OC userin Accounting·18 Dec 20176. The name for comparing across companies that compete in the same section of an industry at the same point in time is: A. ratio analysis B. cross-sectional analysis C. time-series analysis D. financial analysis
OC userin Accounting·17 Dec 2017EXERCISE 3-10 Applying Overhead to a Job [LO3-2] Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $5,000 for direct materials, $8,000 for direct labor, and $6,000 for overhead on its job cost sheet. Job W, which is still in pro- cess at year-end, shows charges of $2,500 for direct materials and $4,000 for direct labor. Required: Should any overhead cost be added to Job W at year-end? If so, how much? Explain.
OC userin Accounting·14 Dec 2017EXERCISE 3-1 Compute the Predetermined Overhead Rate [LO3-1] Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor- hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $94,000 of fixed manu- facturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours. Required: Compute the company's predetermined overhead rate for the year.
OC userin Accounting·15 Dec 201715-3 Assume that two companies in the same industry have equal earnings. Why might these companies have different price-earnings ratios? If a company has a price-earnings ratio of 20 and reports earnings per share for the current year of $4, at what price would you expect to find the stock selling on the market?
OC userin Accounting·11 Dec 2017EXERCISE 12-10 Make or Buy a Component [LO12-3] For many years Futura Company has purchased the starters that it installs in its standard line of farm tractors. Due to a reduction in output, the company has idle capacity that could be used to produce the starters. The chief engineer has recommended against this move, however, pointing out that the cost to produce the starters would be greater than the current $8.40 per unit purchase price: Per Unit Total Direct materials ................ Direct labor ........... ...... Supervision .......... Depreciation ......... Variable manufacturing overhead ... Rent ......... Total production cost ........... $3.10 2.70 1.50 1.00 0.60 0.30 $9.20 $60,000 $40,000 $12,000 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $80.000 per period. Depreciation is due to obsolescence rather than wear and tear. Required: Prepare computations showing how much profits will increase or decrease as a result of making the starters.
OC userin Accounting·11 Dec 20177-9 How can the activity rates (i.e., cost per activity) for the various activities be used to tar- get process improvements?
OC userin Accounting·10 Dec 20175. The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, The Arme Acme buys 500 units at $6 each and in March it buys 200 units at $7 each. Acme sells 350 units during this quarter. What is the cost of goods sold under the LIFO method? A. $2,100 B. $2,300 C. $2,375 D. $2,450
OC userin Accounting·12 Dec 201725 Bowling R Us Ltd. leases the building in which it operates its bowling alleys. Bowling revenues for the year just ended were $27,000. The lease agreement calls for an annual rental fee equal to 10% of the annual bowling revenues, with $200 payable on the 1st day of each month. If all required monthly payments for the year were made and debited to the rent expense account, the adjusting journal entry at year-end would be? a. Debit rent expense $300 Credit rent payable $300 b. Debit rent payable $300 Credit rent expense $300 Debit rent expense $240 Credit rent payable $240 d. Debit rent payable $240 Credit rent expense $240 e. None of the above The correct answer is 'a'
OC userin Accounting·10 Dec 2017EXERCISE 3-14 Computing Predetermined Overhead Rates and Job Costs [LO3-1, L03-2, L03-3, LO3-7] Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production ...... Fixed manufacturing overhead cost .... Variable manufacturing overhead cost per machine-hour ....... 100,000 $650,000 $3.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: $450 Direct materials requisitioned ..... Direct labor cost ... Machine-hours used ...... $210 40 Compute the total manufacturing cost assigned to Job 400. During the year, the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,350,000. What is the amount of underap- plied or overapplied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold would the journal entry increase or decrease net operating income?
OC userin Accounting·7 Dec 2017EXERCISE 12-12 Utilization of a Constrained Resource [L012-5] Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Product 1 A ....... 2. $70 Selling price.......... Variable expenses: Direct materials Other variable expenses ..... Total variable expenses ........ Contribution margin .......... Contribution margin ratio .... de $21 30% 40% 25% Demand for the company's products is very strong, with far more orders each month than the com- pany can produce with the available raw materials. The same material is used in each product. The material costs $3 per pound with a maximum of 5,000 pounds available each month. Required: Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?
OC userin Accounting·6 Dec 2017EXERCISE 2-5 High-Low Method [LO2-5] The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Occupancy-Days Electrical Costs January ........ February ...... March April ........ May .......... June .. July ..........- August September October November ..... December ...... 1,736 1,904 2,356 960 360 744 2,108 2,406 840 124 720 1,364 $4,127 $4,207 $5,083 $2,857 $1,871 $2,696 $4,670 $5,148 $2,691 $1,588 $2,454 $3,529 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. 2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month?
OC userin Accounting·6 Dec 20176-8 If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production in relation to the level of sales?
OC userin Accounting·5 Dec 201712-9 What is the danger in allocating common fixed costs among products or other segments of an organization?