2) Whitman Products and Rockland Industries report the following information at December 31: a. Which company is a manufacturer? Explain. b. Prepare the current asset section of the balance sheet for the manufacturer. WHITMAN ROCKLAND $68,000 7,000 25,000 40,000 Accounts receivable Cash $41,000 6,000 Finished goods inventory Goods in process inventory Merchandise inventory Prepaid expenses 48,000 1,000 2,000

2) Whitman Products and Rockland Industries report the following information at December 31: a. Which company is a manufacturer? Explain. b. Prepare the current asset section of the balance sheet for the manufacturer. WHITMAN ROCKLAND $68,000 7,000 25,000 40,000 Accounts receivable Cash $41,000 6,000 Finished goods inventory Goods in process inventory Merchandise inventory Prepaid expenses 48,000 1,000 2,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PB: Regal Executive, Inc., produces executive motor coaches and currently manufactures the cent awnings...

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Boston Executive. Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs: The company received an offer from Elite Mini-Bars to produce the insets for $2,100 per Unit and supply 1,000 mini-bars for the coming years estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the companys total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. The specialized equipment cannot be used and has no market value. However, the space occupied by the mini bar production can be used by a different production group that will lease it for $55,000 per year. Should the company make or buy the mini-bar insert?
Lavender Manufacturing Company began business in the current year. The company uses the simplified method to allocate mixed services costs to production. The companys costs and expenses for the year were as follows. a. Determine Lavenders total production costs for the year. b. Assume that the hourly pay for direct labor is much lower than the hourly pay for employees in general administration and that the employee turnover is much higher for production employees than for general administration employees. How should these facts affect the companys decision to use the simplified mixed services method to allocate mixed services costs to production?
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?
For E2-17, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods. Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 units of Model B. The following costs were incurred: Required: 1. Assume initially 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. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.
A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price would be 11.50). The order would require specialized materials costing 4.00 per unit. Direct labor and variable factory overhead would cost 2.15 per unit. Fixed factory overhead is 1.20 per unit. However, the company has excess capacity, and acceptance of the order would not raise total fixed factory overhead. The warehouse, however, would have to add capacity costing 1,300. Which of the following is relevant to the special order? a. 11.50 b. 1.20 c. 7.35 d. 8.90
Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Kingston buys the part from Utica Company, Kingston could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Kingston is available: Direct materials $ 31 Direct labor 124 Variable overhead 62 Fixed overhead applied 78 $ 295 Cost to buy the part from Utica Company $ 79 In deciding whether to make or buy the part, Kingston's total relevant cost to make the part would be: Multiple Choice $2,344,000. $2,482,000. $790,000. $2,950,000. Some amount other than these choices.
The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the company’s finished product.The following information was collected from the accounting records and production data for the year ending December 31, 2020.1. 8,000 units of CISCO were produced in the Machining Department.2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $5.23, direct labor $4.71, indirect labor $0.48, utilities $0.39.3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Direct Allocated Depreciation $2,100 $960 Property taxes 500 370 Insurance 910 650 $3,510 $1,980 All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will not be eliminated if CISCO is purchased. So if CISCO is purchased,…
Crown Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Crown buys the part from Utica Company, Crown could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Crown is available: Direct materials $ 23 Direct labor 41 Variable overhead 29 Fixed overhead applied 15 $ 108 Cost to buy the part from Utica Company $ 104 In deciding whether to make or buy the part, Crown's total relevant cost to make the part would be: Multiple Choice $852,000. $990,000. $1,040,000. $1,080,000. Some amount other than these choices.
Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected.Mountainburg's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products. The difference between the $100 estimated selling price for Mountainburg's Product W and its total manufacturing cost of $88 represents
Snipe Company has been purchasing a component, Part Q, for $19.20 a unit. Snipe is currently operating at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows: Direct materials $11.50 Direct labor $4.50 Variable factory overhead $1.12 Fixed factory overhead $3.15 Total $20.27 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.
Helix Company has been approached by a new customer to provide 3,200 units of its regular product at a special price of $8 per unit. The regular selling price of the product is $10 per unit. Helix is operating at 75% of its capacity of 11,200 units. Identify whether the following costs are relevant to Helix’s decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per unit shipping cost. There will be no additional administrative expenses because of this order. Identify whether the cost is relevant or irrelevant to accepting this order.