Part 1

a) Lenox Corporation Manufacturing Statement For Month Ended November 31, 2012 Direct materials Beginning raw materials inventory Raw material purchases Raw materials available for use Less: Ending raw materials inventory Total direct materials used Direct labor Factory Overhead Indirect labor Factory supplies used Factory utilities Repairs-- Factory equipment Rent-- Factory equipment Depreciation-- Factory equipment Total factory overhead Total manufacturing costs Add: Beginning goods in process inventory Total cost of goods in process Less: Ending goods in process inventory Total cost of goods manufactured $ $ $ $ 38,000 184,500 222,500 52,700 $ $ $ $ $ $ $ $ 48,000 16,800 10,200 4,500 47,000 16,800 $ $ $ $ $ $ 143,300 355,100 52,700 407,800 42,000 365,800 169,800 42,000

Part 2a)
Date Dec. 2 Dec. 8 Dec. 14 Total

Raw materials used Total Job J57 Job K52 $ 5,061 $ 3,374 $ 1,687 $ 1,059 $ 706 $ 353 $ 3,459 $ 2,306 $ 1,153 $ 9,579 $ 6,386 $ 3,193

Date Dec. 3 Dec. 9 Dec. 15 Total

Direct labor used Total $ 99 $ 99 $ 99 $ 297

$ $ $ $

Job J57 66 66 66 198

Job K52 $ 33 $ 33 $ 33 $ 99

Predetermined overhead rate Estimated overhead costs $ 840,576 Estimated machine hours 2112 Overhead rate 39800% Applied overhead Machine hours Applied 8.5 $ 3,383 6 $ 2,388 14.5 $ 5,771

Job Job J57 Job K52 Total

Diret Materials Used Direct Labor Used Overhead Total Costs Units produced Per unit cost

Job J57 Job K52 $ 6,386 $ 3,193 $ 198 $ 99 $ 3,383 $ 2,388 $ 9,967 $ 5,680 237 142 $ 42.05 $ 40

Part 2b)
Date Dec. 1 Description Raw Materials Inventory Accounts Payable Goods in Process Factory Overhead Raw Materials Factory Payroll Cash Factory Overhead Cash Finished Goods Goods in Process Factory Overhead Cash Factory Overhead Property taxes Prepaid insurance Accumlated depreciation Debit 53200 53200 40000 3000 43000 65000 65000 9000 9000 50000 50000 12000 12000 36800 12000 8800 16000 Credit

Dec. 2

Dec. 12

Dec. 13

Dec. 18

Dec. 21

Dec. 31

2c)

Overhead has been underapplied.

Cost of Goods sold Factory Overhead

3600 3600

Part 3a) Activity

Irrigation installation Machining Customer orders Selling

Cost Driver Estimated Overhead cost Measure of activity Labor hours $ 1,998,432 12,960 Machine hours $ 1,670,400 33,408,000 Number of orders $ 30,636 2,553 Number of sales calls $ 350,400 21,900 Activity used 200 300 20 50 Rate $ $ $ $ Assigned Overhead $ 30,840.00 $ 15.00 $ 240.00 $ 800.00

c) Cost drivers
Labor hours Machine hours Number of orders Number of sales calls

154.20 0.05 12.00 16.00

Part 4a) Units sold

Price per unit Fixed costs 1) Sales (696000 x $4.20) Variable expenses Contribution Margin CM per unit CM Ratio 2) Break even point $ $ $ $ $ $

696000 4.20 683,256 2,923,200 1,900,080 1,023,120 1.47 35% 464,800 $1,952,160 $971,040 33% 339,864 $ 373,850.40 719,120 units

in units= in dollars= in dollars as a ratio $

3) Margin of safety

4) Target Income Required Sales

373850.40 + 683,256 = 1.47 23,120 units 51,000 214,200 139,230 74,970 New 491740 13,031,110 6,863,512 2,651,657 2,050,140 794,950 670,851 $ $ $ $ $ $

Additional Sales required 5) New Units Additional Revenue = Additional Expenses= Additional Income

$ $ $ Current

b) 1)
Unit Sales Sales Variable Costs Variable Selling Fixed Costs Fixed Selling Net Income

$ $ $ $ $ $

540914 14,442,403.80 7,928,503.00 2,916,822.70 2,050,140.00 794,950.00 751,988

Net increase in income

81,137

Overhead rate $ 154.20 $ 0.05 $ 12.00 $ 16.00

Part 5 1)

Small Set Sales Variable Cost Contribution Margin Machine hours CM per MH $ $ $ $ 77 50 27 9 3.00

Large Set $ $ $ $ 152 100 52 20 2.60

Produce as much of the small set as possible

2) a)

Units Sales Variable costs Contribution margin Fixed Costs Net Income Contribution margin ratio Operating leverage Break-even Margin of safety $ $ $ $ $

4000 170,000 51,000 119,000 94,122 24,878 0.7 4.78 134,460 21%

3)

Special Order 1 Unit sales Incremental revenue Incremental costs Incremental income Special Order 2 Unit Sales Incremental revenue Incremental costs Incremental income

15000 39000 36000 3000

2000 6200 4600 1600

Part 5 Item Metal Plastic Rubber Per Unit 1 lb 12 oz 4 oz

Materials Cost 0.63 per lb 1 per lb 0.88 per lb

Direct Labor Item Labor Unit 15 min Cost 8 per hour 231000 0.80 229000 0.78 lbs per lb lbs per lb Standard Hours Standard Rate Actual Hours Actual Rate 0.25 8 0.3 7.8

Standard Quantity Standard Price Actual Quantity Actual Price

a) b) c) d) e) f) g)

Materials price variance $ 4,580 F Materials quantity variance 1600 F Total materials variance 6180 F Labor price variance $ 0.06 F Labor quantity variance 0.4 U Total labor variance $ 0.34 U Total Overhead variance $ 4,888 U

hours per hour hours per hour

Part 6
a) 1) Annual net cash flow Total Present Value Initial Investment Net Present Value 2) Payback Period (Old) Old Backhoes $ 30,425 $ 182,944.81 $ 55,000 $ 127,944.81 55000 30425 158000 43900 $ $ $ $ 4) Present Value Factor (Old) Present Value Factor (New) Internal Rate of Return = New Backhoes 43900 $ 300,902.74 $ 158,000 $ 142,902.74 1.81 years

Payback Period (New)

3.60 years

3) Profitability index

127,944.81 55,000 142,902.74 158,000 1.8077 3.5991 7% 12%

2.33

0.90

Present Value of annuity 5.7466

0.5403

Part 6.2

Cookies & Coffee Creation INC. Statement of Cash Flows For the Period ending October 31, 2018 Cash flows from operating activities Net Income $ 37,002 Increase in Accounts receivable $ (540) Increase in Inventory $ (447) Decrease in Prepaid expenses $ 250 Decrease in Accounts payable $ (1,300) Increase in Interest payable $ 188 Increase in Income taxes payable $ 2,051 Increase in salaries and wages payable $ 5,970 Depreciation Expense $ 17,600 Loss on disposal of plant assets $ 2,500 Net cash provided by operating activities Cash flows from investing activities Cash received for Disposal of Equipment $ 500 Cash paid for Purchase of Equipment $ (19,000) Net cash used by investing activities Cash flows from financing activities Cash paid on note payable $ (2,000) Cash received from issuing stock $ 1,000 Cash paid for Dividends $ (27,000) Net cash used by financing activities Net Increase in Cash Beginning Cash Balance Ending Cash Balance Current Cash Balance

63,274

(18,500)

$ $ $ $ $

(28,000) 16,774 5,550 22,324 16,774