Use the following information for questions 1-2: The following data from the jus
ID: 2544504 • Letter: U
Question
Use the following information for questions 1-2:
The following data from the just completed year are taken from the accounting records of Mason Company.
Please use the information below:
Sales $524,000
Direct Labor Cost $70,000
Raw Materials Purchased $118,000
Selling Expense $140,000
Administrative Expense $63,000
Manufacturing Overhead Applied to Work in Process $90,000
Actual Manufacturing Overhead Cost $100,000
Inventories Beginning of Year End of Year
Raw Materials $7,000 $15,000
Work in Process ? $5,000
Finished Goods $20,000 ?
Additional information: For the year, the cost of goods manufactured totaled $280,000; the unadjusted cost of goods sold totaled $260,000.
The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold.
1. How much was the Company’s Work in Process inventory balance at the beginning of the year?
A. $2,000 B. $10,000 C. $15,000 D. $20,000 E. None of the above
2. How much was the Company’s adjusted Cost of Goods Sold at the end of the year?
A. $280,000 B. $240,000 C. $250,000 D. $270,000 E. None of the above
3. Botox Inc. had the following financial results for 2013:
Sales Revenue $1,680,000
Contribution Margin $1,008,000
Net Operating Profit $108,000
What is Botox’s margin of safety in dollars?
A. $1,800,000 B. $360,000 C. $180,000 D. $240,000 E. $720,000
4. A company’s total overhead cost at various levels of activity is presented below:
Month Machine-Hours Total Overhead Cost
March ...................................... 5,000 $21,750
April ......................................... 4,000 $19,000
May ......................................... 6,000 $25,000
June ........................................ 7,000 $28,750
Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance.
The breakdown of these costs at the 4,000 machine-hour level of activity is as follows:
Utilities (variable) ............................... $ 8,000
Supervisory salaries (fixed) ................. 4,000
Maintenance (mixed) .......................... 7,000
Total overhead cost ............................ $19,000
Suppose the company uses the high-low method to estimate a cost formula for maintenance.
What is the maintenance cost the company expects to incur at an activity level of 5,500 machine hours?
A. $12,875 B. $19,875 C. $23,875 D. $8,875 E. None of the above
Could you please be kind enough and show me the solutions and answers in detail? Thank you so much for reading this and have a good one!
Explanation / Answer
As per policy only one question is allowed to answer at a time, so answering 1-3 :
1) Beginning WIP Inventory balance=Cogm + c WIP + c Mat. - Mat purch - o Mat - D Lab - O/H applied 280000+5000+15000-118000-7000-70000-90000=(C) $15000 2) Adjusted Cost of Goods sold = Unadjusted COGS -(Actual manufacturing overhead cost - Manufacturing overhead applied 260000 - (100000 - 90000) = (C) $250000 3) Margin of safety = Sales revenue - BE sales BE sales = FC / contribution margin = (conti $1008000 - NOP $108000)/(1008000/1680000)=1500000 Margin of safety = 1680000 - 1500000 = (C) $180000Related Questions
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