Magnificent Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Magnificent Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $750,000 of cash from the owners. 2. Purchased $270, eee of manufacturing equipment. The equipment has a $30,000 salvage value and a four-year useful life. The company uses straight-line depreciation. 3. The company started and completed 5,000 modems. Direct materials purchased and used amounted to $40 per unit. 4. Direct labor costs amounted to $25 per unit. 6. The cost of manufacturing supplies used amounted to $4 per unit. The company paid $50,000 to rent the manufacturing facility. 7. Magnificent sold all 5,000 units at a cash price of $120 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) 3. The sales staff was paid a $6 per unit sales commission. b. Paid $39,000 to purchase equipment for administrative offices. The equipment was expected to have a $3,000 salvage value and a three-year useful life. 1. Administrative expenses consisting of office rental and salaries amounted to $71,950. Required a. Based on these data, Identify each cost incurred by the company as (1) fixed versus variable relative to the number of units produced and sold; and (2) product versus selling, general, and administrative (SG&A). The solution for the first Item is shown as an example. b. Complete the following table to indicate the product cost per unit assuming levels of production of 5,000, 6,000, 7,000, and 8,000. Complete this question by entering your answers in the tabs below. Required A Required B Based on these data, identify each cost incurred by the company as (1) fixed versus variable relative to the number of units produced and sold; and (2) product versus selling, general, and administrative (SG&A). The solution for the first item is shown as an example. Cost Item Depreciation on manufacturing equipment Direct materials Direct labor Manufacturing supplies Rent on manufacturing facility Sales commissions Depreciation on administrative equipment Administrative costs (rent and salaries) Cost Behavior Type of Cost Fixed cost Product cost Variable cost Product cost Variable cost Product cost Variable cost Product cost Fixed cost Product cost Variable cost SG&A cost SG&A cost Fixed cost SG&A cost < Required A Required B Fixed cost Complete this question by entering your answers in the tabs below. Required A Required B Complete the following table to indicate the product cost per unit assuming levels of production of 5,000, 6,000, 7,000, and 8,000. Note: Do not round intermediate calculations. Round "Cost per unit" to 2 decimal places. Production Levels Per Unit 5,000 Variable cost $ 69 Fixed cost Total (Cost of goods sold) Cost per unit 6,000 7,000 8,000 $ 455,000 $ 91.00 < Required A Required B > Magnificent Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $750,000 of cash from the owners. 2. Purchased $270, eee of manufacturing equipment. The equipment has a $30,000 salvage value and a four-year useful life. The company uses straight-line depreciation. 3. The company started and completed 5,000 modems. Direct materials purchased and used amounted to $40 per unit. 4. Direct labor costs amounted to $25 per unit. 6. The cost of manufacturing supplies used amounted to $4 per unit. The company paid $50,000 to rent the manufacturing facility. 7. Magnificent sold all 5,000 units at a cash price of $120 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) 3. The sales staff was paid a $6 per unit sales commission. b. Paid $39,000 to purchase equipment for administrative offices. The equipment was expected to have a $3,000 salvage value and a three-year useful life. 1. Administrative expenses consisting of office rental and salaries amounted to $71,950. Required a. Based on these data, Identify each cost incurred by the company as (1) fixed versus variable relative to the number of units produced and sold; and (2) product versus selling, general, and administrative (SG&A). The solution for the first Item is shown as an example. b. Complete the following table to indicate the product cost per unit assuming levels of production of 5,000, 6,000, 7,000, and 8,000. Complete this question by entering your answers in the tabs below. Required A Required B Based on these data, identify each cost incurred by the company as (1) fixed versus variable relative to the number of units produced and sold; and (2) product versus selling, general, and administrative (SG&A). The solution for the first item is shown as an example. Cost Item Depreciation on manufacturing equipment Direct materials Direct labor Manufacturing supplies Rent on manufacturing facility Sales commissions Depreciation on administrative equipment Administrative costs (rent and salaries) Cost Behavior Type of Cost Fixed cost Product cost Variable cost Product cost Variable cost Product cost Variable cost Product cost Fixed cost Product cost Variable cost SG&A cost SG&A cost Fixed cost SG&A cost < Required A Required B Fixed cost Complete this question by entering your answers in the tabs below. Required A Required B Complete the following table to indicate the product cost per unit assuming levels of production of 5,000, 6,000, 7,000, and 8,000. Note: Do not round intermediate calculations. Round "Cost per unit" to 2 decimal places. Production Levels Per Unit 5,000 Variable cost $ 69 Fixed cost Total (Cost of goods sold) Cost per unit 6,000 7,000 8,000 $ 455,000 $ 91.00 < Required A Required B >
Expert Answer:
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
Posted Date:
Students also viewed these accounting questions
-
Magnificent Modems, Inc., makes modem cards that are used in notebook computers. The company completed the following transactions during 2010. All purchases and sales were made with cash. 1. Acquired...
-
Shreya commutes in a CNG fitted van to school every day along with many other students. She told the van driver to get the CNG connection certified and timely checked it for any leakage or loose...
-
In Problems 1-5, find the directional derivative of ( at the point p in the direction of a. 1. ((x, y) = x2y; p = 1, 2); a = 3i - 4j 2. ((x, y) = y2 ln x; p = 1, 4); a = i - j 3. ((x, y) = 2x2 + xy -...
-
You just won your state lottery and will be receiving a check for $1 million. You have always wanted to own your own business and have noticed the increase in the number of food trucks in your local...
-
Pick a product like Cadillac or Sara Lee Deli products or service like Mr. Clean Performance Car Wash or a car and home insurance company that is offered in a limited number of countries. Assess the...
-
The Ombudsman Foundation is a private not-for-profit organization providing training in dispute resolution and conflict management. The Foundation had the following pre-closing trial balance at...
-
The bar BC exerts a force on the cables at B that is directed along the line from C to B. (Figure 1) The mass of the suspended load is 190 kg. Suppose that = 20 and = 20. Part A What is the tension...
-
MNO makes a tender offer for PRS at 1.5 MNO shares per PRS share. MNO was trading at $40 per share prior to the announcement and fell to $38 on the announcement. PRS was trading at $40 per share...
-
Material requirement planning (MRP) is a computer-based production planning and inventory control system. You are serving as an operations manager for a company of your choice. You are tasked with...
-
Write statement best describes the comparison of fraud and abuse?
-
Answer the following questions with class definition (object) defined below: class Room { private String my_roomName; private int desiredTemp; // desired temperature setting private int actualTemp;...
-
A program SentenceReverser that reverses the words in a sentence by reading words into a Stack until you find a period. Your program should then pop off the words from the stack. Begin your reverse...
-
Brian's non-PAR insurance allowed $75 for an office visit charge of $100. He has met the annual deductible and has a 60/40 co-insurance. What is Brian's out-of-pocket responsibility?
-
The following data relate to labor cost for production of 20,000 cellular telephones: Actual: 8,450 hrs. at $22.50 Standard: 8,400 hrs. at $23.00 a. Determine the direct labor rate variance, direct...
-
H.J. Heinzs annual dividends were as follows: 1990 ..............$0.540 1991.............. 0.620 1992 .............. 0.700 1993.............. 0.780 1994 .............. 0.860 1995 .............. 0.940...
-
Enter up a columnar purchases day book with columns for the various expenses for J. Still for the month from the following information on credit items. 2016 January f 1 Bought goods from H. Graham...
-
A Enter up a columnar purchases day book with columns for the various expenses for F. Graham for the month from the following information on credit items. 2016 June Bought goods from J. Syme 4 Bought...
-
Enter up the relevant accounts in the purchases and general ledgers from the columnar purchases day book you completed for Review Question 20.4A. Data From Review Question 20.4A 20.4A Enter up a...
Study smarter with the SolutionInn App