02dcesDenton Company manufactures and sells a single product. Cost data for the product are given:Variable costs per unit::Direct materials.Direct laborVariable manufacturing overheadVariable selling and administrativeTotal variable cost per unitFixed costs per month:Fixed manufacturing overhead$ 72,000Fixed selling and administrative166,000Total fixed cost per month$ 238,000The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:JulyAugustUnitsProducedUnits Sold14,00022,000The company's Accounting Department prepared the following absorption costing income statements for July and August:JulyAugust$ 700,000 $1,100,000336,000364,000194,000$ 170,000Required:18,00018,000SalesCost of goods sold.Gross marginSelling and administrative expensesNet operating income.$61132$ 22528,000572,000210,000$362,000 02dcesDenton Company manufactures and sells a single product. Cost data for the product are given:Variable costs per unit::Direct materials.Direct laborVariable manufacturing overheadVariable selling and administrativeTotal variable cost per unitFixed costs per month:Fixed manufacturing overhead$ 72,000Fixed selling and administrative166,000Total fixed cost per month$ 238,000The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:JulyAugustUnitsProducedUnits Sold14,00022,000The company's Accounting Department prepared the following absorption costing income statements for July and August:JulyAugust$ 700,000 $1,100,000336,000364,000194,000$ 170,000Required:18,00018,000SalesCost of goods sold.Gross marginSelling and administrative expensesNet operating income.$61132$ 22528,000572,000210,000$362,000

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Description: 02dcesDenton Company manufactures and sells a single product. Cost data for the product are given:Variable costs per unit::Direct materials.Direct laborVariable manufacturing overheadVariable selling and administrativeTotal variable cost per unitFix

Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

Business

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Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 238,000 The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced Sales Cost of goods sold 18,000 18,000 Units Sold 14,000 22,000 Gross margin Selling and administrative expenses Net operating income $6 11 The company's Accounting Department prepared the following absorption costing income statements for July and August: July August $ 700,000 $1,100,000 336,000 3 2 $ 22 364,000 194,000 $ 170,000 528,000 572,000 210,000 $362,000

Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 238,000 The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced Sales Cost of goods sold 18,000 18,000 Units Sold 14,000 22,000 Gross margin Selling and administrative expenses Net operating income $6 11 The company's Accounting Department prepared the following absorption costing income statements for July and August: July August $ 700,000 $1,100,000 336,000 3 2 $ 22 364,000 194,000 $ 170,000 528,000 572,000 210,000 $362,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs were incurred: Required: 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Assume that Tool SK1 is responsible for 60% of the materials cost. Calculate the unit cost for Tool SK 1 and Tool SK3, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. Calculate the unit cost for the two models, using DBC. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2.
Hart Manufacturing makes three products. Each product requires manufacturing operations in three departments: A, B, and C. The labor-hour requirements, by department, are as follows: During the next production period the labor-hours available are 450 in department A, 350 in department B, and 50 in department C. The profit contributions per unit are 25 for product 1, 28 for product 2, and 30 for product 3. a. Formulate a linear programming model for maximizing total profit contribution. b. Solve the linear program formulated in part (a). How much of each product should be produced, and what is the projected total profit contribution? c. After evaluating the solution obtained in part (b), one of the production supervisors noted that production setup costs had not been taken into account. She noted that setup costs are 400 for product 1, 550 for product 2, and 600 for product 3. If the solution developed in part (b) is to be used, what is the total profit contribution after taking into account the setup costs? d. Management realized that the optimal product mix, taking setup costs into account, might be different from the one recommended in part (b). Formulate a mixed-integer linear program that takes setup costs provided in part (c) into account. Management also stated that we should not consider making more than 175 units of product 1, 150 units of product 2, or 140 units of product 3. e. Solve the mixed-integer linear program formulated in part (d). How much of each product should be produced and what is the projected total profit contribution? Compare this profit contribution to that obtained in part (c).
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 2.70 is direct materials and 5.30 is overhead. What is the prime cost per unit? Conversion cost per unit?
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During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows: During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows: Instructions 1. Using the absorption costing concept, prepare income statements for (a) May and (b) June. 2. Using the variable costing concept, prepare income statements for (a) May and (b) June. 3. a. Explain the reason for the differences in operating income in (1) and (2) for May. b. Explain the reason for the differences in operating income in (1) and (2) for June. 4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain.
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Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.
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