Show Work Submit Answers Using Word Or Excel Label

Show Work Submit Answers Using Either Word Or Excel Label Answersfo

Show work. Submit answers using either Word or Excel. Label answers. Format the Excel portion so that it may be easily printed 1. (6 points) Hampton Company had the following inventory balances at the beginning and end of the year: During the year, the company purchased $100,000 of raw material and spent $340,000 on direct labor. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%. Required: A. Calculate cost of goods manufactured. B. Calculate cost of goods sold. C. Determine Hampton's net income. 2. (6 points) The following terms are used to describe various economic characteristics of costs: Required: Choose one of the preceding terms to characterize each of the amounts described below. Each term may be used only once. A. The cost of including one extra child in a day-care center. B. The cost of merchandise inventory purchased five years ago. The goods are now obsolete. C. The cost of feeding 300 children in a public school cafeteria is $450 per day, or $1.50 per child per day. What economic term describes this $1.50 cost? D. The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for $30,000. What economic term describes this $30,000 of lost rental revenue? E. The cost of building an automated assembly line in a factory is $700,000; a manually operated assembly line would cost $250,000. What economic term is used to describe the $450,000 variation between these two amounts? F. Refer to the preceding question and assume that the firm is currently building the assembly line for $700,000. What economic term is used to describe the $700,000 construction cost? 3. (7 points) The selected data that follow relate to the Berger Furniture Company. Assume purchases and sales are made with cash. a. Purchased materials for $160,000. b. Requisitioned $89,000 of materials for use, of which $10,000 were considered indirect materials. c. Paid assembly workers $170,000, supervisors $10,000 and sales people $15,000. d. Recorded $80,000 for depreciation of production equipment. e. Manufacturing overhead applied $90,000. f. During the year, products costing $310,000 were completed. g. Products costing $306,000 were sold for $455,000. Required: Prepare journal entries (or T accounts) to record the preceding transactions and events. 4. (9 points) Dodge Products uses a job-costing system for its units, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs a number of manual-assembly activities. The following information relates to the Machining Department for the year just ended: The Machining Department data that follow pertain to job no. 775, the only job in production at year-end. Required: A. Assuming the use of normal costing, calculate the predetermined overhead rate that is used in the Machining Department. B. Compute the cost of the Machining Department's year-end work-in-process inventory. C. Determine whether overhead was under- or overapplied during the year in the Machining Department. D. If Dodge disposes of the Machining Department's under- or overapplied overhead as an adjustment to Cost of Goods Sold, would the company's Cost-of-Goods-Sold account increase or decrease? Explain. E. How much overhead would have been charged to the Machining Department's Work-in-Process account during the year? F. Comment on the appropriateness of direct labor cost to apply manufacturing overhead in the Assembly Department. 5. (6 points) The controller for Wolfe Machining has established the following overhead cost pools and cost drivers: Order no. 715 has the following production requirements: Machine setups: 7 Raw material: 11,200 units Inspections: 16 Machine hours: 850 Required: A. Compute the total overhead that should be assigned to order no. 715 by using activity-based costing. B. Suppose that Wolfe were to use a single, predetermined overhead rate based on machine hours. Compute the rate per hour and the total overhead assigned to order no. 715. C. Discuss the merits of an activity-based costing system in comparison with a traditional costing system. 6. (6 points) Baker, Inc., produces a number of components that are used in home theater systems. Fred Briggs, head of the company's market research department, has identified the need for a new component that will most likely sell for $75. Projected volume levels are anticipated to reach 28,000 units in the first year, as several firmly entrenched competitors will be introducing a similar product in the not-too-distant future. Conversations with Baker's engineers and reviews of cost accounting data related to similar products that the company manufactures resulted in the following cost estimates for the new component: Baker currently uses cost-plus pricing and adds a 20% markup on total production cost to arrive at what is normally a competitive selling price. Required: A. What is the anticipated selling price of the new component if Baker uses its current pricing policy? What difficulties, if any, might the company face in the marketplace? B. Assume that Baker decides to switch to target costing. What price would the company charge for the new component? C. With the switch to target costing, what would Baker have to do to the component's manufacturing cost to achieve the normal profit margin on sales? Be specific and show calculations. D. Briefly describe a process that Baker can use to achieve your answer in requirement "C."

Paper For Above instruction

The comprehensive exploration of managerial and cost accounting principles outlined in the given assignments provides a detailed insight into the core functions that facilitate effective financial management in businesses. These tasks span calculating manufacturing costs, analyzing economic costs, journalizing business transactions, applying costing systems, and strategic pricing decisions, all of which are essential for managerial accounting and financial analysis.

Question 1: Hampton Company's Manufacturing Costs and Net Income

Hampton Company began the year with certain inventory balances, and during the year, it engaged in various activities including purchasing raw materials and incurring manufacturing costs. To compute the cost of goods manufactured (COGM), we start with the beginning raw materials inventory, add purchases and subtract ending raw materials inventory, then incorporate direct labor and manufacturing overhead. Assuming the beginning and ending raw materials inventory balances are provided, the calculation proceeds as follows:

Cost of Raw Materials Used = Beginning Raw Materials + Purchases - Ending Raw Materials

Cost of Raw Materials Used = $X + $100,000 - $Y (assuming start/end values); then, add direct labor ($340,000) and manufacturing overhead ($450,000). The total manufacturing costs summed give the manufacturing costs added during the period; adding beginning work-in-process inventory (if any) and subtracting ending WIP inventory yields the COGM. This value forms the basis for calculating COGS, which is then used to determine net income after deducting selling, administrative, and income taxes at 30%.

Question 2: Economic Characteristics of Costs

The terms used to describe the economic features of different costs are grounded in managerial accounting concepts. The marginal cost of adding an extra child in a daycare corresponds to the concept of variable cost, as it varies with activity level. The obsolete inventory purchased five years ago exemplifies sunk costs, which are unrecoverable and should not influence current decision-making. The cost of feeding children at $1.50 per day reflects a variable or incremental cost, as it changes with the number of children served.

The opportunity cost of using office space—foregoing rental income—is an implicit cost and represents an opportunity cost. The variation in costs between automated and manual assembly lines ($450,000) exemplifies differential cost, as it pertains to choosing between different production technologies. The $700,000 construction cost for the assembly line is a relevant cost of investment or capital expenditure, representing the initial outlay required for the project.

Question 3: Journal Entries for Berger Furniture Company

Recording transactions involves applying debit and credit entries to reflect asset acquisitions, usage of materials, labor payments, depreciation, overhead application, and sale transactions. For example:

• Purchasing materials: Debit Raw Materials Inventory, Credit Cash
• Requisitioning materials: Debit Work-in-Process Inventory, Credit Raw Materials Inventory
• Payment of wages: Debit Work-in-Process or Manufacturing Overhead accounts as appropriate; Credit Cash
• Recording depreciation: Debit Manufacturing Overhead, Credit Accumulated Depreciation
• Applying manufacturing overhead: Debit Work-in-Process, Credit Manufacturing Overhead
• Completing products: Debit Finished Goods Inventory, Credit Work-in-Process
• Sales of finished goods: Debit Cash, Credit Sales Revenue; Debit Cost of Goods Sold, Credit Finished Goods Inventory

Each of these steps ensures accurate tracking of costs and inventory movement, aligned with generally accepted accounting principles.

Question 4: Job Costing in Dodge Products' Machining Department

Using normal costing, the predetermined overhead rate is based on estimated overhead divided by estimated activity base, typically direct labor hours or machine hours. Once calculated, overhead applied is computed by multiplying the predetermined rate by actual activity. The over- or underapplied overhead is the difference between applied and actual overhead incurred; disposing of overapplied overhead affects the Cost of Goods Sold, generally decreasing it, thus increasing net income.

The overhead charged to work-in-process reflects applied overhead during production; commented upon, applying manufacturing overhead based solely on direct labor cost or machine hours must align with actual overhead incurrence for accurate costing.

Question 5: Activity-Based Costing for Wolfe Machining

Activity-based costing assigns overhead based on multiple cost drivers, providing a more refined costing approach than traditional methods. For order no. 715, total overhead is calculated by multiplying activity levels by respective cost rates, derived by dividing total overhead by activity totals. Comparing this with a single overhead rate based on machine hours illustrates the benefits of ABC, notably improved cost accuracy and fairer product costing, which impacts pricing and profitability analysis.

Question 6: Costing and Pricing Strategies in Baker, Inc.

Using cost-plus pricing with a 20% markup on total cost, the anticipated selling price is calculated as:

Selling Price = Total Cost per Unit × (1 + Markup Percentage)

If the cost estimates for the new component are known, this formula yields the expected price, which may face market challenges if it exceeds competitors’ prices. Conversely, target costing involves setting a competitive market price first and then designing the product process to meet cost targets. Achieving the profit margin within the target cost requires adjustments in manufacturing processes, material sourcing, or design modifications. Baker must engage in value engineering and process improvements to reduce costs accordingly.

Overall, integrating costing strategies with market analysis ensures competitive pricing and sustainable profitability.

References

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