## [answered] Mel Cheek is a fishing guide on the Chenega River. The fish

Mel Cheek is a fishing guide on the Chenega River. The fish are usually found 20 to 50

miles upriver. Once the fish are located, Mel slows the boat to trolling speed and fishes for

about 6 hours before returning to dock. Mel has noted that overall fuel costs vary based on

&quot;miles upriver&quot; and he is considering changing his guide fee to separately charge

customers for estimated fuel costs. Below is Mel's log for 15 typical days showing &quot;miles

upriver to locate fish&quot; and &quot;total fuel cost&quot;. 1 Miles

Upriver

37 2 41 93 3 22 73 4 28 80 5 49 99 6 25 74 7 33 85 8 37 87 9 44 93 10 24 77 11 29 80 12 45 96 13 35 83 14 36 87 15 31 80 Total 516 \$1,273 Day Fuel Cost

\$86 (a) Use the high-low method to determine the &quot;fixed fuel cost&quot; associated with the

trolling time, and the &quot;variable fuel cost&quot; associated with running up and down the

river. (b) If the sole objective of the fuel charge is to approximately recover actual costs

incurred each day, would &quot;\$2.50 per mile upriver&quot; be a fair formula?

What

alternative formula might you suggest? B-18. B-18.03 (a) (b) B-18.0

MILES RUN COST HIGH LOW B-18.03 Greg Morrison recently graduated from mortuary school. He is considering opening his

own funeral home. A funeral home is a high-fixed cost business, as it requires

considerable expenditures for facilities, labor, and equipment, no matter how many

families are served. Assume the annual fixed cost of operations is \$800,000. Further

assume that the only significant variable cost relates to burial containers like urns and

questions in contemplation of providing a loan for this business. (a) If the average family is charged \$6,000 for services and a burial container, how

many families must be served to clear the break-even point? (b) If the banker believes Greg will only serve 100 families during the first year in

business, how much will the business lose during its first year of operation? (c) If Greg believes his profits will be at least \$100,000 during the first year, how

much is he anticipating for total revenue? (d) The banker has suggested that Greg can reduce his fixed costs by \$150,000 if he

will not buy any vehicles. Greg can instead rent vehicles as needed. The variable

cost of renting is \$700 per family served. Will this suggestion help Greg reach the

break-even point sooner? B-18.0 B-18.05 (a) Break-Even Point in Families = (b) (c) Sales for a Target Income = (d) New Break-Even Point in Families = B-18.0 B-18.05 Cool Sun produces awnings and screens. Prepare journal entries to reflect the following

transactions. After you complete the entries, determine the amount to include in raw

materials, work in process, and finished goods. Aug. 4, 20X5 Purchased fabric and aluminum to be used in the manufacturing

process. The purchase price was \$4,000, on account. Aug. 8, 20X5 Transferred 60% of the raw materials purchased on August 4 into

production. Aug. 8, 20X5 Incurred direct labor costs of \$3,000. Factory overhead is applied at

40% of the direct labor cost. Aug. 9, 20X5 Transferred completed awnings with total assigned costs of \$4,400 to

finished goods. Aug. 10, 20X5 Sold and delivered half of the finished goods (from August 9) to a

customer for \$4,000 cash. B-19.0 B-19.06 GENERAL JOURNAL Date Page 1

Accounts 8-4-X5 To record purchase of raw materials 8-8-X5 To

transfer

raw

materials

to

production, record direct labor costs

on job, and apply overhead at the

predetermined rate 8-9-X5 To transfer completed units to finished

goods inventory 8-10-X5 To record sale of finished awning for

\$4,000 8-10-X5 To transfer finished goods to cost of

goods sold Debit Credit B-19.0 B-19.06 Information for three different companies follows.

Each company applies factory

overhead at the rate of 40% of direct labor cost. In each scenario, the following entry

Factory Overhead 85,000 Salaries Payable 50,000 Utilities Payable 15,000 Supplies

Accumulated Depreciation 4,000

16,000 Prepare a compound journal entry for each company to transfer raw materials to

production, record direct labor costs on each job, and apply overhead at the

predetermined rate. If the scenario involves underapplied or overapplied overhead,

prepare an additional journal entry to transfer the amount to Cost of Goods Sold. Company A Raw materials transferred to production totaled \$100,000, and direct

labor cost was \$212,500. Company B Raw materials transferred to production totaled \$110,000, and direct

labor cost was \$200,000. Company C Raw materials transferred to production totaled \$90,000, and direct labor

cost was \$225,000. B-19.0 B-19.07 B-19.0 GENERAL JOURNAL Date Accounts A To record costs and apply overhead at

the predetermined rate (\$212,500 X

40% = \$85,000)

B To record costs and apply overhead at

the predetermined rate (\$200,000 X

40% = \$80,000)

B C To record costs and apply overhead at

the predetermined rate (\$225,000 X

40% = \$90,000)

C Debit Credit B-19.07 B-17.06 Ashley Corporation provided the following list of cost data related to its manufacturing

operations for the month of September 20X4.

Beginning raw materials inventory

Raw materials purchased (net) \$ 966,400

2,345,500 Ending raw materials inventory 818,200 Direct labor costs 322,300 Indirect materials 125,500 Indirect labor

Factory utilities and maintenance 88,900

456,000 Factory depreciation 56,600 Other factory related overhead 24,400 Beginning work in process 777,000 Ending work in process 717,000 (a) Arrange the cost data into a statement of cost of goods manufactured. (b) If Ashley's cost of goods sold for the month was \$4,000,000, how much was the

increase or decrease in finished goods inventory for the month of September? B-17.06 B-17.06 B-17.06 Name:

Date: B-17.06 Section: (a)

ASHLEY CORPORATION

SCHEDULE OF COST OF GOODS MANUFACTURED

FOR THE MONTH ENDING SEPTEMBER 30, 20X4

Direct materials:

\$ - \$ - Raw materials transferred to production \$ Direct labor - Factory overhead

\$ - Total manufacturing costs \$ - \$ - Cost of goods manufactured (b) \$ - Name:

Date: Section: B-17.06 B-17.06 Ekpro Products manufactures containment chambers for environmentally friendly

incinerators. Each chamber is built to customer specifications. Most of the direct labor

time is spent on welding activities. Following is the job cost sheet for an incinerator

manufactured for Benzate Corporation: Ekpro

Job: Job Cost Sheet

Benzate

Applied

Direct Material

Cost

Rat

Qt

Rat

Hours

Total

Per Total Qty

Total

e

y

e

Unit

Direct Labor May 8, 20X7 Total Rod Burner 9 \$25 \$225 \$ 225 Sandy Sharp 1 \$12 \$ 12 \$ 12 Steel 10 \$ 80 \$800 \$ 800 May 9, 20X7

Sandy Sharp 2 \$12 \$ 24 \$ 24 Applied Overhea ?

12 \$261 \$800 ? \$360 \$ 360 \$360 ### (a) What types of costs do you imagine would be included in factory overhead? If

overhead is applied based on direct labor hours, what is the application rate? (b) Ekpro is considering installation of a robotic machine that will do all welding

operations.

How might this decision impact the total overhead and the

application method? (c) How does the applied overhead relate to the actual overhead? When they are

not the same, what happens to the difference? Why is actual overhead not

assigned to each job? B-19.0 B-19.04 (a) (b) (c) B-19.04 B-19.04 Zeus Corporation produces cultured diamonds via a secretive process that grows the

diamonds in a vacuum chamber filled with a carbon gas cloud. The diamonds are

produced in a single continuous process, and Zeus uses the weighted-average process

costing method of accounting for production.

The production process requires constant utilization of facilities and equipment, as well as

direct labor by skilled technicians. As a result, direct labor and factory overhead are both

deemed to be introduced uniformly throughout production. Zeus Corporation prepared the following &quot;unit reconciliation&quot; for the month of July:

Unit Reconciliation: Beginning Work in

Process

Started into Production

Total Units into

Production Quantity

Schedule

5,000

6,000

11,000 Equivalent Units Calculations:

Conversion

Direct

Materials Direct

Labor Factory

Overhead To Finished Goods 8,000 8,000 8,000 8,000 Ending Work in Process 3,000 1,800 1,500 1,500 9,500 9,500 Total Units Reconciled 11,000 9,800 Ending WIP Completion Status:

Materials = 60% and Conversion = 50% The above beginning work in process inventory had an assigned cost of \$3,000,000,

divided between direct materials (30%), direct labor (20%), and factory overhead (50%).

Additional costs incurred during July were \$9,500,000, divided between direct materials

(15%), direct labor (25%), and factory overhead (60%).

Prepare a schedule showing the calculation of cost per equivalent unit. B-20.0 B-20.03 B-20.0

Cost Per Equivalent Unit:

Conversion

Total

Cost

Beginning Work in

Process

Cost incurred during

period

Total cost

Equivalent units

Costs per equivalent

unit Direct

Materials Direct

Labor Factory

Overhead B-20.03 Zeus Corporation produces cultured diamonds via a secretive process that grows the

diamonds in a vacuum chamber filled with a carbon gas cloud. The diamonds are

produced in a single continuous process, and Zeus uses the weighted-average process

costing method of accounting for production.

Below is the company's calculation of cost per equivalent unit for October. During

October, the company completed and transferred 8,000 diamonds to finished goods. An

additional 4,000 units were still in process at the end of the month. The ending work in

process was 60% complete with respect to direct materials and 40% complete with respect

to both elements of conversion cost. Prepare a schedule showing the allocation of total cost between finished goods and ending

work in process. Cost Per Equivalent Unit:

Conversion Beginning Work in

Process

Cost incurred during

period

Total cost Total

Cost Direct

Materials \$ 3,900,000 \$ 1,170,000 9,300,000

\$ 13,200,000 Direct

Labor

\$ Factory

Overhead 780,000 \$ 1,950,000 1,860,000 2,325,000 5,115,000 \$ 3,030,000 \$ 3,105,000 \$ 7,065,000 Equivalent units ? 10,400 ? 9,600 ? 9,600 Costs per equivalent

unit \$ 291.35 \$ 323.44 \$ 735.94 \$1,059.38

\$1,350.72 B-20.0 B-20.04 B-20.0

Cost Allocation:

Equivalent Units:

Conversion

Total

Cost

Transferred to Finished Goods

Ending Work in Process Total Ending Work in Process

Total Cost Allocation Direct

Materials Direct

Labor Factory

Overhead B-20.04 Howorth Dental Products is a London-based producer of a patented anti-microbial

dental floss. All raw material is introduced at the beginning of the production process,

but considerable processing time is needed to create the anti-microbial qualities of the

specially designed floss. Howorth measures output in meters of floss and applies the

weighted-average process costing method. The following information is available for a

recent period: Beginning work in process inventory:

140,000 meters at a cost of ?46,200 for direct materials,

?24,900 for direct labor, and ?24,900 for factory overhead. The

conversion process was 55% complete.

Units started into production:

260,000 meters

Units completed and transferred to finished goods:

380,000 meters

Ending work in process inventory:

20,000 meters, 30% complete

Additional costs incurred during the period:

Direct materials, ?85,400

Direct labor, ?98,200

Factory overhead, ?98,600 Prepare a cost of production report for Howorth. B-20.05 B-20.05 Howorth Dental Cost of Production Report

Weighted-average method Unit Reconciliation:

Quantity

Beginning Work in Process

Started into Production

Total Units into Production Equivalent Units Calculations:

Conversion

Direct

Materials Transferred to Finished

Goods

Ending Work in Process

Total Units Reconciled Direct

Labor Factory

Materials = 100% and Conversion = 30%

Cost Per Equivalent Unit:

Conversion

Total Cost Direct

Materials Direct

Labor Factory

Costs Incurred During

Period

Total cost

Equivalent Units (from

above)

Costs per equivalent unit Cost Allocation:

EQUIVALENT UNITS (from above):

CONVERSION Transferred to Finished

Goods

(

units @

each)

Ending Work in Process

Incurred (Material @

)Incurred (Conver. @

) Ending Work in

Total

Process

Total Cost Allocation Total

Cost Direct

Materials Direct

Labor Factory

2

0

.

0

5 B

2

0

.

0

5 Vasquez Systems produces high-quality table tops. Each table top is produced from

a single large tree in a three-step process consisting of milling, sanding, and cutting.

All raw material is introduced at the start of the milling process. The company uses

a process costing system for all costs incurred throughout the production cycle. The

following data were extracted from each department's cost of production report

prepared for April: Milling Dept. The beginning balance of work in process was \$275,000. During

costs were attributable to direct materials (70%), direct labor

(20%), and factory overhead (10%). The ending balance of work

in process was \$160,000. Sanding Dept. The beginning balance of work in process was \$175,000. During

costs were attributable to direct labor (70%) and factory

overhead (30%). The ending balance of work in process was

\$290,000. Cutting Dept. The beginning balance of work in process was \$365,000. During

costs were attributable to direct labor (60%) and factory

overhead (40%). The ending balance of work in process was

\$210,000. Prepare summary journal entries to reflect costs incurred by each department

during April, as well as the transfer of costs between departments and into finished

goods. B-20.06 B-20.06 GENERAL JOURNAL Date Accounts Debit April To record material,

overhead for Milling labor, and To transfer completed

Milling to Sanding units from April April To record labor and overhead for

Sanding

April To transfer completed

Sanding to Cutting units from April To record labor and overhead for

Cutting

April To transfer completed units to finished

goods Credit B-20.0 B-20.06

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