Managerial Accounting. 4 Questions due by 2/24/2015

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EGE1986

Business Finance

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Here are 4 questions included on Word document. Due by February 24th.

AccountingHWUnit4.docx

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1. Biff Enterprises, Inc. reports the following information: Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit Fixed selling and administrative expenses 2009 2010 2011 20,000 20,000 $1,200,000 $ 200 $ 400 $ 400,000 20,000 24,000 $1,200,000 $ 200 $ 400 $ 400,000 20,000 16,000 $1,200,000 $ 200 $ 400 $ 400,000 Calculate the value of the ending inventory using both absorption costing and variable costing. 2. Check Company has several departments. One of those departments does only printing work for other departments of Check Company, and that department expects to print 1,000,000 documents for other departments at Check Company, and in producing those documents, expects to incur the following costs: Salaries (fixed) Employee benefits (fixed) Depreciation (fixed) Utilities (fixed) Printing supplies (1 cent per document) $12,000 $3,000 $3,000 $1,000 $20,000 Costs are assigned to two cost pools, fixed costs and variable costs. The costs are then assigned to the Executive Department and the Administrative Department at Check Company. Fixed costs are assigned on a lump-sum basis, 30% to the Executive department and 70% to the Administrative Department. The variable costs are assigned at a rate of $0.02 per document printed. If 800,000 documents are printed during 2011, 320,000 documents for the Executive Department and 480,000 documents for the Administrative Department, calculate the costs allocated to the Executive Department. 3. Bernie Company makes two products, wheels and pedals, and reports the following information: Direct Labor Hours Per Unit 0.8 0.4 Wheels Pedals Annual Production 10,000 units 40,000 units Wheels require $12 per unit in direct material, and pedals require $8 per unit in direct material. The direct labor rate for both products is $12 per hour. Wheels require special processing that pedals do not require. The activity-based costing system used by Bernie reflects the following cost pools identified by the company: Activity Cost Pool Number of machine setups Machine hours/special processing General overhead (direct labor hours) Est. Overhead Costs $72,000 $200,000 $816,000 Activity Wheels Pedals 100 300 5,000 0 8,000 16,000 Compute the activity rate for each activity cost pool. What is the unit cost of wheels, and what is the unit cost of pedals? 4. Sterling Corporation reports the following information: 2009 Units sold Units produced Fixed production costs 2010 2011 20,000 20,000 20,000 24,000 $1,200,000 $1,200,000 20,000 16,000 $1,200,000 Total 400 5,000 24,000 Variable production costs per unit Selling price per unit Fixed selling and administrative expenses $200 $200 $200 $400 $400,000 $400 $400,000 $400 $400,000 Calculate the profit each year using variable costing. Explain why profit does not fluctuate from year to year using variable costing.
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