MBA640 UMUC Managerial Accounting questions

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Business Finance

University of Maryland University College

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10:13 ull LTE studypool.com The Justice Corporation mass produces wooden chairs. The standard costs follow: Plastic 10 pounds at $4.50 per pound. Molding 3 feet at $3.00 per foot. Direct labor 4 hours at $15.00 per hour. Variable overhead $3 per direct labor hour. Fixed overhead $.75 per direct labor hour. The static budget called for 80,000 direct labor hours in June. Transactions during June follow: • Justice purchased 200,000 pounds of plastic at $ 4.45 and issued 185,000 pounds to production. Justice purchased 60,000 feet of molding at $3.10 per foot and issued 50,000 feet to production. • The direct labor payroll was 72,500 hours at $14.50. Overhead costs were $275,000 of which $221,125 was variable. Justice produced 18,000 chairs during the month. Required: a) Compute the direct materials, direct labor, variable overhead, and fixed overhead variances that were discussed in class. b) Discuss the significance of the variances. Г m 10:14 ull LTE studypool.com 3. Waiters, Inc. has been manufacturing 10,000 units of part 2050 per month, which is used in manufacturing one of its products. At this level of production, the cost per unit to manufacture part 2050 follows: Direct materials $10.00 Direct labor 25.00 Variable overhead 13.00 Fixed overhead 12.00 Total $60.00 Westbrook Company has offered the sell Waiters 10,000 units of part 2050 for $55 a unit. Waiters has determined that it could use the facilities presently used to manufacture part 2050 to manufacture produce RAC, which would generate an additional contribution margin per month of $50,000. Waiters also has determined that one-third of the fixed overhead will be incurred even if it purchases part 2050 from Westbrook and makes product RAC. Required: Determine whether or not Waiters should purchase from Westbrook. Assume that Waiters would take the opportunity to make product RAC. ) 4. Winslow Corporation prepared a budget last period that called for sales of 20,000 units at a price of $25 each. The costs per unit were estimated to amount to $15 variable and $6 fixed. During the period, actual production and sales were 22,000 units. The actual selling price was $24 per unit. Variable costs were $17 per unit. Fixed costs actually incurred were $125,000. Required: a) Prepare operating statements for the actual output, as well as a static budget and a flexible budget. b) Explain what is indicated when comparing the operating statements. Г m 10:14 ull LTE studypool.com 5. Goran Grill Company makes a single product - a handmade specialty barbeque grill that sells for $600. Data for last operations follow: 0 Units in beginning inventory Units produced 50,000 Units sold 40,000 Variable costs per unit: Direct materials $ 150 120 100 Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 30 S. 400 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $1,500,000 600,000 Total fixed costs $2,100,000 Required: a) Compute the unit product cost for one barbeque grill for absorption costing and variable costing. b) Prepare an income statement for the year using the absorption costing approach. c) Prepare an income statement for the year using the variable costing approach. d) Explain the difference in operating income for the absorption and variable costing approaches. Г m (12 pts) 6. Walker House, Inc., a multinational company based in Maryland, organizes and coordinates art shows and auctions throughout the world. Budgeted and actual costs and expenses for 2018 are compared in the following schedule. 2018 Amounts Budget Actual Expense items Salaries expense, staging Salaries expense, executive $480,000 $513,000 380,000 447,000 Travel costs 640,000 652,000 540,000 450,000 251,000 247,000 192,000 182,000 Auctioneer services Space rental costs Printing costs Advertising expense Insurance, merchandise Insurance, liability 169,000 183,000 85,000 77,000 64,000 67,000 220,000 Home office costs 209,000 105,000 113,000 Shipping costs Miscellaneous 25,000 26,000 Total expenses $3,140,000 $3,177,000 Net sales $6,200,000 $6,370,000 For 2019, the following fixed costs have been budgeted: executive salaries, $440,000; advertising expense, $190,000; merchandise insurance, $80,000; and liability insurance, $68,000. Additional information follows. a. Net sales are expected to be $6,400,000 in 2019. b. Salary expenses for staging will increase 20 percent over actual figures for 2018. c. Travel costs are expected to be 11 percent of net sales. d. Auctioneer services will be billed at 10 percent of net sales. e. Space rental costs will go up 20 percent from 2018 budgeted amounts. f. Printing costs are expected to be $190,000 in 2019. g. Shipping costs are expected to rise 20 percent over 2018 budgeted amounts. h. Miscellaneous expenses for 2019 will be budgeted at $28,000. i. Home office costs are budgeted for $230,000 for 2019. Required: a) Prepare the company's budgeted income statement for 2019. 10:13 ull LTE studypool.com In the context of this course, you will be asked to address the issues/questions below for Costco Wholesale Corporation (COST), www.costco.com When addressing the issues/questions, be sure to do so in the context of this course and Costco. You have been appointed as the special assistant to the Chief Executive Officer, W. Craig Jelinek, who has asked you to address the following six situations: a) A fellow MBA alum from Lynn University, who now works in Admission at Lynn University would like to give each MBA student a benefit, which is programmed into the Lynn University ID card. This benefit would allow the student to buy the video game, Fortnite for $18. Normally the game sells for $30 and its full cost is $20. Discuss if this would be feasible, i.e. Costco is able to do this transaction without it being a donation. b) Costco currently buys much of its shelving from a manufacturer in China. A representative from a company in Vietnam is offering to sell the shelving for 15% less than cost from the manufacturer in China. Discuss the issues that you would consider in deciding whether to accept this offer. c) Mr. Jelinek wishes to develop an incentive plan for the store managers. Before the plan is implemented, he wishes you to make sure that budgeting for the stores is done correctly. He has asked you to submit a document, which discusses the key points related to budgeting that you have learned in MBA 640. Be as thorough as possible. d) Costco has only used absorption costing. Mr. Jelinek has asked you to explain the merits of using variable costing under certain circumstances. e) Mr. Jelinek has asked you to explain how target costing/pricing would be used in Costco's pricing policies. f) Discuss why you like or do not like Costco's mission statement. Г m
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Explanation & Answer

Attached.

Salaries expense, staging
Salaries expense, executive
travel costs
Auctioneer services
Space rental costs
Printing costs
Advertising costs
Insurance, merchandise
Insurance, liability
Home office costs
Shipping costs
Miscellaneous
Total expenses
Net sales

Net sales
Expenses:
Salaries expense, staging
Salaries expense, executive
travel costs
Auctioneer services
Space rental costs
Printing costs
Advertising costs
Insurance, merchandise
Insurance, liability
Home office costs
Shipping costs
Miscellaneous
Total expenses
Net income

Walker House, Inc
2018 amounts
Budget
Actual
$480,000
$513,000
$380,000
$447,000
$640,000
$652,000
$540,000
$450,000
$251,000
$247,000
$192,000
$182,000
$169,000
$183,000
$85,000
$77,000
$64,000
$67,000
$209,000
$220,000
$105,000
$113,000
$25,000
$26,000
$3,140,000
$3,177,000
$6,200,000

$6,370,000

Walker House, Inc
Budgeted Income statement
Year 2019
$6,400,000
$615,600
$440,000
$704,000
$640,000
$301,200
$190,000
$190,000
$80,000
$68,000
$230,000
$126,000
$28,000
$3,612,800
$2,787,200

Walker House, Inc
2019 amounts
Budget
$615,600
$440,000
$704,000
$640,000
$301,200
$190,000
$190,000
$80,000
$68,000
$230,000
$126,000
$28,000
$3,612,800
$6,400,000

Walker House, Inc
2019 amounts

Goran Grill Company
Inputs
Selling price
Units in the beginning inve...


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