,500 for use in December. Bill is due January 30 of next year. PROBLEM 3 (9 POINTS) Use the below account balances from ABC Corporation's ledger at December 31, 2023 to prepare a multiple-step income statement (3 points); a statement of shareholders' equity (2 points); and a classified balance sheet (4 points) in good form. Accounts Payable 3,200 Accounts Receivable 8,000 Accumulated Depreciation 1,600 Building & Equipment 6,400 Cash 1,920 Contributed Capital 4,096 Cost of Goods Sold 14,400 Dividends Declared 1,120 Depreciation Expense 1,200 Income Tax Expense 1,760 Inventory 5,120 Land 1,920 Mortgage Payable (LT) 4,480 Other Operating Expenses 880 Prepaid Expenses 160 Retained Earnings, 1/01/23 3,840 Salaries Expense 960 Salaries Payable 64 Sales Revenue 24,000 Unearned Revenue 2,560 Problem 4 (7 points) Durango Company manufactures and sells a product with the following price and cost data for the year just ended: Selling price Variable manufacturing costs Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Number of units manufactured and sold $42 per $18 per unit unit $6 per unit $455,000 per year $245,000 per year 80,000 units Required: Show all calculations. (See point allocation below; total 5 points) 1. Compute Durango Company's break-even point in units for the year just ended. (2 points) 2. Compute the NOI for the year just ended. (2 points) 3. Compute the sales dollars that Durango Company would need to earn a target profit of $625,000 (ignore taxes). (1 point) 4. Due to competition, Durango is considering lowering the unit sales price by 12% next year and increasing fixed marketing expenses by $60,000. If these changes are made, how many units must be sold next year to earn a target profit of $625,000 (ignore taxes)? (2 points) Problem 5 (8 points) Brown Company is planning to introduce a new product which has the following variable unit costs: • direct materials == $18 per unit • direct labor cost = $35 per unit • variable manufacturing overhead = $15 per unit variable selling and administrative expense = $5 per unit. The annual fixed manufacturing overhead related to the product is $200,000 and its annual fixed selling and administrative expense is $60,000. Brown Company expects to produce and sell 5,000 units of the new product annually. The new product would require an investment of $300,000 and has a required return on investment of 12%. Brown would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. Required: Show all work to earn credit. a. Determine the unit product cost for the new product. (2 points) b. Determine the markup percentage on absorption cost for the new product. (3 points) c. Determine the selling price for the new product using the absorption costing approach. (3 points) Problem 6 (7 points) Fantasy Company is developing a new product. To be competitive, the price of the new product that Fantasy Company is developing cannot exceed $12. Fantasy's required rate of return is 15% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 1,000,000 units of product that Fantasy's management team thinks it can sell each year at the $12 price. Required: Show all work to earn credit. Please compute the target cost of one unit of product. (7 points) Brown, Inc., a builder, has a material-handling department which has studied its cost for the past year and has determined the following Month January February March April Activity Level (pellets Material Handling of material) Department Ca 4,750 $11,700 4,200 11,500 4,050 12,200 3,000 10.002 May 5.900 13,300 Junie 5,800 13,600 July 5,400 12.000 August 4,600 11.400 September 6400 12,500 October 3,100 10.038 November 3,400 LL.200 December 3,900 11.350 Required: Show all work. (See point allocation below; total 9 points) 1. Construct an Excel spreadsheet to perform a least-squares regression to estimate the material- handling department's cost behavior. (4 points) 2. Provide an equation to express the results of tus estimation method. (1 point) 3. Use your Excel spreadsheet from requirement (2) to compute the value for the regression. What does this R' meat? (2 points) 4 Predict the department's material-handling costs for a month when 8,500 units of activity are recorded. Use your cost equations to make the prediction. (2 points) PROBLEM 2 (10 points) Prepare the journal entry for each transaction in good form. The Company's fiscal year ends December 31st. (2 points each) 1. Purchased a building by paying $100,000 down, giving the seller 1,000 shares of the company's $3 par value common stock which was actively trading on the market at $10.50 per share, and taking out a $500,000 mortgage. 2. In November, received $2,000 of office supplies. The vendor requires payment in 30 days. 3. Provided services in December and mailed the client an invoice for $75,000 due in January. 4. Paid for the supplies received in November. 5. Received utility bill for $3,500 for use in December. Bill is due January 30 of next year. PROBLEM 3 (9 POINTS) Use the below account balances from ABC Corporation's ledger at December 31, 2023 to prepare a multiple-step income statement (3 points); a statement of shareholders' equity (2 points); and a classified balance sheet (4 points) in good form. Accounts Payable 3,200 Accounts Receivable 8,000 Accumulated Depreciation 1,600 Building & Equipment 6,400 Cash 1,920 Contributed Capital 4,096 Cost of Goods Sold 14,400 Dividends Declared 1,120 Depreciation Expense 1,200 Income Tax Expense 1,760 Inventory 5,120 Land 1,920 Mortgage Payable (LT) 4,480 Other Operating Expenses 880 Prepaid Expenses 160 Retained Earnings, 1/01/23 3,840 Salaries Expense 960 Salaries Payable 64 Sales Revenue 24,000 Unearned Revenue 2,560 Problem 4 (7 points) Durango Company manufactures and sells a product with the following price and cost data for the year just ended: Selling price Variable manufacturing costs Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Number of units manufactured and sold $42 per $18 per unit unit $6 per unit $455,000 per year $245,000 per year 80,000 units Required: Show all calculations. (See point allocation below; total 5 points) 1. Compute Durango Company's break-even point in units for the year just ended. (2 points) 2. Compute the NOI for the year just ended. (2 points) 3. Compute the sales dollars that Durango Company would need to earn a target profit of $625,000 (ignore taxes). (1 point) 4. Due to competition, Durango is considering lowering the unit sales price by 12% next year and increasing fixed marketing expenses by $60,000. If these changes are made, how many units must be sold next year to earn a target profit of $625,000 (ignore taxes)? (2 points) Problem 5 (8 points) Brown Company is planning to introduce a new product which has the following variable unit costs: • direct materials == $18 per unit • direct labor cost = $35 per unit • variable manufacturing overhead = $15 per unit variable selling and administrative expense = $5 per unit. The annual fixed manufacturing overhead related to the product is $200,000 and its annual fixed selling and administrative expense is $60,000. Brown Company expects to produce and sell 5,000 units of the new product annually. The new product would require an investment of $300,000 and has a required return on investment of 12%. Brown would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. Required: Show all work to earn credit. a. Determine the unit product cost for the new product. (2 points) b. Determine the markup percentage on absorption cost for the new product. (3 points) c. Determine the selling price for the new product using the absorption costing approach. (3 points) Problem 6 (7 points) Fantasy Company is developing a new product. To be competitive, the price of the new product that Fantasy Company is developing cannot exceed $12. Fantasy's required rate of return is 15% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 1,000,000 units of product that Fantasy's management team thinks it can sell each year at the $12 price. Required: Show all work to earn credit. Please compute the target cost of one unit of product. (7 points)
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Problem 1 9 points 1 Construct an Excel spreadsheet to perform a leastsquares regression to estimate the material handling departments cost behavior 4 points I have created an Excel spreadsheet to per... View the full answer
Related Book For
Managerial Decision Modeling With Spreadsheets
ISBN: 9780136115830
3rd Edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair
Posted Date:
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