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Act 202 Midterm Fall 2020 Maths

The document provides information on the costing systems and financial performance of multiple companies: 1) Cribb Corporation uses a predetermined overhead rate based on estimated direct labor hours. It must calculate the applied overhead, determine if overhead was under or over-applied, and make a journal entry to close any variance to cost of goods sold. 2) Zen Company produces shoes and must prepare a contribution format income statement to determine the contribution of each pair toward covering fixed costs. 3) Messana Corporation must prepare schedules of cost of goods manufactured and cost of goods sold using inventory and production data provided. 4) PVC Company uses a weighted average method to allocate production costs of plastic pipes over multiple departments.

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90 views

Act 202 Midterm Fall 2020 Maths

The document provides information on the costing systems and financial performance of multiple companies: 1) Cribb Corporation uses a predetermined overhead rate based on estimated direct labor hours. It must calculate the applied overhead, determine if overhead was under or over-applied, and make a journal entry to close any variance to cost of goods sold. 2) Zen Company produces shoes and must prepare a contribution format income statement to determine the contribution of each pair toward covering fixed costs. 3) Messana Corporation must prepare schedules of cost of goods manufactured and cost of goods sold using inventory and production data provided. 4) PVC Company uses a weighted average method to allocate production costs of plastic pipes over multiple departments.

Uploaded by

Mahi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1) Cribb Corporation uses direct labor-hours in its predetermined overhead rate.

At the beginning of the year, the


estimated direct labor-hours were 17,900 hours and the total estimated fixed manufacturing overhead was
$306,090.Again estimated variable manufacturing overhead was $2 per direct labor hours. At the end of the year,
actual direct labor-hours for the year were 16,700 hours and the actual manufacturing overhead for the year was
$336,890.

Requirement
a) Determine the predetermined overhead rate and total applied manufacturing overhead cost for the year.
b) Determine whether the overhead is underapplied or overapplied.
c) State the journal entry if the firm wants to close out underapplied or overapplied overhead to cost of goods sold.
(8 marks)
.

2. Zen Company
Income Statement
For the month ended September 30
Sales $750,000
Cost of good sold (660,000)
Gross margin 90,000
Selling and Administration expense:
Selling expenses 20,000
Administration expense 10,000
(30,000)
Net operating income 60,000

Zen company sell its shoes for $750 per pair. Cost of goods sold is a mixed expense and the variable expense to
produce shoes is $320 per pair. The full admin cost is variable. In terms of selling expenses, the sales commission
per pair is $ 5 and the remaining are the fixed salaries of sales people.
Requirement
a. Prepare a contribution format income statement. Find the contribution of each pair of shoes toward covering
fixed cost (7 marks)

3) Messana Corporation reported the following data for the month of August:
Inventories Beginning Ending
Raw Materials $36,000 $24,000
Work in process $23,000 $17,000
Finished goods $37,000 $55,000

Additional Information
Raw Material purchases $69,000
Direct Labor cost $94,000
Manufacturing Overhead incurred $54,000
Indirect Materials included in maufacturing overhead incurred $8,000
Manufacturing overhead cost applied to Work in process $56,000
Instruction

1.Prepare the schedule of cost of goods manufactured.


2. Prepared the schedule of cost of goods sold. (8 marks)
4) The PVC Company manufactures a high-quality plastic pipe that goes through three processing stages prior to
completion. Information on work in the first department, Cooking, is given below for May:
Production data:
Pounds in process, May 1: materials 100%
complete; conversion 90% complete . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Pounds started into production during May . . . . . . . . . . . . . . . . . . . . . 350,000
Pounds completed and transferred to the next department . . . . . . . . 380,000
Pounds in process, May 31: materials 75% complete;
conversion 25% complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Cost data:
Work in process inventory, May 1:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $86,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,000
Cost added during May:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $447,000
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $198,000
The company uses the weighted-average method.

Required:
1. Compute the equivalent units of production.
2. Compute the costs per equivalent unit for the month.
3. Determine the cost of ending work in process inventory and of the units transferred out to the next department.
4. Prepare a cost reconciliation report for the month. ( 12marks

5) Larita Corporation produces and sells a single product. Data concerning that product appear below:

   
Fixed expenses are $243,000 per month. The company is currently selling 3,000 units per month.

Required:
The marketing manager believes that a $28,000 increase in the monthly advertising budget would result
in a 300 unit increase in monthly sales.They also can reduce sales commission by $2 per unit. What
should be the overall effect on the company's monthly net operating income of this change? Show your
work!  (5 marks)

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