Smart Technology Company had the following information during the previous year for one of its product lines:
Question:
Smart Technology Company had the following information during the previous year for one of its product lines:
Sales Price per Unit | $6000 |
Units in Beginning Inventory | 0 |
Units Started During the Year | 55,000 |
Units Sold | 52,000 |
Variable Costs per Unit: | |
Direct Materials | $145 |
Direct Labor | $200 |
Variable Overhead Costs | $75 |
Fixed Costs: | |
Fixed Overhead per Unit | $50 |
General and Administrative | $1,250,000 |
- Calculate the ending inventory value and prepare an income statement using absorption costing.
- Calculate the ending inventory value and prepare an income statement using variable costing.
Question 2
Flight Company recently hired you as a managerial accountant.Ithasn't used budgets in the past butis expecting significant growth in the next year and needs to get a loan to pay for the expansion. In order to help determine the amount of the loan needed, your manager asks you to prepare the following budgets:
- sales budget,
- production budget,
- direct materials purchases budget,
- direct labor budget, and
- overhead budget.
The estimates for the next year are as follows:
- Quarter 1 sales:520,000 units
- Quarter 2 sales:750,000 units
- Quarter 3 sales:900,000 units
- Quarter 4 sales:875,000 units
- Quarter 1 of the following year sales:475,000 units
- The price of the product:$30
- Beginning finished goods inventory:40,000 units
- The company policy is to have 10% of next quarter's sales in ending inventory.
- The product contains only two materials (Material A and Material B).
- The product requires three units of Material A costing $3.
- The product requires one unit of Material B costing $1.
- The beginning materials inventory for Material A is 250,000 units.
- The beginning materials inventory for Material B is 175,000 units.
- Company policy is to have 15% of next quarter's material needs in ending inventory.
- Desired ending inventory for the year in Material A is 475,000 units.
- Desired ending inventory for the year in Material B is 225,000 units.
- The direct labor required for each product is 0.25 hours at an average rate of $10 per hour.
- The variable overhead rate is $4 per direct labor hour.
- Fixed overhead is expected to be $45,000 per quarter.
Question 3
You have recently been hired by Window Magic Company, which produces windows for personal homes. Based on the following information, prepare a flexible budget for 5,000; 6,000; and 7,000 units.
Direct Materials per Unit | $14.00 |
Direct Labor per Unit | $18.00 |
Variable Overhead Cost per Unit | $7.00 |
Fixed Overhead | $125,000 per year |
Question 4
Higher Education Company has two divisions with the following information:
Division 1 | Division 2 |
Sales: $3,500,000 | Sales: $2,500,000 |
Operating Income: $800,000 | Operating Income: $750,000 |
Assets Jan. 1: $5,500,000 | Assets Jan. 1: $3,000,000 |
Assets Dec. 31: $6,000,000 | Assets Dec. 31: $3,500,000 |
The minimum required rate of return for the company for all its divisions is 15%, and its cost of capital is 10%. The company has a tax rate of 20%. Calculate the following ratios for both divisions:
- return on investment,
- margin,
- turnover,
- residual income, and
- economic value added.
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer