June2017SupportPackage.pdf

# Change in income xylo zinten sales differential

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Change in income: = Xylo – Zinten sales differential – Additional cost = [ 2,000 x (\$15 - \$12)] - \$4,000 = \$6,000 - \$4,000 = \$2,000 216. Correct answer c. Abnormal spoilage is spoilage that should not arise under efficient production conditions and is written off as a loss in the period in which it is detected. Therefore, there would be no effect on the unit manufacturing cost of Job 532 but operating income would decrease. 217. Correct answer b. Baldwin’s annual budgeted overhead is \$600,000 calculated as follows. Overhead cost per unit \$4.30 – (\$1,000 ÷ 1,000) – (\$1,500 ÷ 1,000) = \$1.80 Overhead hours per unit 450 ÷ 1,000 = .45 hr. Overhead budget per unit \$1.80 ÷ .45 = \$4.00 Total overhead budget 150,000 x \$4.00 = \$600,000 218. Correct answer b. Total overhead applied to Job #231 is \$303 as shown below. Tooling overhead/hr. \$8,625 ÷ 460 hours = \$18.75 Fabricating overhead/hr. \$16,120 ÷ 620 hours = \$26.00 Job #231 overhead (\$18.75 x 12) + (\$20.00 x 3) = \$303.00 219. Correct answer d. The weighted average inventory cost per unit completed in October is \$4.00 calculated as follows. Equivalent units: Units transferred out 27,000 Ending inventory (3,000 x .5) 1,500 Total 28,500 Cost incurred: \$4,300 + \$39,700 + \$70,000 = \$114,000 Unit cost: \$114,000 ÷ 28,500 = \$4.00/unit 220. Correct answer c. The total raw material cost in ending inventory is \$60 calculated as follows. Since material is added at the beginning of the manufacturing process, all units are 100% complete with regard to material. Material cost = \$120 + \$540 = \$660 Unit cost = \$660 ÷ 110 units = \$6.00 EI raw material = \$6.00 x 10 units = \$60 221. Correct answer d. Normal spoilage is allocated to the units produced during the period while abnormal spoilage is treated as a period cost.

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141 222. Correct answer b. Normal spoilage should be part of the normal cost of manufacturing goods and should be charged to good units produced. Abnormal spoilage, not a part of normal operations, should be expensed as a period cost when detected. 223. Correct answer b. Southwood would transfer 16,000 units to finished goods inventory at a cost of \$154,850 as shown below. Inventory cost = Cost of good units + Cost of normal spoilage = [16,000 x (\$3.50 + \$6.00)] + {300 x (\$3.50 + \$6.00)] = \$152,000 + \$2,850 = \$154,850 224. Correct answer a. The 65,000 units that were started and completed during the month represent the equivalent units for Material B. Material B was previously added to the beginning work-in-process and the ending work-in-process had not yet reached 80% where Material B would have been added. 225. Correct answer c. Oster’s October manufacturing cost should be assigned \$1,155,000 to production completed and \$235,000 to work-in-process inventory calculated as follows. Material at 100% = (\$700,000 + \$40,000) ÷ (60,000 + 20,000) = \$740,000 ÷ 80,000 = \$9.25/unit Equivalent conversion units = 60,000 + (20,000 x .25) = 65,000 units Conversion cost = (\$32,500 + \$617,500) ÷ 65,000 = \$10/unit Cost of production = 60,000 x (\$9.25 + \$10) = \$1,155,000 Cost of work-in-process = (20,000 x \$9.25) + (5,000 x \$10) = \$235,000 226. Correct answer d. The equivalent units used to assign material costs is 100,000 consisting of the 30,000 in beginning inventory and the 70,000 units started during the month. The equivalent units used to assign conversion costs is 82,000 consisting of 12,000 units (30,000 x 40%) in beginning inventory and the 70,000 units started during the month.
142 227. Correct answer b. The total conversion cost transferred to the next department is \$1,600 calculated as follows.

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