Notre Dame College
MBA 540 Accounting
Week 5
Assignment 5-2
Total points: 50
1. This is a numerical assignment. The maximum points are shown against each problem given below.
2. Show the complete work before you give the final answer.
3. Analytical approach is expected where a question is descriptive in nature.
1. (3 points) Rita works for BSD Cleaning Services, LLC. She is allowed to clean 5 seconds per square foot. She cleans two school buildings. School 1, which is 3,000 square feet, and school 2, which is 2,460 square feet. Will she finish these two school buildings in an 8-hour shift? Will she have time for a
eak?
Required:
a) Will she finish these two school buildings in an 8-hour shift? Please calculate.
) Will she have time for a
eak and how long will be the
eak?
Answer and Work:
2. (3 points) Johan is working with the operations manager to determine what the standard labor cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what each employee does. The first employee selects and mills the wood, so it is smooth on all four sides. This takes the employee 1 hour for each chest. The next employee takes the wood and cuts it to the proper size. This takes 30 minutes. The next employee assembles and sands the chest. Assembly takes 2 hours. The chest then goes to the finishing department. It takes 1.5 hours to finish the chest. All employees are cross-trained, so they are all paid the same amount per hour, $17.50.
Required:
a) What are the standard hours per chest?
) What is the standard cost per chest for labor?
Answer and Work:
3. (6 points) Norwell Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
Total budgeted fixed overhead cost for the yea
$ 446,400
Actual fixed overhead cost for the yea
$ 440,000
Budgeted direct labor-hours (denominator level of activity)
62,000
Actual direct labor-hours
63,000
Standard direct labor-hours allowed for the actual output
60,000
Required:
a) Calculate the fixed portion of the predetermined overhead rate for the year.
) Calculate the fixed overhead budget variance and volume variance.
Answer and Work:
4. (10 points) Swain Company has the following information available:
Actual price paid for material
$1.00
Standard price paid for material
$1.20
Actual quantity purchased and used in production
100
Standard quantity for unit produced
110
Actual labor rate per hou
$15
Standard labor rate per hou
$16
Actual hours
200
Standard hours per units produced
220
Required:
a) Calculate the material price and quantity, and the labor rate and efficiency variances.
) Describe the possible causes for this combination of favorable and unfavorable variances.
Answer and Work:
5. (5 points) Think of a company that manufactures a product and explain the required questions.
Required:
a) What type of standards do you think they might have regarding their sustainability efforts?
) Do you think sustainability standards would be beneficial for the company? Why or why not?
Answer and Work:
6. (3 points) Please answer the following questions:
Required:
a) What advantages might be experienced by a company if it adopts ideal standards for its direct material standards and direct labor standards?
) What advantages are there to using practical standards?
c) As an employee, which would you prefer and why?
d) Does your answer change if you are the manager in charge of production? Why or why not?
7. (10 Points) Use Netflix’s 2020 annual report and answer the following questions.
http:
q4live.s22.clientfiles.s3-website-us-east-1.amazonaws.com/ XXXXXXXXXX/files/doc_financials/2020/a
8f311d9b-787d-45db-a6ea-38335ede9d47.pdf
Required:
a) How many segments does Netflix have?
) What are the segments?
c) Prepare a
ief presentation listing the “Paid memberships at end of period,” “Revenues,” and “Contribution profit” (also called operating profit) for the three most recent years (2020, 2019, and 2018).
d) In the presentation, include any observations you notice about the trends of each segment.
8. (10 Points) Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system for the company. The Transportation Department of the company sells all of its product to the Bottling Department of the company. Thus the Transportation Department’s sales become the Bottling Department’s cost of goods sold. In order to determine an optimal transfer pricing system, management would like you to demonstrate what an income statement would look like under a cost, market, and negotiated transfer pricing structure. These various transfer prices are listed below.
Required:
Prepare an income statement for each of the transfer prices by filling in the missing numbers in the provided income statement based on each transfer price (thus three different income statements) and calculate the operating income/loss percentage. Prepare a
ief summary of the results.
Cost-based
$0.62
Market-based
$0.74
Negotiated
$0.70
Gallons Transfe
ed
278,000
Great Springs Bottled Water Company
Income Statement (Market-based)
Month Ending Aug. 31, 2018
Transportation
Bottling
Sales
?
$286,000
Cost of Goods Sold
89,627
?
Gross Profit
?
?
Expenses
Fuel/Utility Expense
15,000
3,200
Wages Expense
43,090
57,200
Costs Allocated from Corporate
17,236
15,000
Total Expenses
$75,326
$75,400
Operating Income/(loss) $
?
?
Operating Income/(loss) %
?
?
Answer and Work:
Notre Dame College
MBA 540 Accounting
Week 5
Assignment 5
-
2
Total points: 50
1.
This is a numerical assignment. The maximum points are shown against each problem given
elow.
2.
Show the complete work before you give the final answer.
3.
Analytical approach is expected where a question is descriptive in nature.
1.
(
3 points
)
Rita
works for BSD Cleaning Services, LLC. She is allowed to clean 5
seconds per square foot. She cleans two school buildings. School 1, which is 3,000
square feet, and school 2, which is 2,460 square feet. Will she finish these two school
uildings in an 8
-
h
our shift? Will she have time for a
eak?
Required:
a)
Will she finish these two school buildings in an 8
-
hour shift? Please calculate.
)
Will she have time for a
eak and how long will be the
eak?
Answer and Work
:
2.
(
3 points
)
Johan is working with the operations manager to determine what the standard
labor cost is for a spice chest. He has watched the process from start to finish and taken
detailed notes on what each employee does. The first employee selects and mills the
wood,
so it is smooth on all four sides. This takes the employee 1 hour for each chest.
The next employee takes the wood and cuts it to the proper size. This takes 30 minutes.
The next employee assembles and sands the chest. Assembly takes 2 hours. The chest
th
en goes to the finishing department. It takes 1.5 hours to finish the chest. All employees
are cross
-
trained, so they are all paid the same amount per hour, $17.50.
Required:
a)
What are the standard hours per chest?
)
What is the standard cost per chest fo
labor?
Answer and Work
:
Notre Dame College
MBA 540 Accounting
Week 5
Assignment 5-2
Total points: 50
1. This is a numerical assignment. The maximum points are shown against each problem given
elow.
2. Show the complete work before you give the final answer.
3. Analytical approach is expected where a question is descriptive in nature.
1. (3 points) Rita works for BSD Cleaning Services, LLC. She is allowed to clean 5
seconds per square foot. She cleans two school buildings. School 1, which is 3,000
square feet, and school 2, which is 2,460 square feet. Will she finish these two school
uildings in an 8-hour shift? Will she have time for a
eak?
Required:
a) Will she finish these two school buildings in an 8-hour shift? Please calculate.
) Will she have time for a
eak and how long will be the
eak?
Answer and Work:
2. (3 points) Johan is working with the operations manager to determine what the standard
labor cost is for a spice chest. He has watched the process from start to finish and taken
detailed notes on what each employee does. The first employee selects and mills the
wood, so it is smooth on all four sides. This takes the employee 1 hour for each chest.
The next employee takes the wood and cuts it to the proper size. This takes 30 minutes.
The next employee assembles and sands the chest. Assembly takes 2 hours. The chest
then goes to the finishing department. It takes 1.5 hours to finish the chest. All employees
are cross-trained, so they are all paid the same amount per hour, $17.50.
Required:
a) What are the standard hours per chest?
) What is the standard cost per chest for labor?
Answer and Work: