## Friday, 14 December 2012

### Whitman Corporation, a merchandising company, reported sales of 12,100 units for May at a selling

Whitman Corporation, a merchandising company, reported sales of 12,100 units for May at a selling price of \$714 per unit. The cost of goods sold (all variable) was \$448 per unit and the variable selling expense was \$63 per unit. The total fixed selling expense was \$163,800. The variable administrative expense was \$28 per unit and the total fixed administrative expense was \$376,100.

 Required: a. Prepare a contribution format income statement for May. (Input all amounts as positive values. Omit the "\$" sign in your response.)

 Whitman Corporation Income Statement Sales \$ Variable expenses: Cost of goods sold \$ Variable selling expense Variable administrative expense Contribution margin Fixed expenses: Fixed selling expense Fixed administrative expense Net operating income (loss) \$

 Whitman Corporation Income Statement Sales \$ Cost of goods sold Gross margin Operating expenses: Selling expense \$ Administrative expense Net operating income (loss) \$

Explanation: a.
 Sales (12,100 units × \$714 per unit) = \$8,639,400 Cost of goods sold (12,100 units × \$448 per unit) = \$5,420,800 Variable selling expense (12,100 units × \$63 per unit) = \$762,300 Variable administrative expense (12,100 units × \$28 per unit) = \$338,800

b.
 Sales (12,100 units × \$714 per unit) = \$8,639,400 Cost of goods sold (12,100 units × \$448 per unit) = \$5,420,800 Selling expense ((12,100 units × \$63 per unit) + \$163,800) = \$926,100 Administrative expense ((12,100 units × \$28 per unit) + \$376,100) = \$714,900

### Corio Corporation reports that at an activity level of 4,800 units, its total variable cost is \$328,224 and its total fixed cost is \$128,919.

 Corio Corporation reports that at an activity level of 4,800 units, its total variable cost is \$328,224 and its total fixed cost is \$128,919. Required: For the activity level of 4,900 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range. (Round your "Average cost" to 2 decimal places and final answers to the nearest dollar amount. Omit the "\$" sign in your response.)

 (a) Total variable cost \$ (b) Total fixed cost \$ (c) Total cost \$ (d) Average variable cost per unit (e) Average fixed cost per unit (f) Average total cost per unit

Explanation: Variable cost = \$328,224 ÷ 4,800 units = \$68.38 per unit

 Activity level \$ 4,900 Total cost: Variable cost (a) [4,900 units × \$68.38 per unit] 335,062 Fixed cost (b) 128,919 Total (c) \$ 463,981 Cost per unit: Variable cost (d) 68.38 Fixed cost (e) [\$128,919 ÷ 4,900 units] 26.31 Total (f) 94.69

### In July, one of the processing departments at Wrightsel Corporation had beginning work in process inventory of \$33,000 and ending work in process inventory of \$23,000. During the month, \$233,000 of costs were added to production and the cost of units transferred out from the department was \$243,000.

In July, one of the processing departments at Wrightsel Corporation had beginning work in process inventory of \$33,000 and ending work in process inventory of \$23,000. During the month, \$233,000 of costs were added to production and the cost of units transferred out from the department was \$243,000.

 Required: Construct a cost reconciliation report for the department for the month of July. (Omit the "\$" sign in your response.)

 Cost Reconciliation Costs to be accounted for: Cost of beginning work in process inventory \$ Costs added to production during the month Total cost to be accounted for \$ Costs accounted for as follows: Cost of ending work in process inventory \$ Cost of units transferred out Total cost accounted for \$

### Yoke Corporation has provided the following data from its activity-based costing accounting system:

Yoke Corporation has provided the following data from its activity-based costing accounting system:

 Supervisory wages \$ 86,200 Factory Utilities \$ 296,000

 Distribution of Resource Consumption across Activity Cost Pools:

 Activity Cost Pools Batch set-ups Unit Processing Other Total Supervisory wages 62 % 37 % 1 % 100 % Factory Utilities 32 % 64 % 4 % 100 %

 The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.

 Required:
 a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the unit Processing activity cost pool. (Omit the "\$" sign in your response.)

 Total amount \$

 b. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Other cost pool. (Omit the "\$" sign in your response.)

 Total amount \$

Explanation:

### Hugle Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows:

Hugle Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows:

 Machining \$ 72,798 Setting up \$ 119,978 Other \$ 23,900

 Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products:

 MHs Batches Product E8 2,580 1,330 Product V8 8,450 1,180 Total 11,030 2,510

Additional data concerning the company's products appears below:

 Product E8 Product V8 Sales (total) \$ 273,000 \$ 273,000 Direct materials (total) \$ 88,300 \$ 83,500 Direct labor (total) \$ 99,400 \$ 66,300

 Activity Rate Machining \$ per MH Setting up \$ per batch

 b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. (Omit the "\$" sign in your response.)

 Product E8 Product V8 Machining \$ \$ Setting up Total \$ \$

 c. Determine the product margins for each product using activity-based costing. (Omit the "\$" sign in your response.)

 Product Margin Product E8 \$ Product V8 \$

Explanation: a.
Computation of activity rates:

 Activity Cost Pools Total Cost Total Activity Activity Rate Machining \$ 72,798 11,030 MHs \$ 6.60 per MH Setting up \$ 119,978 2,510 batches \$ 47.80 per batch

b.

 Activity Rate Activity ABC Cost Machining \$ 6.60 per MH 2,580 MHs \$ 17,028 Setting up \$ 47.80 per batch 1,330 batches 63,574 Total \$ 80,602

 Activity Rate Activity ABC Cost Machining \$ 6.60 per MH 8,450 MHs \$ 55,770 Setting up \$ 47.80 per batch 1,180 batches 56,404 Total \$ 112,174

c.
Determine product margins:

 Product E8 Product V8 Sales \$ 273,000 \$ 273,000 Direct materials \$ 88,300 \$ 83,500 Direct labor 99,400 66,300 Machining 17,028 55,770 Setting up 63,574 268,302 56,404 261,974 Product margin \$ 4,698 \$ 11,026

### Blockmon Hospital bases its budgets on patient-visits. The hospital's static planning budget for November appears below:

Blockmon Hospital bases its budgets on patient-visits. The hospital's static planning budget for November appears below:

 Budgeted number of patients-visits 8,300 Budgeted variable costs: Supplies (@ \$8.39 per patient-visit) \$ 69,637 Laundry (@ \$7.89 per patient-visit) 65,487 Budgeted fixed costs: Wages and salaries 97,800 Occupancy costs 80,180 Total cost \$ 313,104

 Required: Complete the flexible budget for 8,800 patient-visits per month. (Omit the "\$" sign in your response.)

 Cost Formula (per patient-visit) Flexible Budget Based on 8,800 Patient-Visits Variable costs: Supplies \$ 8.39 \$ Laundry 7.89 Fixed costs: Wages and salaries Occupancy costs Total cost \$

### Filkins Clinic bases its budgets on the activity measure patient-visits. During February, the clinic

Filkins Clinic bases its budgets on the activity measure patient-visits. During February, the clinic planned for 4,400 patient-visits, but the actual level of activity was 4,600 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting:

 Fixed element per month Variable element per patient-visit Revenue \$ 32.60 Personnel expenses \$ 31,900 \$ 10.00 Medical Supplies \$ 1,900 \$ 6.00 Occupancy expenses \$ 6,900 \$ 2.00 Administrative expenses \$ 5,900 \$ 0.20

 Required: Complete the report showing the clinic's activity variances for February. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "\$" sign in your response.)

 Filkins Clinic Activity Variances For the Month Ended February 28 Revenue \$ F Expenses: Personnel expenses U Medical Supplies U Occupancy expenses U Administrative expenses U Total expense U Net operating income \$ F

Explanation:
 Filkins Clinic Activity Variances For the Month Ended February 28 Planning Budget Flexible  Budget Activity Variances Patient-visits (q) 4,400 4,600 Revenue (\$32.60q) \$ 143,440 \$ 149,960 \$ 6,520 F Expenses: Personnel expenses (\$31,900 + \$10.00q) 75,900 77,900 2,000 U Medical Supplies (\$1,900 + \$6.00q) 28,300 29,500 1,200 U Occupancy expenses (\$6,900 + \$2.00q) 15,700 16,100 400 U Administrative expenses (\$5,900 + \$0.20q) 6,780 6,820 40 U Total expense 126,680 130,320 3,640 U Net operating income \$ 16,760 \$ 19,640 \$ 2,880 F