User Account

All Pages

Compute the equivalent units of input resources

Assignment Help Financial Accounting
Reference no: EM131230913

Part 1

Exercise 1: Spear Custom Furniture uses an activity-based cost accounting system to apply overhead to production.

The company maintains four overhead cost pools. The four cost pools, and their budgeted

amounts for the upcoming period, are as follows:

Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Materials handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Set-ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Quality control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000

Four cost drivers are used by Spear to allocate its overhead cost pools to production. The four cost drivers, and their budgeted total levels of activity for the upcoming period, are shown below:

Machine hours (to allocate maintenance costs) . . . . . . . . . . . . . . . . . . . . . . . 600 hours
Material moves (to allocate materials handling costs) . . . . . . . . . . . . . . . . . . 400 moves
Set-ups (to allocate set-up costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 set-ups
Number of inspections (to allocate quality control costs) . . . . . . . . . . . . . . . . 300 inspections

The company has been asked by Cosmopolitan University to submit a bid for tables to be used in a new computer lab. The plant manager feels that obtaining this job would result in new business in future years. Estimates for the Cosmopolitan University project are as follows:

Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,000
Direct labor (500 hours) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000
Number of machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Number of material moves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Number of set-ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Number of inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

a. Estimate the total cost of manufacturing the tables for Cosmopolitan University.

b. Determine the company's bid price if bids are based upon the total estimated manufacturing cost of a particular project, plus 75 percent.

Exercise 2. Accessory World makes floor mats for the automobile industry. Finished sets of mats must pass through two departments: Cutting and Coating. Large sheets of synthetic material are cut to size in the Cutting Department and then transferred to the Coating Department, where each set is sprayed with a chemical coating for improved durability. The following information pertains to May activity in the Cutting Department:

Cost data:

Total cost of beginning inventory on May 1 . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,800
Direct materials costs incurred in May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Conversion costs incurred in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,200

Physical units data:

Units in process, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 sets
Units started in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 sets
Units in process, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 sets

Percentage of completion data:

Direct materials, May 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Conversion, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Direct materials, May 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Conversion, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

a. Prepare a schedule showing: (1) the number of mat sets transferred from the Cutting Department to the Coating Department in May, and (2) the number of mat sets started and completed by the Cutting Department in May.

b. Compute the equivalent units of input resources for the Cutting Department in May.

c. Compute the cost per equivalent unit of input resource for the Cutting Department in May.

d. Prepare the summary journal entry required to transfer the cost of completed mat sets from the Cutting Department to the Coating Department in May.

e. Compute the total cost assigned to the Cutting Department's ending inventory on May 31.

Write a 350-word paper that compares and contrasts the approaches to costing in E17.15 and E18.10. Distinguish production procedures that match with process costing from those that correspond with job order costing. Additionally, explain how job order costing, when used in conjunction with activity-based costing, can contribute to the allocation of indirect costs

Part 2

Exercise 3 is an extension of Exercise 2.

EXERCISE 3: The following information pertains to May activity in Accessory World's Coating Department:

Cost data:

Total cost of beginning inventory on May 1 . . . . . . . . . . . . . . . . . . . . . . . . . $45,300
Direct materials costs incurred in May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,925
Conversion costs incurred in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,525
Cut sets transferred in during May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Physical units data:

Units in process, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 sets
Units started in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? sets
Units in process, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 sets
Percentage of completion data:
Direct materials, May 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60%
Conversion, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Cut sets transferred in, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Direct materials, May 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70%
Conversion, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Cut sets transferred in, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

a. Compute how many cut mat sets were started in the Coating Department during May.

b. Prepare a schedule showing: (1) the number of mat sets transferred out of the Coating Department in May, and (2) the number of mat sets started and completed by the Coating Department in May.

c. Compute the equivalent units of input resources for the Coating Department in May.

d. Compute the cost per equivalent unit of input resource for the Coating Department in May.

e. Prepare the summary journal entry required to transfer the cost of finished mat sets from the Coating Department's Work in Process Inventory to the company's Finished Goods Inventory in May.

f. Compute the total cost assigned to the Coating Department's ending inventory in process on May 31.

Reference no: EM131230913

Questions Cloud

Reinforcement in advertising : Central to the subject of consumer behavior is the concept of reinforcement. We marketers have "borrowed" this from psychology, as we have done with many other concepts. Positive reinforcement is reward for doing something you should do. Punishment i..
Problems of external adaptation and internal integration : Please explain how culture can impact solutions to problems of external adaptation and internal integration. Please apply this notion to a real-world example of a company that either ‘did’ or ‘should have’ considered culture when solving such problem..
Describe the product and service and the ad : Maslow looked at the different levels of need satisfaction. Find two ads that are directed at each of the levels of satisfaction. Describe the product/service and the ad.
Facilities and alcohol restrictions : What responsibility do facility/event managers have in regards to alcohol sales in facilities and at events? Should the facility/event have alcohol restrictions higher than that of the community in which they operate?
Compute the equivalent units of input resources : Compute the equivalent units of input resources for the Coating Department in May. Compute the cost per equivalent unit of input resource for the Coating Department in May.
Explain corporate governance to integrated audits : Explain the purposes and reasons for public accounting firms to perform an integrated audit. Address the Sarbanes-Oxley Act (SOX). Explain corporate governance and its relation to integrated audits.
Prepare the four basic financial statements for the march : D.C. Dawg started a business, Cats and Dogs Company, by contributing $6,000. Prepare the four basic financial; statements for the month of March. Show how each cash transaction affects the accounting equation.
Explain the major advantages of a business owner : Explain the major advantages of a business owner with minimal accounting experience maintaining the company's book. Then explain the disadvantages.
Prepare a brief paper that reports your findings of material : You will use this business combination throughout the rest of the course, so select accordingly. Prepare a brief paper that reports your findings of the material listed above.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Contributed capital in excess

Common stock outstanding, 1,000 shares (par $20) $20,000-Contributed capital in excess of par 1,000-Retained earnings 50,000

  Damage awards and fines to recognize the expense for period

Several months ago, Welker Chemical Company experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $630,000. The company is contesting the fine. In addition, an employee ..

  Operates two dry cleaning businesses

Stanford owns and operates two dry cleaning businesses. He travels to Boston to discuss acquiring a restaurant. Later in the month, he travels to New York to discuss acquiring a bakery. What is the maximum amount Stanford can deduct in 2015 for inves..

  Equity method balance for the investment

On 1/1/14, P. Inc. acquired 70% of the outstanding shares of S. Comp. for $1141000 in cash. The price paid was proportionate to S's total fair value; although at the date of acquisition S. had a total book value of $1380000. Prepare a schedule showin..

  Determine the issue price of the bonds

On March 1, 2014, Oaken furniture Co. issued $700,000 of 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in ten years. Oaken Furniture Co. is a calendar-year corporation. Determine ..

  A simplified cost approach is used based on hours

Dye and Dye, Attorneys-at-Law, each bill 1,500 hours per year and receive pay of $100,000 each. Four paralegals work for the firm and each receives pay of $40,000 and works 2,000 hours per year. A simplified cost approach is used based on hours. b. A..

  Relates to accountable care organizations

Analyze the affordable Care Act of 2010 as it relates to Accountable Care Organizations. Should we become an ACO? What are the advantages and disadvantages?

  Capital loss and no other capital losses or capital gains

During 2014, Gary receives a $50,000 salary and has no deductions for AGI. In 2013, Gary had a $5,000 short-term capital loss and no other capital losses or capital gains. Consider the following sales and determine Gary's AGI for 2014

  Issuance of bonds with detachable warrants

On September 1, 2014, Universal Coat Company sold at 104 (plus accrued interest) 3,000 of its 8%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one sha..

  Earnings per share and price-earnings ratio

Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. Determine the company's price-earnings ratio.

  What is the materials inventory, work in process inventory

What is the materials inventory, work in process inventory, finished goods inventory and actual manufacturing overhead incurred for Boone Company January 1, 2009?

  Create the required journal entries for the transactions

The projected cost is $2 million. A bond issue for $1.2 million has been authorized, and the remainder is supposed to come from a contribution of $800,000 from the general fund. The bonds sold for $1.3 million, a premium of $100,000. Create the requi..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd