Toyboy (Pty) Ltd is a small company in the Cape, it manufactures household light fittings and sells to the public. It has a policy to refund purchases to dissatisfied customers within six months from date of purchase. Based on past experience, 70% of all goods sold had no defects. it would cost the company R100 000 to repair 75% of all items sold, and R40 000 to repair 25% of all iters sold. 25% of goods sold had minor defects. Goods having major defects made up 5% of goods sold which would cost them R10 000 to repair. Required: Calculate the estimated provision for warranty repairs for the year ended 31 December 2019, based on the expectations of management. Show all calculations.

Toyboy (Pty) Ltd is a small company in the Cape, it manufactures household light fittings and sells to the public. It has a policy to refund purchases to dissatisfied customers within six months from date of purchase. Based on past experience, 70% of all goods sold had no defects. it would cost the company R100 000 to repair 75% of all items sold, and R40 000 to repair 25% of all iters sold. 25% of goods sold had minor defects. Goods having major defects made up 5% of goods sold which would cost them R10 000 to repair. Required: Calculate the estimated provision for warranty repairs for the year ended 31 December 2019, based on the expectations of management. Show all calculations.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
BXY Co. has a branch, and all goods are sent thereto at cost plus 25%. The accounting is done at head office.In the first year, the branch received goods from head office costing K8,000. During the year the branch sent back to head office goods at internal invoice price of K500.Some of the goods sold to customers by the branch were unsatisfactory, and the customers complained and sent the goods in question, amounting to K50, direct to head office.During the year remittances to head office were K5,000; closing cash balance at branch K1,010, and closing branch debtors K2,340. The branch deals only with goods sent from head office. There are no discounts or bad debts and no stock differences. Ignore expenses.You are required to prepare the following accounts:a) Branch Stockb) Goods sent to branchc) Branch Adjustmentd) Branch Debtorse) Branch Cash.
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,060 each. The average cost of a television from the manufacturer is $1,330. Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: Costs Cost Formula Selling: Advertising $ 1,090 per month Delivery of televisions $ 50 per television sold Sales salaries and commissions $ 3,040 per month, plus 5% of sales Utilities $ 404 per month Depreciation of sales facilities $ 3,160 per month Administrative: Executive salaries $ 11,500 per month Depreciation of office equipment $ 805 per month Clerical $ 1,860 per month, plus $49 per television sold Insurance $ 720 per month During April, the company sold and delivered 219…
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The trial balance of Magic Shop Company showed inventories of P164,000. The inventories include some goods that have a production cost of P18,000. These goods have a manufacturing defect that will cost P6,000 to correct. The normal selling price for these goods would be P25,000, but after the remedial work they will be sold through an agent as refurbished goods at a discount of 20% on the normal selling price. The agent will receive a commission of 10% of the reduced selling price. In relation to the defective goods, the company will recognize a loss on inventory write down of? A. P4,000 B. P0 C. P1,000 D. P6,000
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