No 1

Foxwood Company (meatl and woodcutting manufacture)

Sandpaper $ 2,000.00
Materials-handling cost $ 70,000.00
Lubricants and coolants $ 5,000.00
Miscellaneous indirect manufacturing labor $ 40,000.00
Direct manufacturing labor $ 300,000.00
Direct materials inventory Jan 1, 2011 $ 40,000.00
Direct materials inventory Dec 31, 2011 $ 50,000.00
Finished goods inventory Jan 1, 2011 $ 100,000.00
Finished goods inventory Dec 31, 2011 $ 150,000.00
Work in process inventory Jan 1, 2011 $ 10,000.00
Work in process inventory Dec 31, 2011 $ 14,000.00
Plant leasing costs $ 54,000.00
Depreciation-plant equipment $ 36,000.00
Property taxes on plant equipment $ 4,000.00
Fire insurance on plant equipment $ 3,000.00
Direct materials purchased $ 460,000.00
Revenues $ 1,360,000.00
Marketing promotions $ 60,000.00
Marketing salaries $ 100,000.00
Distribution costs $ 70,000.00
Customer service costs $ 100,000.00
Answer: a.
Income Statement

Debit
Revenues
Cost of Goods Sold
Finished goods inventory Jan 1, 2011 $ 100,000.00
Cost of Good Manufacturing (COGM) $ 960,000.00
Cost of goods available for sale $ 1,060,000.00
Deduct
Finished goods inventory Dec 31, 2011 $ 150,000.00
Gross Margin
Marketing promotions $ 60,000.00
marketing salaries $ 100,000.00
Distribution costs $ 70,000.00
Customer-service costs $ 100,000.00
Operating income

Schedule of COGM

Debit
Direct Materials
Direct materials inventory Jan 1, 2011
Direct materials purchased
Cost of direct materials available for use
Direct materials inventory Dec 31, 2011
Direct materials used

Direct manufacturing labor

Total Direct cost

Indirect manufacturing costs

Sandpaper
Materials-handling cost
Lubricants and coolants
Miscellaneous indirect manufacturing labor
Plant leasing costs
Depreciation-plant equipment
Property taxes on plant equipment
Fire insurance on plant equipment
$ 2,000.00
$ 70,000.00
$ 5,000.00
$ 40,000.00
$ 54,000.00
$ 36,000.00
$ 4,000.00
$ 3,000.00

Manufacturing costs incurred during 2011

Work in process inventory Jan 1, 2011
Total manufacturing costs to account for
Work in process inventory Dec 31, 2011
COGM
 B.
Number of production 900000
Direct materials cost per unit $ 0.50
Credit Plant leasing cost per unit $ 0.06
$ 1,360,000.00
C.
Number of production 1000000
Direct materials cost per unit $ 0.50
Plant leasing cost per unit $ 0.05

$ 910,000.00
$ 450,000.00

$ 330,000.00
$ 120,000.00

Credit

$ 40,000.00
$ 460,000.00
$ 500,000.00
$ 50,000.00
$ 450,000.00

$ 300,000.00
$ 750,000.00

$ 214,000.00

$ 964,000.00
$ 10,000.00
$ 974,000.00
$ 14,000.00
$ 960,000.00
unit
variable cost
fixed cost

unit
variable cost
fixed cost
Chapter 3
Wembley Travel Agency
Ticket price (United Airlines) 900
Commission 10%
Commission 90 for revenue ticket agency
Fixed cost 14000 per month
Variable costs 20 per ticket purchased for a passanger
fee paid 15
No1
a. b.
Commission 10% to earn an operating income
Quantity of tickets required to
Selling price (United Airlines) 900 be sold
Fixed cost
Wembley Agency operating income
Selling price 90
Variable cost 20
Contribution margin 70
Fixed cost 14000

Breakeven number of ticket 200

No2
a.
Selling price 50
Variable cost 20
Contribution margin 30

Breakeven number of ticket 466.6666667

b.
Quantity of tickets require to be sold 700
 United Airlines
Revised payment schedule
pay travel agent 10% per ticket up to maximum 50
any ticket costing more than 500 generates only 50

7000

300
14000
7000
Endeavor Printing Inc

Materials Control
12/31/2011 15000

Work in Process Control

Finished Goods Control

12/31/2011 20000

1. Materials purchased
Direct materials 90000
materials inventory 20000
materials control 15000
material purchased 95000

2. COGS
Finished Goods inventory Control, December 31 2012 20000
Cost of Goods 180000
Finished Good Inventory January 31, 2012 15000
COGS 185000

3.Direct Manufacturing labor costs

Direct manufacturing labor rate 16 per labor hour
direct manufacturing labor cost 2000
hours 125 labor hours
total hours january 2500 hours
Direct manufacturing labor cost january 40000

4. Manufacturing Overhead allocated during January

Manufacturing overhead costs 600000
Direct manufacturing labor 400000
Manufacturing Overhead Rate 150 %
Manufacturing Overhead allocated during January 60000
 Wages Payable Control
1/31/2012 3000

Manufacturing Overhead Control

1/31/2012 57000

Costs of Good Sold

5. Balance, Wages Payable Control

Wages pay control 3000
gross plant payroll 52000
direct manufacturing labor 40000
other labor cost 10000
Wages payable 5000

6. Work in process control 31-Jan-12

direct material cost 8000
direct manufacturing labor 2000
manufacturing overhead 3000 150%*manufacturing overhead
Work in process control 13000

7. Work in process control 31-Dec-11

Cost of goods completed 180000
work in process 31-jan-2012 13000
Total direct materials 90000
Direct manufacturing cost 40000
Manufacturing overhead 60000
Work in process control 3000

8 Manufacturing overhead
Manufacturing overhead allocated 60000
Manufacturing overhead control 57000
Manufacturing overallocated 3000
Family Supermarkets (FS)
Goals Increase the size of its Memphis store

Soft drinks
Revenues $ 317,400.00
Cost of goods sold $ 240,000.00
cost of bottle returned $ 4,800.00
Number of purchase orders placed 144
Number of deliveries received 120
Hours of shelf stocking time 216
Items sold 50400

Activity Description of Activity

Bottle returns Returning of empty bottles to store
Ordering
Delivery
Shelf stocking
Customer support
Total

The allocation rate for store support cost

Total support cost $ 360,000.00
Total COGS $ 1,200,000.00
The allocation rate for store support cost $ 0.30

1. Operating income, operating income as a percentage of revenues for each product line
Soft Drinks
Revenues $ 317,400.00
COGS $ 240,000.00
Store support cost $ 72,000.00
Total cost (COGS+ Store Support Cost) $ 312,000.00
Operating income(revenues-Total cost) $ 5,400.00
Operating income/revenues 1.70

2. Operating income, operating income as a percentage of revenues for each product line
ABC system
Activity Cost Hierarchy
Bottle returns
Ordering
Delivery
Shelf stocking
Customer support

Soft Drinks
Revenues $ 317,400.00
COGS $ 240,000.00
Bottle returns $ 4,800.00
Ordering $ 14,400.00
Delivery $ 9,600.00
Shelf stocking $ 4,320.00
Customer support $ 10,080.00
Total Support cost $ 43,200.00
Total costs $ 283,200.00
Operating income $ 34,200.00
Operating income/revenues 10.78

Simple cost system

Soft Drinks 1.7
Fresh Produce 7.17
Packaged Food 3.30

Soft Drinks
Revenues 0.19
COGS
Bottle returns 4800.00
Activity
Ordering 0.23
Delivery 0.10
Shelf stocking 0.06
Customer support 0.08
 Fresh produce Package Food
$ 840,240.00 $ 483,960.00
$ 600,000.00 $ 360,000.00
$ - $ -
336 144
876 264
2160 1080
441600 122400

Total Support Costs Cost-Allocation Base

$ 4,800.00 Direct tracing to soft-drink line
$ 62,400.00 624 purchase order
$ 100,800.00 1260 deliveries
$ 69,120.00 3456 hours
$ 122,880.00 614400 items sold
$ 360,000.00

product line
Fresh Produce Package food
$ 840,240.00 $ 483,960.00
$ 600,000.00 $ 360,000.00
$ 180,000.00 $ 108,000.00
$ 780,000.00 $ 468,000.00
$ 60,240.00 $ 15,960.00
7.17 3.30
Total
$ 1,641,600.00
$ 1,200,000.00
$ 360,000.00
$ 1,560,000.00
$ 81,600.00
4.97

product line

Total support costs Cost-Allocation Base Overhead Allocation Rate

$ 4,800.00 Direct tracing to soft-drink line
$ 62,400.00 624 $ 100.00
$ 100,800.00 1260 $ 80.00
$ 69,120.00 3456 $ 20.00
$ 122,880.00 614400 $ 0.20

Fresh Produce Packaged Food Total

$ 840,240.00
$ 600,000.00
$ -
$ 33,600.00
$ 70,080.00
$ 43,200.00
$ 88,320.00
$ 235,200.00
$ 835,200.00
$ 5,040.00
0.60
$ 483,960.00 $ 1,641,600.00
$ 360,000.00 $ 1,200,000.00
$ - $ 4,800.00
$ 14,400.00 $ 62,400.00
$ 21,120.00 $ 100,800.00
$ 21,600.00 $ 69,120.00
$ 24,480.00 $ 122,880.00
$ 81,600.00 $ 360,000.00
$ 441,600.00 $ 1,560,000.00
$ 42,360.00 $ 81,600.00
8.75 4.97

ABC cost system

10.775
0.60
8.75

Fresh Produce packaged Food

0.51 0.29

0.00 0.00

0.54 0.23
0.70 0.21
0.72 0.20
0.72 0.20
per purchase order
per deliveries
per hours
per items sold
Standard costing system
Developing its flexible-budget amounts

finished unit 2000

Direct materials
number 4400 kg
7
Budgeted variable cost per jacket

Cost Category
Direct material costs
Direct manufacturing labor costs
Variable manufacturing overhead costs
Total variable costs

Budgeted and actual data

Budgeted fixed costs for production
Budgeted selling price
Budgeted production and sales
Actual production and sales

Level 1

Units sold
Revenues
Variable costs
Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Total variable costs
Contribution margin
Fixed costs
Operating income

Level 2 Analysis

Units sold
Revenues
Variable costs
Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Total variable costs
Contribution margin
Fixed costs
Operating income

Direct materials purchased an used

Square yards of cloth input purchased and used
Actual price incurred per square yard
Direct material cost
Direct manufacturing labors
1. Direct manufacturing labor-hours
2. Actual price incurrred per direct manufacturing labor hour
3. Direct manufacturing labor-costs

Price variances

Direct Cost Category

Direct materials
Direct manufacturing labor

Direct Cost Category

Direct materials
Direct manufacturing labor

Direct materials
Level 3
Level 2

Direct manufacturing labor

Level 3
Level 2
Variable cost per jacket
$ 60.00
$ 16.00
$ 12.00
$ 88.00

276000
120 per jacket
12000 jacket
10000 jacket

Actual Results Static Budget Variances

10000 2000
1250000 190000

621600 98400
198000 6000
130500 13500
950100 105900
299900 84100
285000 9000
14900 93100

Actual Results Static Budget Variances

$ 10,000.00 $ 2,000.00
$ 1,250,000.00 $ 190,000.00

$ 621,600.00
$ 198,000.00
$ 130,500.00
$ 950,100.00
$ 299,900.00
$ 285,000.00
$ 14,900.00
$ 98,400.00
$ 6,000.00
$ 13,500.00
$ 105,900.00
$ 84,100.00
$ 9,000.00
$ 93,100.00

22,200
$ 28.00
$ 621,600.00
 9000
$ 22.00
$ 198,000.00

Actual price of input Budgeted price of input

28 30
22 20

Actual quantity of input Budgeted quantity of input

22,200 20000
9,000 8000

Actual Cost incurred Actual Input Quantity x Budgeted Price

(actual input quantity x actual price)
621600 666000
44400
21600

198000 180000
18000
38000
Static Budget
12000
1440000

720000
192000
144000
1056000
384000
276000
108000

actual-flexible
Static Budget Flexible-Budget Variance
$ 12,000.00 $ -
$ 1,440,000.00 $ 50,000.00

$ 720,000.00
$ 192,000.00
$ 144,000.00
$ 1,056,000.00
$ 384,000.00
$ 276,000.00
$ 108,000.00
$ 21,600.00
$ 38,000.00
$ 10,500.00
$ 70,100.00
$ 20,100.00
$ 9,000.00
$ 29,100.00
Difference Actual quantity of input
2 22,200
2 9,000

Difference Budgeted price

2,200 30
1,000 20

Flexible Budget
(Budgeted quantity input * Budgeted price)
600000
66000

160000
20000
 flexible-static
Flexible Budget Sales volume variance
$ 10,000.00 $ (2,000.00)
$ 1,200,000.00 $ (240,000.00)

$ 600,000.00 $ (120,000.00)
$ 160,000.00 $ (32,000.00)
$ 120,000.00 $ (24,000.00)
$ 880,000.00 $ (176,000.00)
$ 320,000.00 $ (64,000.00)
$ 276,000.00 $ -
$ 44,000.00 $ (64,000.00)
Price Variances
44400
18000

Efficiency Variance
66000
20000
Goldcoast products

Workstation
Original cost 300000
Useful life 5
Current age 2
Remaining useful life 3
Accumulated depreciation 120,000
current book value 180,000
current disposal value (in cash) 95,000
terminal disposal value ( in cash 3 years from now) 0
annual computer-related cash operating costs 40000
annual revenues 1000000
annual noncomputer-related operating costs 880000

All Items Workstations

Revenues 3000000
Operating costs
Noncomputer related opearting coats 2640000
computer related cash operating costs 120000
Workstations book value
Periodic write off as depreciation
Lump sum write off
Current disposal value of workstations
Networked PCs written off periodically as depreciation
Total operating costs
Operating income
Networked PCs
135000
3
0
3
not acquired yet
not acquired yet
not acquired yet
0
10000
1000000
880000

Networked PCs Difference

3000000

2640000
30000