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Sunday, February 13, 2011

EUP Equivalent Units of Production Problems

Solution is available here for U$35

6-21) Funtime Inc. makes small toys in a one-department production process. Plastic is added at the beginning of the process; all other materials are considered indirect. The following information is available relative to September 2010 production activities:
Beginning WIP Inventory:15,000 toys (60% complete to labor; 75% complete as overhead)
Started into production: plastic for 620,000 toys
Ending WIP Inventory: 25,400 toys (35% complete as to labor; 60 complete as to overhead)
a. Computed the EUP for direct material, direct labor, and overhead using weighted average process costing
b. Compute the EUP for direct material, direct labor, and overhead using FIFO process costing.
c. Reconcile the calculations in parts (a) and (b)

6-7)  Ro-Day-O Inc. manufactures belt buckles in a single step production process. The following information is available for June 2010:
                                                                Whole Unit         Cost of material                                cost of labor
 Beginning work in progress        200,000 $1,200,000                           $1,728,000
Units started during period         1,000,000             7,800,000                             9,612,000
Units in ending inventory             300,000
Beginning inventory units were over 100 percent complete as to material and 80 percent complete as to labor. The ending inventory units were 100 percent complete as to material and 50 percent as to labor. Overhead is applied to production at the rate of 60 percent of direct labor.
a. prepare a schedule to compute equivalent units of production by cost component assuming the weighted average method.
b. Determine the unit production costs for material and conversion.
c. Calculate the costs assigned to completed units and ending inventory for August  2010


14-28) Mountain  Mist Inc’s. cost of capital is 11 percent. In 2010, one of the firm’s divisions generated an EVA of $1,130,000. The fair market value of the capital investment in that division was $29,500,000. How much after-tax income was generated by the division in 2010?
14-39) Evergreen Industries operates a chain of lumber stores. In 2010, corporate management examined industry-level data and determined the following performance targets for lumber retail stores:
Asset turnover                  1.9%
Profit margin                      7.0%
The actual 2010 results for the company’s lumber retail stores area as follows:
Total assets at beginning of year               $10,200,000
Total assets at end of year                           12,300,000
Sales                                                                      28,250,000
Operating expenses                                       25,885,000
a. For 2010, how did the lumber retail stores perform relative to their industry norms?
b. Which, as indicated by the performance measures, are the most likely areas to improve performance in the retail lumber stores?
c. What are the advantages and disadvantages of setting a performance target at the start of the year compared with one that is determined at the end of the year based on actual industry performance?


14-48)  You have been elected president of your university’s newly chartered accounting honor society. The society is a chapter of a national organization that has the following mission: “To promote the profession of accountancy as a career and to imbue members with high ethical standards.”
a. Determin the balanced scorecard categories that you believe would be appropriate for the honor society.
b. Under each category, determine between four and six important performance measures.
c. How would you choose benchmarks against which to compare your chapter to others of the national organization?
18-21)  Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product:
Year                       expected volume                            Expected Price per unit
1                              48,000 units                                        $19
2                              48,000                                                   20
3                              90,000                                                   16
4                              40,000                                                   12
If the firm desires to net $3.50 per unit in profit over the life of the product , and selling and administrative expenses are expected to average $50,000 per year, what is the target cost to produce the new utensil?
18-32) X-caliber manufactures high-end flatware. One of the crucial processes in flatware production is polishing. The company normally operates three polishing machines to maintain pace with the upstream and downstream production operations. However, one of the polishing machines broke yesterday, and management has been informed that the machine will not be back in operation until repairs are completes in three weeks. Two machines cannot keep pace with the volume of product flowing to the polishing operation. You have been hired as a consultant to improve the throughput of the polishing operation. Discuss tactics you would recommend Xcaliber to employ for handling the capacity limitation.

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