Assignment Second Production Department

MANAGERIAL ACCOUNTING Exercise 4-11 Comprehensive Exercise; Second Production Department —Weighted-Average Method Special instructions: Complete Exercise 4-11 using Microsoft Excel. Details for how to complete this exercise can be found in the sections on learning objectives 2, 3, 4, and 5 in Chapter 4 of your textbook. Scribners Corporation produces fine papers in three production departments—Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department follow: Percent Complete Units Pulping Conversio n Work in process inventory, March 1 5,000 100% 20% Work in process inventory, March 31 8,000 100% 25% Pulping cost in work in process inventory, March 1 $4,800 Conversion cost in work in process inventory, March 1 $500 Units transferred to the next production department 157,000 Pulping cost added during March $102,450 Conversion cost added during March $31,300 No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of dried paper that is passed on to the Finishing Department. Required: 1. Compute the Drying Department’s equivalent units of production for pulping and conversion in March. Physical Units = Completed and Transferred Pulping 157,000 Ending Work in process Inventory 157,000 8,000 = 100% for Pulping = 25% for Conversion = EQUIVALENT UNITS Conversion 157,000 = 8,000 = = 2,000 165,000 165,000 159,000 2. Compute the Drying Department’s cost per equivalent unit for pulping and conversion in March. Description Cost of Beginning Work in Process Inventory, March 1 Cost for current period Total Cost Equivalent Units Cost Per Equivalent Units Pulping $4,800 $102,450 $107,250 165,000 $0.65 Conversion $500 $31,300 $31,800 159,000 $0.20 3. Compute the Drying Department’s cost of ending work in process inventory for pulping, conversion, and in total for March. Cost of Ending Work in Process Inventory Pulping Conversion Total Equivalent Units 8,000 2000 = Cost per EUP $0.65 $0.20 = Total $5,200 $400 $5,600 4. Compute the Drying Department’s cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March. Cost of Units Transferred Out to Finishing Dept Pulping Conversion Total Equivalent Units 157,000 157000 = Cost per EUP $0.65 $0.20 = Total $102,050 $31,400 $133,450 5. Prepare a cost reconciliation report for the Drying Department for March. Costs to be Accounted For Cost of Beginning Inventory Costs for Current Period Total Costs to be accounted for < Costs to be Accounted For $5,300 Units Completed and Transferred $133,750 Cost of Ending Inventory $139,050 Total Costs to be accounted for < $133,450 $5,600 $139,050 Exercise 5-6 Break-Even Analysis Special instructions: Answer the questions for Exercise 5-6 on this document, using the space after the requirements. The equations for completing exercise 5-6 can be found on page 210 of your textbook. Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200. Required: 1. Calculate the company’s break-even point in unit sales. 2. Calculate the company’s break-even point in dollar sales. 3. If the company’s fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? Data (Given) = Per Unit Total Sales Price $15.00 = Varible Cost $12.00 = Contribution Margin $3.00 = $4,200. Fixed Cost = 00 Solution 1 and 2 Contribution Margin Ratio = Breakeven Point (Units) < Breakeven Point (Sales) < 0.20 1,400 $21,00 0 Solution 3 Company's Fixed Expense (Increased) Contribution Margin Ratio Breakeven Point (Units) Breakeven Point (Sales) = $4,800. 00 = 0.20 < 1,600 $24,00 0 < Exercise 5-10 Multiproduct Break-Even Analysis Special instructions: Use Microsoft Excel to complete Exercise 5-10. Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:  Sales Variableexpenses Contributionmargin Fixedexpenses Netoperatingincome Required: Claimjumper $30,000 20,000 $10,000         Makeover $70,000 50,000 $20,000         Total $100,000 70,000 30,000 24,000 $6,000 1. What is the overall contribution margin (CM) ratio for the company? a. Company’s overall contribution margin ratio is 30%. 2. What is the company’s overall break-even point in dollar sales? a. Company’s break-even point in dollar sales is $80,000. 3. Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products. = Sales Variable expenses Contribution margin Fixed expenses Net operating income Claimjumpe Makeover r $24,000 $56,000 16,000 40,000 $10,000 $20,000 = = = = Total $80,000 56,000 $24,000 24,000 $0