Accounting 221 Homework 7 | Complete Solution

Question 1 (8 points)

Alpha manufactures chairs, and each requires 4 board feet of lumber. Alpha expects that 1,500 and 1,700 chairs will be built in April and May, respectively. Alpha keeps lumber on hand at 40% of the next month's production needs. Use this information to determine number board feet of lumber that Alpha Company: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units.)

            1. should buy in April

            2. have for desired March ending raw material inventory

FIB - 2

Question 2 (8 points)

Alpha company anticipated unit sales of widgets are January, 5,000; February, 4,000; and March 8,000. Alpha consistently maintained finished goods inventory at 80% of the following month's sales. The historic total unit cost has been $10 for each unit produced. Use this information to determine the total cost of completed production for: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

            1. January

            2. February

Question 3 (5 points)

Alpha Company began operations on January 1 with cash of $95,000. All of January's $150,000 sales were on account. During January no customer collections occurred. Cost of goods sold was $45,000, and there was no ending inventories or any accounts payables. Use this information to determine the ending balance of cash on hand for January. (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

Question 4 (5 points)

Alpha Company has budgeted activity for October to reflect net income $120,000. All sales are credit sales. Receivables are planned to increase by $35,000, payables to decrease by $25,000 and Depreciation Expense is $65,000. Use this information to determine how much cash will increase (decrease) during the month of October. (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

Question 5 (12 points)

Alpha Company began operations on January 1. All sales are on credit. Alpha has sales budgeted as $170,000 for February. Receivables at January 31 were $25,000. Accounts Receivable collections are expected to be 60% in the month of sale, 30% the next month, and 10% in the next. Use this information to determine the dollar value of: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

            1. January Sales

            2. January Cash Collections from Customers

            3. February Expected Cash Collections from Customers

Question 6 (5 points)

Alpha Company is preparing its cash budget for the month of May.  The company estimated credit sales for May at $200,000. Actual credit sales for April were $150,000. Estimated collections in May for credit sales in May are 20%.   Estimated collections in May for credit sales in April are 70%.  Estimated Collections in May for credit sales prior to April are $12,000.  Estimated write-offs in May for uncollectible credit sales are $8,000.  Estimated provision for bad debts in May for credit sales in May are $7,000.  What are the estimated cash receipts from accounts receivable collections in May?

Question 7 (8 points)

Alpha Company has provided projected information as follows: 

                     Net sales                                                $10,000

                     Fixed manufacturing costs      $1,000

Additionally, Alpha has experienced a variable manufacturing costs of 45% of net sales and sees not changes during the budget period. Alpha expects that there will be no changes to any inventory values. Use this information to determine Alpha's: . (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

            1. Budgeted Cost of Goods Sold

            2. Budgeted Gross Profit

Question 8 (12 points)

Alpha Company has two service departments (Cafeteria Services & Maintenance Services). Alpha has two production departments (Printing Department & Binding Department.) Cafeteria Services has costs of $140,000 and are allocated to production departments based on their number of employees. Employees are:

            Cafeteria Services                2

            Maintenance Services           2

            Printing Department             4

            Binding Department             8

Alpha uses the direct method for service cost allocation. Use this information to determine for Alpha Company the amount of its Cafeteria costs that are to be absorbed by: . (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

            1. the Maintenance Service Department

            2. the Printing Department

            3. the Binding Department

Question 9 (9 points)

Alpha Company has two service departments (Cafeteria Services & Maintenance Services). Alpha has two production departments (Printing Department & Binding Department.) Cafeteria Services has costs of $140,000 and are allocated to production departments based on their number of employees. Employees are:

            Cafeteria Services                2

            Maintenance Services           2

            Printing Department             4

            Binding Department             8

Alpha uses the step method for service cost allocation. Use this information to determine for Alpha Company the amount of its Cafeteria costs that are to be absorbed by: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

            1. the Printing Department

            2. the Binding Department

Question 10 (14 points)

Alpha Company provides the following information for their first year of operations in 2016:

            Sales, 5,000 units @ $10 each

            Total production, 7,500 units

            Selling and administrative costs:

         Fixed                 $1,000

                     Variable                       $1 per unit

            Production costs per unit:

         Direct materials            $2.00

                     Direct labor                   $2.00

                     Variable overhead        $1.00

            Fixed manufacturing overhead       $7,500

Alpha Company uses absorption costing. Use this information to determine for Alpha Company the FY 2016: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

1. Cost of Goods Sold

2. Net Income

3. Cost of Ending Inventory

Question 11 (14 points)

in 2016:

            Sales, 5,000 units @ $10 each

            Total production, 7,500 units

            Selling and administrative costs:

         Fixed                 $1,000

                     Variable                       $1 per unit

            Production costs per unit:

         Direct materials            $2.00

                     Direct labor                   $2.00

                     Variable overhead        $1.00

            Fixed manufacturing overhead       $7,500

Alpha Company uses direct (variable) costing. Use this information to determine for Alpha Company the FY 2016: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

1. Contribution Margin

2. Net Income

3. Cost of Ending Inventory