1.

The following data (in thousands of dollars) have been taken from the accounting records of Acme Corporation for the just completed year.

 

 

Required:

a. Prepare a Schedule of Cost of Goods Manufactured in good form.

b. Compute the Cost of Goods Sold.

c. Using data from your answers above as needed, prepare an Income Statement in good form

 

 

2.

The following cost data relate to the manufacturing activities of the Kanaba Company last year:

 

 

The company uses a predetermined overhead rate to apply manufacturing overhead cost to production. The rate last year was $5.00 per machine-hour; a total of 5,000 machine-hours were recorded for the year.

 

Required:

 

a. Compute the amount of under- or overapplied overhead cost for the year.

b. Prepare a schedule of Cost of Goods Manufactured for the year.

 

 

3.

Aladili Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:

 

 

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 21,000 machine-hours and incur $210,000 in manufacturing overhead cost. The following transactions were recorded for the year:

 

a.       Raw materials were purchased, $346,000.

b.      Raw materials were requisitioned for use in production, $338,000 ($302,000 direct and $36,000 indirect).

c.       The following employee costs were incurred: direct labor, $360,000; indirect labor, $68,000; and administrative salaries, $111,000.

d.      Selling costs, $153,000.

e.       Factory utility costs, $29,000.

f.        Depreciation for the year was $102,000 of which $93,000 is related to factory operations and $9,000 is related to selling and administrative activities.

g.       Manufacturing overhead was applied to jobs. The actual level of activity for the year was 19,000 machine-hours.

h.       The cost of goods manufactured for the year was $870,000.

i.         Sales for the year totaled $1,221,000 and the costs on the job cost sheets of the goods that were sold totaled $855,000.

j.        The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

 

Required:

 

Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

 

 

4.

The management of Buff Sports Stadium believes that the number of sporting events each month is a measure of activity for total clean up cost. Shown below are event figures and total clean up costs for the past four months:

 

Required:

  1. Determine Buff's cost formula for monthly clean up cost using the high-low method.
  2. Estimate clean up costs if 25 events were held.

 

 

 

5.

Rapid Delivery, Inc., operates a parcel delivery service across the nation. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 150,000 miles per year the average operating cost is 10 cents per mile. This cost increases to 11 cents per mile if a truck is driven only 100,000 miles per year.

Assume that all of the activity levels mentioned in this problem are within the relevant range.

 

Required:

  1. Using the high-low method, derive the cost formula for truck operating costs.
  2. Using the cost formula you derived above, what total cost would you expect the company to incur in connection with the truck if it is driven 130,000 miles in a year?
  3. What would their profit or loss be if 30,000 of the 130,000 miles were not billable and they charges $0.20 per billable mile