Requirements for Problem Set 1 Prof. O'Kelly ACCT 2301 Summer 2, 2013The work is to be completed on...

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Requirements for Problem Set 1 Prof. O'Kelly ACCT 2301 Summer 2, 2013
The work is to be completed on an individual basis and should not be discussed with other students in the course. The use of outside resources should not be used with the exception of the textbook and course materials. Your signature on the cover page confirms that you have complied with this policy. The assignment should be turned in electronically using Turn-it-in (found in the Assignments tab of Blackboard) by 12 noon on Tuesday, July 16, 2013. You are also required to bring a hard copy of your answers to the problem set to class and turn it in directly to me on Tuesday, July 16, 2013.
1. Answer the problems included in the assignment in order and reference your answers with the corresponding letters a, b, c, d, e, as appropriate. It is important that you make it clear which question you are answering. No introduction or statement of the problem is required.
2. Clearly show all calculations done to arrive at your answers and analyses. Where possible, use Tables and Exhibits to present calculations and quantitative analyses. You will be evaluated on the clarity of the solutions as well as the quality of the analysis.
3. Support your answers with evidence drawn from the facts in the problem along with additional material discussed in class and in the textbook.
4. Calculations are only the beginning of the analysis. You must interpret the calculations and assess their implications and significance for the managerial analysis and decisions under discussion. Be careful to respond directly to the question asked.
5. Type your answers, double-spaced, in 12 point font. Number each page sequentially including exhibits.
6. Type an 8 1/2" x 11" cover page that includes your name, instructor name, section time of the course, and the date the case write-up is due. You should also sign your name on the cover page which confirms the following: I completed the assignment on an individual basis and did not discuss the questions or my answers with other students in the course. I did not use any outside resources with the exception of the textbook and course materials. I pledge that the work I am submitting is completely my own.
7 . STAPLE the pages in the upper left-hand corner-. (Paper clips have a nasty habit of coming off, and pages are lost.) Submit only the stapled 8 1/2" x 11" pages.

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David · Accepted Answer

1
     Managerial Accounting 
Student’s Name: 
Instructor’s Name: 
Section time: 
Due Date:
       2    
SOLUTION 1(A): 
Option 1: 
Calculation of per unit costs:
  Particulars Amount 
Direct Materials  $ 225,000.00  
Wages  $ 250,000.00  
Factory Utilities  $   20,000.00  
Total  $ 495,000.00  
Units produced      20000.00 
Per Unit Cost  $          24.75  
  Calculation of Fixed Factory Overheads:
  Particulars Amount 
Production Supervisors Salary  $   90,000.00  
Health care benefits for factor labor  $   74,000.00  
Rent on corporate headquarters  $   15,400.00  
Total Fixed Factory Overheads  $ 179,400.00  
  Calculation of Selling, General & Administrative Overheads: 
  Particulars Amount 
Depreciation ($450,000 / 10 years)  $   45,000.00  
Research & Development Costs  $ 220,000.00  
Other Costs  $ 140,000.00  
Total Selling, General & Administrative Overheads  $ 405,000.00
Income Statement of Wheelock Company:
  Particulars Amount 
Sales Revenue (15,000 units * $80)  $ 1,200,000.00  
Variable Costs (15,000 units * $24.75)  $    371,250.00  
Contribution  $    828,750.00  
Fixed Costs:   
Total Fixed Factory Overheads  $    179,400.00  
Total Selling, General & Administrative Overheads  $    405,000.00  
       3    
Total Fixed Costs  $    584,400.00
Net Income  $    244,350.00
Cash Balance:
  Particulars Amount 
Common Stock  $    880,000.00  
Sales Revenue  $ 1,200,000.00  
Less: Purchase of Equipment  $    450,000.00  
Less: Variable Cost of production ($24.75 * 20,000)  $    495,000.00  
Less: Fixed Factory Overheads  $    179,400.00  
Less: Research & Development Costs  $    220,000.00  
Less: Other Selling, General & Administrative Costs  $    140,000.00
Cash Balance  $    595,600.00
Balance Sheet of Wheelock Company:
  Particulars Amount 
Assets:
Current Assets:   
Cash  $    595,600.00  
Inventory ((20,000 - 15,000) * $24.75)  $    123,750.00  
Total Current Assets  $    719,350.00
Fixed Assets:   
Equipment ($450,000 - $45,000)  $    405,000.00  
Total Fixed Assets  $    405,000.00
Total Assets  $ 1,124,350.00
Liabilities & Shareholders’ Equity:
Liabilities  $                  -
       4    
Shareholders’ Equity:   
Common Stock  $    880,000.00  
Net Income  $    244,350.00  
Total Shareholders' Equity  $ 1,124,350.00
Total Liabilities & Shareholders' Equity  $ 1,124,350.00
Option 2: 
Calculation of per unit costs:
  Particulars Amount 
Direct Materials  $    225,000.00  
Wages  $    250,000.00  
Research & Development Costs  $    220,000.00  
Factory Utilities  $      20,000.00  
Total  $    715,000.00  
Units produced 20000.00 
Per Unit Cost  $             35.75  
  Calculation of Fixed Factory Overheads:
  Particulars Amount 
Production Supervisors Salary  $      90,000.00  
Health care benefits for factor labor  $      74,000.00  
Rent on corporate headquarters  $      15,400.00  
Total Fixed Factory Overheads  $    179,400.00  
  Calculation of Selling, General & Administrative Overheads: 
  Particulars Amount 
Depreciation ($450,000 / 10 years)  $      45,000.00  
Other Costs  $    140,000.00  
Total Selling, General & Administrative Overheads  $    185,000.00  
  Income Statement of Wheelock Company:
  Particulars Amount 
       5    
Sales Revenue (15,

Requirements for Problem Set 1 Prof. O'Kelly ACCT 2301 Summer 2, 2013 The work is to be completed on an individual basis and should not be discussed with other students in the course. The use of...

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