1.(TCO F) Wahr Corporation bases its predetermined overhead rate on the estimated labor hours for theupcoming year. At the beginning of the most recently completed year, the company estimated the laborhours for the upcoming year at 32,000. The estimated variable manufacturing overhead was $7.17 perlabor hour and the estimated total fixed manufacturing overhead was $584,320. The actual labor hours forthe year turned out to be 33,300.Required:Compute the company’s predetermined overhead rate for the recently completed year.2.(TCO C) Enciso Corporation is preparing its cash budget for November. The budgeted beginning cashbalance is $31,000. Budgeted cash receipts total $135,000 and budgeted cash disbursements total$141,000. The desired ending cash balance is $50,000. The company can borrow up to $100,000 at anytime from a local bank, with interest not due until the following month.Required:Prepare the company’s cash budget for November in good form.1.(TCOC)Thefollowingoverheaddataareforadepartmentofalargecompany.ActualcostsStaticIncurredbudgetActivitylevel(inunits)800750Variablecosts:Indirectmaterials$6,850$6,600Electricity$1,312$1,275Fixedcosts:Administration$3,570$3,700Rent$3,320$3,200Required:Constructaflexiblebudgetperformancereportthatwouldbeusefulinassessinghowwellcostswerecontrolledinthisdepartment.2.(TCOD)LindonCompanyuses5,000unitsofPartXeachyearasacomponentintheassemblyofoneofitsproducts.ThecompanyispresentlyproducingPartXinternallyatatotalcostof$80,000asfollows:Directmaterials………………………………………..$18,000Directlabor………………………………………………20,000Variablemanufacturingoverhead………………. 12,000Fixedmanufacturingoverhead………………….. 30,000Totalcosts……………………………………………….80,000AnoutsidesupplierhasofferedtoprovidePartXatapriceof$13perunit.IfLindonstopsproducingthepartinternally,onethirdofthemanufacturingoverheadwouldbeeliminated.Required:Prepareamakeorbuyanalysisshowingtheannualadvantageordisadvantageofacceptingtheoutsidesupplier’soffer.3.(TCOE)HanksCompanyproducesasingleproduct.Operatingdataforthecompanyanditsabsorptioncostingincomestatementforthelastyearispresentedbelow.Unitsinbeginninginventory……………………………..0Unitsproduced………………………………………..9,000Unitssold………………………………………………8,000Sales…………………………………………………$80,000Lesscostofgoodssold:Beginninginventory……………………………………….0Addcostofgoodsmanufactured………………54,000Goodsavailableforsale………………………….54,000Lessendinginventory………………………………6,000Costofgoodssold………………………………..48,000Grossmargin……………………………………….32,000Lesssellingandadmin.expenses……………..28,000Netoperatingincome…………………………..$ 4,000Variablemanufacturingcostsare$4perunit.Fixedfactoryoverheadtotals$18,000fortheyear.Thisoverheadwasappliedatarateof$2perunit.Variablesellingandadministrativeexpenseswere$1perunitsold.Required:Prepareanewincomestatementfortheyearusingvariablecosting.Commentonthedifferencesbetweentheabsorptioncostingandthevariablecostingincomestatements.4.(TCOA)Thefollowingdata(inthousandsofdollars)havebeentakenfromtheaccountingrecordsofKarmanaCorporationforthejustcompletedyear.Sales……………………………………………………….$950Rawmaterialsinventory,beginning………………….$10Rawmaterialsinventory,ending……………………..$30Purchasesofrawmaterials………………………….$120Directlabor………………………………………………$180Manufacturingoverhead……………………………..$230Administrativeexpenses……………………………..$100Sellingexpenses………………………………………..$140Workinprocessinventory,beginning………………$70Workinprocessinventory,ending………………….$40Finishedgoodsinventory,beginning………………$100Finishedgoodsinventory,ending……………………$80Usethesedatatoprepare(inthousandsofdollars)ascheduleofCostofGoodsManufacturedandaScheduleofCostofGoodsSoldfortheyear.Inaddition,elaborateontherelationshipbetweentheseschedulesastheyrelatetotheflowofproductcostsinamanufacturingcompany.1.(TCOF)LoxhamCorporationusestheweightedaveragemethodinitsprocesscostingsystem.Dataconcerningthefirstprocessingdepartmentforthemostrecentmontharelistedbelow:Workinprocess,beginning:Unitsinbeginningworkinprocessinventory400Materialscosts$6,900Conversioncosts$2,500Percentcompleteformaterials80%Percentcompleteforconversion15%Unitsstartedintoproductionduringthemonth6,000Unitstransferredtothenextdepartmentduringthemonth5,400Materialscostsaddedduringthemonth$112,500Conversioncostsaddedduringthemonth$210,300Endingworkinprocess:Unitsinendingworkinprocessinventory1,000Percentagecompleteformaterials80%Percentagecompleteforconversion30%Required:Calculatetheequivalentunitsformaterialsforthemonthinthefirstprocessingdepartment.2.(TCO B) Heckaman Corporation produces and sells a single product. Data concerning that productappear below.SellingpriceperunitVariableexpenseperunitFixedexpensepermonth$230.00$112.70$239,292Required:Determine the monthly break-even in unit sales. Show your work!3.(TCOG)(Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 toinvest and is considering a franchise for a fast food outlet. He would have to purchase equipment costing$500,000 to equip the outlet and invest an additional $150,000 for inventories and other working capitalneeds. Other outlets in the fast food chain have an annual net cash inflow of about $160,000. Mr. Anderswould close the outlet in 8 years. He estimates that the equipment could be sold at that time for about10% of its original cost. Mr. Anders’ required rate of return is 16%.Required:Part A: What is the investment’s net present value when the discount rate is 16%?Part B: Refer to your calculations. Is this an acceptable investment? Why or why not?
