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- Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet: Designing and planning P1,800,000 Code development 2,700,000 Testing 900,000 Production of product master 4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered…Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet: Designing and planning P1,800,000 Code development 2,700,000 Testing 900,000 Production of product master 4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered…Sunrise, Inc. manufactures gears as a component for its product. In 2022, Sunrise incurred the following costs in producing 12,000 pieces of gears: direct materials – P120,000; direct labor – P80,000; variable manufacturing overhead – P100,000; fixed manufacturing overhead – P200,000; and fixed non-manufacturing costs – P150,000. Makina Corp. offers to produce the 15,000 pieces of the gear component for Sunrise, Inc. needs in 2023. If the latter (Sunrise) accepts to buy the gears from Makina, 40% of the fixed manufacturing overhead will be avoided, but fixed non-manufacturing costs will not change. At what selling price of each gear from Makina will make Sunrise indifferent on whether to produce or buy the said gear components?
- Barbardy Company is introducing a new product. The managers are trying to decide whether to make one of its components or buy it from a supplier at a price of P320. The space that could be used to produce the component would have no other use. The following are the data to make the component. Materials P 90 Labor 100 Variable manufacturing overhead 90 Fixed manufacturing overhead 130 Total 410 The estimate reflects 20,000 volume units of the component. Fixed manufacturing overhead consists of depreciation on old machinery. Required: Determine which option is advantageous and by how much? Buy is advantageous by P800,000 Make is advantageous by P800,000 Buy is advantageous by P1,800,000 Make is advantageous by P1,800,000 Group of answer choices 1 2 3 4Harris Ltd also recently imported an artificial intelligent machinery and incurred the following costs: $List price (trade discount 12.5% on list price) 480,000Haulage costs 5,500Pre-production testing of machinery 25,000Repair & maintenance contract for three years 48,000Running of electrical cable for machinery 28,000Special foundation for mounting machinery 9,000Labor costs (direct) 15,000Harris Ltd paid for the machinery within four weeks of the order, therefore, obtained an early settlement discount of 3%.Harris Ltd had wrongly specified the power loading of the original…NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards.The company incurred the following expenditures during 2018 related to the development of a chip to be used inmobile devices:Salaries and wages for basic research $3,450,000Materials used in basic research 330,000Other costs incurred for basic research 1,220,000Development costs 1,800,000Legal and filing fees for a patent for the new technology 50,000The development costs were incurred after NXS established technological and commercial feasibility and afterNXS deemed the future economic benefits to be probable. The project was successfully completed, and the newchip was patented near the end of the 2018 fiscal year.Required:1. Which of the expenditures should NXS expense in its 2018 income statement?2. Explain the accounting treatment of the remaining expenditures.
- ABC company manufactures a particular computer component. Currently, the cost per unit is as follows: Direct Materials;P50, Direct Labor,P500; Variable Overhead,P250; Fixed Overhead,P400XYZ company has obtained with an offer to sell 10,000 units of the component for P1,100 per unit. If ABC accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should ABC make or buy the component? Select the correct response: Make due to savings of P3,000,000 Buy due to savings of P1,000,000 Buy due to savings of P2,500,000 Make due to savings of P500,000On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000), equipment ($300,000), and materials ($100,000). The company also had the following additional costs: $20,000 in legal fees associated with the purchase and filing of the patent, $35,000 to advertise its new laser surgery techniques, and $45,000 to train employees. What is the recorded cost of the patent?Curios Creatives Ltd (CC) is a company specialising in UI and UX design. In the financial year ended30 June 2021, the CC commenced development of a running application that can be fullyintegrated on all types of smartphones, smart watches, and smart gear.The following expenditures were incurred in respect of the running application in the currentfinancial period:Testing of designs R350 000Developer Salaries * R400 000General overhead expenditure R155 000Legal costs associated with the sale of the application** R 70 000Technical feasibility testing *** R 85 000Training of Staff to manage application R35 000*Developer salaries are the salaries paid to the software developers during the design stage of theapplication.** Legal costs include VAT*** Technical feasibility testing costs include the staff members that came in on the weekendwhile the directors did a trial run to test the calibration of the app.After the weekend trial run, the board of directors have assessed that the technology…
- Curios Creatives Ltd (CC) is a company specialising in UI and UX design. In the financial year ended30 June 2021, the CC commenced development of a running application that can be fullyintegrated on all types of smartphones, smart watches, and smart gear.The following expenditures were incurred in respect of the running application in the currentfinancial period:Testing of designs R350 000Developer Salaries * R400 000General overhead expenditure R155 000Legal costs associated with the sale of the application** R 70 000Technical feasibility testing *** R 85 000Training of Staff to manage application R35 000*Developer salaries are the salaries paid to the software developers during the design stage of theapplication.** Legal costs include VAT*** Technical feasibility testing costs include the staff members that came in on the weekendwhile the directors did a trial run to test the calibration of the app.After the weekend trial run, the board of directors have assessed that the technology…A manufacturer has been offered a contract to manufacture a certain product that will utilize the waste materials from his present product. The new product will use 0.3kg of waste materials per unit which is presently sold by the company for P2.00 per kg. Other materials to be used will cost P0.80 per unit. Direct labor per unit will cost P2.30. The present overhead costs of the company amount to P380,000 plus 40% of the total for direct materials and direct labor costs per year. The buyer will pay the manufacturer per unit an amount equal to the increment costs plus P1.20 profit. Determine the selling price of the manufacturer per unit.Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The followinginformation to a single part which is used in the production of a wind instrument. The business earnedOperating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is underpressure from shareholders to increase operating income in 2020 and is therefore considering theimplementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data forvariable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $58Direct Labour $74Variable Manufacturing Overhead $48Fixed expenses: Fixed Manufacturing Overhead $215,000Fixed Selling Costs $65,000Fixed Administrative Costs $160,000 Required:d) Calculate the margin of safety in units and in sales dollars. e) The President of Benoit is under pressure from shareholders to increase operating income by 50% in2020. Management expects per unit…