Reference no: EM131794557
1. The Stamping Department accepted Job 051507A on May 15th to make 1,000 funnels.
To complete the job they requisitioned 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set.
The cost driver that the Stamping Department uses is drop-forge strokes which are counted on a machine mounted counter. $2.25 is applied as overhead for each dropforge stroke. Additionally $375.00 of overhead is applied to each job due to setup and teardown.
Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6 1/2 hours of labor by the team.
When the job was complete Job 051507A was transferred to Semi-finished Goods Inventory (SFGI). When the job was transferred, 20 sheets were returned unused to raw material inventory, 75 grommet sets were returned, and there were 1,115 strokes on the counter.
Journalize all events depicted as of May 15th.
2. On August 1, Jones Corporation's packaging department had Work in Process inventory of 8,000 units that were 75% complete with respect to materials and 30% complete with respect to conversion costs. The cost of these units was $99,525 ($62,000 transferred-in from previous departments, $28,775 in materials, and $8,750 in labor and overhead). During August, 125,000 units were transferred into the department. These units had accumulated costs in previous departments of $1,418,560. The packaging department incurred costs of $799,225 for materials and $498,010 for conversion costs in August and transferred 131,000 units out of the department. The 2,000 units remaining in ending inventory are 50% complete with respect to materials and 20% complete with respect to conversion costs. Jones Corporation uses the average cost method to cost its inventories.
Required
a. Calculate the cost per equivalent unit for transferred-in costs, materials, and conversion costs.
b. Calculate the cost of the units transferred out of the department.
c. Calculate the cost of the ending inventory.
3. A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August:
(a) Materials purchased on account, $120,000.
(b) Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product.
(c) Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product.
(d) Factory overhead costs for Department 1 incurred on account, $54,700.
(e) Depreciation on machinery in Department 1, $29,200.
(f) Expiration of prepaid insurance chargeable to Department 1, $7,000.
(g) Factory overhead applied to production, $106,300.
(h) Output of Department 1 transferred to Department 2, $362,700.
4. A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.
(a) What is the break-even point?
(b) What is the operating income?
(c) If neither the relationship between variable costs and sales nor the amount of fixed costs is expected to change in the next year, how much additional operating income can be earned by increasing sales by $110,000?
5. Silver River Company sells Products S and T and has made the following estimates for the coming year: Product Unit Selling Price Unit Variable Cost Sales Mix S $30 $24 60% T 70 56 40 Fixed costs are estimated at $202,400.
Determine:
(a) the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, (b) the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and (c) the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.