Answer:
December 31 2014, cash = $486,000
Explanation:
To solve this, we will classify the particulars as either income or expenditure,and find the difference. This is shown below:
Particulars income($) expenditure($)
operating activities 531,000 -
investing activities - 963,000
financing activities 585,000 -
January 1 cash balance 333,000 -
Total 1,449,000 963,000
∴ net cash available on December 31 2014 = Total income - expenditure
= 1,449,000 - 963,000 = $486,000
As discussed in the case and the text, W. L. Gore and Zappos adopted new organizational structures during periods of growth. In general, most firms follow a predictable pattern of structural change. Which of the following best exemplifies this pattern?
a. Simple to functional to multidivisional structures
b. Ambidextrous to functional to matrix structures
c. Functional to simple to matrix structures
d. Global to functional to multidivisional structures
e. Simple to matrix to functional structures
Answer: a. Simple to functional to multidivisional structures
Explanation:
An Organisational structure refers to how tasks flow in a company to enable them to achieve their goals.
As a company grows, they tend to go through different types of structures which fit their size and enable them to reach their goals better.
They generally start with the Simple Structure which is very common in smaller businesses. Here most decisions are centred on the owner. The owner as the proprietor is in charge of coming up with basically everything to push the business forward.
As the company grows they switch to a Functional Structure. This is when the company will be structured by function to enable better specialization and divisions of labour. Examples of separation by function include, IT Department, Marketing Department, Production Department etc.
If the growth continues the company finds it best to specialize even more and this is when Multidivisional Structures kick in. In a Multidivisonal Structure, the company divides itself into different divisions while maintaining a parent company. The Divisions are fairly independent and pursue different goals and products but all under the direction of the parent company. An example is Google splitting into divisions with Alphabet Inc being the Parent Company and Divisions such as Google, Calico, Deepmind and Waymo being created.
Sheridan Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 485 units that cost $66 each. During the month, the company made two purchases: 725 units at $69 each and 364 units at $71 each. Sheridan Company also sold 1198 units during the month. Using the average cost method, what is the amount of ending inventory? (Round average cost per unit to 2 decimal places, e.g. 21.48.)
Answer:
Value of closing inventory = $25771.04
Explanation:
To calculate the value of ending inventory under a periodic average cost method, we will calculate the average price per unit of inventory at the end of the month. To calculate the average price per unit, we simply divide the total cost of the inventory by the total number of units for the month.
Average cost per unit = Total cost of all units for the month / Total units available for the month
Total cost of all units:
Beginning inventory (485 * 66) 32010
Purchase 1 (725 * 69) 50025
Purchase 2 (364 * 71) 25844
Total 107879
Total Units
Beginning Inventory 485
Purchase 1 725
Purchase 2 364
Total 1574
Average cost per unit = 107879 / 1574
Average cost per unit = $68.54
Units of closing inventory = 1574 - 1198 = 376 units
Value of closing inventory = 376 * 68.54
Value of closing inventory = $25771.04
Henry Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the machine-hours for the upcoming year at 20,000 machine-hours. The estimated variable manufacturing overhead was $9 per machine-hour and the estimated total fixed manufacturing overhead was $600,000. The predetermined overhead rate for the recently completed year was closest to:__________
Answer:
Estimated manufacturing overhead rate= $39 per machine hour
Explanation:
Giving the following information:
Estimated machine-hours= 20,000
The estimated variable manufacturing overhead was $9 per machine-hour.
The estimated total fixed manufacturing overhead was $600,000.
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
Estimated manufacturing overhead rate= (600,000/20,000) + 9
Estimated manufacturing overhead rate= $39 per machine hour
A clothing manufacturer produces clothing in five locations in the United States. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows: Location (X,Y) A 7,2 B 4,7 C 5,5 D 6,2 E 8,4 If the amount of fabric shipped to each plant are equal, what is the optimal location for the fabric plant?
Answer:
(6,4)
Explanation:
The computation of optimal location for the fabric plant is shown below:-
X Y
A 7 2
B 4 7
C 5 5
D 6 2
E 8 4
Total 30 20
[tex]\bar X = \frac{Total\ of\ X}{Total\ number\ of\ locations}[/tex]
[tex]\bar X = \frac{30}{5}[/tex]
= 6
[tex]\bar Y = \frac{Total\ of\ Y}{Total\ number\ of\ locations}[/tex]
[tex]\bar Y = \frac{20}{5}[/tex]
= 4
So, the optimal location for the fabric plant is (6,4)
Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows:
110 Cash $ 83,600
112 Accounts Receivable 233,900
115 Merchandise Inventory 624,400
116 Estimated Returns Inventory 28,000
117 Prepaid Insurance 16,800
118 Store Supplies 11,400
123 Store Equipment 569,500
124 Accumulated Depreciation-Store Equipment 56,700
210 Accounts Payable 96,600
211 Salaries Payable ---
212 Customers Refunds Payable 50,000
310 Common Stock 100,000
311 Retained Earnings 585,300
312 Dividends 135,000
313 Income Summary ----
410 Sales 5,069,000
510 Cost of Merchandise Sold 2,823,000
520 Sales Salaries Expense 664,800
521 Advertising Expense 281,000
522 Depreciation Expense ---
523 Store Supplies Expense ---
529 Miscellaneous Selling Expense 12,600
530 Office Salaries Expense 382,100
531 Rent Expense 83,700
532 Insurance Expense ---
539 Miscellaneous Administrative Expense 7,800
During May, the last month of the fiscal year, the following transactions were completed:
May
1 Paid rent for May, $5,000.
3 Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
4 Paid freight on purchase of May 3, $600.
6 Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.
7 Received $22,300 cash from Halstad Co. on account.
10 Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
13 Paid for merchandise purchased on May 3.
15 Paid advertising expense for last half of May, $11,000.
16 Received cash from sale of May 6.
19 Purchased merchandise for cash, $18,700.
19 Paid $33,450 to Buttons Co. on account.
20 Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500 and the cost of the returned merchandise was $8,000.
20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,0000. The cost of the merchandise sold was $70,000.
21 For the convenience of Cresecent Co., paid freight on sale of May 20, $2,300.
21 Received $42,900 cash from Gee Co. on account.
21 Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
24 Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
28 Paid sales salaries of $56,000 and office salaries of $29,000.
29 Purchased store supplies for cash, $2,400.
30 Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000.
30 Received cash from sale of May 20 plus freight paid on May 21.
31 Paid for purchase of May 21, less return of May 24.
Required:
Enter the May 1 balances of each of the accounts in the appropriate balance column of a four-column account.
Enter May 1 in the date column. Write Balance in the item section, and place a check mark (?) in the Posting Reference column.
Answer:
1 Paid rent for May, $5,000.
Dr Rent expense 5,000
Cr Cash 5,000
3 Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
Dr Merchandise inventory 36,000
Cr Accounts payable 36,000
4 Paid freight on purchase of May 3, $600.
Dr Merchandise inventory 600
Cr Cash 600
6 Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.
Dr Accounts receivable 68,500
Cr Sales revenue 68,500
Dr Cost of Merchandise Sold 41,000
Cr Merchandise inventory 41,000
7 Received $22,300 cash from Halstad Co. on account.
Dr Cash 22,300
Cr Accounts receivable 22,300
10 Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
Dr Cash 54,000
Cr Sales revenue 54,000
Dr Cost of Merchandise Sold 32,000
Cr Merchandise inventory 32,000
13 Paid for merchandise purchased on May 3.
Dr Accounts payable 36,000
Cr Cash 36,000
15 Paid advertising expense for last half of May, $11,000.
Dr Advertising expense 11,000
Cr Cash 11,000
16 Received cash from sale of May 6.
Dr Cash 67,130
Dr Sales discounts 1,370
Cr Accounts receivable 68,500
19 Purchased merchandise for cash, $18,700.
Dr Merchandise inventory 18,700
Cr Cash 18,700
19 Paid $33,450 to Buttons Co. on account.
Dr Accounts payable 33,450
Cr Cash 33,450
20 Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500 and the cost of the returned merchandise was $8,000.
Dr Sales revenue 13,230
Cr Cash 13,230
Dr Merchandise inventory 8,000
Cr Cost of Merchandise Sold 8,000
20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,0000. The cost of the merchandise sold was $70,000.
Dr Accounts receivbale 110,000
Cr Sales revenue 110,000
Dr Cost of Merchandise Sold 70,000
Cr Merchandise inventory 70,000
21 For the convenience of Cresecent Co., paid freight on sale of May 20, $2,300.
Dr Accounts receivable 2,300
Cr Cash 2,300
21 Received $42,900 cash from Gee Co. on account.
Dr Cash 42,900
Cr Accounts receivable 42,900
21 Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
Dr Merchandise inventory 88,000
Cr Accounts payable 88,000
24 Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
Dr Accounts payable 5,000
Cr Merchandise inventory 5,000
26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
Dr Sales revenue 7,500
Cr Cash 7,500
Dr Merchandise inventory 4,800
Cr Cost of Merchandise Sold 4,800
28 Paid sales salaries of $56,000 and office salaries of $29,000.
Dr Wages expense 85,000
Cr Cash 85,000
29 Purchased store supplies for cash, $2,400.
Dr Supplies 2,400
Cr Cash 2,400
30 Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000.
Dr Accounts receivable 78,750
Cr Sales revenue 78,750
Dr Cost of Merchandise Sold 47,000
Cr Merchandise inventory 47,000
30 Received cash from sale of May 20 plus freight paid on May 21.
Dr Cash 110,100
Dr Sales discounts 2,200
Cr Accounts receivable 112,300
31 Paid for purchase of May 21, less return of May 24.
Dr Accounts payable 83,000
Cr Cash 82,170
Cr Purchase discounts 830
I prepared a general ledger for May in an excel spreadsheet that I attached.
Assume the company is considering investing in a new machine that will increase its fixed costs by $36,000 per year and decrease its variable costs by $10 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine
Answer:
Find below complete question:
Hudson Co. reports the contribution margin income statement for 2017. Assume sales remain constant at 10.000 units.
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2017
Sales (10,000 units at $244 each) $2,440,000
Variable costs (10,000 units at $195 each) $1,950,000
Contribution margin $490,000
Fixed costs $327,600
Pretax Income $162,400
Assume the company is considering investing in a new machine that will increase its fixed costs by $36,000 per year and decrease its variable costs by $10 per unit.
Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine
The new pretax income is $226,400 compared to 2018 $162,400,which implies that investing in the new machine is viable
Explanation:
The forecast contribution margin income statement for 2018 is prepared below with fixed costs of $36,000 added to the previous cost of $327,600 while variable cost per unit drops by $10 to $185 per unit
Hudson Co,forecast contribution margin income statement for 2018
Sales (10,000*$244) $2,440,000
variable cost(10,000*$185) ($1,850,000)
Contribution margin $590,000
fixed costs( $327,600+$36,000) ($ 363,600)
Pretax income $ 226,400
A consumer has $130 in monthly income to be spent on two goods Z and B. The price of good Z (Pz) is $8.00. The Marginal Rate of Transformation (MRT) is equal to minus−2. That is 2 units of good B can be traded for 1 unit of good Z. What is the price of good B in $?
Answer:
Price of B is $4
Explanation:
Marginal rate of transformation is defined as the amount of a good x has to stop being produced inorder to produce a certain amount of a good y. Factors of production and technology used are assumed to be constant.
In this scenario the marginal rate of transformation is -2, that is 2 units of good B can be traded for 1 unit of good Z, mathematically
2 * Pb = Pz
Substitute price of Z
2* Pb = $8
Pb= 8 ÷ 2
On= $4
Which of the following statements is CORRECT? a. If a company follows a policy of "matching maturities," this means that it matches its use of short-term debt with its use of long-term debt. b. If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt. c. Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased. d. Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing. e. Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased.
Answer: d. Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.
Explanation:
Using short term financing is generally considered to be an aggressive strategy and is more often than not frowned upon by investors.
This is because of the reputational risk involved. A company that keeps using short term financing gives off the impression that it is barely keeping afloat and therefore relying on short term loans to continue functioning.
Other risks involved include, short term loans are usually given in small quantities so they cannot be used effectively as they will bareky go anywhere in terms of investment and their payback installment schedule can be in weeks instead of months like long term financing which can be detrimental to survival.
This is as opposed to a Conservative Approach that uses long term financing to finance most of it's Working Capital.
Managers involved in negotiation should:__________.
1. Search for the absolute best answer.
2. Exercise premature judgment.
3. Realize that solving the other party's problem is actually the other party's problem.
4. Verify whether there is only a fixed set of alternatives.
Which of the following phenomena would be most likely to occur if the project team did not have clear and commonly understood project goals?
1. The level of trust among team members would increase.
2. The motivation level of team members would increase.
3. The interdependency among team members would increase.
4. Conflict among team members would increase.
Answer:
For question (1): 4. Verify whether there is only a fixed set of alternatives.
For question (2): 4. Conflict among team members would increase.
Explanation:
Managers involved in negotiation should always verify whether there is only a fixed set of alternatives.
It is ideal that when managers are making a negotiation and by extension decision-making, they should ensure there are one or more alternative options. A fixed set of alternatives would only mean they're absolutely liable to the other party, without any reasonable benefits to their organization in the event of a crisis with the deal.
Conflict among team members would increase if the project team did not have clear and commonly understood project goals.
As a rule and standard, it is necessary to ensure that team members share common understanding, aims, ideas and vision in order to achieve their project goals and objectives.
When team members are in sync, they're bound to collaborate and use collective intelligence to attain success.
Hence, to increase the level of trust, motivation level, and interdependency among team members, project managers should ensure they've clear and commonly understood project goals.
A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends.
Time Price Action
0 $190 Buy 3 shares
1 200 Sell 1 share
2 200 Sell 1 share
3 200 Sell 1 share
A. Calculate the time-weighted geometric average return on this "portfolio."
B. Calculate the time-weighted arithmetic average return on this portfolio.
C. Calculate the dollar-weighted average return on this portfolio.
Answer:
a. The Geometric average return is 1.72%
b. The Arithmetic average return is 1.75%
c. The Dollar weighted average return is 2.61%
Explanation:
a) In order to calculate the time-weighted geometric average return we would have to calculate first the Holding period return as follows:
Holding period return = (200 - 190) / 190 = 5.263%
Hence, Geometric average return = (1 + .05263)^(1/3) - 1 = 1.72%
b) To calculate time-weighted arithmetic average return we have to make the following calculation:
Arithmetic average return = 5.263% / 3 = 1.75%
c) To calculate time-weighted arithmetic average return we would have to make the following calculation:
Dollar weighted average return=-190*3 + 200/(1+r) + 200/(1+r)^2 + 200 / (1+r)^3 = 0
= 2.61%
At the beginning of the month, the Forming Department of Martin Manufacturing had 23,000 units in inventory, 40% complete as to materials, and 20% complete as to conversion. During the month the department started 86,000 units and transferred 88,000 units to the next manufacturing department. At the end of the month, the department had 21,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. How many units did the Forming Department start and complete in the current month
Answer:
Units stated and completed during the month= 65,000
Explanation:
The units stated and completed in the current period is referred to as the fully worked.
Using the first in first out (FIFO) approach, the fully worked is calculated as
Fully worked = newly introduced -closing inventory
= 86,000- 21,000 = 65000
Note that out of the 86,000 that were completed in the period, it assumed that 23,000 representing the opening inventory would first be completed and the balance would from the newly introduced.
Another way to determine the fully worked is as follows
Fully worked = transferred out - opening inventory
Fully worked = 88,000- 23,000 = 65,000
Units stated and completed during the month= 65,000
An investor enters into a 2-year swap agreement to purchase crude oil at $51.25 per barrel. Soon after the swap is created, forward prices rise and the new 2-year swap price is $61.50. If interest rates are 1% and 2% on 1- and 2-year zero coupon government bonds, respectively, what is the gain or loss to be made from unwrapping the original swap agreement?
Answer:
The present Value of Annual Gain for two years made from unwrapping the original swap agreement is $20.00
Explanation:
From the given information;
The annual gain from swap agreements = $61.50 - $51.25
The annual gain from swap agreements = $10.25
Annual rate for the first year = 1% = 0.01
Annual rate for the second year = 2% = 0.02
However the present gain for the first year will be;
[tex]= \dfrac{Annual \ Gain}{(1+r_1)^1}[/tex]
[tex]= \dfrac{10.25}{(1+0.01)^1}[/tex]
= 10.14851485
The present gain for the second year will be;
[tex]= \dfrac{Annual \ Gain}{(1+r_2)^2}[/tex]
[tex]= \dfrac{10.25}{(1+0.02)^2}[/tex]
= 9.851980008
The present Value of Annual Gain for two years is:
[tex]= \dfrac{Annual \ Gain}{(1+r_1)^1} + \dfrac{Annual \ Gain}{(1+r_2)^2}[/tex]
= 10.14851485 + 9.851980008
= 20.00049486
≅ $ 20.00
The present Value of Annual Gain for two years is $20.00
Culver Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,100 and the following divisional results. Division I II III IV Sales $250,000 $198,000 $499,000 $446,000 Cost of goods sold 198,000 191,000 298,000 254,000 Selling and administrative expenses 74,900 63,000 63,000 46,000 Income (loss) from operations $ (22,900) $ (56,000) $138,000 $146,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 69 % 90 % 80 % 74 % Selling and administrative expenses 41 62 52 58 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.
Answer:
Income after discontinuing operations from both departments 1 and 2 is greateri.e. $ 207 444 than income after discontinuing operations from department 1 . i.e. $ 172964
Explanation:
Option 1:
If the 1st division is discontinued. 50 % of the fixed costs and expenses will continue and included in irrelevant costs.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $198,000 $499,000 $446,000
Cost of G. Sold 191,000 298,000 254,000
V. COGS 90 % 80 % 74 %
V.COGS 171,900 238,400 187960
FIxed COGs 19,100 59600 66,040 30690
Selling &
Administrative Exps 63,000 63,000 46,000
Var. S& Admin Exps. 62% 52% 58%
Var. S& Admin Exps. 39060 32760 26,680
Fixed S.& Admin Exps 23940 30240 19320 24346
Income (loss) $ (56,000) $138,000 $146,000
Total Income = $ (56,000)+$138,000+$146,000-30690- 24346
Total Income= $ 172964
Option 2:
If both the 1st and 2nd division are discontinued. 50 % of the fixed costs and expenses are added under the section II.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $499,000 $446,000
Cost of G. Sold 298,000 254,000
V. COGS 80 % 74 %
V.COGS 238,400 187960
FIxed COGs 9,550 59600 66,040 30690
Selling &
Administrative Exps 63,000 46,000
Var. S& Admin Exps. 52% 58%
Var. S& Admin Exps. 32760 26,680
Fixed S.& Admin Exps 11970 30240 19320 24346
Income (loss) $138,000 $146,000
Total Income = $138,000+$146,000-30690- 24346- 9,550 - 11970
Total Income= $ 207 444
We calculate the fixed and variable costs by multiplying with the given percentages and subtracting it from the total .
Culver Company
Income Statement
For the 1st Quarter 2017
Division I II III IV
Sales $250,000 $198,000 $499,000 $446,000
Cost of G. Sold 198,000 191,000 298,000 254,000
V. COGS 69 % 90 % 80 % 74 %
V.COGS 136,620 171,900 238,400 187960
FIxed COGs 61,380 19,100 59600 66,040
Selling &
Administrative Exps 74,900 63,000 63,000 46,000
Var. S& Admin Exps. 41% 62% 52% 58%
Var. S& Admin Exps. 30,709 39060 32760 26,680
Fixed S.& Admin Exps 48691 23940 30240 19320
Income (loss) $ (22,900) $ (56,000) $138,000 $146,000
A store sells 20 ice cream bars per hour for $4 each, but on discount days, it sells 35 ice cream bars per hour for $3. Based on these two data points, what would be the slope for the relationship between the price and the quantity of ice cream sold?
Answer:
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
Explanation:
In order to calculate the slope for the relationship between the price and the quantity of ice cream sold we would have to calculate the following formula:
Slope= change in yaxis( vertical)/change in xaxis(horizontal)
Slope= change in price/change in quantity demand
Slope=P2-P1/Q2-Q1
Slope=3-4/35-20
Slope=-1/15
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
Foster Manufacturing uses a job order cost accounting system. On April 1, the company has Work in Process Inventory of $7,600 and two jobs in process: Job No. 221, $3,600, and Job No. 222, $4,000. During April, a summary of source documents reveals the following:
For Materials Requisition Slips Labor Time Tickets
Job No. 221 $1,200 $1,600
222 1,700 2,200
223 2,400 2,900
224 2,600 2,800
General use 600 400
Totals $8,500 $9,900
Foster applies manufacturing overhead to jobs at an overhead rate of 70% of direct labor cost. Job No. 221 is completed during the month.
Required:
Prepare summary journal entries to record the raw materials requisitioned, factory labor used, the assignment of manufacturing overhead to jobs, and the completion of Job No. 221.
Answer:
Foster Manufacturing
Journal Entries
Sr. No Particulars Debit Credit
1 Work in Process Job No. 221 1200
Work in Process Job No. 222 1700
Work in Process Job No. 223 2400
Work in Process Job No. 224 2600
Factory Overhead Indirect Materials 600
Materials Inventory 8500
Materials Requisitioned to specific jobs work in process inventory.
2. Direct Labor Work in Process Job No. 221 1600
Direct Labor Work in Process Job No. 222 2200
Direct Labor Work in Process Job No. 223 2900
Direct Labor Work in Process Job No. 224 2800
Indirect Labor 400
Payroll 9500
Factory OverheadControl 400
Direct Labor used for specific jobs.
3. Work in Process Job No. 221 1120
Work in Process Job No. 222 1540
Work in Process Job No. 223 2030
Work in Process Job No. 224 1960
Manufacturing Overheads 6930
Manufacturing Overheads applied to specific jobs at the rate of 70%.
4. Finished Goods Inventory $ 7940
Opening Work in Process Job No. 221 3600
Work in Process Job No. 221 Materials 1200
Work in Process Job No. 221 Direct Labor 1600
Work in Process Job No. 221 MOH 1540
Job 221 completed and transferred to finished goods.
Presented below are certain account balances of Paczki Products Co.Rent revenue$ 6,500Interest expense 12,700 Beginning retained earnings 114,400Ending retained earnings 125,000Dividend revenue 71,000 Sales returns and allowances 12,400 Allocation to noncontrolling interest 17,000 Sales discounts$ 7,800Selling expenses 99,400Sales revenue 390,000 Income tax expense 31,000 Cost of goods sold 184,400 Administrative expenses 82,500Instructions From the foregoing, compute the following: (a) total net revenue, (b) net income, and (c) income attributable to controlling stockholders.
Answer:
Kindly check attached picture for the detailed computations
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $30,000 and $20,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $38,000. a. What is the amount of a gain or loss on realization
Answer:
$12,000
Explanation:
The amount of a gain or loss on realization is the difference between the sum of capital balances of partners and cash balance after settling all liabilities.
Total capital balances = $30,000 + $20,000 = $50,000
Total loss = Cash balance - Total capital balances = $38,000 - $50,000 = $12,000 loss.
Therefore, the amount of loss on realization is $12,000.
An insured states her age as 40 on the application. When she dies, the insurer discovers that she was actually only 37 at the time of application. What will the insurance company do?
a) pays nothing since there was a material misrepresentation on the application
b) pays the death benefit in the amount that the premium at the correct age would have purchased
c) pays a decreased death benefit
d) adjust premiums to reflex correct age
Answer: pays the death benefit in the amount that the premium at the correct age would have purchased
Explanation:
According to the question, an insured states her age as 40 on the application and upon her death, the insurer discovers that the insured was 37 at the time of application.
The right thing for the insurance company to do is to pay the death benefit which in entitled to the insured in the amount which the premium at the correct age would have been bought. If insured overstates his or her age, the insurer will have to pay the full death benefit and then refund excess premiums paid.
Balance sheet The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company's financial condition and performance.
Cold Goose Metal Works Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet.
Cold Goose Metal Works Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars)
Year 2 Year 1 Year 2 Year 1
Assets Liabilities and equity
Current assets: Current liabilities
Cash and equivalents $4,612 Accounts payabl $0 $0
Accounts receivable 2,109 1.688 Accruals 293 293 0
Inventories 6,187 4,950 Notes par 1,660 1,562
Total current assets $14,062 $11,250 Total current abilities $1,562
Net fixed assets: Long-term debt 5,859 4,688
Net plant and equipment $13.750 Total debt $7,812 $6,250
Conon equity
Common stock 15.235 12,188
Retained earnings 6,562
Total common equity $23,438 $18,750
Total assets $31,250 $25,000 Total abilities and equity $31,250 $25,000
Given the information in the preceding balance sheet—and assuming that Cold Goose Metal Works Inc. has 50 million shares of common stock outstanding—read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.Statement #1: Cold Goose’s pool of relatively liquid assets, which are available to support the company’s current and future sales, decreased from Year 1 to Year 2.This statement is , because:Cold Goose’s total current asset balance increased from $11,250 million to $14,062 million between Year 1 and Year 2Cold Goose’s total current liabilities balance increased from $1,688 million to $2,109 million between Year 1 and Year 2Cold Goose’s total current liabilities balance decreased by $2,812 million between Year 1 and Year 2Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-term debt financing.This statement is , because:Cold Goose’s total current liabilities increased by $391 million, while its use of long-term debt increased by $1,171 millionCold Goose’s total current liabilities decreased by $391 million, while its long-term debt account decreased by $1,171 millionCold Goose’s total notes payable increased by $98 million, while its common stock account increased by $3,047 millionStatement #3: One way to interpret the change in Cold Goose’s accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts.This statement is , because:The $421 increase in accounts receivable means either that Year 1’s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1’s credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1’s credit salesThe decrease from $2,109 million to $1,688 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on creditThe change from $4,950 million to $6,187 million reflects a net accumulation of new credit salesBased on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to if the firm buys a new plant and equipment at a cost of $1 million with liquid capital.
Answer:
Cold Goose Metal Works Inc.
Balance Sheet
For Year Ending December 31 (Millions of Dollars)
Year 2 Year 1
Assets
Current assets:
Cash and equivalents $5,766 $4,612
Accounts receivable 2,109 1.688
Inventories 6,187 4,950
Total current assets $14,062 $11,250
Net fixed assets:
Net plant and equipment $17,188 $13.750
Total assets $31,250 $25,000
Liabilities and Equity
Current liabilities:
Accounts payable $0 $0
Accruals 293 0
Notes payable 1,660 1,562
Total current abilities $1,953 $1,562
Long-term debt 5,859 4,688
Total debt $7,812 $6,250
Common equity
Common stock 15.235 12,188
Retained earnings $8,203 6,562
Total abilities and equity $31,250 $25,000
Statement #1: Cold Goose’s pool of relatively liquid assets, which are available to support the company’s current and future sales, decreased from Year 1 to Year 2.
This statement is FALSE, because: Cold Goose’s total current asset balance increased from $11,250 million to $14,062 million between Year 1 and Year 2
Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-term debt financing.
This statement is FALSE, because: Cold Goose’s total current liabilities increased by $391 million, while its use of long-term debt increased by $1,171 million
Statement #3: One way to interpret the change in Cold Goose’s accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts.
This statement is TRUE, because:The $421 increase in accounts receivable means either that Year 1’s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1’s credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1’s credit sales
Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to DECREASE if the firm buys a new plant and equipment at a cost of $1 million with liquid capital.
Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Pasadena Candle Inc. Direct Labor Cost Budget For the Month Ending January 31 Hours required for assembly: Candles min. Convert minutes to hours ÷ min. Molding hours hrs. Hourly rate × $ Total direct labor cost
Answer:
Direct labour cost budget= $1,413,000.
Explanation:
The direct labor cost budget is a function of the production product budget. The quantity of the product budgeted to be produced would determine the labor cost budget.
Direct labour budget = Production budget × standard hours × standard labour rate per hour
Standard hour = 6/60 =0.1 (note there are 60 minutes in an hour)
Direct labour budget = 785,000 × 0.1× 18 = $1,413,000.
Direct labour cost budget= $1,413,000.
In January 2020, the management of Sheridan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. Feb. 1 Purchased 500 shares of Muninger common stock for $27,500. Mar. 1 Purchased 700 shares of Tatman common stock for $17,500. Apr. 1 Purchased 40 $1,050, 6% Yoakem bonds for $42,000. Interest is payable semiannually on April 1 and October 1. July 1 Received a cash dividend of $0.50 per share on the Muninger common stock. Aug. 1 Sold 167 shares of Muninger common stock at $65 per share. Sept. 1 Received a $1 per share cash dividend on the Tatman common stock. Oct. 1 Received the semiannual interest on the Yoakem bonds. Oct. 1 Sold the Yoakem bonds for $41,000. At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.Prepare the adjusting entry at December 31, 2020, to report the investment securities at fair value. All securities are considered to be trading securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
December 31, 2020, fair value adjustment
Dr Investment in Muninger stocks 333
Cr Unrealized gain - Investment in Muninger stocks 333
December 31, 2020, fair value adjustment
Dr Unrealized loss - Investment in Tatman stocks 700
Cr Investment in Tatman stocks 700
Explanation:
Feb. 1 Purchased 500 shares of Muninger common stock for $27,500.
Dr Investment in Muninger stocks 27,500
Cr Cash 27,500
Mar. 1 Purchased 700 shares of Tatman common stock for $17,500.
Dr Investment in Tatman stocks 17,500
Cr Cash 17,500
Apr. 1 Purchased 40 $1,050, 6% Yoakem bonds for $42,000. Interest is payable semiannually on April 1 and October 1.
Dr Investment in Yoakem bonds 42,000
Cr Cash 42,000
July 1 Received a cash dividend of $0.50 per share on the Muninger common stock.
Dr Cash 250
Cr Dividend revenue 250
Aug. 1 Sold 167 shares of Muninger common stock at $65 per share.
Dr Cash 10,855
Cr Investment in Muninger stocks 9,185
Cr Gain on sale 1,670
Sept. 1 Received a $1 per share cash dividend on the Tatman common stock.
Dr Cash 700
Cr Dividend revenue 700
Oct. 1 Received the semiannual interest on the Yoakem bonds.
Dr Cash 1,260
Cr Interest revenue 1,260
Oct. 1 Sold the Yoakem bonds for $41,000.
Dr Cash 41,000
Dr Loss on sale 1,000
Cr Investment in Yoakem bonds 42,000
At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.
Answer:
Sheridan Company
Adjusting Entries for Trading Investments at Fair Value:
December 31, 2020:
Debit Investment in Muninger $333
Credit Gain on Investment $333
To record the $1 per share gain on investment (500 - 167 shares).
Debit Loss on Investment $700
Credit Investment in Tatma $700
To record the $1 per share loss on investment (700 shares).
Explanation:
Investments held for trading are short-term investments in debt and stock securities. They are accounted for at fair value.
This implies that at the end of each reporting period, the difference between the book value of the investment and the fair value is adjusted either as gain or loss on investment. This adjusting entry increases or reduces the book value of the investment to its fair value. The gain or loss remains an unrealized gain or loss until the investment is sold.
The text states, "Over sufficiently long time periods, net income equals cash inflows minus cash outflows, other than cash flows with owners." Demonstrate the accuracy of this statement in the following scenario: Two friends contributed $50,000 each to form a new business. The owners used the amounts contributed to purchase a machine for $100,000 cash. They estimated that the useful life of the machine was five years and the salvage value was $20,000. They rented out the machine to a customer for an annual rental of $25,000 a year for five years. Annual cash operating costs for insurance, taxes, and other items totaled $6,000 annually. At the end of the fifth year, the owners sold the equipment for $22,000, instead of the $20,000 salvage value initially estimated. (Hint: Compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.)
Answer:
Cash Equipment Common stock Net income
Cash contributed
by Owners $ 100,000 $ 100,000
Purchase of
machine for cash $ (100,000) $ 100,000
Recoginition of
rent revenue $125,000 $125,000
Recoginition of
operating
expense $(30,000) $(30,000)
Recoginition of
Depreciation $ (80,000) $(80,000)
Sale of Machine $ 22,000 $ (20,000) $ 2,000
Totals $ 117,000 $0 $100,000 $ 17,000
Explanation:
Which of the following statements regarding changes in accounting principles is not true? Most changes in accounting principles are retroactively reported. Most changes in accounting principles are only reported in current periods when the principle change takes place. Changes in accounting principles are allowed when new principles are preferable to old ones. Consistency is one of the biggest concerns when a change in accounting principle is undertaken.
Answer:
Most changes in accounting principles are only reported in current periods when the principle change takes place.
Explanation:
Accounting principle can be defined as a general guideline to be followed by accountants or financial institutions when they record and report their financial transactions.
A change in an accounting principle involves a change in an accounting method used.
For instance, an accountant switching between First In, First Out (FIFO) to Last In, First Out (LIFO) method of inventory valuation or by using another depreciation method.
Additionally, an accounting principle should only be changed, if it's applicable to the accounting framework being used such as Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
Also, it is important to state in the footnotes of the financial statements a full disclosure to highlight the justification for the preferred change and financial implications of this change.
The following are true about the change in accounting principles;
1. Most changes in accounting principles are retroactively reported.
2. Changes in accounting principles are allowed when new principles are preferable to old ones.
3. Consistency is one of the biggest concerns when a change in accounting principle is undertaken.
Colleague responsibilities related to compliance include which of the following:________. A. Report if you have been placed on a state or federal exclusion list B. Report if you have been convicted of a minor traffic violation C. Report when your employment-related professional licenses have been renewed D. Report when you complete annual continuing education
Answer:
A. Report if you have been placed on a state or federal exclusion list
Explanation:
While working in an organization you have some responsibilities which are related to compliance, integrity, honesty, etc are as follows
1. They have to report if they are placed on a state or federal exclusion list that also includes Officer of Inspector General (OIG), General Service Administration (GSA)
2. Instant report the criminal offense if you are convicted other than the minor traffic violation
The conviction excludes the following things
a. Arrest or charges
b. Judicially dismissed
c. That does not consider except felony convictions that also includes controlled substances should always be reported
hence, the correct option is a.
In a company, individuals have roles and responsibilities which should be fulfilled. It can include truthfulness, virtue, compliance's etc.
The correct answer is:
Option A. Report if you have been placed on a state or federal exclusion list.
This can be explained as:
The colleague should report if they were on the state or national exclusion list.The exclusion list can also contain General Service Administration or Officer of Inspector General.If the charges were other than minor traffic violations like criminal offences should be reported instantly.The convictions do not include charges, arrests, court dismissals etc.Therefore, if placed on the exclusion list should be reported.
To learn more about federal exclusion list follow the link:
https://brainly.com/question/25087292
Managers in international businesses will need to evaluate the attractiveness of a country as a market or location for a facility or investment. Knowing how to think about events and situations will help the manager make that evaluation?
Countries with democratic regimes, market-based economic policies, and strong protection of property rights are more likely to attain high and sustained economic growth rates, and are thus a more attractive location for international business. The benefits, costs, and risks are associated with the political, economic, and legal systems of the country. The overall attractiveness of a country depends on balancing the benefits, costs, and risks.
Drag each item to the appropriate category of evaluations a manager must make when examining a country's attractiveness.
1. Middle-class population growth potential
2. First-mover advantages
3. Bribe payments
4. Unaxpestec political change
5. Infrastructure issuos
6. Resolving contract disputes
7. Free market economy
8. Economio uncertainty
A. Evaluate Benefits
B. Evaluate Costs
C. Evaluate Risks
Answer: Please refer to Explanation
Explanation:
When Evaluating a country's attractiveness for investment, there are several factors that should be evaluated. Key amongst them are, Benefits, Costs and Risks.
Under Benefits, the economy is evaluated based on the benefits it brings to the table. It's strengths and Opportunities. The goal is to see if these benefits present the company with adequate enough incentives to want to invest.
Under Costs, the cost of setting up and thriving is evaluated. What does the company have to pay and who do they have to pay it to in order to set up properly.
Under Threats, the factors that could adversely affect the company as a result of Investing in the country are evaluated. This is very important to know so that if need be, contingencies can be established.
Classifying the above.
1. Middle-class population growth potential. EVALUATE BENEFITS.
The middle class are the main purchasers of goods and services in the economy. In evaluating benefits the potential growth rate of the middle class should be evaluated.
2. First-mover advantages. EVALUATE BENEFITS.
Evaluating the potential benefits to be had from investing first in a country is part of Benefits Evaluation.
3. Bribe payments. EVALUATE COSTS.
Bribery payments are a cost when it comes to setting up in corrupt nations. They need to be evaluated as costs.
4. Unexpected political change. EVALUATE RISKS.
Under the evaluation of risks, this should be evaluated because a new Political leadership could have a different attitude to the company and this is a threat.
5. Infrastructure issues. EVALUATE COSTS.
Under the evaluation of cost there must be an evaluation of infrastructural issues in the country. If there are infrastructural challenges, the cost of setting up will be higher because depending on the infrastructure you'd have to bring in infrastructure from other areas and that would be expensive.
6. Resolving contract disputes. EVALUATE COSTS.
What are the costs of resolving contract disputes in the country. If they are favourable then the country is fine.
7. Free market economy. EVALUATE BENEFITS.
A free Market Economy is very useful to Entreprise. The type of economy needs to be evaluated therefore to see if it is a Free Market Economy that can benefit the company.
8. Economic uncertainty. EVALUATE RISKS.
How stable is the economy of the country in question. A country with an unstable Economy is one with a lot of Uncertainty and any company going in there will have to risk suffering losses if the Economy goes through peril.
FICO is a. a company that analyzes consumer credit histories. b. a measure of your debt-to-income ratio. c. a special introductory interest rate on any purchases made during the holiday shopping season. d. a federal agency charged with monitoring consumer spending habits.
Answer: a. a company that analyzes consumer credit histories.
Explanation: The Fair Isaac Corporation (FICO) founded in 1956 by Bill Fair and Earl Isaac is a data analytics company and also the first company to offer a credit-risk model with a score. In other words, the FICO model is the primary method used for determining an individual's creditworthiness and in the provision of a credit rating or score.
They also offer credit scores for sales, either alone or as part of a package of products.
Ivory Corporation, a calendar year, accrual method C corporation, has two cash method, calendar year shareholders who are unrelated to each other. Craig owns 35% of the stock, and Oscar owns the remaining 65%. During 2019, Ivory paid a salary of $100,000 to each shareholder. On December 31, 2019, Ivory accrued a bonus of $25,000 to each shareholder. Assuming that the bonuses are paid to the shareholders on February 1, 2020, compute Ivory Corporation's 2019 deduction for the above amounts.
Answer:
$225,000
Explanation:
Computation for Ivory Corporation's 2019 deduction for the above amounts.
In a situation where a Corporation uses the accrual method such Corporation cannot in any way claim a deduction for an accrual with respect to a related party reason been that the recipient have to reports the amount as income.
Therefore Ivory Corporation cannot deduct the $25,000 bonus which was attributable to Oscar because Oscar is the related party until the year 2018.
Ivory Corporation should go ahead and deduct in 2017 the salary payments which is been made to each shareholder plus the accrued bonus to Craig, or $225,000
Salary of $100,000 + Salary of $100,000 + $25,000 bonus
$225,000
Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 10%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 14.50%. What is Pearson's cost of common equity
Answer:
21.45%
Explanation:
Pearson motors has a target capital structure of 45% debt and 55% common equity
The yield to maturity is 10%
Tax rate is 40%
WACC is 14.50%
First of all we have to find the tax cost of debt
Tax cost of debt= Yield to maturity×(1-tax rate)
= 8×(1-25/100)
= 8×(1-0.25)
= 8×0.75
= 6%
The next step is to calculate the common equity
Therefore, the common equity can be calculated as follows
WACC= Respective cost×Respective weight
14.50= (6×0.45)+(0.55×common equity)
14.50= 2.7+(0.55×common equity)
14.50-2.7= (0.55×common equity)
11.8= (0.55×common equity)
Common equity= 11.8/0.55
Common equity= 21.45%
Hence Pearson's cost of common equity is 21.45%
Exceptional Electronics began operations September 1, 2019. The firm sells its merchandise for cash and on open account. Sales are subject to a 7 percent sales tax. During September, Exceptional Electronics engaged in the following transactions:Date Transactions2019Sept. 1 Sold a high-definition television set on credit to Candy Cho: issued Sales Slip 101 for $2,100 plus sales tax of $147.3 Sold stereo equipment on credit to Jim Peters; issued Sales Slip 102 tor $900 plus sales tax of $63.7 Sold a microwave oven on credit to Bridgette Huffman: issued Sales Slip 103 for $300 plus sales tax or $21.12 Accepted return of defective stereo equipment from Jim Peterson: issued Credit Memorandum 101 for $200 plus sales tax of $14. The stereo equipment was sold on September 3.15 Recorded cash sales for the period from September 1 to September 15 of $10,500 plus sales tax of $735.16 Sold a gas dryer on credit to Kathy Sundstrand: issued Sales Slip 104 tor $600 plus sales tax of $42.17 Sold a home entertainment system on credit to Mark Navalta; issued Sales Slip 105 for $2,100 plus sales tax of $147.18 Received $670 from Candy Cho on account.20 Received payment in full from Jim Peterson for the sale of September 3, less the return of September 12.25 Gave Mark Navalta an allowance because of scratches on his home entertainment system sold on September 17, Sales slip 105; issued Credit Memorandum 102 for $200 plus sales tax of $14.27 Received payment in full from Bridgette Huffman tor the sale of September 7.29 Sold a dishwasher on credit to Mark Navalta: issued Sales Slip 106 tor $400 plus sales tax or $28.30 Recorded cash sales for the period From September 16 to September 30 of $10,800 plus sales tax of $756.GENERAL LEDGER ACCOUNTS101 Cash111 Accounts Receivable221 Sales Tax Payable481 Sales421 Sales Returns and AllowancesACCOUNTS RECEIVABLE LEDGER ACCOUNTSCandy Cho Jim PetersonBridgette Huffman Kathy SundstrandMark Navalta Required:2. Post the entries from the general journal into the appropriate accounts in the general ledger and in the accounts receivable ledger.3. Prepare a schedule of accounts receivable.
Answer:
Since there is not enough room here, I prepared the general ledger, the accounts receivable ledger and the schedule of accounts receivable in an excel spreadsheet (attached).
Explanation:
Graham Petroleum produces oil. On May 1, it had no work-in-process inventory. It started production of 244 million barrels of oil in May and shipped 216 million barrels in the pipeline. The costs of the resources used by Graham in May consist of the following:
Materials $6,000 Million
Conversion Cost (Labor and overhead) $7,968 Million
Required:
The production supervisor estimates that the ending work-in-process is 60 percent complete on May 31.
Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending inventory as of May 31. (Do not round intermediate calculations. Enter your answers in millions. For example, enter "1" instead of "1,000,000".)
Answer:
The cost of 216 million barrels of oil shipped is $ 12,960 million
Cost of ending work in process is $1,008 million
Explanation:
The total costs of oil production is computed thus:
$million
materials 6,000
conversion cost 7,968
total cost 13,968
Production started 244 million
Oil shipped 216 million
ending work in process 28 million
total equivalent units=216 million+28 million*60%=216 million+16.8 million=232.8 million
cost of oil shipped=$13,968/232.8*216=$ 12,960 million
amount of ending inventory=$13,968-$12,960=$1,008.00
