Kunci Pr 1.docx

2-36 (25–30 min.) Income statement and schedule of cost of goods manufactured. Calendar Corporation Income Statement for the Year Ended December 31, 2011 (in millions) Revenues Cost of goods sold Beginning finished goods, Jan. 1, 2011 Cost of goods manufactured (below) Cost of goods available for sale Ending finished goods, Dec. 31, 2011 Gross margin Marketing, distribution, and customer-service costs Operating income (loss)

$354 $43 225 268 19

249 105 91 $14

Calendar Corporation Schedule of Cost of Goods Manufactured for the Year Ended December 31, 2011 (in millions) Direct material costs Beginning inventory, Jan. 1, 2011 $ 39 Direct materials purchased 82 Cost of direct materials available for use 121 Ending inventory, Dec. 31, 2011 9 Direct materials used Direct manufacturing labor costs Indirect manufacturing costs Plant supplies used 5 Property taxes on plant 3 Plant utilities 6 Indirect manufacturing labor costs 25 Depreciation––plant and equipment 8 Miscellaneous manufacturing overhead costs 17 Manufacturing costs incurred during 2011 Add beginning work-in-process inventory, Jan. 1, 2011 Total manufacturing costs to account for Deduct ending work-in-process inventory, Dec. 31, 2011 Cost of goods manufactured (to income statement)

$112 41

64 217 15 232 7 $225

2-37 (15–20 min.) Terminology, interpretation of statements (continuation of 2-34). 1. Direct materials used Direct manufacturing labor costs Prime costs

$112 million 41 million $153 million

Direct manufacturing labor costs Indirect manufacturing costs Conversion costs

$41 million 64 million $105 million

2. Inventoriable costs (in millions) for Year 2011 Plant utilities Indirect manufacturing labor Depreciation—plant and equipment Miscellaneous manufacturing overhead Direct materials used Direct manufacturing labor Plant supplies used Property tax on plant Total inventoriable costs Period costs (in millions) for Year 2011 Marketing, distribution, and customer-service costs

$ 6 25 8 17 112 41 5 3 $217 $ 91

3. Design costs and R&D costs may be regarded as product costs in case of contracting with a governmental agency. For example, if the Air Force negotiated to contract with Lockheed to build a new type of supersonic fighter plane, design costs and R&D costs may be included in the contract as product costs. 4. Direct materials used = $112,000,000 ÷ 1,000,000 units = $112 per unit Depreciation on plant and equipment = $8,000,000 ÷ 1,000,000 units = $8 per unit 5. Direct materials unit cost would be unchanged at $112. Depreciation unit cost would be $8,000,000 ÷ 2,000,000 = $4 per unit. Total direct materials costs would rise by 100% to $224,000,000 ($112 per unit × 2,000,000 units). Total depreciation cost of $8,000,000 would remain unchanged. 6. In this case, equipment depreciation is a variable cost in relation to the unit output. The amount of equipment depreciation will change in direct proportion to the number of units produced. a. Depreciation will be $1 million (1 million × $1) when 1 million units are produced. b. Depreciation will be $2 million (2 million × $1) when 2 million units are produced.

2-40 (30 min.) Comprehensive problem on unit costs, product costs. 1. If 2 pounds of direct materials are used to make each unit of finished product, 115,000 units × 2 lbs., or 230,000 lbs. were used at $0.65 per pound of direct materials ($149,500 ÷ 230,000 lbs.). (The direct material costs of $149,500 are direct materials used, not purchased.) Therefore, the ending inventory of direct materials is 2,300 lbs. x $0.65 = $1,495. 2.

DM Costs DM labor costs Plant energy costs Indirect manufacturing costs Other indirect manufacturing costs COGM

Manufacturing Costs for 115,000 units Variable Fixed Total $149,500 $149,500 34,500 34,500 6,000 6,000 12,000 $17,000 29,000 7,000 27,000 34,000 $209,000 $44,000 $253,000

Average unit manufacturing cost: $253,000 ÷ 115,000 units = $2.20 per unit Finished goods inventory in units: $15,400 (given) ÷ $2.20 per unit = 7,000 units 3. Units sold in 2011 = Beginning inventory + Production – Ending inventory = 0 + 115,000 – 7,000 = 108,000 units Selling price in 2011 = $540,000 ÷ 108,000 = $5.00 per unit 4. Denver Office Equipment Income Statement Year Ended December 31, 2011 (in thousands) Revenues (108,000 units sold × $5.00) Cost of units sold: Beginning finished goods, Jan. 1, 2011 Cost of goods manufactured Cost of goods available for sale Ending finished goods, Dec. 31, 2011 Gross margin Operating costs: Marketing, distribution, and customer-service costs Administrative costs Operating income

$540,000 $ 0 253,000 253,000 15,400

173,000 58,000

237,600 302,400

231,000 $71,400

2-42 (20–25 min.) Finding unknown amounts. Revenues COGS Gross margin

A

Case 1 $48,000 31,050 $16,950

DM used DML costs Indirect manufacturing costs Manufacturing costs incurred Add WIP, beginning Total manufacturing costs to account for Deduct WIP, ending

$12,000 4,500 10,500

COGM Finished goods inventory, beginning COGM COG available for sale Finished goods inventory, ending COGS

B

C

D

Case 2 $47,700 30,000 $17,700 $18,000 7,500 9,750

27,000

35,250

0 27,000

1,200 36,450

0

4,500

$27,000

$31,950

$6,000

$6,000

27,000 33,000 1,950

31,950 37,950 7,950

$31,050

$30,000

10-18 (20 min.) Various cost-behavior patterns. 1. K 2. B 3. G 4. J. Note that A is incorrect because, although the cost per pound eventually equals a constant at $9.20, the total dollars of cost increases linearly from that point onward. 5. I. The total costs will be the same regardless of the volume level. 6. L 7. F. This is a classic step-cost function. 8. K 9. C 10-20 (20 min.) Account analysis 1. The electricity cost is variable because, in each month, the cost divided by the number of kilowatt hours equals a constant $0.30. The definition of a variable cost is one that remains constant per unit. The telephone cost is a mixed cost because the cost neither remains constant in total nor remains constant per unit. The water cost is fixed because, although water usage varies from month to month, the cost remains constant at $60.

2. The month with the highest number of telephone minutes is June, with 2,880 minutes and $197.60 of cost. The month with the lowest is April, with 1,960 minutes and $179.20. The difference in cost ($197.60 – $179.20), divided by the difference in minutes (2,880 – 1,960) equals $0.02 per minute of variable telephone cost. Inserted into the cost formula for June: $197.60 = X fixed cost + ($0.02 × number of minutes used) $197.60 = X + ($0.02 × 2,880) $197.60 = X + $57.60 X = $140 monthly fixed telephone cost Therefore, Java Joe’s cost formula for monthly telephone cost is: Y = $140 + ($0.02 × number of minutes used) 3. Electricity rate = ($1,266 - $720) ÷ (4,220 – 2,400) = $0.3 per kwh used. The electricity rate is $0.30 per kw hour. The telephone cost is $140 + ($0.02 per minute) The fixed water cost is $120 Adding them together we get: Fixed cost of utilities = $140 (telephone) + $120 (water) = $260 4. Monthly Utilities Cost = $260 + (0.30 per kw hour) + ($0.02 per telephone min.) Estimated utilities cost = $260 + ($0.30 × 4,400 kw hours) + ($0.02 ×3,000 minutes) = $260 + $1,320 + $60 = $1,640

10-27 High-low, regression 1. Melissa will pick the highest point of activity, 4,068 parts (March) at $17,280 of cost, and the lowest point of activity, 2,316 parts (August) at $10,272. Cost driver: Quantity Cost Purchased Highest observation of cost driver 4,068 $17,280 Lowest observation of cost driver 2,316 $10,272 Difference 1,752 $7,008 Purchase costs = a + b x Quantity purchased Slope Coefficient = $7,008 ÷ 1,752 = $4.00 per part Constant (a) = $17,280 ─ ($4 x 4,068) = $1,008 The equation Melissa gets is: Purchase costs = $1,008 + ($4 x Quantity purchased) 2. Using the equation above, the expected purchase costs for each month will be:

Month October November December

Purchase Quantity Expected 3,360 3,720 3,000

Formula

Expected Cost

Y = $1,008 + ($4 x 3,360) Y = $1,008 + ($4 x 3,720) Y = $1,008 + ($4 x 3,000)

$14,448 $15,888 $13,008

3. Economic Plausibility: Clearly, the cost of purchasing a part is associated with the quantity purchased. Goodness of Fit: As seen in Solution Exhibit 10-28, the regression line fits the data well. The vertical distance between the regression line and observations is small. An r-squared value of greater than 0.98 indicates that more than 98% of the change in cost can be explained by the change in quantity. Significance of the Independent Variable: The relatively steep slope of the regression line suggests that the quantity purchased is correlated with purchasing cost for part #4599.

According to the regression, Melissa’s original estimate of fixed cost is too low given all the data points. The original slope is too steep, but only by 33 cents. So, the variable rate is lower but the fixed cost is higher for the regression line than for the high-low cost equation. The regression is the more accurate estimate because it uses all available data (all nine data points) while the high-low method only relies on two data points and may therefore miss some important information contained in the other data. 4. Using the regression equation, the purchase costs for each month will be: Month Purchase Quantity Formula Expected Cost Expected October 3,360 Y = $2,135.5 + ($3.67 x 3,360) $14,466.7 November 3,720 Y = $2,135.5 + ($3.67 x 3,720) $15,787.9 December 3,000 Y = $2,135.5 + ($3.67 x 3,000) $13,145.5 Although the two equations are different in both fixed element and variable rate, within the relevant range they give similar expected costs. This implies that the high and low points of the data are a reasonable representation of the total set of points within the relevant range.