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# Accounting questions: Marts Company, Vaquero Corporation, Topper Company, and more...

6-18

Funnifaces , inc. manufactures various Halloween masks. Each mask is shaped from a piece of rubber in the molding department. The masks are then transferred to the finishing department where they are painted and have elastic bands attached. In April, the molding department reported the following data:

a. In molding, all materials are added at the beginning of the process.

b. Beginning work in process consisted of 6,000 units, 20 percent complete with respect to direct labor and overhead. The total cost of beginning inventory included direct materials, \$1800 and conversion costs, \$552.

C. Costs added to production during the month were direct materials, \$3800 and conversion costs, \$8698.

D. At the end of the month, a total of 18000 units were transferred out to finishing. Then, 2,000 units remained in ending work in process, 25 percent complete.

1. Prepare a physical flow schedule.
2. Calculate equivalent units of production for direct materials and conversion costs.
3. Compute the unit cost.
4. Calculate the cost of goods transferred out to finishing at the end of the month. Calculate the costs of ending inventory.

7-18
Goodson Company has two support departments-human resources and general factory- and two producing departments- grinding and assembly, budgeted data for each follow:

Human resources general
Factory grinding assembly
Direct cost \$70,000 \$230,000 \$63,900 \$39,500
Square feet 4,000 --------------- 2,000 6,000
Direct labor hrs 600 11,000 20,000 80,000
Machine hours ----------------- 1,000 4,000 1,000
Human resources is allocated on the basis of direct labor hours; general factory is allocated on the basis of square footage.
Required:

1. Allocate overhead costs to the producing departments using the direct method.

2. Calculate departmental overhead rates, using machine hours for grinding and direct labor hours for assembly.

3. If a unit has prime costs of \$123 and spends one hour in grinding and 12 hours in assembly, what is the unit cost?

7-19 refer to the data in 7-18
Problem - 7-18 Goodson Company

1. General
HR Factory Grinding Assembly
Direct costs \$ 70,000 \$ 230,000 63,900 39,500
Allocate:
HR (70,000) - 14,000 56,000
Gen. Factory - (230,000) 57,500 172,500
Total OH \$ 0 \$ 0 \$135,400 \$268,000

2. Grinding OH rate: = \$ 33.85 per mhr (135400 / 4000)
Assembly OH rate: = \$ 3.35 per DLH (268000/80000)

3. Prime costs 123
Grinding (1 &#61620; \$33.85) 33.85
Assembly (12 &#61620; \$3.35) 40.2
Unit product cost \$197.05

Required:
1. Allocate the costs of the support departments using the sequential method.
2. Calculate departmental overhead rates, using machine hours for grinding and direct labor hours for assembly.
3. If a unit has prime costs of \$123 and spends one hour in grinding and 12 hours in assembly, what is the unit cost?
8-12
Topper Company provided the following information relating to cash payments.
A. Topper purchased direct materials on account in the following amounts.
June \$20,000
July \$25,000
August \$30,000

B. In July, direct labor cost \$57,000. August direct labor cost was \$63,000. The company finds that typically 90 percent of direct labor cost is paid in cash during the month, with the remainder paid in the following month.
C. August overhead mounted to \$110,000, including \$5,500 of depreciation.
D. Topper had taken out a loan of \$10,000 on May 1. Interest, due with payment of principle, accrued at the rate of 12 percent per year. The loan and all interest was repaid on august 31.
Required:
Prepare a schedule of cash payments for Topper Company for the month of august.

9-6
Vaquero Corporation produces high-quality leather purses. The company uses a standard costing system and has set the following standards for materials and labor;

Leather (6 strips @\$10) \$60
Direct labor (1.5 hrs @ \$14) \$21
Total prime cost \$81

During the year, vaquero produced 20,000 leather purses. Actual leather purchased was 122,000 strips at \$9.96 per strip. There was no beginning or ending inventories of leather. Actual direct labor was 31,200 hours at \$12.50 per hour.

Required:
1. Compute the costs of leather and direct labor that should have been incurred for the productio of 20,000 leather purses.
2. Compute the total budget variances for materials into a price variance and a usage variance.
3. Break down the total variance for labor into a rate variance and an efficiency variance.

9-8
Marts Company is planning to produce 1,200,000 power drills for the coming year. Each drill requires one-half standard hour of labor for completion. The company uses direct labor hours to assign overhead to products. The total overhead budgeted for the coming year is \$1,350,000, and the standard fixed overhead rate is \$0.55 per unit produced. Actual results for the year follow:
Actual production (units) 1,180,000
Actual direct labor hours 595,000