Problem – 1
ABC Company had a beginning work-in-process inventory of 30,000 units On June 1. These units contained $120,000 of direct materials and $272,000 of conversion cost. The following data relate to activity during June:
Production completed (units)
Ending work-in-process, 60% complete (units)
Direct materials used
ABC uses a weighted-average process-costing system. All materials are added at the start of manufacturing; in contrast, conversion cost is incu
ed evenly throughout production.
A. Compute the total equivalent units for direct material and conversion cost.
B. Compute the cost per equivalent unit of direct material and conversion cost.
C. Determine the cost of complete production.
Problem – 2
ABC Pizza, a manufacturer of frozen pizzas, has the following data:
Work-in-Process, October 1
ed during Octobe
*complete as to direct material; 40% complete as to conversion
The equivalent units of activity for October are:
Direct material (weighted-average method)
Conversion (weighted-average method)
Completed and transfe
Compute the following amounts using weighted-average process costing.
1. Cost of goods completed and transfe
ed out during October.
2. Cost of the October 31 work-in-process inventory.
Problem – 3
ABC corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration.
Cost of goods sold
General selling costs
General administrative costs
Cost-driver data used by the firm and traceable to Evans and Rogers are:
A. Perform a customer profitability analysis for ABC. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration.
B. Compute gross margin as a percentage of sales revenue. Then compute (1) general selling and administrative costs as a percentage of gross margin and (2) total customer-related costs (i.e., costs that arise from sales visits, order taking, and special handling and shipping) as a percentage of gross margin.
C. On the basis of your calculations, which of the two customers is “more costly” to deal with? Briefly explain.
Problem – 4
ABC Medical clinic offers a number of specialized medical services. A review of data for the year just ended revealed variable costs of $32 per patient day; annual fixed costs of $48,000, which are incu
ed evenly throughout the year; and semi variable costs that displayed the following behavior at the “peak” and “valley” of activity:
January (2,400 patient day): $258,400
August (2,900 patient day): $278,900
A. Calculate the total cost for an upcoming month (2,800 patient days) if cu
ent cost behavior patterns continue. ABC uses the high-low method to analyze cost behavior.
B. There is a high probability that ABC’s volume will increase in forthcoming months as patients take advantage f new scientific advances. Can the data and methodology used in part (a) for predicting the costs of 2,800 patient days be employed to estimate the costs for, say, 3,800 patient days? Why or why not?
Problem – 5
ABC corporation reports the following data for the first six months of the year:
a. Using the least-squares regression method, the estimated variable electrical cost per machine hour.
. Using the least-squares regression method, the estimated monthly fixed component of the electrical cost.