Answer 4 questions in images: problem 1,2,4,6Course accounting 213roblem 1 (6 pts)
Jones Corporation produced 2,200 units in August. Its manufacturing costs for August
appear below:
Direct material (VC)
Direct labor (VC)
Variable overhead (VC)
Factory depreciation (FC)
Other fixed factory costs (FC)
oud
udget
$12,000
6,000
8,000
11,000
Instructions
pont
con
3,500
If Stratten produces a September flexible budget based on August activity, then what will
its total budgeted costs be for September if 900 units are likely to be produced in
September? Use the template below for your answer. Show all calculations to the right
ry
Amount
Direct Materials
Direct Labor
Variable Overhead
Factory Depreciation
Other Fixed Factory Costs
Total Budgeted Costs
Problem 2 (14 pts)
Soster makes and sells candles. Each candle uses 1/4 pound of wax. Budgeted sales
and production of candles in units for the next five months is as follows:
April May June
July
Budgeted production 11,500 14,000 15,900 16,500
The company wants to maintain monthly ending inventories of candles equal to 30% of
the following months budgeted sales. It also wants to maintain monthly ending
inventories of wax equal to 20% of the following month’s
budgeted production needs
The cost of wax is $0.80 per pound. Prepare a direct materials budget for the months of
April, May, and June.
Total
April
May
June
Candles to be produced
Pounds of wax per candle
Wax needed for production
Desired wax in ending inventory
Wax needed
Wax in beginning inventory
Wax to be purchased
Cost of wax, per pound
Cost of wax purchases
Name
each of the
Problem 4 (16 pts)
The income statement information for the first quarter of 2013 shows Sales of
300,000 (5,000 clocks at $60 each). The Clock Company must prepare its
uarterly budgeted income statement for 2014. The regional manager expects
that the number of clocks sold in the first quarter of 2014 will increase by 10%
over the first quarter of 2013 while sales price per clock will remain constant.
The Direct Material (DM) budget shows that each clock requires 2.4 units of DM
and that the average cost of each DM unit is $3. The Direct Labor budget
shows that it takes craftsmen 0.8 hours to assemble each clock and that the
craftsmen’s wages average $13/hour. The Manufacturing Overhead budget
shows that overhead costs should be $6/DL hour.
Instructions
a) (6 pts) In the space provided below, show your calculation of Direct Materials
cost per unit, Direct Labor cost per unit, and Manufacturing Overhead cost per
unit. Circle your answers.
DM
DL
OH
Problem 4 – continued
Statet0 pts) Using information from the previous page, prepare a budgeted income
statement for the first quarter of 2014 on the following schedule (leave shaded cells
Wages
Rent expense
Depreciation on office equipment
Utilities expense
Miscellaneous expenses
$8,200 + 11% of sales
$4,500
$2,100
$2,200
3% of sales
The Clock Company
Budgeted Income Statement
For the Quarter Ending March 31, 2014
Sales
Cost of Goods Sold
Gross Profit
Selling and Administrative Expenses
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Miscellaneous Expense
Total Selling and Administrative Expenses
Net Income
Problem 6 (15 pts)
Anna Manipulation Corp. is considering investing in new optical brain-washing
equipment. It has two options as follows, and each has a 6-year life. The company’s
minimum rate of return is 8%.
Initial cost
Option A
$133,000
Option B
$150,000
Net Cash Inflows expected from each investment
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
$ 30,000
$ 30,000
$ 30,000
$ 30,000
$ 30,000
$ 30,000
$ 70,000
$ 50,000
$ 40,000
$ 30,000
$ 20,000
$ 10,000
Instructions
(a) Using the table below, compute the net present value of each option.
PV of Cash Flows
Option A
Option B
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Total PV of Cash Flows
Investment
Net Present Value
Option A
Option B
(b) Which option should Anna choose (circle one)?
(c) What is the approximate Internal Rate of Return for Option A? Show your work.

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