Directions
CTA 4- CVP & Cost Management Systems
**Before you begin, save this file to your computer named as LastName, First Name CTA4
This critical thinking analysis includes a comprehensive problem that will cover concepts you learned in chapters XXXXXXXXXXThere is also one problem that continues our problem with Nerdzy Computer Company that is focused on chapter 21.
The comprehensive problem that covers chapters 16-20 can be found on the tab named "Comprehensive". All of the data that you will need and all of your answer input areas will be found in that one sheet.
The problem that covers cost management systems and continues working with Nerdzy Computer Company can be found in the tab labelled "Req2". All of the data and answer inputs will be found in that one sheet.
Special Notes:
1. Only enter answers in blue shaded cells. If you would like to do additional calculations in excel that are not part of the final answer, please add a new worksheet to the workbook.
2. If a cell does not have an answer, leave it blank. If a cell should have a zero, please enter it into the cell.
3. I tried to set the pages up so that they would print nicely on whole sheets of paper. If you would like to, you can print the file and complete it by hand. After, please transcribe your answers to this excel workbook so that it can be submitted.
4. When you are done with the assignment, upload the completed file into the associated Blackboard assignment area.
Comprehensive
Comprehensive Problem Chapters 16-20 Req C1. Complete a production cost report for the Cutting Department and the Sewing Department. What is the cost of one basic shirt?
The Tattered Threads Shirt Company makes two types of T-shirts: basic and custom. Basic shirts are plain shirts without any screen printing on them. Custom shirts are created using the basic shirts and then adding a custom screen-printing design.
The company buys cloth in various colors and then makes the basic shirts in two departments, Cutting and Sewing. The company uses a process costing system (weighted-average method) to determine the production cost of the basic shirts. In the Cutting Department, direct materials (cloth) are added at the beginning of the process and conversion costs are added evenly through the process. In the Sewing Department, no direct materials are added. The only additional material, thread, is considered an indirect material because it cannot be easily traced to the finished product. Conversion costs are added evenly throughout the process in the Sewing Department. The finished basic shirts are sold to retail stores or are sent to the Custom Design Department for custom screen printing.
The Custom Design Department creates custom shirts by adding screen printing to the basic shirt. The department creates a design based on the customer’s request and then prints the design using up to four colors. Because these shirts have the custom printing added, which is unique for each order, the additional cost incu
ed is determined using job order costing, with each custom order considered a separate job.
The Tattered Threads Shirt Company
Production Cost Report- Cutting Dept
Month Ended March 2021
Equivalent Units
UNITS Whole Units Direct Materials Conversion Costs
Units to account for:
Beg. WIP
Started in Production
Total Units to Account fo
Units accounted for:
Completed & trsf out
End WIP
Total units accounted fo
For March 2021 the Tattered Threads Shirt Company compiled the following data for the Cutting and Sewing Departments:
COSTS Direct Materials Conversion Costs Total Costs
Costs to account for:
Department Item Amount Units Beg. WIP
Cutting Beginning balance - 0 - 0 shirts Costs added during period
Started in March - 0 1,411 shirts Total costs to account fo
Direct materials added in March 1,980 ÷ total EUP
Conversion costs 1,380 Cost per EU
Completed and transfe
ed to Sewing ??? 1,411 shirts
Ending balance - 0 - 0 shirts Costs accounted for:
Sewing Beginning balance, transfe
ed in, $1458; conversion costs, $688 2,146 521 shirts Completed & Trsf out
Transfe
ed in from Cutting ??? ??? Ending WIP
Conversion costs added in March 1,257 - 0 Total costs accounted fo
Completed and transfe
ed to Finished Goods ??? 1,000 shirts
Ending balance, 63% complete ??? ???
For the same time period, the Tattered Threads Shirt Company compiled the following data for the Custom Design Department: The Tattered Threads Shirt Company
Production Cost Report- Sewing Dept
Month Ended March
Job Quantity Design Fee Printing Status
367 400 Yes 3 colors Complete Equivalent Units
368 150 No 2 colors Complete UNITS Whole Units Transfe
ed in Direct Materials Conversion Costs
369 100 Yes 5 colors Complete Units to account for:
370 500 Yes 4 colors Complete Beg. WIP
Transfe
ed in
The Tattered Threads Shirt Company has previously determined that creating and programming the design cost Total Units to Account fo
84 per design. This is a one time charge.
Units accounted for:
If a customer places another order with the same design, the customer is not charged a second time. Completed & trsf out n/a
End WIP n/a
Additionally, the cost to print is .25 per color per shirt. Total units accounted for n/a
Requirements COSTS Direct Materials Conversion Costs Total Costs
C1. Complete a production cost report for the Cutting Department and the Sewing Department. What is the cost of one basic shirt? Costs to account for:
Beg. WIP n/a
Costs added during period n/a
C2. Determine the total cost and the average cost per shirt for jobs 367, 368, 369, and 370. If the company set the sales price at 225% of the total cost, determine the total sales price of each job. Total costs to account for n/a
÷ total EUP n/a
Cost per EU n/a
C3. In addition to the custom jobs, the Tattered Threads Shirt Company sold 1250 basic shirts. If the company set the sales price at 140% of the cost, determine the sales price per unit, total sales revenue, total cost of goods sold, and total gross profit for the basic shirts.
Costs accounted for:
Completed & Trsf out n/a
**(assume the beginning balance in Finished Goods Inventory is sufficient to make these sales, and the unit cost of the basic shirts in Finished Goods Inventory is the same as the unit cost incu
ed this month) Ending WIP n/a
Total costs accounted for n/a
C4. Calculate the total revenue, total cost of goods sold, and total gross profit for all sales, basic and custom.
C5. Assume the company sold only basic shirts (no custom designs) and incu
ed fixed costs of $790 per month. Cost of one basic shirt =
a. Calculate the contribution margin per unit, contribution margin ratio, required sales in units to
eak even, and required sales in dollars to
eak even.
b. Determine the margin of safety in units and dollars.
c. Suppose the Tattered Threads Shirt Company wants to earn an operating income of $1240 per month. Compute the required sales in units and dollars to achieve this profit goal.
C6. The Tattered Threads Shirt Company is considering adding a new product line, a cloth shopping bag with custom screen printing that will be sold to grocery stores. If the cu
ent market price of cloth shopping bags is $2.12 and the company desires a net profit of 62% what is the target cost?
C2. Determine the total cost and the average cost per shirt for jobs 367, 368, 369, and 370. If the company set the sales price at 225% of the total cost, determine the total sales price of each job.
The company estimates the full product cost of the cloth bags will be $0.70. Should the company manufacture the cloth bags? Why or why not?
Job 367 368 369 370 TOTALS
COSTS:
Student Calculations / Notes: Basic shirt
Design Cost
Printing Cost
Total Cost
Cost per shirt
Sales Price per shirt
Total Sales
C3. In addition to the custom jobs, the Tattered Threads Shirt Company sold 1250 basic shirts. If the company set the sales price at 140% of the cost, determine the sales price per unit, total sales revenue, total cost of goods sold, and total gross profit for the basic shirts.
**(assume the beginning balance in Finished Goods Inventory is sufficient to make these sales, and the unit cost of the basic shirts in Finished Goods Inventory is the same as the unit cost incu
ed this month)
Sales price per unit
Total Sales Revenue
Total COGS
Total GP
C4. Calculate the total revenue, total cost of goods sold, and total gross profit for all sales, basic and custom.
Custom Shirts Basic Shirts Totals
Sales Revenue
COGS
GP
C5. Assume the company sold only basic shirts (no custom designs) and incu
ed fixed costs of $790 per month.
a. Calculate the contribution margin per unit, contribution margin ratio, required sales in units to
eak even, and required sales in dollars to
eak even.
CM per unit= Req. sales in units= shirts
CM Ratio= Req sales in $ =
b. Determine the margin of safety in units and dollars.
Margin of safety in units = shirts
Margin of safety in $=
c. Suppose the Tattered Threads Shirt Company wants to earn an operating income of $1240 per month. Compute the required sales in units and dollars to achieve this profit goal.
Req. sales in units=
Req. sales in $ =
C6. The Tattered Threads Shirt Company is considering adding a new product line, a cloth shopping bag with custom screen printing that will be sold to grocery stores. If the cu
ent market price of cloth shopping bags is $2.12 and the company desires a net profit of 62% what is the target cost?
The company estimates the full product cost of the cloth bags will be $0.70. Should the company manufacture the cloth bags? Why or why not?
Target Cost
Should they produce the bags?
Explanation:
Req2
Variable vs Absorption Costing 2a. Compute the product cost per unit produced under absorption costing and under variable costing. Student Calculations / Notes:
Nerdzy Computer company has been operating for a couple of years now and decided to do away with its desktop computer production. It now only sells laptops.
Absorption Costing Variable Costing
Recent company data reveals that under the cu
ent sales mix, the weighted average sales price per unit is 373 and the weighted-average variable cost per unit is 62. Variable Manufacturing cost
Fixed MOH
Total unit product cost
The company does not expect the sales mix to vary for the next year. Assume the beginning balance in finished goods inventory is $0. Additional data for the first month of the year show:
2b. Prepare income statements for January using:
2b1. absorption costing.
JAN Nerdzy Computer Co.
Units produced and sold: Income Statement
Sales 1,025 units Month ended January 20XX
Production 1,200 units
Variable manufacturing cost per unit 62 Net Sales Revenue
Sales commission cost per unit 12 Cost of Goods Sold
Total fixed manufacturing overhead 93,600 Gross Profit
Total fixed selling and administrative costs 62,400 Selling & Admin Costs
Operating Income
Requirements
2a. Compute the product cost per unit produced under absorption costing and under variable costing. 2b2. variable costing.
2b. Prepare income statements for January using: Nerdzy Computer Co.
2b1. absorption costing. Income Statement
2b2. variable costing. Month ended January 20XX
2c. Is operating income higher under absorption costing or variable costing in January? What causes the difference?
Net Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Operating Income
2c. Is operating income higher under absorption costing or variable costing in January? What causes the difference?
Data1
Flexible Budgets & Standard Cost Systems Formula Drop Downs Fav Drop Down Chart of Accounts Income Stmt
lbs price (AC-SC)*AQ F Accounts Payable Cost of Goods Sold at actual cost
Direct Materials (0.2 lbs. @ $0.25 per lb.) $0.05 0.2 0.25 (AQ-SQ)*SC U Accounts Receivable Cost of Goods Sold at standard cost
Direct Labor (3 minutes @ $0.11 per minute) 0.33 3 0.11 Act. VOH - (SC*AQ) Additional Paid In Capital Direct Labor Cost Variance
Manufacturing Overhead: Act. FOH - Bud FOH Bonds Payable Direct Labor Efficiency Variance
Variable (3 minutes @ $0.06 per minute) $0.18 3 0.06 Bud FOH- All. FOH Cash Direct Materials Cost Variance
Fixed (3 minutes @ $0.13 per minute) 0.39 $0.57 3 0.13 Common Stock Direct Materials Efficiency Variance
Total Cost per Soap Jug $0.95 Cost of Goods Sold Fixed Overhead Cost Variance
Direct Labor Cost Variance Fixed Overhead Volume Variance
Direct Labor Efficiency Variance Gross Profit
Direct Materials Cost Variance Manufacturing Cost Variances:
Static budget volume 59,800 Direct Materials Efficiency Variance Operating Income / (Loss)
Date 2,021 Direct Materials Inventory Sales Revenue at standard
Actual Production Sales 62,500 Finished Goods Inventory Selling & Administrative Expenses
Act DM lbs 11,000 Fixed Overhead Cost Variance Total Manufacturing Cost Variances
ACT dm cost 0.17 Fixed Overhead Volume Variance Variable Overhead Cost Variance
Act DL usage minutes 197,000 Interest Expense Variable Overhead Efficiency Variance
Act DL cost 25,610 Interest Revenue Sales Revenue Variance
Actual OH cost Var 10,835 Manufacturing Overhead Sales Revenue at Actual
Act OH costs Fix 29,765 Notes Payable
S&A 95,000 Office Supplies
Sales Price 3 Raw Materials Inventory
Retained Earnings
Sales Revenue
Supplies Expense
Unearned Revenue
Variable Overhead Cost Variance
Variable Overhead Efficiency Variance
Various Accounts
Wages Expense
Wages Payable
Work In Process Inventory
Directions
CTA 6- Flexible Budgets & Standard Cost Systems
**Before you begin, save this file to your computer named as LastName, First Name CTA6
In this Critical Thinking Assignment you will be Variances for Sudsy Soap Co. Navigate to the tab "Req1" to see all of the data you will need to complete the assignment and to input all of your answers. Req 2 refers to an unrelated company and situation requires short answer responses.
Special Notes:
1. Only enter answers in blue shaded cells. If you would like to do additional calculations in excel that are not part of the final answer, please use the "student calculations area" tab.
2. If a cell does not have an answer, leave it blank. If a cell should have a zero, please enter it into the cell.
3. I tried to set the pages up so that they would print nicely on whole sheets of paper. If you would like to, you can print the file and complete it by hand. After, please transcribe your answers to this excel workbook so that it can be submitted.
4. When you are done with the assignment, upload the completed file into the associated Blackboard assignment area.
REQ1
Flexible Budgets & Standard Cost Systems
One of the owners of Nerdzy Computer Company had a midlife crisis and decided to leave the business and start manufacturing soap