Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Textbook Question
Chapter 10, Problem 10.5.1P
Flow of costs and income statement
R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 20Y8. For the first six months of 20Y8, the company spent $1,000,000 on a media campaign for Cyclone Panic and $175,000 in legal costs. The CD production began on April 1, 20Y8. R-Tunes uses a
The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 3,600 CDs per hour.
After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.37 per CD.
The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $30 per record store. In addition, shipping costs average $0.28 per CD.
Total completed production was 500,000 CDs during the year. Other information is as follows:
Instructions
Prepare an annual income statement for the Cyclone Panic CD, including supporting calculations, from the information above.
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Company XYZ is a smart phone merchant. The company purchases smart phones directly from the manufacturer and sells them to customers.
During the month of April, the company purchased 65 smart phones and paid $1,000 for each one. The company managed to sell 60 smart phones
during the same month for $1,300each. The company incurred total Selling and Administrative costs of $4,000 of which 20% is fixed costs.
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Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected
operation in the next quarter follow.
Clients
Revenues
Staff hours
Eastside
25,000
$ 510,000
8,100
Staff costs
$ 99,000
Westside
6,250
$ 340,000
2,700
$ 153,000
General operating costs
Total
31,250
$ 850,000
10,800
$ 252,000
$ 510,000
Required:
a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the
number of clients to allocate general operating costs.
b. Based on the rates computed in requirement (a), what is the expected surplus (revenues less costs) for each center?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Based on the rates computed in requirement (a), what is the expected surplus (revenues less costs) for each center?
Center
Surplus
Eastside
Westside
B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year (before the proposed contract).
B-YOU
Annual Income Statement
Sales revenue
$ 560,000
Costs
Labor
260,000
Equipment lease
42,000
Rent
35,000
Supplies
30,000
Officers' salaries
160,000
Other costs
20,000
Total costs
$ 547,000
Operating profit (loss)
$ 13,000
If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $85,500. The equipment lease will increase by 20 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work.
Chapter 10 Solutions
Survey of Accounting (Accounting I)
Ch. 10 - Which 01 the following is not considered a cost of...Ch. 10 - Which of the following costs would be included as...Ch. 10 - A company estimated $420,000 of factory overhead...Ch. 10 - If the factory overhead account has a negative...Ch. 10 - When using job order costing for a professional...Ch. 10 - List three differences in how managerial...Ch. 10 - For a company that produces desktop computers,...Ch. 10 - How is product cost information used by managers?Ch. 10 - a.Name two principal types of cost accounting...Ch. 10 - What kind of firm would use a job order cost...
Ch. 10 - Prob. 6CDQCh. 10 - Prob. 7CDQCh. 10 - Describe the Source 01 the data for increasing...Ch. 10 - Prob. 9CDQCh. 10 - a.How is a predetermined factory overhead rate...Ch. 10 - a.What is (1) overapplied factory overhead and (2)...Ch. 10 - At the end of the fiscal year, there s a...Ch. 10 - What is the difference between a product cost and...Ch. 10 - Prob. 14CDQCh. 10 - Prob. 15CDQCh. 10 - How can activity based costing be used in service...Ch. 10 - Classifying costs as materials, labor, or factory...Ch. 10 - Classifying costs as materials, labor, or factory...Ch. 10 - Classifying costs as factory overhead Which of the...Ch. 10 - Classifying costs as product or period costs For...Ch. 10 - Prob. 10.5ECh. 10 - Transactions in a job order cost system Five...Ch. 10 - Cost flow relationships The following information...Ch. 10 - Cost of materials issuances An incomplete...Ch. 10 - Recording issuing of materials Materials issued...Ch. 10 - Amounts for materials Big Timber Furniture Company...Ch. 10 - Prob. 10.11ECh. 10 - Recording factory labor costs The weekly time...Ch. 10 - Recording direct labor and factory overhead...Ch. 10 - Factory overhead rates and account balances...Ch. 10 - Predetermined factory overhead rate Novus Engine...Ch. 10 - Predetermined factory overhead rate Mt Ellis...Ch. 10 - Recording jobs completed The following account...Ch. 10 - Determining manufacturing costs Wagner Printing...Ch. 10 - Financial statements of a manufacturing firm The...Ch. 10 - Job order cost accounting entries for a service...Ch. 10 - Prob. 10.21ECh. 10 - Prob. 10.22ECh. 10 - Just-in-time principles Jupiter Shirt Company...Ch. 10 - Activity-based costing for a hospital Deer Lodge...Ch. 10 - Activity-based costing in an insurance company...Ch. 10 - Classifying costs The following is a list of costs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Schedules for unfinished jobs and completed jobs...Ch. 10 - Job cost sheet Hallmark Furniture Company...Ch. 10 - Job cost sheet Hallmark Furniture Company...Ch. 10 - Analyzing manufacturing cost accounts Summer...Ch. 10 - Analyzing manufacturing cost accounts Summer...Ch. 10 - Flow of costs and income statement R-Tunes Inc. is...Ch. 10 - Flow of costs and income statement R-Tunes Inc. is...Ch. 10 - Unit cost analysis The management of Colfax...Ch. 10 - Prob. 10.2MBACh. 10 - Prob. 10.3MBACh. 10 - Prob. 10.4MBACh. 10 - Prob. 10.1CCh. 10 - Prob. 10.2CCh. 10 - Prob. 10.3.1CCh. 10 - Classifying costs Reboot Inc. provides computer...Ch. 10 - Prob. 10.4.1CCh. 10 - Factory overhead rate Fabricator Inc., a...Ch. 10 - Factory overhead rate Fabricator Inc., a...Ch. 10 - Prob. 10.5CCh. 10 - Just-in-time principles Warm Space Inc....
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