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stiv31 [10]
3 years ago
13

A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of com

puter support is $13.27 million. The following information is given: Gigabytes of Storage Number of Consultants Corporate 98,200 145 Government 60,000 175 Required: What is the cost allocation if fixed computer costs of $7.43 million are allocated on the basis of number of consultants and the remaining costs (all variable) are allocated on the basis of the number of gigabytes of storage used by the department
Business
1 answer:
mestny [16]3 years ago
6 0

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The cost of computer support is $13.27 million.

Gigabytes of Storage -  Number of Consultants:

Corporate 98,200 145

Government 60,000 175

Fixed computer costs of $7.43 million are allocated based on the number of consultants.

Variable costs are allocated based on the number of gigabytes of storage used by the department.

First, we need to determine the estimated overhead allocation rate for each type of cost (fixed and variable).

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

<u>Fixed costs:</u>

Estimated manufacturing overhead rate= 7,430,000/(145 + 175)= $23,218.75 per consultant.

<u>Variable cost:</u>

Estimated manufacturing overhead rate= (13,270,000 - 7,430,000)/ (98,200 + 60,000)= $36.91 per gygabyte

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

<u>Corporate:</u>

Allocated MOH= 23,128.75* 145 + 36.91*98,200= $6,978,230.75

<u>Government:</u>

Allocated MOH= 23,128.75*175 + 36.91*60,000= $6,262,131.25

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3 years ago
Atlantic Fisheries has an EBIT of $3,280, depreciation of $1,850, cost of goods sold of $6,920, dividends paid of $750, interest
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Answer: $2420

Explanation:

The following can be deduced from the question:

EBIT = $3,280

Depreciation = $1,850

Cost of goods sold = $6,920

Dividends = $750

Interest expense = $860,

Taxable Income will be calculated as:

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6 0
3 years ago
The Cutting Department of Sheridan Company has the following production and cost data for July.
alina1380 [7]

Answer:

1.                                                                   Materials       Conversion Costs

Total equivalent units of production        17,200                  15,800  

2. Cost per Equivalent Unit                    $ 4.05                           $ 2.6

Explanation:

Cutting Department

Weighted-Average Method

1. Equivalent Units

Particulars              Units       % of Completion       Equivalent Units

                                     Materials Conversion   Materials Conversion

Transferred Out    13,700     100         100             13,700      13,700

<u>Ending Inventory     3500      100          60             3500        2100    </u>

<u>Total Equivalent Units                                             17,200      15,800  </u>

<em>The Ending Inventory  units are 3500 which are not yet complete. </em>

                                                                   Materials       Conversion Costs

Total equivalent units of production        17,200                  15,800  

2. Cost Per Equivalent Units

                                                    Materials         Conversion

Cost Added                               69,660                18,480 + 22,600

                             

Total Costs                                69,660                  41,080

Equivalent Units                       <u> 17,200                    15,800 </u>

Cost per Equivalent Unit             69,660 / 17,200         41,080/ 15,800  

                                                    $ 4.05                           $ 2.6

Cost of Ending Work In Process  $ 19635

Materials = 3500 * $ 4.05= $ 14175

Conversion = 2100 * $ 2.6=  $ 5460

We multiply the equivalent number of units with the cost per unit to find the cost.

Cost Of Units Transferred Out = $ 91,105

Materials = 13,700 * $ 4.05= $ 55,485

Conversion = 13,700 * $ 2.6 =  $ 35620

B. A Cost Reconciliation Report

                                    Materials              Conversion

Ending WIP                     $ 14175                  $ 5460

<u>Transferred Out             $ 55,485              $ 35620</u>

<u />

<u>Total                                 $ 69660                 41080   </u>

These calculated costs reconcile with the costs given in the above data.

                                                  Materials              Conversion

<u>Cost Added                               69,660                18,480 + 22,600</u>

<u>Total Costs                                69,660                  41,080</u>

<u></u>

These costs reconcile with the given costs.

5 0
3 years ago
An all-equity firm has a return on assets of 15.3 percent. The firm is considering converting to a debt-equity ratio of 0.30. Th
Elina [12.6K]

Answer:

re 17.4600%

Explanation:

We will calculate using the Modigliani Miller proposition with no taxes to solve for the cost of equity of a levered firm

r_e = r_u + (r_r - r_b) \frac{B}{S}\\where:\\r_e= $cost of equity\\r_b= $cost of debt\\r_u= $return on assets\\B/S = Debt to Equity

We plus our values into the formula and solve

r_e = 0.153+ (0.153 - 0.081)0.3

re 17.4600%

8 0
3 years ago
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