Solution for QID #36332: Given the following selected account balances of Shanta Comp | StudyHelpMe

Given the following selected account balances of Shanta Company.                Sales $ 1,250,000     Raw materials inventory, Dec. 31, 2012   37,000     Goods in process inventory, Dec. 31, 2012   53,900     Finished goods inventory, Dec. 31, 2012   62,750     Raw materials purchases   175,600     Direct labor   225,000     Factory computer supplies used   17,840     Indirect labor   47,000     Repairs—Factory equipment   5,250     Rent cost of factory building   57,000     Advertising expense   94,000     General and administrative expenses   129,300     Raw materials inventory, Dec. 31, 2013   42,700     Goods in process inventory, Dec. 31, 2013   41,500     Finished goods inventory, Dec. 31, 2013   67,300         Prepare its manufacturing statement for the year ended on December 31, 2013.           Following are the selected account balances of Shanta Company:           Sales $ 1,250,000     Raw materials inventory, Dec. 31, 2012   37,000     Goods in process inventory, Dec. 31, 2012   53,900     Finished goods inventory, Dec. 31, 2012   62,750     Raw materials purchases   175,600     Direct labor   225,000     Factory computer supplies used   17,840     Indirect labor   47,000     Repairs—Factory equipment   5,250     Rent cost of factory building   57,000     Advertising expense   94,000     General and administrative expenses   129,300     Raw materials inventory, Dec. 31, 2013   42,700     Goods in process inventory, Dec. 31, 2013   41,500     Finished goods inventory, Dec. 31, 2013   67,300     Prepare an income statement for Shanta Company (a manufacturer). Assume that its cost of goods manufactured is $534,390.         Widmer Watercraft’s predetermined overhead rate for year 2013 is 200% of direct labor. Information on the company’s production activities during May 2013 follows.    a. Purchased raw materials on credit, $260,000. b. Paid $127,800 cash for factory wages. c. Paid $15,750 cash to a computer consultant to reprogram factory equipment. d. Materials requisitions record use of the following materials for the month.               Job 136 $ 49,000     Job 137   32,500     Job 138   19,800     Job 139   23,400     Job 140   7,400          Total direct materials   132,100     Indirect materials   21,000          Total materials used $ 153,100           e. Time tickets record use of the following labor for the month.               Job 136 $ 12,100     Job 137   10,600     Job 138   37,700     Job 139   39,200     Job 140   3,200          Total direct labor   102,800     Indirect labor   25,000          Total $ 127,800            f. Applied overhead to Jobs 136, 138, and 139.  g. Transferred Jobs 136, 138, and 139 to Finished Goods.  h. Sold Jobs 136 and 138 on credit at a total price of $535,000.  i. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).               Depreciation of factory building $ 69,500     Depreciation of factory equipment   38,000     Expired factory insurance   11,000     Accrued property taxes payable   35,000       j. Applied overhead at month-end to the Goods in Process (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost. Required: 1. Prepare a job cost sheet for each job worked on during the month.   2. Prepare journal entries to record the events and transactions a through j 3. Prepare T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Goods in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Then post the journal entries to these T-accounts and determine the balance of each account.         During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 56,000 were in process in the production department at the beginning of April and 260,000 were started and completed in April. April’s beginning inventory units were 50% complete with respect to materials and 50% complete with respect to labor. At the end of April, 68,000 additional units were in process in the production department and were 80% complete with respect to materials and 40% complete with respect to labor.    The production department had $500,000 of direct materials and $400,000 of direct labor cost charged to it during April. Also, its beginning inventory included $90,000 of direct materials cost and $60,000 of direct labor.     1&2. Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit and assign April's costs to the department’s output. (Round "Cost per EUP" to 2 decimal places.)     Blanchard Company manufactures a single product that sells for $310 per unit and whose total variable costs are $248 per unit. The company’s annual fixed costs are $992,000.    (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.   (2) Assume the company’s fixed costs increase by $145,000. What amount of sales (in dollars) is needed to break even?     Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $192 per unit. The company targets an annual after-tax income of $780,000. The company is subject to a 35% income tax rate. Assume that fixed costs remain at $734,400.   Castor, Inc. is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow:      April May June   Budgeted sales $ 31,500   $ 40,500   $ 24,500     Budgeted cash payments for merchandise   21,200     16,300     16,700           Sales are 60% cash and 40% on credit. All credit sales are collected in the month following the sale. The March 30 balance sheet includes balances of $12,500 in cash, $12,500 in accounts receivable, $11,000 in accounts payable, and a $2,500 balance in loans payable. A minimum cash balance of $12,500 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 2% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (5% of sales), shipping (4% of sales), office salaries ($3,500 per month) and rent ($5,500 per month).        Prepare a cash budget for each of the months of April, May, and June.     Antuan Company set the following standard costs for one unit of its product.             Direct materials ((4.0 Ibs. @ $6.0 per Ib.) $ 24.00     Direct labor (1.7 hrs. @ $14.0 per hr.)   23.80     Overhead (1.7 hrs. @ $18.50 per hr.)   31.45        Total standard cost $ 79.25        The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% level.   Overhead Budget (75% Capacity)   Variable overhead costs                Indirect materials $ 15,000            Indirect labor   75,000            Power   15,000            Repairs and maintenance   30,000                     Total variable overhead costs       $ 135,000     Fixed overhead costs                Depreciation—building   25,000            Depreciation—machinery   71,000            Taxes and insurance   18,000            Supervision   222,750                     Total fixed overhead costs         336,750              Total overhead costs       $ 471,750              The company incurred the following actual costs when it operated at 75% of capacity in October.                  Direct materials (61,000 Ibs. @ $6.10 per lb.)       $ 372,100     Direct labor (29,000 hrs. @ $14.10 per hr.)         408,900     Overhead costs                Indirect materials $ 44,000            Indirect labor   177,750            Power   17,250            Repairs and maintenance   34,500            Depreciation—building   25,000            Depreciation—machinery   95,850            Taxes and insurance   16,200            Supervision   222,750     633,300          Total costs       $ 1,414,300              Required: 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.   3. Compute the direct materials cost variance, including its price and quantity variances. (Round actual price to 2 decimal places.) 4. Compute the direct labor cost variance, including its rate and efficiency variances.(Round actual rate to 2 decimal places.)   World Company expects to operate at 80% of its productive capacity of 55,000 units per month. At this planned level, the company expects to use 27,500 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate based on direct labor hours. At the 80% capacity level, the total budgeted cost includes $66,000 fixed overhead cost and $313,500 variable overhead cost. In the current month, the company incurred $360,000 actual overhead and 24,500 actual labor hours while producing 39,000 units.   (1) Compute the overhead volume variance. (Round all your intermediate calculations to 2 decimal places.)   Marathon Running Shop has two service departments (advertising and administration) and two operating departments (shoes and clothing). During 2013, the departments had the following direct expenses and occupied the following amount of floor space.        Department Direct Expenses Square Feet   Advertising $ 16,000     780     Administrative   18,300     1,040     Shoes   101,600     7,020     Clothing   12,100     4,160        The advertising department developed and distributed 120 advertisements during the year. Of these, 90 promoted shoes and 30 promoted clothing. The store sold $350,000 of merchandise during the year. Of this amount, $280,000 is from the shoes department, and $70,000 is from the clothing department. The utilities expense of $65,000 is an indirect expense to all departments.      Complete the departmental expense allocation spreadsheet for Marathon Running Shop. Assign (1) direct expenses to each of the four departments, (2) the $65,000 of utilities expense to the four departments on the basis of floor space occupied, (3) the advertising department’s expenses to the two operating departments on the basis of the number of ads placed that promoted a department’s products, and (4) the administrative department’s expenses to the two operating departments based on the amount of sales.   B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $240,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 96,000 units of the equipment’s product each year. The expected annual income related to this equipment follows.                 Sales $ 150,000     Costs           Materials, labor, and overhead (except depreciation)   80,000       Depreciation on new equipment   20,000       Selling and administrative expenses   15,000          Total costs and expenses   115,000          Pretax income   35,000     Income taxes (50%)   17,500          Net income $ 17,500          1. Compute the payback period. 2. Compute the accounting rate of return for this equipment.   B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $369,600 with a 7-year life and no salvage value. It will be depreciated on a straight-line basis. B2B Co. concludes that it must earn at least a 9% return on this investment. The company expects to sell 147,840 units of the equipment’s product each year. The expected annual income related to this equipment follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)                     Sales $ 231,000     Costs              Materials, labor, and overhead (except depreciation)   81,000        Depreciation on new equipment   52,800        Selling and administrative expenses   23,100          Total costs and expenses   156,900          Pretax income   74,100     Income taxes (40%)   29,640          Net income $ 44,460             Compute the net present value of this investment. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount.)