1. Waters Salad Dressing had beginning work-in-process in July of $248,320 consisting of $101,640 of materials and $146,680 of conversion costs. There were 16,000 units (one unit equals one case of salad dressing) in beginning work-in-process, 40% complete as to conversion costs. Materials are added at the beginning of the process. During November, 34,000 were transferred out; 1,000 were spoiled and 9,000 remained in ending inventory. The spoiled units were 60% complete for conversion cost. The ending work-in-process was 70% complete for conversion cost. Costs during the period amounted to $781,200 for direct materials and $1,009,280 for conversion. Waters uses the weighted-average-method and identifies all spoilage costs separately.
The number of units started during July was:
2. The Stanhope Corporation produces three outputs: A, B and C from one input. The net-realizable-value of A at the split-off point is $200,000. The net-realizable-value of B at the split-off point is $400,000 and the net-realizable- value of C at the split-off is $50,000. Final sales values are $400,000, $600,000 and $50,000 for A, B and C respectively. However, these prices are subject to erratic change. The additional processing costs for A, B and C are $100,000, $150,000 and $0 respectively. Stanhope produces 120,000 units of A, 120,000 units of B and 60,000 units of C. The total costs incurred up to the split-off point are $300,000.
If the net-realizable-value method is used and product C is accounted for as a joint-product, what amount of joint- costs should be allocated to product A?
3. A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:
Service Departments Producing Departments
Department S1 S2 S3 P1 P2
S1 --- .10 .05 .40 .45
S2 --- --- --- .45 .55
S3 .10 .10 --- .35 .45
Direct costs in the various departments are as follows:
Department Direct Costs
In what order should the three service departments be allocated, assuming the step-method is used?
4. The Vituilli Company manufactures surgical gowns for hospitals. Their controller, Evah Hieken is preparing the variance analysis report for October. Standard Costs are as follows:
Direct Material 2.0 yards at $6 per yard
Direct Labor0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
The direct labor efficiency variance is
A) $12,000 favorable
B) $12,000 unfavorable
C) $36,000 favorable
D) $36,000 unfavorable
5. Riyyad Co. produces its only product in a highly automated process, expected monthly production is 50,000 units. The required direct material costs $0.85 per unit. Manufacturing overhead costs are $75,000 per month and are allocated based on units of production.
What is the total flexible budget for 50,000 units and 25,000 units, respectively?
A) $117,500; $58,750
B) $ 75,000; $37,500
C) $ 75,000; $38,000
D) $117,500; $96,250
Excel file contains calculations, explanations and answers of various cost accounting problems.
1. Larry Bounds has won the gold bat award for hitting the longest home run in major league baseball this year. The bat is worth almost $35,000. Under what conditions can Larry exclude the award from his gross income? Explain.
2. Compare and contrast start-up costs and organizational expenditures. Describe how the tax treatment of these expenditures differs from the treatment for financial accounting purposes.
3. Congress has tried to subsidize the cost of higher education through the federal income tax system. Compare and contrast the operation of the deduction for qualified educational costs and the operation of the deduction for interest on qualified educational loans.
4. What is an ordinary and necessary business expenditure?