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Computing equivalent units and assigning costs to completed units and ending work in process; no beginning inventory or cost transferred in [ 30-45 min]
Sue Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no work in process on March 31. In mid- April, Sue Electronics started production on 100,000 CD players. Of this number 76,1– CD players were assembled during April and transferred out of the Programming Dept. The A[ril 30 work in process in the Assembly Dept. was 40% of the way through the assembly process. Direct materials costing $375,720 were placed in production in Assembly during April, and direct labor of $157,700 and manufacturing overhead of $98,505 were assigned to that department.
1. Draw a time line for the Assembly Department.
2. Use the time line to help you compute the number of equivalent units and the cost per equivalent unit in the Assembly Department for April.
3. Assign total costs in the Assembly Dept. to (a) units completed and transferred to Programming during April and (b) units still in process at April 30.
4. Prepare a T-account for Work in Process Inventory- Assembly to show its activity during April, including the April 30 balance.
Break even sales; sales to ear a target operating income; contribution margin income statement [30-45 min]
British Productions performs London shows. The average show sells 1,200 tickets at $50 per ticket. There are 120 shows a year. The average show has a cast of 70, each earning an average of $300 per show. The cast is paid after each show. The other variable cost is a program-printing cost of $7 per guest. Annual fixed costs total $459,000.
1. Compute revenue and variable costs for each show.
2. Use the income statement equation approach to compute the number of shows British Productions must perform each year to break even.
3. Use the contribution margin approach to compute the number of shows needed each year to earn a profit of $3, 825,000. Is this profit goal realistic? Give your reasoning. 4. Prepare British Productions’ contribution margin income statement for 120 shows for 2011. Report only two categories of costs: variable and fixed.
P18-26A (p. 980)