1. (TCO F) Sandler Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year. Data for the upcoming year appear below.Estimated machine hours73,000Estimated variable manufacturing overhead$3.49per machine hourEstimated total fixed manufacturing overhead$838,770Required:Compute the companys predetermined overhead rate. (Points : 25)Question 2.2. (TCO C) The selling and administrative expense budget of Fenley Corporation is based on the number of units sold, which are budgeted to be 2,500 units in January. The variable selling and administrative expense is $4.40 per unit. The budgeted fixed selling and administrative expense is $35,750 per month, which includes depreciation of $4,000. The remainder of the fixed selling and administrative expense represents current cash flows.Required:Prepare the selling and administrative expense budget for January. (Points : 25)1. (TCO C) The following overhead data are for a department of a large company. Actual costs StaticIncurred budgetActivity level (in units) 360 340Variable costs:Indirect materials $4,182 $4,148Electricity $2,536 $2,414Fixed costs:Administration $6,540 $6,500Rent $6,310 $6,400Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.(Points : 30)Question 2.2. (TCO D) Lindon Company uses 5,000 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $80,000 as follows: Direct materials..$18,000Direct labor20,000Variable manufacturing overhead. 12,000Fixed manufacturing overhead.. 30,000Total costs.80,000An outside supplier has offered to provide Part X at a price of $13 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside suppliers offer.(Points : 30)Question 3.3. (TCO E) Duif Companys absorption costing income statement for the last year of operations is presented below. Sales$70,000Less cost of goods sold:Beginning inventory. 0Add cost of goods manufactured48,000Goods available for sale.48,000Less ending inventory6,000Cost of goods sold..42,000Gross margin.28,000Less selling and admin. expenses..25,000Net operating income..$ 3,000Data on units produced and sold for the year are given below.Units in beginning inventory..0Units produced.8,000Units sold7,000Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.(Points : 30)Question 4.4. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.Sales $950Raw materials inventory, beginning $10Raw materials inventory, ending .$30Purchases of raw materials .$120Direct labor $200Manufacturing overhead ..$230Administrative expenses ..$100Selling expenses ..$140Work-in-process inventory, beginning $70Work-in-process inventory, ending .$40Finished goods inventory, beginning $100Finished goods inventory, ending $80Use these data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, elaborate on the relationship between these schedules as they relate to the flow of product costs in a manufacturing company. (Points : 25). ..1. (TCO F) Loxham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Work in process, beginning:Units in beginning work in process inventory 400Materials costs $6,900Conversion costs $2,500Percent complete for materials 80%Percent complete for conversion 15%Units started into production during the month 6,000Units transferred to the next department during the month 5,400Materials costs added during the month $112,500Conversion costs added during the month $210,300Ending work in process:Units in ending work-in-process inventory 1,000Percentage complete for materials 80%Percentage complete for conversion 30%Required: Calculate the equivalent units for materials for the month in the first processing department.(Points : 25)Question 2.2. (TCO B) Heckaman Corporation produces and sells a single product. Data concerning that product appear below.Selling price per unit$230.00Variable expense per unit$112.70Fixed expense per month$239,292Required:Determine the monthly break-even in unit sales. Show your work! (Points : 25)Question 3.3. (TCO G) (Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:Old SystemNew SystemCost of radar system..$30,000$50,000Current salvage value.$10,000Salvage value in 10 years..$5,000$8,000Annual operating costs..$34,000$29,000Upgrade required in 5 years$4,000Discount rate..14%14%Required:a. What is the City of Paranoyas net present value for the decision described above? Use the total cost approach.b. Should the City of Paranoya purchase the new system or keep the old system?(Points : 35)
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