Explore BrainMass
Share

Explore BrainMass

    Accounting Problems - Preparing T accounts, beginning and ending balances.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Preparing T accounts, beginning and ending balances. See the attachment for the problem description.

    1. The following data pertain to Martin Company for September:

    Raw Materials Inventory, September 1 ...$80,000
    Work in Process Inventory, September 1 ...$95,000
    Finished goods inventory, September 1 ...$65,000
    Raw material purchases ...$55,000

    Raw materials issued ...$100,000
    Direct labor costs incurred ...$60,000
    Overhead costs incurred ...$75,000
    Costs of goods completed and transferred ...$210,000
    Cost of sales ...$235,000

    A. Prepare T accounts for the three inventory accounts and cost of sales
    B. Record the beginning balances and post the transaction for the month
    C. Draw arrows to show the transfers between accounts
    D. Calculate the inventory balances as of September 30th.

    2. Micha Smith is a young attorney who has decided to leave her current employer and set up her own law practice. She has prepared the following monthly cost estimates.

    Salary of Legal Secretary.....$3000
    Office rent and utilities........$1,200
    Other costs ..........$1,500
    Total cost ..........$5700

    Micha would like to earn $3,300 a month and feels that she will be able to bill 150 hours of her time per month to clients.

    Required:

    A. Assuming that Micha is correct in her estimates, what fee per hour shoudl Micha charge her clients?

    B. At the fee calculated in (a) what would Micha earn in a month in which her time charged to clients was only 100 hours? Assume that all costs are fixed.

    3. Valade Company produces two products, J and K. Estimated costs are pesented below for a year in which 10,000 units of each product are expected to be sold:

    Total Product J Product K
    Direct production Cost $700,000 $400,000 $300,000
    Overhead Cost $280,000 $160,000 $120,000
    Selling and Administrative Cost $140,000 $80,000 $60,000

    An Annual Profit of $280,000 for the whole company is considered satisfactory. The company uses the same profit margin(as a percentage of costs) to arrive at the price for both products.

    Required:

    A. Calculate normal selling prices for Products J and K.

    B. Using the prices calculated above, how much profit would result if the sales were
    5000 units of J and 15,000 units of K instead of 10,000 of each?

    C. Comment on the effect of changes in the product mix on total profit when the same profit margin percentage is used.

    © BrainMass Inc. brainmass.com October 9, 2019, 3:28 pm ad1c9bdddf
    https://brainmass.com/business/accounting/preparing-accounts-beginning-ending-balances-5014

    Attachments

    Solution Summary

    This problem looks at different accounting problems: preparing T accounts, beginning and ending balances.

    $2.19