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Lennon Fans manufactures three model fans for industrial use. The standard selling price and cost of each fan follow:
Essentially, all overhead costs are fixed. Some of the fixed overhead costs are direct costs to particular models, and others are common fixed costs.
Lennon allocates overhead costs to products using a single overhead rate developed as follows. Estimated total overhead is divided by estimated direct labor cost. This results in an overhead rate per labor dollar. This rate is used to assign standard overhead to products. Below are estimates of sales and direct labor. These values imply an overhead rate of $1.5992 per labor dollar ($13,000,000 , $8,129,000).
Required:
a. Because Model 599 is showing a loss, the controller of Lennon has asked you to analyze whether it should be dropped. You should assume that direct fixed costs will be avoided if model is dropped but common fixed costs will not be avoided if the model is dropped.
b. Explain why the method used to allocate costs at Lennon results in unreasonably high charges to the Model 599 fan.
What is the total tax due for 2012, including self-employment tax, for Stuart, assuming that he earned $20,000 in wages, earned $24,000 in self-employment income from his first business,
1. Martinez Company's ending inventory includes the following items. Compute the lower of cost or market for ending inventory applied separately to eachproduct.
Cooper Company expects to sell 200,000 units of its product next year, which would generate total sales of $ 17 million.
Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following characteristics:
Suppose that the company sold 8,000 units during the year. What would the variable costing net income have been? What would the full costing net income have been?
Management accounting formats are identical for all companies
Describe how they are similar and why there are differences. Also, include specific examples of how and when to apply the principles of both types of accounting.
Prepare a consolidation worksheet. Balfour Corporation acquired 100% of Tobac Inc., a foreign corporation, for 33,000,000 FC.
Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for the Drawing Department.
Grade A wire requires $450,000 of monthly variable costs to process into staples, which can be sold in the market on 5/1/XX for $7.00 per pound. Grade B wire requires $600,000 of monthly variable costs to process into paperclips, which can be sold in..
Evaluate and use quantitative and qualitative information to measure financial and non financial performance of an organisation
What is the role of cost drivers in an activity-based cost system? Explain how analysis of cost drivers can be useful in identifying inefficient activities and the cause(s) of inefficiency.
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