8 8 1 multiple choice exercises 81 a 82 d 83 a 84 e

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8-8-1
MULTIPLE-CHOICE EXERCISES8–1a8–2d8–3a8–4e8–5c8–6b8–7d8–8a8–9c8–10d8–11b8–12d8-8-1
CORNERSTONE EXERCISESCornerstone Exercise 8–131.Units ending inventory= Units beginning inventory + Units produced – Units sold= 400 + 12,000 – 11,200= 1,2002.Direct materials$ 25Direct labor80Variable overhead20Fixed overhead30Unit product cost$1553.Value of ending inventory = 1,200 × $155 = $186,000Cornerstone Exercise 8–141.Units ending inventory= Units beginning inventory + Units produced – Units sold= 400 + 12,000 – 11,200= 1,2002.Direct materials$ 25Direct labor80Variable overhead20Unit product cost$1253.Value of ending inventory = 1,200 × $125 = $150,000
Cornerstone Exercise 8–151.Direct materials$20Direct labor14Variable overhead3Fixed overhead5Unit COGS$42Total COGS = $42 × 7,500 units = $315,0002.Engers CompanyIncome Statement Under Absorption CostingFor the Most Recent YearSales ($70 × 7,500).......................................................................$525,000Less: Cost of goods sold............................................................315,000Gross margin..........................................................................$210,000Less: Selling and administrative expenses..............................142,000Operating income........................................................................$68,000Cornerstone Exercise 8–161.Direct materials$20Direct labor14Variable overhead3Unit variable COGS$37Total variable COGS = $37 × 7,500 units = $277,5002.Engers CompanyIncome Statement Under Variable CostingFor the Most Recent YearSales ($70 × 7,500).................................................$525,000Less: Variable cost of goods sold.......................277,500Contribution Contribution margin.........................................$247,500Less fixed expense:Overhead...........................................................$ 40,000Selling and administrative expenses.............142,000182,000Operating income..................................................$65,5008-8-3
Cornerstone Exercise 8–17Fering Nurseries, Inc.Segmented Income StatementFor the Coming YearPoinsettiasFruit TreesTotalSales$1,200,000$ 3,000,000$ 4,200,000Variable cost of goods sold(400,000)(1,000,000)(1,400,000)Variable selling expense(36,000)(90,000)(126,000)Contribution margin$764,000$ 1,910,000$ 2,674,000Less direct fixed expenses:Direct fixed overhead(260,000)(200,000)(460,000)Direct selling and administrative(127,000)(78,000)(205,000)Segment margin$377,000$1,632,000$ 2,009,000Less common fixed expenses:Common fixed overhead(1,475,000)Common selling and administrative(380,000)Operating income$154,000Cornerstone Exercise 8–181.Number of orders= orderaninpoundsofNumberusedpoundsofnumberAnnual= 5002,500= 5 orders per year2.Total ordering cost= Number of orders × Cost per order= 5 orders × $4= $203.Total carrying cost=Average number of pounds in inventory ×Cost of carrying one pound in inventory=2500× $2=$5004.Total inventory-related cost= Total ordering cost + Total carrying cost= $20 + $500= $520
Cornerstone Exercise 8–191.EOQ = 2 × D × COCCEOQ= 2 × 4 × $2,500/2= 100 pounds2.Number of orders= orderaninpoundsofNumberusedpoundsofnumberAnnual= 1002,500= 25 orders per year3.Total ordering cost= Number of orders × Cost per order= 25 orders × $4= $1004.Total annual carrying cost under the EOQ policy= (100/2)/2= $1005.Total inventory-related cost= Total ordering cost + Total carrying cost= $100 + $100= $200Cornerstone Exercise 8–20Reorder point = Daily usage × Lead timeReorder point = 10 × 4 days = 40Cornerstone Exercise 8–211.Safety stock= (Maximum daily usage – Average daily usage) × Lead time= (15 – 10) × 4 days= 202.Reorder point = Maximum daily usage × Lead timeReorder point = 15 × 4 days = 60OrReorder point = (Average daily usage × Lead time) + Safety stockReorder point = (10 × 4 days) + 20 = 608-8-5

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