Complete a five-part assessment using the Assessment 1 Template. Prepare calculations, enter them into the template, and make decisions using statements for cost of goods manufactured (COGM), cost of goods sold (COGS), and cost-volume-profit analysis.
Accounting information systems in large corporations consist of two major subsystems: a financial accounting system and a cost accounting system. One of the main distinctions between the two systems is the target audience for the information. Financial accounting information is primarily for external users of financial information, including investors, creditors, and government agencies.
Cost accounting information is used internally by managers for planning and controlling costs, continuous improvements, and decision making.
Managers must understand the relationship among revenues, costs, volume, and profit. It is the cost accounting department that supplies the data and analysis that support these managers. By understanding the types of decisions managers make and how they think about the issues of volume, pricing, and cost incursion, cost accountants can lessen managers’ concerns about the effects of their decisions on profits.
Before beginning this assessment, take time to review the following topics:
Complete a five-part assessment in a supplied Excel template in which you prepare and make decisions based on statements for cost of goods manufactured (COGM), cost of goods sold (COGS), and cost-volume-profit analysis.
Use the Assessment 1 Template [XLSX] to complete the following five parts. Each part is a different tab in the template.
Submit the completed template for Assessment 1.
In the template, review the T-Rex Company scenario and production costs and compute the requested unit costs. Show all calculations.
T-Rex Company makes a variety of products. It is organized in two divisions, East and West. The managers for each division are paid, in part, based on the financial performance of their divisions. The West division normally sells to outside customers but occasionally sells to the East division. When it does, corporate policy states that the price must be cost plus 15 percent to ensure a fair return to the selling division. West received an order from East for 600 units. West’s planned output for the year had been 2,640 units before East’s order. West’s capacity is 3,300 units per year. The costs for producing those 2,640 units follow:
T-Rex Company Production CostsProduction Costs for 2,640 UnitsTotalPer Unit
Materials
$528,000
$200
Direct Labor
$253,440
$96
Other Costs Varying With Output
$168,960
$64
Fixed Costs (Do Not Vary With Output)
$2,217,600
$840
Total Costs
$3,168,000
$1,200
Complete the following:
In the template, review the accounting records for Joplin Products. Compute the different costs per unit. Show all calculations.
Joplin Products produced and sold 990 units of the company’s only product in June. You have collected the following information from the accounting records:
Information on Joplin Products
Item
Value
Sales Price (Per Unit)
$492.80
Manufacturing Costs:
Fixed Overhead (Monthly)
$55,440.00
Direct Labor (Per Unit)
$38.50
Direct Materials (Per Unit)
$123.20
Variable Overhead (Per Unit)
$77.00
Marketing and Administrative Costs:
Fixed Costs (Monthly)
$74,250.00
Variable Costs (Per Unit)
$15.40
Complete the following:
In the template, review the accounting records for Idaho Tool & Die. Prepare an income statement with a supporting cost of goods sold statement. Show all calculations.
The administrative offices and manufacturing plant of Idaho Tool & Die are in the same building. The following information (in $000s) appears in the accounting records for last year:
Accounting Records for Idaho Tool & DieItem
Value
Administrative Costs
$10,560
Building and Machine Depreciation (75% of this amount is for factory)
$5,940
Building Utilities (90% of this amount is for factory)
$8,250
Direct Labor
$5,544
Direct Materials Inventory, December 31
$84
Direct Materials Inventory, January 1
$72
Direct Materials Purchases
$24,090
Factory Supervision
$3,234
Finished Goods Inventory, December 31
$390
Finished Goods Inventory, January 1
$324
Indirect Factory Labor
$5,472
Indirect Materials and Supplies
$4,110
Marketing Costs
$5,226
Property Taxes on Building (80% of this amount is for factory)
$5,040
Sales Revenue
$85,602
Work-in-Process Inventory, December 31
$74
Work-in-Process Inventory, January 1
$192
Complete the following:
In the template, review the Toronto Partners scenario. Compute the volume of units and volume of sales outlined. Explain how a price increase would be required to increase profits.
Toronto Partners is concerned about the possible effects of inflation on its operations. The company currently sells 66,000 units at $30 per unit. The variable production costs are $15 and fixed costs amount to $770,000. Production engineers have advised management that they expect unit labor costs to rise by 15 percent and unit materials costs to rise by 10 percent in the coming year. Of the $15 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 5 percent as a result of increased taxes and other fixed charges.
The company wishes to maintain the same level of profit in real dollar terms. To accomplish this, profits must increase by 6 percent over the year.
Complete the following:
In the template, review the sales revenue and costs for Chase Corporation. Prepare a schedule computing Chase’s estimated operating profit from options A, B, and C for closing a plant. Show all calculations.
You have been asked to help Chase Corporation’s management make certain decisions. Chase has its home office in Oklahoma and leases factory buildings in Arkansas, Kansas, and Colorado, all of which produce the same product. Chase’s management provided you a projection of operations for next year follow:
Chase Corporation’s Projection of OperationsItemTotalArkansasKansasColarado
Sales Revenue
$968,000
$484,000
$308,000
$176,000
Fixed Costs:
Factory
$242,000
$123,200
$61,600
$57,200
Administration
$77,000$46,200$24,200$6,600
Variable Costs
$319,000
$146,300
$93,500
$79,200
Allocated Home Office Costs
$110,000
$49,500
$38,500
$22,000
Total
$748,000
$365,200
$217,800
$165,000
Operating Profit
$220,000
$118,800
$90,2000
$11,000
Due to the marginal results of operations of the Colorado factory, Chase has decided to cease its operations and sell that factory’s machinery and equipment by year end. Chase expects that the proceeds from the sale of these assets would equal all termination costs. Chase would like to continue serving most of its customers in that area if it is economically feasible and is considering one of the following three options:
Increase Over Kansas Factory’s Current Operations
Item
Percentage
Sales Revenue
50%
Fixed costs: Factory20%Administration10%
Under this proposal, variable costs would be $2 per unit sold.
Complete the following:
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more