Reference no: EM134001

Problem 1

The Frackle Department is the first of a two-stage production method. Spoilage is identified when the units have completed the Forming process. Costs of spoiled units are assigned to units transferred and completed to the second department in the period spoilage is identified. The subsequent information concerns Forming's conversion costs in May:

                                                                          Units Conversion                    costs

Starting work-in-process (50% complete)                 2,000                             $10,000

Units started during May                                         8,000                               75,500

Spoilage-normal 500

Units completed & transferred 7,000

Ending work-in-process (80% complete) 2,500

Using the weighted average technique, what was Forming's conversion cost transferred to the second production department?

Problem 2

BadBoy, Inc. makes two products, X and Y,that require allocation of indirect manufacturing costs. The subsequent data was compiled by the accountant before making any allocations:

                                                                Product X                       Product Y

Quantity produced                                       10,000                             20,000

Direct manufacturing labor hours                  15,000                              5,000

Setup hours                                                 500                                   1,500

The total cost of setting up manufacturing processes and equipment is $400,000. The company uses a job-costing system with a particular indirect cost rate. Under this system, allocated costs were $300,000 and $100,000 for X and Y, correspondingly. If an activity-based system is used, what would be the allocated costs for each product?

Product X = ?? Product Y = ???

Problem 3

Universal Company has made changes in its inventory management policies that are expected to increase turnover from 7 to 8 times per year. Unity's budgeted sales and costs of sales for the subsequently year are $42 million and $28 million, correspondingly. At a 6% interest rate, Evaluate Unity's expected savings from the lower inventory level?

Problem 4

Para Co. is reviewing the given data relating to an energy saving investment proposal:

Cost $50,000

Residual value at the end of 5 years 10,000

Present value of an annuity of 1 at 12% for 5 years 3.60

Present value of 1 due in 5 years at 12% 0.57

Evaluate the annual savings needed to make the investment realize a 12% yield?