KLK Clothing Company manufactures professionals clothing for women. In order to keep costs low while still producing quality clothes, KLK conducts many research and development projects. On a current project KLK researchers used P35,000of cotton and P27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages and purchased a special weaving machine for P60,000 cash. The machine was not suitable for use in production activities and was not expected to be used in other research projects. In addition, depreciation of the project’s research lab amounted to P20,000. RequiredPrepare the journal entry to record KLK’s

KLK Clothing Company manufactures professionals clothing for women. In order to keep costs low while still producing quality clothes, KLK conducts many research and development projects. On a current project KLK researchers used P35,000of cotton and P27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages and purchased a special weaving machine for P60,000 cash. The machine was not suitable for use in production activities and was not expected to be used in other research projects. In addition, depreciation of the project’s research lab amounted to P20,000. RequiredPrepare the journal entry to record KLK’s

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 11PA: Quality Clothing, Inc., produces skorts and jumper uniforms for schoolchildren. In the process of...

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Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,600 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the orders offering price of 12.80 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. No variable selling or administrative expenses would be associated with the order. Non-unit-level activity costs are a small percentage of total costs and are therefore not considered. Required: 1. Assume that the company would accept the order only if it increased total profits. Should the company accept or reject the order? Provide supporting computations. 2. Suppose that Feinan Sports has negotiated with the potential customer, and has determined that it can substitute cheaper materials, reducing direct materials cost by 0.95 per unit. In addition, the companys engineers have found a way to reduce direct labor cost by 0.50 per unit. Should the company accept or reject the order? Provide supporting computations. 3. Consider the personnel managers concerns. Discuss the merits of accepting the order even if it decreases total profits.
Quality Clothing, Inc., produces skorts and jumper uniforms for schoolchildren. In the process of cutting out the cloth pieces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorges Scrap Warehouse for $3.25 per pound. Last year, the company sold 40,000 lb. of scrap, which would be enough to make 10,000 teddy bears that the management of Quality is now interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.85. Fixed costs would increase by $95,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 10,000 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Should Quality continue to sell the scrap cloth or should Quality process the scrap into teddy bears to sell?
The KLK Clothing Company manufactures professionals clothing for women. In order to keep costs low while still producing quality clothes, KLK conducts many research and development projects. On a current project KLK researchers used P35,000of cotton and P27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages and purchased a special weaving machine for P60,000 cash. The machine was not suitable for use in production activities and was not expected to be used in other research projects. In addition, depreciation of the project’s research lab amounted to P20,000. Required Prepare the journal entry to record KLK’s research and development costs and also include the solution.
The KLK Clothing Company manufactures professionals clothing for women. In order to keep costs low while still producing quality clothes, KLK conducts many research and development projects. On a current project KLK researchers used P35,000of cotton and P27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages and purchased a special weaving machine for P60,000 cash. The machine was not suitable for use in production activities and was not expected to be used in other research projects. In addition, depreciation of the project’s research lab amounted to P20,000.RequiredPrepare the journal entry to record KLK’s research and development costs. *Note: Show the solution step by step with formula
KLK Clothing Company manufactures professionals clothing for women. In order to keep costs low while still producing quality clothes, KLK conducts many research and development projects. On a current project KLK researchers used P35,000of cotton and P27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages and purchased a special weaving machine for P60,000 cash. The machine was not suitable for use in production activities and was not expected to be used in other research projects. In addition, depreciation of the project’s research lab amounted to P20,000.RequiredPrepare the journal entry to record KLK’s research and development costs. Show the solution step by step
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Mohave Corp. is considering outsourcing production of the umbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 10,000 units per year for $7.00 each. Mohave has the following information about the cost of producing tote bags: Direct materials $ 3.00 Direct labor 2.00 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 2.50 Total cost per unit $ 8.50 Mohave has determined that all variable costs could be eliminated by outsourcing the tote bags, while 75 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags.Required:1. Compute the difference in cost between making and buying the umbrella tote bag.2. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them?3-a. Suppose that the space Mohave currently uses to make the bags could be…
Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushions
Tidwell, Inc., has two plants that manufacture a line of wheelchairs. One is located in Dallas, and the other in Oklahoma City. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for $1,782. Sales volume averages 20,000 units per year in each plant. Recently, the Dallas plant reduced the price of the tilt model to $1,584. Discussion with the Dallas manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called “non-value-added costs.” The Dallas manufacturing and selling costs for the tilt model were $1,386 per unit. The Dallas manager offered to loan the Oklahoma City plant his cost accounting manager to help it achieve similar results. The Oklahoma City plant manager readily agreed, knowing that his plant must keep pace—not only with the Dallas plant but also with competitors. A local competitor had also reduced its price on a similar model,…
Tidwell, Inc., has two plants that manufacture a line of wheelchairs. One is located in Dallas, and the other in Oklahoma City. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for $1,782. Sales volume averages 20,000 units per year in each plant. Recently, the Dallas plant reduced the price of the tilt model to $1,584. Discussion with the Dallas manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called “non-value-added costs.” The Dallas manufacturing and selling costs for the tilt model were $1,386 per unit. The Dallas manager offered to loan the Oklahoma City plant his cost accounting manager to help it achieve similar results. The Oklahoma City plant manager readily agreed, knowing that his plant must keep pace—not only with the Dallas plant but also with competitors. A local competitor had also reduced its price on a similar model,…
Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $15 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $6 and the labor cost would be $4 per set and that it would have to purchase cutting and sewing equipment, which would add $10,000 to annual fixed costs. Calculate Amount company will save if company make 10,000 cushions What amount should have been inccrued if company purchase the units what amount should have been inccrued if company produce the units
Quality Clothing, Inc., produces skorts and jumper uniforms for school children. In the process of cutting out the cloth pieces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorge's Scrap Warehouse for $3.15 per pound. Last year, the company sold 39,000 lb. of scrap, which would be enough to make 9,750 teddy bears that the management of Quality is now interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.80. Fixed costs would increase by $94,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 9,750 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Calculate the effect on operating income. Round your answers to the nearest dollar. Sell…