Managerial Accounting. 4 Questions due by 2/24/2015

  

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1. Biff Enterprises, Inc. reports the following information:
Units sold
Units produced
Fixed production costs
Variable production costs per unit
Selling price per unit
Fixed selling and administrative expenses
2009
2010
2011
20,000
20,000
$1,200,000
$ 200
$ 400
$ 400,000
20,000
24,000
$1,200,000
$ 200
$ 400
$ 400,000
20,000
16,000
$1,200,000
$ 200
$ 400
$ 400,000
Calculate the value of the ending inventory using both absorption costing and
variable costing.
2. Check Company has several departments. One of those departments does only
printing work for other departments of Check Company, and that department
expects to print 1,000,000 documents for other departments at Check Company,
and in producing those documents, expects to incur the following costs:
Salaries (fixed)
Employee benefits (fixed)
Depreciation (fixed)
Utilities (fixed)
Printing supplies (1 cent per document)
$12,000
$3,000
$3,000
$1,000
$20,000
Costs are assigned to two cost pools, fixed costs and variable costs. The costs are
then assigned to the Executive Department and the Administrative Department at
Check Company. Fixed costs are assigned on a lump-sum basis, 30% to the
Executive department and 70% to the Administrative Department. The variable
costs are assigned at a rate of $0.02 per document printed.
If 800,000 documents are printed during 2011, 320,000 documents for the
Executive Department and 480,000 documents for the Administrative Department,
calculate the costs allocated to the Executive Department.
3. Bernie Company makes two products, wheels and pedals, and reports the
following information:
Direct Labor Hours Per Unit
0.8
0.4
Wheels
Pedals
Annual Production
10,000 units
40,000 units
Wheels require $12 per unit in direct material, and pedals require $8 per unit in
direct material. The direct labor rate for both products is $12 per hour. Wheels
require special processing that pedals do not require.
The activity-based costing system used by Bernie reflects the following cost pools
identified by the company:
Activity Cost Pool
Number of machine setups
Machine hours/special processing
General overhead (direct labor hours)
Est. Overhead Costs
$72,000
$200,000
$816,000
Activity
Wheels
Pedals
100
300
5,000
0
8,000
16,000
Compute the activity rate for each activity cost pool. What is the unit cost of wheels,
and what is the unit cost of pedals?
4. Sterling Corporation reports the following information:
2009
Units sold
Units produced
Fixed production costs
2010
2011
20,000
20,000
20,000
24,000
$1,200,000 $1,200,000
20,000
16,000
$1,200,000
Total
400
5,000
24,000
Variable production costs
per unit
Selling price per unit
Fixed selling and
administrative expenses
$200
$200
$200
$400
$400,000
$400
$400,000
$400
$400,000
Calculate the profit each year using variable costing. Explain why profit does not
fluctuate from year to year using variable costing.

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