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madreJ [45]
3 years ago
11

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a jo

b-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:
First Quarter Second Quarter Third Quarter Fourth Quarter
Direct materials $320,000 $160,000 $80,000 $240,000
Direct labor 80,000 40,000 20,000 60,000
Manufacturing overhead 230,000 206,000 194,000 ?
Total manufacturing costs (a) $630,000 $406,000 $294,000 $
Number of units to be produced (b) 80,000 40,000 20,000 60,000
Estimated unit product cost (a + b) $7.88 $10.15 $14.70 $

Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.

Required:
a. Using the high-low method, estimate the fixed manufacturing overhead cost per quarter and the variable manufacturing overhead cost per unit.
b. Compute the total cost of manufacturing cost and unit product cost for the fourth quarter.
c. Estimate the total manufacturing overhead cost for the year and an annual predetermined overhead rate.
Business
1 answer:
ASHA 777 [7]3 years ago
7 0

Answer:

A. Variable manufacturing overhead cost per unit $0.6 per unit

Fixed manufacturing overhead per quarter $182,000

B.Manufacturing overhead $218,000

C. Total manufacturing overhead cost $848,000

Predetermined rate $4.24 per unit

Explanation:

a. Calculation to estimate the fixed manufacturing overhead cost per quarter and the variable manufacturing overhead cost per unit.

Variable manufacturing overhead cost per unit= (230,000-194,000)/(80,000-20,000)

Variable manufacturing overhead cost per unit= $0.6 per unit

Fixed manufacturing overhead per quarter = 230,000 – (80,000*0.6)

Fixed manufacturing overhead per quarter = $182,000

B. Computation for the total cost of manufacturing cost and unit product cost for the fourth quarter

Manufacturing overhead = 182,000 + (60,000*.6).

Manufacturing overhead = $218,000

Now let calculate the Unit product cost

Unit product cost = $218,000/60,000 = $3.63

C. Calculation to Estimate the total manufacturing overhead cost for the year and an annual predetermined overhead rate

Total manufacturing overhead cost = 230,000+206,000+194,000+218,000 = $848,000

Predetermined rate = 848,000/200,000 = $4.24 per unit

(80,000+40,000 +20,000 +60,000=$200,000)

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<h3>What is break-even analysis?</h3>

Break-even analysis is an accounting concept that can be used to determine the <u>number of units</u> that must be sold to achieve $40,000 of operating income. This can be computed by using the concept of break-even analysis as follows:

<h3>Data and Calculations:</h3>

Sales units = 500 units

Sales revenue = $75,000

Selling price per unit = $150 ($75,000/500)

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Variable cost per unit = $56 ($28,000/500)

Contribution margin per unit = $94 ($150 - $56)

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Target operating income = $40,000

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What do investors use the income statements of organizations for?
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Explanation:

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Answer:

c. A credit to Cash of $272.75.

Explanation:

These transactions can be explained with the help of T- Account .

<h2><u>          Cash             </u></h2><h3><u>Debit                   Credit   </u></h3>

                         Bal $ 500

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The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year e
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Answer:

A.Net income $5,155

Earning per share :-

Income from continuing operation 3.20

Income from discontinued operation 0.47

Net income 3.67

B. Comprehensive income $5,215

Explanation:

A. Preparation of statement of comprehensive income for 2021, including earnings per share disclosures

SCHEMBRI MANUFACTURING CORPORATION

Statement of Comprehensive Income

For the Year Ended December 31, 2021

($ in 000s)

Sales revenue $17,900

Cost of goods sold ($7,500)

Gross profit $10,400

Operating expenses:

Selling expenses ($1,430)

General and administrative expenses ($930)

Restructuring costs ($1,600)

Total operating expenses ($3,960)

Operating income $6,440

(10,400-3,960)

Other income (expenses):-

Loss on sale of investment $(350)

Interest expenses $(310)

Interest revenue $200

Other income (expenses) $(460)

Income from continue operation before income tax $5,980

(6,440-460)

Income tax expenses (25%*5,980) $1,495

Income from continuing operations $4,485

(5,980-1,495)

Discontinued operation :-

Income from operation of discontinued component (1,660-680) $980

Income tax expenses $(310)

Income from discontinued operation $670

(980-310)

Net income $5,155

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Unrealized gain from investment,net of tax [460*(1-25%)] $345

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Total other comprehensive income $60

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Income from discontinued operation 0.47

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Weighted average share = 1,000000+400,000

Weighted average share = 1,400,000

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2. Preparation of a separate statement of comprehensive income for 2021.

SCHEMBRI MANUFACTURING CORPORATION

Statement of comprehensive income

For the year ended December 31,2021

Net income $5,155

(4,485+670)

Other comprehensive income (loss)

Unrealized gain from investment,net of tax [460*(1-25%)] $345

Loss from foreign currency translation , net of tax [380*(1-25%)] $(285)

Total other comprehensive income $60

(345-285)

Comprehensive income $5,215

(5,155+60)

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