Cybertext managerial accounting answers

Introduction

ZC7461

I SEE THE LIGHT

zixuan, when you are ready to have your work graded you will upload this file ZC7461.xls, or ZC7461.xlsx,

to the same screen that the project was downloaded from:

F710 160825

www.cybertext.com, The Book List, Building Blocks of Accounting--A Managerial Perspective, Enter password, Upload Your Excel File. Keep two copies of your spreadsheet in two separate places in case one of Big Al's competitors sends someone to destroy your work or it is lost in transmission. You may find it easier to work on this project if you print a hard copy of all the pages. There are alternative methods of solving problems. To insure similar answers and to guarantee that you are graded correctly please follow the instructions as to rounding. NOTE: If there are any questions about the project e-mail markfriedman@miami.edu or call 305.284.6296. Grade will be based upon answers entered into the shaded boxes.

FAQ

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Building Blocks of Accounting .. A Financial Perspective

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FAQ 01 My file used to upload, why is it not uploading?

Answer: Sometimes we unknowingly add items to a workbook that inhibits the upload process. The conversion to a Excel Binary

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FAQ Page 2

FAQ 02 What is the difference between rounding a number and rounding up a number?

Answer: B C D E F

1 Cost of a Taxi $ 100.00

2 Number of Passengers 3

3

4 Cost per Passenger

5 Without rounding 33.3333333333 =F1/F2

6 Rounding to two decimals 33.33 =ROUND(F1/F2,2)

7 Roundup to two decimals 33.34 =ROUNDUP(F1/F2,2)

FAQ 03 When I upload it, the results show that I have an answer wrong, yet that answer is needed for another

question which is marked correct.

Answer: The computer is giving you part credit.

Given: Width 10 ft

Length 12 ft

Cost per sq. ft. $6

Find {1.1} Area ----- 100 sq ft (wrong)

{1.2} Cost ---- $600 correct based on the wrong area.

Note if the area is corrected,120 sq ft, the cost would be wrong.

MF1234.xlsx

1

FIRST LAST number File

zixuan cheng 7461 ZC7461

I SEE THE LIGHT

Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lamps/nightlights for use in bedrooms. These lamps are sold nationwide through a group of independent sales representatives who have an exclusive sales region. The business is in its tenth year and has asked you to assist in planning for next year's operations. The lamps are ceramic figurines of animals, boats, boys and girls playing and singing, all in delightful colors. The owner of the business, Big Al, creates a drawing for the figurine and faxes it to a plant in China where a mold is created and a sample produced and hand painted. If the mold meets the expectations of Big Al an order of 500 lamp parts is placed. Each lamp kit consists of the parts required to complete one lamp; a figurine, a lamp shade and the required electrical components. There are presently 10 different figurines that come in six different colors; 60 models. There are presently 10 workers in the plant. They are responsible for receiving the raw material, manufacturing the product, packing and shipping. In addition to Big Al there are two office workers who are responsible for all administrative duties. Big Al had his accountant prepare the Projected Income Statement and Balance Sheet presented on page two. Big Al heard about your skills in managerial accounting and would like your assistance in the following areas: Part 1 Fixed and Variable Cost Determinations - Unit Cost Calculations Part 2 Cost Volume Relationships - Profit Planning Part 3 Budgets Part 4 Process Costing Part 5 Job Order Costing Part 6 Standard Costing - Variance Analysis Part 7 Capital Decision Making To upload your work to Big Al the file without changing the name. Pay attention to the specific location that Excel saves the file. Return to the bottom of the page that you downloaded the file from; Cybertext.com, The Book List, Building Blocks of Accounting--A Managerial Perspective, Enter password, Upload Your Excel File. If you upload an old version of the file the results will not update. Keep two copies of your spreadsheet in two separate places in case one of Big Al's competitors sends someone to destroy your work or it is lost in transmission. You may find it easier to work on this project if you print a hard copy of all the pages. NOTE: If there are any questions about the project e-mail markfriedman@miami.edu or call 305.284.6296. Grade will be based upon answers entered into the shaded boxes.

2

I See The Light

Projected Income Statement

For the Period Ending December 31, 20x1

Sales 25,000 lamps @ $45.00 $ 1,125,000.00

Cost of Goods Sold @ $30.00 750,000.00

Gross Profit $ 375,000.00

Selling Expenses:

Fixed $ 23,000.00

Variable (Commission per unit) @ $3.00 75,000.00 $ 98,000.00

Administrative Expenses:

Fixed $ 42,000.00

Variable @ $2.00 50,000.00 92,000.00

Total Selling and Administrative Expenses: 190,000.00

Net Profit $ 185,000.00

I See The Light

Projected Balance Sheet

As of December 31, 20x1

Current Assets

Cash $ 34,710.00

Accounts Receivable 67,500.00

Inventory

Raw Material

Lamp Kits 500 @ $16.00 8,000.00

Work in Process 0 - 0

Finished Goods 3000 @ $30.00 90,000.00

Total Current Assets $ 200,210.00

Fixed Assets

Equipment $ 20,000.00

Accumulated Depreciation 6,800.00

Total Fixed Assets 13,200.00

Total Assets $ 213,410.00

Current Liabilities

Accounts Payable $ 54,000.00

Total Liabilities $ 54,000.00

Stockholder's Equity

Common Stock $ 12,000.00

Retained Earnings 147,410.00

Total Stockholder's Equity 159,410.00

Total Liabilities and Stockholder's Equity $ 213,410.00

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PART 1

Fixed and Variable Cost Determinations

Unit Cost Calculations

The projected cost of a lamp is calculated based upon the projected increases or decreases to

current costs. The present costs to manufacture one lamp are:

Lamp Kit: $16.0000000 per lamp

Electrical Sets - 0 per lamp

Lamp Shade - 0 per lamp

Direct Labor: 2.0000000 per lamp (4 lamps/hr.)

Variable Overhead: 2.0000000 per lamp

Fixed Overhead: 10.0000000 per lamp (based on normal capacity of 25,000 lamps)

Cost per lamp: $30.0000000 per lamp

Expected increases for 20x2

When calculating projected increases round to TWO ($0.00) decimal places.

1. Material Costs are expected to increase by 4.00% .

2. Labor Costs are expected to increase by 5.50%.

3. Variable Overhead is expected to increase by 6.50%.

4. Fixed Overhead is expected to increase to $270,000.

5. Fixed Administrative expenses are expected to increase to $58,000.

6. Variable selling expenses (measured on a per lamp basis) are expected to increase

by 5.00%.

7. Fixed selling expenses are expected to be $41,000 in 20x2.

8. Variable administrative expenses (measured a per lamp basis) are expected to

increase by 3.00%.

On the following schedule develop the following figures:

1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp.

2- 20x2 Projected Variable Unit Cost per lamp.

3- 20x2 Projected Fixed Costs.

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I See The Light, Inc

Schedule of Projected Costs

Variable Manufacturing Unit Cost

20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places

Lamp Kit {4.01} 0 2

Labor {4.02} 0 2

Variable Overhead {4.03} 0 2

Projected Variable Manufacturing Cost Per Unit {4.04} 0 2

Total Variable Cost Per Unit

20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places

Variable Selling {4.05} 0 2

Variable Administrative {4.06} 0 2

Projected Variable Manufacturing Unit Cost {4.04} 0 2

0

0

Projected Total Variable Cost Per Unit {4.07} 0 2

0

0

Schedule of Fixed Costs

20x1 Cost Projected Percent Increase 20x2 Cost

Fixed Overhead {4.08} 0 2

(normal capacity of _________ lamps @ __ )

Fixed Selling {4.09} 0 2

Fixed Administrative {4.10} 0 2

Projected Total Fixed Costs {4.11} 0 2

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PART 2

Cost Volume Relationships -

Profit Planning

Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis

based on the following assumptions.

Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round

up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the

number of units and then multiply by the selling price per unit.

1. For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution

margin ratio for each lamp sold?

Contribution Margin per unit (Round to two places, $##.##) {5.01} 0 2

Contribution Margin Ratio (Round to four places,% is two of those places ##.##%) {5.02} 0 4

2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $200,000 . What

would sales in units have to be in 20x2 to reach the profit goal?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.03} 0 0

3. For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $50,000.00 how many lamps

must be sold to breakeven?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.04} 0 0

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4. For 20x2 the selling price per lamp will be $45.00. If the variable cost increase by $5.00 a unit how many lamps

must be sold to breakeven?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.01} 0 0

5. For 20x2 the selling price per lamp will be $45.00. If the variable cost decreased by $5.00 a unit how many lamps

must be sold to breakeven?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.02} 0 0

6. If for 20x2 the selling price per lamp is increased to $50.00 a unit how many lamps must be sold

to breakeven?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.03} 0 0

7. If for 20x2 the selling price per lamp is decreased to $40.00 a unit how many lamps must be sold

to breakeven?

Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.04} 0 0

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PART 3

Budgets

Division N has decided to develop its budget based upon projected sales of 39,000 lamps at

$52.00 per lamp.

The company has requested that you prepare a master budget for the year. This budget is to be used

for planning and control of operations and should be composed of:

1. Production Budget

2. Materials Budget

3. Direct Labor Budget

4. Factory Overhead Budget

5. Selling and Administrative Budget

6. Cost of Goods Sold Budget

7. Budgeted Income Statement

8. Cash Budget

Notes for Budgeting:

The company wants to maintain the same number of units in the beginning and ending inventories of

work-in-process, and electrical parts while increasing the inventory of Lamp Kits to 750 pieces and

decreasing the finished goods by 20%.

Complete the following budgets

1 Production Budget

Planned Sales

Desired Ending Inventory of Finished Goods

Total Needed

Less: Beginning Inventory

Total Production {7.01} 0 0

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2 Materials Budget

Lamp Kits

Needed for Production {8.01} 0 0

Desired Ending Inventory {8.02} 0 0

Total Needed {8.03} 0 0

Less: Beginning Inventory {8.04} 0 0

Total Purchases

Cost per piece {8.05} 0 2

Cost of Purchases (Round to two places, $##.##) {8.06} 0 0

3 Direct Labor Budget

Labor Cost Per Lamp {8.07} 0 2

Production

Total Labor Cost (Round to two places, $##.##) {8.08} 0 2

4 Factory Overhead Budget

Variable Factory Overhead:

Variable Factory Overhead Cost Per Unit

Number of Units to be Produced

Total Variable Factory Overhead (Round to two places, $##.##) {8.09} 0 2

Fixed Factory Overhead {8.10} 0 2

Total Factory Overhead (Round to two places, $##.##) {8.11} 0 2

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4 Factory Overhead Budget

Overhead Allocation rate based on:

1. Number of Units

Total Factory Overhead / Number of Units

(Round to two places, $##.##) {9.01} 0 2

5 Cost of making one unit next year

Cost of one Lamp Kit

Labor Cost Per Lamp {9.02} 0 2

Factory overhead per unit 0 2

0 2

Total cost of one unit {9.03} 0 2

(Round to two places, $##.##)

0 4

6 Selling and Admin. Budget

Fixed Selling

Variable Selling (Round to two places, $##.##) {9.04} 0 2

Fixed Administrative

Variable Administrative (Round to two places, $##.##) {9.05} 0 2

Total Selling and Administrative (Round to two places, $##.##) {9.06} 0 2

7 Cost of Goods Sold Budget - Assume FIFO (First-In, First-Out) and overhead is applied based on the number of units to be produced. Round dollars to two places, $##.##

Beginning Inventory, Finished Goods {9.07} 0 2

Production Costs:

Materials:

Lamp Kits:

Beginning Inventory

Purchased

Available for Use

Ending Inventory of Lamp Kits {9.08} 0 2

Lamp Kits Used In Production

Total Materials: {9.09} 0 2

Labor {9.10} 0 2

Overhead {9.11} 0 2

Cost of Goods Available {9.12} 0 2

Less: Ending Inventory, Finished Goods {9.13} 0 2

Cost of Goods Sold {9.14} 0 2

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7 Budgeted Income Statement

Sales

Cost of Goods Sold

Gross Profit

Selling Expenses & Admin. Expenses

Net Income {10.01} 0 2

8 Cash Budget

Assume actual cash receipts and disbursements will follow the pattern below: (Note: Receivables and

Payables of 12/31/x1 will have a cash impact in 20x2.)

1. 21.00% of sales for the year are made in November and December. Since our customers have 60 day terms

those funds will be collected be collected in January and February.

2. 84.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February.

3. All other manufacturing and operating costs are paid for when incurred.

4. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses.

5. Minimum Cash Balance needed for 20x2, $195,000 .

I See The Light

Projected Cash Budget

For the Year Ending December 31, 20x2

Round dollars to two places, $##.##

Beginning Cash Balance

Cash Inflows:

Sales Collections:

Account Receivable (Sales last year not collected) {10.02} 0 2

Sales made and collected in 20x2 {10.03} 0 2

Cash Available {10.04} 0 2

Cash Outflows:

Purchases

Accounts Payable (Purchases last year)

Purchases made and paid for in 20x2 {10.05} 0 2

Other Manufacturing Costs

Direct Labor

Total Manufacturing Overhead

Selling and Administrative

Less: Depreciation {10.06} 0 2

Total Cash Outflows {10.07} 0 2

Budgeted Cash Balance before financing {10.08} 0 2

Needed Minimum Balance

Amount to be borrowed (if any) {10.09} 0 2

Budgeted Cash Balance {10.10} 0 2

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PART 4

Process Costing - Weighted Average

General Information

The I See The Light Company has a related company that produces the figurines. They use process costing

in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars.

The material is added at the beginning of the process. The labor and overhead costs are assumed

to be added uniformly throughout.

Month of January

Selected information for January is presented below. Note that the applied overhead rate was

50% of direct labor costs in the molding department.

Molding Department

Goods in-process as of January 1 were 3,500 figurines at a cost of $63,070.00. Of this amount, $5,740.00 was from

raw materials added, $38,220.00 for labor and $19,110.00 for overhead. These 3,500 figurines were assumed to be

80.00% complete as to labor and overhead.

During January, 24,500 units were started, $39,060.00 of materials and $58,980.00 of labor costs were incurred.

The 5,000 figurines that were in-process at the end of January were assumed to be 80.00% complete to

labor and overhead.

All figurines in January passed inspection.

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January

MOLDING

Physical Flow of Units

Work-in-Process - Beginning

Units Started this Period

Units to Account for

Total transferred out {12.01} 0 0

Work-in-Process - Ending {12.02} 0 0

Total Accounted for

Equivalent Units Material (Round to two places, ##,###.##) {12.03} 0 2

Equivalent Units Conversion (Round to two places, ##,###.##) {12.04} 0 2

Total cost of Material (Round to two places, ##.###.##) {12.05} 0 2

Total cost of Conversion (Round to two places, ##.###.##) {12.06} 0 2

Total cost to account for (Round to two places, ##.###.##) {12.07} 0 2

Cost per equivalent unit of Material (Round to two places, ###.##) {12.08} 0 2

Cost per equivalent unit of Conversion (Round to two places, ###.##) {12.09} 0 2

Cost of the ending inventory, material and convesion (Round to two places, $###,###.## ) {12.10} 0 2

Cost of the units transferred, material and convesion (Round to two places, $###,###.## ) {12.11} 0 2

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PART 5

Job Order Costing

To keep records of the actual cost of a special order job, a Job Order Cost System has been developed.

Overhead is applied at the rate of 50% of the direct labor cost.

Job Order Costing Section

On January 1, 20x2, Division S began Job 2407 for the Client, THE BIG CHILDREN STORE. The

job called for 4,000 customized lamps. The following set of transactions occurred from

January 5 until the job was completed: