Questions 1. Outdoor Furniture Company has inventory balances at the end of August as
Finished goods inventory
Job order cost cards for jobs in process at the company as of the end of September were as
Materials purchased and received in September:
Direct labor costs for September:
September 15 payroll
September 29 payroll
Predetermined overhead rate:
130% of direct labor costs
Direct material transferred to production during September:
Finished goods with a 75% markup over cost were sold during September for $230,000.
Compute the cost of units completed during the month.
What was the total cost of units sold during the month?
What are ending inventory balances?
Questions 2: Financial information for a recent year for Apples, Inc. is:
Cost of goods sold
Selling and administrative expenses
Income before taxes
Less: income taxes
Total assets were $104,000,000 and the non-interest-bearing current liabilities were $2,000,000.
The company has a required rate of return on invested capital of 10%.
Calculate the company’s return on investment.
Questions 3: Tree Top Company manufactures a single product and uses a process costing
system. On the first day of April, there were 5,000 units in process that were 100% complete as
to direct materials and 50% complete as to direct labor and manufacturing overhead. During the
month of April, the company began production of 100,000 units, and at the end of April, the
Work-in-Process inventory consisted of 2,000 units that were 100% complete as to direct
materials and 80% complete as to direct labor and manufacturing overhead. The company’s
cost information is as follows:
Costs Added In April
Calculate the cost of units manufactured during April and the cost of Work-in-Progress at the
end of April.
Question 4: Reliable Rental Resources, Inc. is buying a new computer for its receptionist. The
company can rent a basic computer for $2,500 per year. The company can rent a better computer
for $3,100 per year, but the better computer uses some software that the basic computer cannot
use, and that software costs $750. The receptionist’s salary of $2,200 month will not be affected
by the computer that the company decides to rent. If the company rents the better computer, the
receptionist will need training on the software that the computer uses, and that training costs
$300 per year. The better computer has a greater capacity and speed than the basic computer and
is expected to save the company $1,600 per year in part-time wage expenses. The other upkeep
and operating costs will not be affected by the computer that the company decides to rent.
a. Identify the relevant costs.
b. Which computer should the company
Question 5: Sitting Pretty, Inc. makes garden chairs that sell for $800 each. The variable cost of
producing the chairs is $300 per unit and the fixed costs are $50,000 each month.
a. What is the contribution margin associated
with the chairs produced and sold by Sitting
b. In June, the company had sales that were
$5,000 higher than anticipated. What is the
expected effect on profits as a result of these
Your response should be at least 200 words in length. You may use only your textbook for this
exam. All paraphrased and quoted material must have accompanying citations and references.
For problems, be sure to answer all questions and provide all requested information.
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