ABA 202A

Answer of Problem 48 (Chapter 2)

a. Number of units sold = !24"000 # $2 = 2%"000
Number of units &ompleted = 'nits in () *n+entor, - 'nits .old
= !"000 - 2%"000 = !0"000
b. /ire&t material used 0!"000
/ire&t labor 1%"000
2+erhead3
(a&tor, rent $"800
(a&tor, utilities 8"$00
(a&tor, depre&iation %"000
.uper+isor salar, !"200 2$"000
4otal &osts to a&&ount for $8$"000
5ndin6 7*P *n+entor, ($%"800)
Cost of 6oods manufa&tured $1!"800
&. $1!"800 # !0"000 = 8.48 per unit
d. 9aw :aterial *n+entor, $24"000
A&&ounts Pa,able $24"000
To purchase direct material on account
7or; in Pro&ess *n+entor, 0!"000
9aw :aterial *n+entor, 0!"000
To issue direct material to production
7or; in Pro&ess *n+entor, 1%"000
7a6es Pa,able 1%"000
To accrue direct labor payroll
:anufa&turin6 2+erhead Control $"800
Cash $"800
To pay factory rent
:anufa&turin6 2+erhead Control 8"$00
'tilities Pa,able 8"$00
To accrue factory utilities
:anufa&turin6 2+erhead Control %"000
A&&umulated /epre&iation %"000
To record depreciation on factory equipment
:anufa&turin6 2+erhead Control !"200
Cash !"200
To pay supervisors salary
7or; in Pro&ess *n+entor, 2$"000
:anufa&turin6 2+erhead Control 2$"000
To assign actual overhead to WIP (see part b)
(inished )oods *n+entor, $1!"800
7or; in Pro&ess *n+entor, $1!"800
To transfer completed good to FG (see part b)
Cost of )oods .old $4%"$80
(inished )oods *n+entor, $4%"$80
To record cost of goods sold (!"#! $ %&'((()
A&&ounts 9e&ei+able !24"000
.ales !24"000
To record sales on account
)ns*er of Problem %+ (,hapter -)
a. 280 !00 !80 400
<ariable &osts3
.upplies = 4.00 per />? $"000 $"200 $"400 $"100
/ire&t labor = %.00 per />? $"%80 2"$00 2"480 2"800
'tilities =8.40 per />? $"!80 $"120 $"800 2"$10
(i@ed &osts3
/ire&t labor 800 800 800 800
'tilities !80 !80 !80 !80
9ent 480 480 480 480
Ad+ertisin6 %8 %8 %8 %8
4otal &ost 8"4%8 1"208 %"$$8 %"0!8
b. Cost per />? 2$.00 20.08 20.!! $0.84
&. 20.!! @ $.4 = 28.41 hourl, &har6e
28.41 @ $.28 hours per repair = !8.88 or !1 per &ustomer repair
Answer of Problem !8 (Chapter 0)
!8. a. 4otal +ariable &osts = 81 - 24 - $1 = 01
Contribution mar6in per unit = $40 A 01 = 44 per unit
Contribution mar6in ratio = 44 # $40 = !$.4!B
4otal fi@ed &osts = 20"000 - 48"000 = 18"000
Brea;Ae+en point in units = 18"000 # 44 per unit = $"841 units (rounded)
Brea;Ae+en point in dollars = 18"000 # 0.!$4! = 2$1"!84 (rounded)
b. (80"000 - 18"000) # .!$4! = 4%0"888 (rounded)
(4%0"888 # $40) = !"!14 units (rounded)
&. Con+ert afterAta@ earnin6s to preta@ earnin6s3 80"000 # ($ A .40) =
$!!"!!!.
9eCuired sales = ($!!"!!! - 18"000) # .!$4! = 140"8%1 (rounded)
140"8%1 # $40= 4"8%1 units (rounded)
d. Con+ert the afterAta@ rate of earnin6s to a preta@ rate of earnin6s3
D20B # ($ A 0.40)E = !!.!!B.
Be&ause the C:B is onl, !$.4!B" no le+el of sales would 6enerate net
in&ome eCual to" on a preta@ basis" !!.!!B of sales.
e. <ariable &ost sa+in6s (8"000 @ $2.00) 10"000
Additional fi@ed &osts (8"000)
Additional profit 82"000
Fes" the &ompan, should bu, the sewin6 ma&hine.
f. 5@istin6 C: per unit = 44
C: under proposal = ($40 @ 0.00) A 01 = !0
4otal C: under proposal !"000 @ $.!0 @ !0 = $$%"000
5@istin6 C: (!"000 @ 44) = ($!2"000)
Chan6e in C: ($8"000)
Chan6e in fi@ed &osts (20"000)
Chan6e in net earnin6s before ta@es (!8"000)
No" these two &han6es should not be made be&ause the, would lower preta@
profits b, !8"000 relati+e to e@istin6 le+els.