Accounting Homework

Accounting Homework


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Week 5 – Term 5 Homework

60 Points

Due June 10, 2012


1.(6 points)

At the beginning of 2010, Zuir Company’s accounting department calculated the following estimates for the coming year’s production:


Estimated overhead $441,600
Direct labor hours 9,200 hr



During the year, Zuir Company experienced $440,000 in actual overhead costs and actually worked 9,100 direct labor hours. Zuir applies overhead to production using a predetermined overhead rate based on direct labor hours.


a. Calculate the predetermined overhead rate Zuir uses to apply overhead. (Show your computations.)

b. By what amount was overhead over- or underapplied for 2010? (Show your computations.)

c. Assuming the amount of over- or underapplied overhead is not significant, will the Cost of Goods Sold account be increased or decreased to correct the application of overhead?


2.(10 points)

Yamishi Production had the following inventories for the first quarter of 20xx:



  Beginning Ending
Materials $606,600 $522,100
Work in process 312,100 280,800
Finished goods 416,100 540,200


Purchases of materials during the quarter were $427,800. Total direct labor costs were incurred in the amount of $1,482,000. Actual overhead costs were incurred as follows: operating supplies used, $17,100; janitorial and maintenance, $87,300; employee benefits, $26,400; utilities, $162,000; depreciation of factory, $43,200; property taxes, $24,000; factory insurance, $29,000. Net sales for the quarter were $3,562,200. Selling and administrative expenses were $508,000. Income taxes should be computed at 40 percent.


Prepare a statement of cost of goods manufactured for the first quarter of 20xx.


3.(6 points)

The following information has been made available to you. Assume that overhead is applied on the basis of direct labor hours.


Estimated overhead $1,638,000
Estimated direct labor hours 390,000
Actual direct labor hours 442,000
Actual overhead $1,862,000


a. Compute the predetermined overhead rate.

b. Compute the amount of applied overhead for the year.

c. Compute the amount of underapplied or overapplied overhead.


4.(6 points)

Job 29 consists of 300 units and has total manufacturing costs of direct materials, $4,500; direct labor, $7,500; and overhead, $3,600.


a. What is the unit product cost?

b. What are the prime costs per unit?

c. What are the conversion costs per unit?

5.(10 points)

Cancun Company uses a FIFO process costing system.


Cancun Company

Equivalent Production





Physical Units  
Beginning inventory 2,350 Equivalent Units


Units started this period 10,120 Direct Materials % Conversion Costs %
Units to be accounted for 12,470        
Beginning inventory


Units started and completed 9,120        
Ending inventory


Units accounted for




The following costs relate to work in process during November:


Beginning inventory  
Direct materials $7,200
Direct labor 380
Overhead 630
Current month’s costs  
Direct materials $51,612
Direct labor 21,562
Overhead 32,342


At the end of the last period, all direct materials had been added, and the units were 40% complete for conversion costs.


At the end of this period, all direct materials for the 1,000 units had been added, and 70% of conversion costs had been incurred.


Prepare a process report for November, and identify the amount to be transferred.


6.(4 points)

Denapasa Manufacturing leases a vacuum cleaning system for a basic monthly fee plus an additional cost per hour used above a given minimum for each month. Given below is the information for the most recent six-month period on the number of machine hours of use and the total cost under this lease.


Month Machine Hours Total Cost
7 6,300 $58,200
8 4,400 49,935
9 4,700 52,390
10 5,200 54,440
11 5,600 56,620
12 5,000 53,800


You are to provide information for planning on the variable and fixed cost elements in this lease. Use the high-low method to (a) determine the variable cost per machine hour and (b) compute the fixed and variable costs for months 7 and 8.


7.(4 points)

Ditex is a manufacturer of digital cameras and is preparing production and sales forecasts for the coming fiscal year. The company needs to determine the point at which the projected sales revenue will equal the total of all fixed and variable costs. Fixed costs are estimated to be $314,390, and variable costs are expected to be maintained at $150 per camera. Each camera will sell for $299. Compute (a) the breakeven point in sales units and (b) the breakeven point in sales dollars.


8.(6 points)

A new product, an easy to store guitar stand, is being planned, with the following cost estimates: variable cost per unit, $9, and total fixed costs, $58,000. The projected sales price is $13 each.


a. Using the contribution margin approach, compute the number of units that must be sold to break even.

b. Using the same approach and assuming that fixed costs can be reduced by $8,000, how many units must be sold to produce a profit of $65,000?

c. Given the original information and the projection that 50,000 units can be sold, compute the selling price that the producer must use to obtain a profit of $150,000.



9.(8 points)

Projected cost information for a new product to be produced by Kolier Manufacturing is as follows:


Expected variable unit costs:  
Direct materials $10.90
Direct labor 7.18
Overhead 1.92
Selling costs 4.00
Annual fixed costs:  
Taxes on property used $ 8,870
Depreciation on building and equipment 18,920
Advertising 38,840
Other 2,070



The product is to be sold for $49.


a. Compute the number of units that must be sold to earn a profit of $80,000.

b. Compute the number of units that must be sold if advertising costs rise by $12,000 and a targeted profit of $120,000 is to be obtained.

c. Use the original information and sales of 10,000 units to compute the new selling price that the company must use to obtain a profit of $200,000.

d. The most in annual sales that could be projected is 20,000 units. Determine the added amount that could be spent on fixed advertising costs if the highest possible selling price that management believes can be charged is $50 and if there is a targeted profit of $225,000.