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ACC 406 Study Guide - Final Guide: Man-Hour

290 views5 pages
coppergnu687
5 Dec 2014
School
Ryerson University
Department
Accounting
Course
ACC 406
Professor
Anthony Chan

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Document Summary

F = yh - (v)(x) = - (10)(120000) = 0. Requirement 1: superisim: y = , depreciation: y = , rent: y = , direct labour: v = yh - yc = - = per dl hour. Y = (10)(x) --> x = 112000. Y = : utilities: y = + (0. 15)(x)! Y = : supplies: y = (sh. 25)(x), maintenance: y = + (2. 2)(x)! Y = : other: y = + (0. 5)(x) ! Chapter 4 - review question, question 2, baker company. Sales ( x 20000 units) - variable cost (. 95 x 20000 units) = contribution margin. Contribution margin () - fixed costs () = income before taxes. Income before taxes () - taxes (34%) = income after taxes. - 135000 = income before taxes. - 30600 = income after taxes. Contribution margin ratio = contribution margin per unit = -. 75 = 0. 45.

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Related Questions

The Hampshire Company manufactures umbrellas that sell for$12.50 each. In 2014, the company made and sold 60,000 umbrellas.The company had fixed manufacturing costs of $216,000. It also hadfixed costs for administration of $79,525. The per-unit costs ofeach umbrella are as follows:

Direct Materials: $3.00

Direct Labor: $1.50

Variable Manufacturing Overhead: $0.40

Variable Selling Expenses: $1.10

Using the information above, perform a cost-volume-profit (CVP)analysis by completing the steps below.

1. Compute net income before tax.

2. Compute the unit contribution margin in dollars and thecontribution margin ratio for one umbrella.

3. Calculate the break-even point in units and dollars ofrevenue.

4. Calculate the margin of safety:

In units

In sales dollars

As a percentage

5. Calculate the degree of operating leverage.

6. Assume that sales will increase by 20% in 2015. Calculate thepercentage of before-tax income for this increase. Providecalculations to prove that your percentage increase is correctbased on the operating leverage calculated in step 5.

7. Compute the number of umbrellas that Hampshire is required tosell if it plans to earn $150,000 in income before taxes by usingthe target income formula. Proof your calculation.

8. A company that specializes in tours in England has offered topurchase 5,000 umbrellas at $11 each from Hampshire. The variableselling costs of these additional units will be $1.30 as opposed to$1.10 per unit. Also, this production activity will incur another$15,000 of fixed administrative costs. Should Hampshire agree tosell these additional 5,000 umbrellas to the touring business?Provide calculations to support your decision.

Requirement 1
Units Price Totals
Sales X $ $
Variable Costs X $ $
Fixed Costs $
Net Income $
Requirement 2
Contribution Margin per Unitin Dollars = Selling Price – Variable Costs
Selling Price Variable Costs Contribution Margin per Unit
Contribution Margin Ratio =Contribution Margin/Selling Price
Contribution Margin Selling Price Contribution Margin Ratio
Requirement 3
Break-Even Point = Fixed Costs/ Contribution Margin
Fixed Costs Contribution Margin Break-Even Point in Units (Rounded)
Break-Even Point in Units XSelling Price per Unit = Break-Even Point Sales
Break-Even Point in Units Selling Price per Unit Break-Even Point in Sales (Rounded)
Requirement 4A
Margin of Safety in Units =Current Unit Sales – Break-Even Point in Unit Sales
Current Unit Sales Break-Even Point in Sales Margin of Safety in Units
Requirement 4B
Margin of Safety in Dollars =Current Sales in Dollars – Break-Even Point Sales in Dollars
Current Sales in Dollars Break-Even Point in Dollars Margin of Safety in Dollars
Requirement 4C
Margin of Safety as aPercentage = Margin of Sales in Units / Current Unit Sales
Margin of Safety in Units Current Unit Sales Margin of Safety Percentage
Requirement 5
Degree of Operating Leverage =Contribution Margin / Operating Income
Contribution Margin Operating Income Operating Leverage
Requirement 6
Units $ Per Unit Totals
Sales X $ $
Variable Costs X $ $
Fixed Costs $
Net Income $
Operating Leverage Times % Increase Increase would be XX%
Prior Income $ From Part 1
Increase $ Prior Income X XX% Above
Total $
Requirement 7
Targeted Income = (Fixed Costs+ Target Income) / Contribution Margin
Fixed Costs + Target Income Divided by Contribution Margin # of Units (Rounded)
Fixed Costs $
Target Income $
Total $ $ X
# of Units Above X $ Per Unit
Proof Revenue XX,XXX X $XX.XX $
Variable Costs XX,XXX X $X.XX $
Contribution Margin $
Fixed Costs $
Net Income $
Requirement 8
Sales Mix
Current Specialty Total
Expected Sales Units X X
Revenue = Sales X Price $ $ $
Variable Costs X Units $ $ $
Contribution Margin $ $ $
Fixed Costs $ $ $
Operating Income $
Prior Net Income FromRequirement 1 $
Additional Operating Income (Operating Income Above Less Prior Income) $
Decision With Explanation

Problem 1:

Peaceful Corporation manufactures figurines based on thefollowing information.

Standard costs

$20

Materials (4 ounces at $5)

$8

Direct labor (1 hour per unit)

$4

Variable overhead (based on direct labor hours)

Fixed overhead budget

$19,000

Actual results and costs

Materials purchased

Units

9,000

Cost

$39,600

Materials used in production

Finished product units

2,000

Raw material (ounces)

8,200

Direct labor hours

2,000

Direct labor cost

$20,000

Variable overhead costs

$5,980

Fixed overhead costs

$19,500

Required:

  1. Prepare a performance report for Peaceful using the following headings.
    2. Actual Production Costs
    3. Flexible Budget Costs
    4. Flexible Budget Variances
  2. Compute the following variances (show calculations).
    2. Materials usage variance
    3. Labor rate variance
    4. Labor efficiency variance
    5. Variable overhead spending variance
    6. Variable overhead efficiency variance
    7. Fixed overhead budget variance
  3. Give one possible explanation for each of the six variances computed in part b.

Problem 2:

The following is the current variable costing income statementfor Dolly Corporation.

Sales (5,000 units)

$100,000

Variable expenses Cost of goods sold

$35,000

Selling (10% of sales)

$10,000

$45,000

Contribution margin

$55,000

Fixed expenses

Manufacturing overhead

$24,000

Administrative

$12,500

$36,500

Operating income

$18,500

Below is the following information on operations for DollyCorporation.

Beginning inventory (units)

0

Units produced (units)

6,000

Manufacturing costs

Direct labor (per unit)

$5.00

Direct materials (per unit)

$2.30

Variable overhead (per unit)

$2.40

Required:
Prepare an absorption costing income statement.

Problem 3:

The following information was compiled for two models of cellphones.

3G model

4G model

Average

Budgeted Contribution Margin

$80.00

$120.00

$95.25

Budgeted Sales in Units

28,000

18,000

Actual Sales in Units

28,600

16,500

Required:
Calculate the sales mix variance. (Show your calculations.)

Foam Products, Inc., makes foam seat cushions for the automotiveand aerospace industries. The company’s activity-based costingsystem has four activity cost pools, which are listed below alongwith their activity measures and activity rates:


Activity Cost Pool ActivityMeasure Activity Rate
Supporting direct labor Numberof direct labor-hours $5.55 perdirect labor-hour
Batch processing Number ofbatches $ 107.00 per batch
Order processing Number oforders $ 275.00 per order
Customer service Number ofcustomers $ 2,463.00 percustomer


The company just completed asingle order from Interstate Trucking for 1,000 custom seatcushions. The order was produced in two batches. Each seat cushionrequired 0.25 direct labor-hours. The selling price was $20 perunit, the direct materials cost was $8.50 per unit, and the directlabor cost was $6.00 per unit. This was Interstate Trucking’s onlyorder during the year.


Required:

Prepare a report showing the customer margin on sales toInterstate Trucking for the year. (Round your final answersto 2 decimal places.)

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