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    Managerial Accounting for a Northstar Company

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    NORTHSTAR COMPANY

    Maintenance department costs:
    Budgeted operating costs per month $80,000
    plus cost per machine-hour $0.50

    Peak-period requirements:
    Machine tools division 65%
    Special products division 35%

    October estimates of machine-hour activity:
    Machine tools division 90,000
    Special products division 60,000

    October actual machine-hour activity:
    Machine tools division 60,000
    Special products division 60,000

    Actual October costs:
    Maintenance department fixed costs $85,000
    Maintenance department variable costs $78,000

    Check figure:
    (1) Cost to Machine Tools Division $81,500

    RESTON COMPANY
    Income Statement
    For the Month Ended May 31

    Sales $900,000
    Variable expenses 408,000
    Contribution margin 492,000
    Fixed expenses 465,000
    Net operating income $27,000

    Additional data:
    Central Territory sales $400,000
    Central Territory variable expenses $208,000
    Central Territory fixed expenses $160,000
    Eastern Territory fixed expenses $130,000

    Awls sales $100,000
    Pows sales $300,000
    Awls variable expenses 25%
    Pows variable expenses 61%
    Awls fixed expenses, Central Territory $60,000
    Pows fixed expenses, Central Territory $54,000

    Check figure:
    (1) Central segment margin $32,000
    Severo S.A.
    Income Statement for Last Month:
    (Brazilian currency Real)
    Division
    Total
    Company Cloth Leather
    Sales 3,500,000 2,000,000 1,500,000
    Variable expenses 1,721,000 960,000 761,000
    Contribution margin 1,779,000 1,040,000 739,000
    Traceable fixed expenses:
    Advertising 612,000 300,000 312,000
    Administration 427,000 210,000 217,000
    Depreciation 229,000 115,000 114,000
    Total traceable fixed expenses 1,268,000 625,000 643,000
    Divisional segment margin 511,000 415,000 96,000
    Common fixed expenses 390,000
    Net operating income 121,000

    Leather Division Product Lines
    Garments Shoes Handbags
    Sales 500,000 700,000 300,000
    Traceable fixed expenses:
    Advertising 80,000 112,000 120,000
    Administration 30,000 35,000 42,000
    Depreciation 25,000 56,000 33,000
    Variable expenses as a percentage of sales 65% 40% 52%

    Common administrative expenses 110,000

    Handbag Markets
    Domestic Foreign
    Sales 200,000 100,000
    Traceable fixed expenses:
    Advertising 40,000 80,000
    Variable expenses as a percentage of sales 43% 70%

    Possible increase sales of garment line 200,000
    Possible increase sales of shoe line 145,000
    Campaign cost 30,000

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    https://brainmass.com/business/international-finance/managerial-accounting-northstar-company-245891

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    Solution Summary

    The solution explains three problems in budgeting - Northstar Company, Savero S.A., and Reston Company

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