accounting 4535871 2

CVP Analysis (5 points)

 

In the month of September, Browning Company sold 800 units of product. The average sales price was $45. During the month, fixed costs were $7,200 and variable costs were 60% of sales.

 

Instructions

(a)   Determine the contribution margin in dollars, per unit, and as a ratio.

(b)   Using the contribution margin technique, compute the break-even point in dollars and in units.

 

 

 

 

 

 

 

 

Derrick Browning Inc. designs high-fashion clothes. Recently the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s fashion apparel. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $2,000,000 of 11% term corporate bonds on March 1, 2007, due on March 1, 2022, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%.

Instructions

1)   As the controller of the company, determine the selling price of the bonds.  (6 pts)

2)   Record the journal entry to record the bond issue. (3 pts)

Present Value Interest Factor of an Ordinary Annuity of 30 periods at 5% = 15.37245

Present Value Interest Factor of a Lump Sum of 30 periods at 5% = 0.23138

Present Value Interest Factor of an Ordinary Annuity of 15 periods at 10% = 7.60608

Present Value Interest Factor of a Lump Sum of 15 periods at 10% = 0.23939


 

 

Standard Cost Analysis (6 points)

The following direct materials and direct labor data pertain to the operations of Goddess Cher Manufacturing Company for the month of August.

 

Costs

 

Quantities

Actual labor rate

$14 per hour

 

Actual hours incurred and used

4,120 hours

Actual materials price

$130 per ton

 

Actual quantity of materials purchases and used

1,278 tons

Standard labor rate

$10 per hour

 

Standard hours used

4,380 hours

Standard materials price

$132 per ton

 

Standard quantity of materials used

1,180 tons

Instructions

Compute the total, price, and quantity variances for materials and labor and tell whether they are favorable or unfavorable.

Total materials variance

 

 

Materials price variance

 

 

Materials quantity variance

 

 

Total labor variance

 

 

Labor price variance

 

 

Labor quantity variance

 

 

 

 

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