Cost accounting - see the light PDF

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CK1978

I SEE THE LIGHT christina, when you are ready to have your work graded you will upload this file to the same screen that the project was downloaded from: www.cybertext.com, The Book List, Building Blocks of Accounting--A Managerial Perspective, Enter password, Upload Your Excel File. Keep two copies of your spreadsheet in two separate places in case one of Big Al's competitors sends someone to destroy your work or it is lost in transmission. You may find it easier to work on this project if you print a hard copy of all the pages. There are alternative methods of solving problems. To insure similar answers and to guarantee that you are graded correctly please follow the instructions as to rounding. NOTE: If there are any questions about the project e-mail [email protected] or call 305.284.6296. Grade will be based upon answers entered into the shaded boxes.

L830

160825

CK1978.xls or CK1978.xlsx

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Building Blocks of Accounting .. A Financial Perspective Page 1

FAQ

FAQ 01 Answer:

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Building Blocks of Accounting .. A Financial Perspective FAQ

FAQ 02 Answer:

What is the difference between rounding a number and rounding up a number?

B

1 2 3 4 5 6 7

FAQ 03

Answer:

C

D

E

F

Cost of a Taxi $ 100.00 Number of Passengers

3

Cost per Passenger Without rounding

33.33333 =F1/F2

Rounding to two decimals

33.33 =ROUND(F1/F2,2)

Roundup to two decimals

33.34 =ROUNDUP(F1/F2,2)

When I upload it, the results show that I have an answer wrong, yet that answer is needed for another question which is marked correct.

The computer is giving you part credit. Given: Width 10 ft Length 12 ft Cost per sq. ft. $6 Find

{1.1} Area ----- 100 sq ft (wrong) {1.2} Cost ---- $600 correct based on the wrong area. Note if the area is corrected,120 sq ft, the cost would be wrong.

Page 2

FIRST christina

LAST khan

number 1978

File CK1978

I SEE THE LIGHT Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lamps/nightlights for use in bedrooms. These lamps are sold nationwide through a group of independent sales representatives who have an exclusive sales region. The business is in its tenth year and has asked you to assist in planning for next year's operations. The lamps are ceramic figurines of animals, boats, boys and girls playing and singing, all in delightful colors. The owner of the business, Big Al, creates a drawing for the figurine and faxes it to a plant in China where a mold is created and a sample produced and hand painted. If the mold meets the expectations of Big Al an order of 500 pieces is placed. There are presently 10 different figurines that come in six different colors; 60 models. The lamp shades and the electrical parts are supplied from domestic manufacturers. There are presently 10 workers in the plant. They are responsible for receiving the raw material, manufacturing the product, packing and shipping. In addition to Big Al there are two office workers who are responsible for all administrative duties. Big Al had his accountant prepare the Projected Income Statement and Balance Sheet presented on page two. Big Al heard about your skills in managerial accounting and would like your assistance in the following areas: Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7

Fixed and Variable Cost Determinations - Unit Cost Calculations Cost Volume Relationships - Profit Planning Budgets Process Costing Job Order Costing Standard Costing - Variance Analysis Capital Decision Making

To upload your work to Big Al the file without changing the name. Pay attention to the specific location that Excel saves the file. Return to the bottom of the page that you downloaded the file from; Cybertext.com, The Book List, Building Blocks of Accounting --A Managerial Perspective, Enter password, Upload Your Excel File. If you upload an old version of the file the results will not update. Keep two copies of your spreadsheet in two separate places in case one of Big Al's competitors sends someone to destroy your work or it is lost in transmission. You may find it easier to work on this project if you print a hard copy of all the pages. NOTE: If there are any questions about the project e-mail [email protected] or call 305.284.6296. Grade will be based upon answers entered into the shaded boxes.

Page 2

I See The Light Projected Income Statement For the Period Ending December 31, 20x1

Sales 25,000 lamps @ $45.00 Cost of Goods Sold @ $28.93 Gross Profit Selling Expenses: Fixed Variable (Commission per unit) @ $3.15 Administrative Expenses Total Selling and Administrative Expenses: Net Profit

$ 1,125,000.00 723,250.00 $ 401,750.00 $ 23,000.00 78,750.00 $ 101,750.00 40,750.00 $

142,500.00 259,250.00

I See The Light Projected Balance Sheet As of December 31, 20x1 Current Assets Cash Accounts Receivable Inventory Raw Material Figurines Electrical Sets Work in Process Finished Goods Total Current Assets Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets

Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity

$

500 @ $9.20 500 @ $1.25 0 3000 @ $28.9250

34,710.00 67,500.00

$

4,600.00 625.00 86,775.00 194,210.00

$

13,200.00 207,410.00

$ $

54,000.00 54,000.00

$

153,410.00 207,410.00

$ 20,000.00 6,800.00

$ 12,000.00 141,410.00

Page 3

christina khan 2342

PART 1 Fixed and Variable Cost Determinations Unit Cost Calculations

The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Figurines Electrical Sets Lamp Shade Direct Labor: Variable Overhead: Fixed Overhead: Cost per lamp:

$9.2000000 1.2500000 6.0000000 2.2500000 0.2250000 10.0000000

per lamp per lamp per lamp per lamp (4 lamps/hr.) per lamp per lamp (based on normal capacity of 25,000 lamps)

$28.9250000 per lamp

Expected increases for 20x2 When calculating projected increases round to SEVEN decimal places,$0.0000000. 1. Material Costs are expected to increase by 4.50% . 2. Labor Costs are expected to increase by 3.00%. 3. Variable Overhead is expected to increase by 3.00%. 4. Fixed Overhead is expected to increase to $295,000. 5. Fixed selling expenses are expected to be $35,000 in 20x2. 6. Variable selling expenses (measured on a per lamp basis) are expected to increase by 4.50%. 7.

Fixed Administrative expenses are expected to increase by $8,000. The total administrative expenses for 20x0 were $40,625.00, when 22,500 units were sold. Use the High-Low method to calculate the total fixed administrative expense.

8. Variable administrative expenses (measured on a per lamp basis) are expected to increase by 4.00%. The total administrative expenses for 20x0 were $40,625.00, when 22,500 units were sold. Use the High-Low method to calculate the variable administrative expense per lamp. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3- 20x2 Projected Fixed Costs.

Page 4

christina khan 2342 I See The Light, Inc Schedule of Projected Costs

Variable Manufacturing Unit Cost 20x1 Cost

Projected Percent Increase

20x2 Cost Rounded to 7 Decimal Places

Figurines

$9.20

4.50%

$9.6140000

{4.01}

Electrical Sets

$1.25

4.50%

$1.3062500

{4.02}

Lamp Shade

$6.00

4.50%

$6.2700000

{4.03}

Labor

$2.25

3.00%

$2.3175000

{4.04}

Variable Overhead

$0.23

3.00%

$0.2317500

{4.05}

$19.7395000

{4.06}

Projected Variable Manufacturing Cost Per Unit

$18.93

Total Variable Cost Per Unit 20x1 Cost

Variable Selling Variable Administrative 20x1

$3.15 0.0500000

Projected Percent Increase

20x2 Cost Rounded to 7 Decimal Places

4.50%

3.2917500

4.00%

{4.08}

Variable Administrative 20x2

0.0520000

Projected Variable Manufacturing Unit Cost

$18.93

Projected Total Variable Cost Per Unit

$22.13

{4.07} {4.09} {4.06}

$23.0832500

{4.10}

Schedule of Fixed Costs 20x1 Cost Fixed Overhead (normal capacity of _________ lamps @ __ ) Fixed Selling Fixed Administrative 20x1

250000

Projected Increase 45000

20x2 Cost Rounded to 2 Decimal Places $

295,000.00

$

35,000.00

{4.11}

25000*10 23000 39,500.00

8000

{4.12} {4.13}

Fixed Administrative 20x2

$

47,500.00

{4.14}

Projected Total Fixed Costs

$

377,500.00

{4.15}

Page 5

PART 2 Cost Volume Relationships Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 1.

For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold?

4523.08325/

23.08325 45

Contribution Margin per unit (Round to seven places, $##.#######) Contribution Margin Ratio (Round to seven places,% is two of those places ##.#####%)

2.

$21.9167500

{5.01}

48.70389%

{5.02}

17,225 units

{5.03}

29,510 units

{5.04}

For 20x2 the selling price per lamp will be $45.00. How many lamps must be sold to breakeven?

377500/ 21 23.0832500)

Breakeven sales in units (Round up to zero places, ###,### units)

3.

For 20x2 the selling price per lamp will be $45.00. The desired operating income in 20x2 is $269,250 . What would sales in units have to be in 20x2 to reach the profit goal?

Sales in units (Round up to zero places, ###,### units)

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christina khan 2342

4.

For 20x2 the selling price per lamp will be $45.00. The company would like to have a operating income equal to 28.00% of sales. If that is to be achieved, what would be the sales in units in 20x2?

377500+315,000=692500/21.91675

Sales in units (Round up to zero places, ###,### units)

5.

40,519 units

If the company believed that it could only sell 25,000 lamps, what would the new selling price have to be so that the new contribution margin per unit is equal to last year's contribution margin per unit? LY SP LY Var C LY CM

45 Price 22.125 CY Var cost 22.875 CY CM

= to a +b = 45.96 (a) 23.08325 (b) 22.875

New Selling Price (Round up to two places, $###,###.## ) 6.

$

45.96

{6.02}

For 20x2 the selling price per lamp will be $45.00 and the effective tax rate is 39%. How many units must be sold to generated a operating income of $200,000 after taxes? FC

377500 + 200,000 [1-.39] divided by CM 21.91675

Sales in units (Round up to zero places, ###,### units) 7.

{6.01}

32,185 units

{6.03}

If the company believes that the demand will be 27,500 units for the year. What selling price per lamp, rounded to two places, would generate a operating income of $820,500?

New selling price per lamp (Round up to two places, $###,###.## )

$

66.65

{6.04}

Page 7

christina khan 2342

PART 3 Budgets Keep in mind that the budget section builds on work from the previous parts, including Part I as well as the Background Information (tabs 1-4). You should continue to use the same file with your previously submitted answers.

Division N has decided to develop its budget based upon projected sales of 31,000 lamps at $51.00 per lamp. The company has requested that you prepare a master budget for the year. This budget is to be used for planning and control of operations and should be composed of: 1. Production Budget 2. Materials Budget 3. Direct Labor Budget 4. Factory Overhead Budget 5. Selling and Administrative Budget 6. Cost of Goods Sold Budget 7. Budgeted Income Statement 8. Cash Budget Notes for Budgeting:

The company wants to maintain the same number of units in the beginning and ending inventories of work-in-process, and electrical parts while increasing the figurines inventory to 675 pieces and increasing the finished goods by 25.00% . Complete the following budgets 1 Production Budget Planned Sales Desired Ending Inventory of Finished Goods (roundup to the next unit) Total Needed Less: Beginning Inventory Total Production

31000 3750 34750 -3000 31,750 units

{7.01}

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christina khan 2342

2 Materials Budget Figurines Needed for Production

31,750 units

{8.01}

Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases

675 units 32425 500 units 31,925 units

{8.02} {8.03} {8.04}

9.614 306,926.95

{8.05}

Cost per piece Cost of Purchases (Round to two places, $##.##)

$

Electrical Parts Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.##)

Lamp Shades - not inventoried they arrive from the shop next door Just-in-time. Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.##)

31750 500 32,250 units 500 31750 1.30625

{8.06}

$

41,473.44

{8.07}

$

199,072.50

{8.08}

3 Direct Labor Budget Labor Cost Per Lamp Production Total Labor Cost (Round to two places, $##.##)

$

2.3175 31750 73,580.63

{8.09}

4 Factory Overhead Budget Variable Factory Overhead: Variable Factory Overhead Cost Per Unit Number of Units to be Produced Total Variable Factory Overhead (Round to two places, $##.##) Fixed Factory Overhead Total Factory Overhead (Round to two places, $##.##) Predetermined Factory Overhead Rate based upon the budgeted total factory OH, divided by the budgeted number of units to be produced, and then rounded to seven places, $##.#######)

$

0.23175 31750 7,358.06 295000

$ 302,358.06 /31750 equals 8.12 $

9.52308850

{8.10}

{8.11}

{8.12}

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christina khan 2342

5 Selling and Admin. Budget Fixed Selling Variable Selling (Round to two places, $##.##) Fixed Administrative Variable Administrative (Round to two places, $##.##) Total Selling and Administrative (Round to two places, $##.##)

6

3.29

35000 101990 47500 1651 $186,156.25 {9.01}

31000

.052 x

31000

Cost of Goods Sold Budget -Assume FIFO (First - In, First - Out) and overhead is applied based on the number of units to be produced.

Round dollars to seven places, $##.####### 17.19025 2.3175 9.5230885

Cost of making one unit next year Material cost per unit Labor Cost Per Lamp Factory overhead per unit Total cost of one unit (Round to seven places, $##.#######)

d.

$

29.03083850

{9.02}

Round dollars to two places, $##.## Beginning Inventory, Finished Goods Production Costs: Materials: Figurines: Beginning Inventory Purchased Available for Use Ending Inventory of Figurines Figurines Used In Production Electrical Parts Beginning Inventory Purchased Available for Use Ending Inventory of Electrical Parts Electrical Parts Used In Production Lamp Shades: Lamp Shades Used In Production Total Materials: Labor Overhead Cost of Goods Available Less: Ending Inventory, Finished Goods Cost of Goods Sold

e

$

$

86,775.00

{9.03}

4600 306926.95 311526.95 6489.45 305,037.50 {9.04} 625 41473.44 42098.44 653.13

$

a b C a+b+c + e 3750 x d.

$ $ $ $ $ $ $

41,445.31

{9.05}

199,072.50 {9.06} 545,555.31 {9.07} 73,580.63 302,358.06 1,008,269.00 108,865.64 899,403.36

{9.08} {9.09} {9.10} {9.11} {9.12}

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christina khan 2342

7 Budgeted Income Statement Sales Cost of Goods Sold Gross Profit Selling Expenses & Admin. Expenses Net Operating Income

1581000 899403.36 681596.64 186156.25 495,440.39 {10.01}

$

8 Cash Budget Assume actual cash receipts and disbursements will follow the pattern below: (Note: Receivables and Payables of 12/31/x1 will have a cash impact in 20x2.) 1. 19.00% of sales for the year are made in November and December. Since our customers have 60 day terms those funds will be collected be collected in January and February. 2. 85.00% of material purchases w...