Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variableoverhead rate is $1.10 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is$120,320 per month, which includes depreciation of $19,730. All other fixed manufacturing overheadcosts represent current cash flows. The September direct labor budget indicates that 9,400 direct laborhours will be required in that month.Required:a. Determine the cash disbursement for manufacturing overhead for September. (Omit the “$” sign inyour response.) Cash disbursement for manufacturing overheadb. Determine the predetermined overhead rate for September. (Round your answer to 2 decimalplaces. Omit the “$” sign in your response.)Predetermined overhead rateLahay Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $3.80 per unit. The budgeted fixed selling and administrative expense is $30,350 per month, which includes depreciation of $3,620. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 3,000 units are planned to be sold in April.Required:Calculate the selling and administrative cash disbursements budget for April. (Omit the “$” sign in yourresponse.) Cash disbursement for selling and administrative expensesVelazques Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases itsbudgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used inone tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the followingdata in its budgeting:In March, the company budgeted for 357 guests and 127 jeeps. The company’s income statementshowing the actual results for the month appears below:Required:Complete the report showing the company’s activity variances for March. (Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect ofeach variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e.,zero variance). Omit the “$” sign in your response.)During May, Hiles Corporation budgeted for 26,000 customers, but actually served 24,000 customers.The company uses the following revenue and cost formulas in its budgeting, where q is the number ofcustomers served:Revenue: $4.81qWages and salaries: $35,100 + $1.72qSupplies: $0.62qInsurance: $12,100Miscellaneous: $5,100 + $0.12qRequired:Complete the company’s flexible budget for May based on the actual level of activity for themonth. (Input all amounts as positive values. Omit the “$” sign in your response.)Hiles CorporationFlexible BudgetFor the Month Ended May 31Actual customers servedCrovo Corporation uses customers served as its measure of activity. During December, the companybudgeted for 44,000 customers, but actually served 46,000 customers. The company has provided thefollowing data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting:Required:Complete the report showing the company’s revenue and spending variances for December. (Input allamounts as positive values. Leave no cells blank – be certain to enter “0” wherever required.Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and”None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)In June the company produced 5,100 units using 24,710 grams of the direct material and 2,550 directlabor-hours. During the month the company purchased 25,000 grams of the direct material at a price of$6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead ratewas $1.90 per hour. The materials price variance is computed when materials are purchased. Variableoverhead is applied on the basis of direct labor-hours.Required:Compute the following variances for raw materials, direct labor, and variable overhead, assuming that theprice variance for materials is recognized at point of purchase: (Input all amounts as positive values.Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” whereverrequired. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable,and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)Costs associated with two alternatives, code-named Q and R, being considered by Corniel Corporationare listed below:Required:a. Which costs are relevant and which are not relevant in the choice between these two alternatives?b. What is the differential cost of Alternative R over Alternative Q? (Negative amount should beindicated by a minus sign. Omit the “$” signs in your response.)Differential costNutall Corporation is considering dropping product N28X. Data from the company’s accounting systemappear below:All fixed expenses of the company are fully allocated to products in the company’s accounting system.Further investigation has revealed that $192,500 of the fixed manufacturing expenses and $107,500 ofthe fixed selling and administrative expenses are avoidable if product N28X is discontinued.Required:a. According to the company’s accounting system, what is the net operating income earned by productN28X? (Input the amount as a positive value. Omit the “$” sign in your response.)b-1.What would be the effect on the company’s overall net operating income of dropping product N28X?(Input the amount as a positive value. Omit the “$” sign in your response.)Net operating income would be by $ .b-2.Should the product be dropped?NoYesMasse Corporation uses part G18 in one of its products. The company’s Accounting Department reportsthe following costs of producing the 16,700 units of the part that are needed every year.Per UnitAn outside supplier has offered to make the part and sell it to the company for $32.00 each. If this offer is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted, only $22,700 of these allocated general overhead costs would be avoided. In addition, the space used to produce part G18 could be used to make more of one of the company’s other products, generating an additional segment margin of $29,000 per year for that product.Required:a. Calculate the effect on the company’s total net operating income of buying part G18 from the supplier rather than continuing to make it inside the company. (Input the amount as a positive value. Omit the “$” sign in your response.) Net operating income would be by $ .b. Which alternative should the company choose?Foulds Company makes 6,000 units per year of a part it uses in the products it manufactures. The unitproduct cost of this part is computed as follows:An outside supplier has offered to sell the company all of these parts it needs for $41.20 a unit. If thecompany accepts this offer, the facilities now being used to make the part could be used to make moreunits of a product that is in high demand. The additional contribution margin on this other product would be $43,200 per year.If the part were purchased from the outside supplier, all of the direct labor cost of the part would beavoided. However, $6.30 of the fixed manufacturing overhead cost being applied to the part wouldcontinue even if the part were purchased from the outside supplier. This fixed manufacturing overheadcost would be applied to the company’s remaining products.Required:a. How much of the unit product cost of $43.50 is relevant in the decision of whether to make or buy the part? (Round your answer to 2 decimal places. Omit the “$” sign in your response.)b. What is the net total dollar advantage (disadvantage) of purchasing the part rather than makingit? (Input the amount as a positive value. Omit the “$” sign in your response.)c. What is the maximum amount the company should be willing to pay an outside supplier per unit forthe part if the supplier commits to supplying all 6,000 units required each year? (Round your answerto 2 decimal places. Omit the “$” sign in your response.)Holtrop Corporation has received a request for a special order of 9,500 units of product Z74 for $47.00each. The normal selling price of this product is $52.10 each, but the units would need to be modifiedslightly for the customer. The normal unit product cost of product Z74 is computed as follows:Direct labor is a variable cost. The special order would have no effect on the company’s total fixedmanufacturing overhead costs. The customer would like some modifications made to product Z74 thatwould increase the variable costs by $6.70 per unit and that would require a one-time investment of$46,500 in special molds that would have no salvage value. This special order would have no effect onthe company’s other sales. The company has ample spare capacity for producing the special order.Required:Calculate the incremental net operating income of accepting the special order. (Omit the “$” sign inyour response.)Incremental net operating incomeJanes, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 5years, at the end of which, the machine would have a salvage value of $43,000. The machine wouldreduce labor and other costs by $103,000 per year. Additional working capital of $5,000 would be needed immediately, all of which would be recovered at the end of 5 years. The company requires a minimum pretax return of 16% on all investment projects. (Ignore income taxes.)Required:Determine the net present value of the project. (Negative amount should be indicated by a minussign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearestdollar amount. Omit the “$” sign in your response.)Brewer Company is considering purchasing a machine that would cost $451,260 and have a useful life of 6 years. The machine would reduce cash operating costs by $98,100 per year. The machine would have a salvage value of $107,270 at the end of the project. (Ignore income taxes.)Required:a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)Payback periodb. Compute the simple rate of return for the machine. (Round your answer to 2 decimal places. Omitthe “%” sign in your response.)Simple rate of returnAustin Company is investigating four different investment opportunities. Information on the four projects under study is given below:Because the companyâs required rate of return is 8%, a 8% discount rate has been used in the presentvalue computations above. Limited funds are available for investment, so the company canât accept all of the available projects.Required:1. Compute the project profitability index for each investment project. (Round your answers to 3decimal places.)2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return.Net PresentValueFirst preferenceSecond preferenceThird preferenceFourth preferenceProjectProfitability IndexInternal Rate ofReturn
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