Instructions
ACCT 346 | ||||||
Student Name | ||||||
Bravo Baking Company began operations in May of 2010 with the production and sales of speciality breads. | ||||||
The company has experienced a good market demand for its high protein, low carbohydrate product called "Hi-Lo" | ||||||
Hi-Lo's success has required that Bravo continue to make only this one product, however, Bravo's customers, | ||||||
the local retailers, have been asking for more specialty breads from the company. The decision to expand will be made | ||||||
in the coming weeks. | ||||||
Weekly Assignments: Complete the assigned Tab each week. | ||||||
In each worksheet there are several Green colored cells. These cells must be filled in with your response. | ||||||
Due | Points Available | Points Earned | ||||
Tab1) Product vs. Period Costs | Week 1 | 10 | 10.00 | |||
Tab 2) Cost of Goods Manufactured Schedule | Week 2 | 30 | 25.71 | |||
Tab 3) Break Even Analysis | Week 3 | 40 | 0.00 | |||
Tab 4) Incremental Analysis | Week 5 | 40 | 0.00 | |||
Tab 5) Capital Budgeting | Week 6 | 40 | 0.00 | |||
Tab 6) Variance Analysis | Week 7 | 40 | 0.00 | |||
200 | 35.71 | Total |
Tab 1 ProductPeriod
ACCT 346 | |||||||||||||
Student Name | |||||||||||||
For Tables A : From the list below, identify if the cost item is a "Product Cost" or "Period Cost" by typing "Product" or "Period" in the appropriate box. | 10 points | For Table B: From the list below, identify if the cost item is a "Direct Cost" or "Indirect Cost" by typing "Direct" or "Indirect" in the appropriate box. | |||||||||||
Table A | Enter either "Product" or "Period" | Table B | Enter either "Direct" or "Indirect" | ||||||||||
Flour used in baking bread | product | 1 | Correct | Flour used in baking bread | direct | Correct | 1 | ||||||
Factory Supervisor Salaries | product | 1 | Correct | Factory Supervisor Salaries | indirect | Correct | 1 | ||||||
Bakers wages | product | 1 | Correct | Bakers wages | direct | Correct | 1 | ||||||
Rent for Executive Offices | period | 1 | Correct | Factory Insurance | indirect | Correct | 1 | ||||||
Sales Commissions | period | 1 | Correct | Rent for Factory | indirect | Correct | 1 | ||||||
Utilities used in the factory | product | 1 | Correct | Utilities used in the factory | indirect | Correct | 1 | ||||||
Advertising costs | period | 1 | Correct | Cleaning Bake Ovens | indirect | Correct | 1 | ||||||
Delivery truck costs | period | 1 | Correct | Insurance on Factory | indirect | Correct | 1 | ||||||
Paper wrappers for bread | product | 1 | Correct | Paper wrappers for bread | direct | Correct | 1 | ||||||
Depreciation on bake ovens | product | 1 | Correct | Depreciation on bake ovens | indirect | Correct | 1 | ||||||
Eggs, salt, water used for baking | product | 1 | Correct | Eggs used for baking | direct | Correct | 1 | ||||||
Interest on bank loan | period | 1 | Correct | Small amounts of salt used | indirect | Correct | 1 | ||||||
Factory Insurance | product | 1 | Correct | Factory Insurance | indirect | Correct | 1 | ||||||
13 | Points | 10.00 | 13 | ||||||||||
Tab 2 COGM&COGS
ACCT 346 | |||||||||||||
Student Name | |||||||||||||
Use the information provided below to prepare the Cost of Good Manufactured Schedule:Bravo had the following costs as of Dec 31, 2010. Enter the correct values in the Green shaded cells. | (TCO 2) | 30 points | |||||||||||
Table C | Cost of Goods Manufactured Schedule | 1 | |||||||||||
Materials used in baking bread | 32,000 | Correct | Beginning Work In Process | $8,000 | Correct | 1 | |||||||
Factory Supervisor Salaries | 20,000 | Materials | |||||||||||
Bakers wages | $32,000 | Beginning Inventory Materials | $10,000 | Correct | 1 | ||||||||
Rent for Executive Offices | 36,000 | Plus: Purchases | $26,000 | Correct | 1 | ||||||||
Sales Commissions | 10000 | Materials Available | $36,000 | Correct | 1 | ||||||||
Utilities used in the factory | 5000 | Less: Ending Inventory Materials | $4,000 | Correct | 1 | ||||||||
Advertising costs | 12000 | Materials Used | $32,000 | Correct | 1 | ||||||||
Delivery truck costs | 25000 | Direct Labor | $32,000 | Correct | 1 | ||||||||
Depreciation on bake ovens | 500 | Overhead | |||||||||||
Interest on bank loan | 250 | Factory Rent | $7,500 | Correct | 1 | ||||||||
Beginning Inventory Materials | 10,000 | Depreciation on bake ovens | $500 | Correct | 1 | ||||||||
Beginning Work in Process | 8000 | Utilities used in Factory | $5,000 | Correct | 1 | ||||||||
Ending Inventory Materials | 4000 | Other Overhead costs | $1,200 | Correct | 1 | ||||||||
Inventory Purchases | 26000 | Total Overhead | $14,200 | Correct | 1 | ||||||||
Ending Work in Process | 2500 | Total Manufacturing Costs | $78,200 | Correct | 1 | ||||||||
Other Overhead costs | 1200 | Total Work in Process | 0 | ||||||||||
Beginning Finished Goods Inventory | 7500 | Less: Ending Work in Process | $2,500 | Correct | 1 | ||||||||
Ending Finished Goods Inventory | 6000 | Cost of Goods Manufactured | $83,700 | Correct | 1 | ||||||||
Rent for Factory | 7500 | ||||||||||||
Complete only the Green cells. Values in Red are from the schedule above. | |||||||||||||
Cost of Goods Sold Schedule | |||||||||||||
Beginning Finished Goods Inventory | $7,500 | Correct | 1 | ||||||||||
Beginning Work In Process | $8,000 | Correct | |||||||||||
Materials | |||||||||||||
Beginning Inventory Materials | $10,000 | Correct | |||||||||||
Plus: Purchases | $26,000 | Correct | |||||||||||
Materials Available | $36,000 | Correct | |||||||||||
Less: Ending Inventory Materials | $4,000 | Correct | |||||||||||
Materials Used | $32,000 | Correct | |||||||||||
Direct Labor | $32,000 | Correct | |||||||||||
Overhead | |||||||||||||
Factory Rent | $7,500 | Correct | |||||||||||
Depreciation on bake ovens | $500 | Correct | |||||||||||
Utilities used in Factory | $5,000 | Correct | |||||||||||
Other Overhead costs | $1,200 | Correct | |||||||||||
Total Overhead | $14,200 | Correct | |||||||||||
Total Manufacturing Costs | $78,200 | Correct | |||||||||||
Total Work in Process | $0 | Try Again | |||||||||||
Less: Ending Work in Process | $2,500 | Correct | |||||||||||
Cost of Goods Manufactured | -$2,500 | Try Again | |||||||||||
Goods Available for Sale | $83,700 | Try Again | 0 | ||||||||||
Less: Ending Finished Goods Inventory | $6,000 | Correct | 1 | ||||||||||
Cost of Goods Sold Schedule | $83,700 | Try Again | 0 | ||||||||||
Points | 25.71 | 18 |
Tab 3 CVP
ACCT 346 | |||||||
Student Name | |||||||
Bravo Baking identified the costs below to determine its cost of one unit of product and its monthly operating costs. (TCO 4) | 40 Points | ||||||
Units produced | 14,000 | ||||||
Part I Enter your solution in the green cells for each of the following: | |||||||
Table A | Variable | Fixed | Using the costs from Table A compute | ||||
Materials used in baking bread | 2.29 | A) Breakeven units (rounded to 2 decimal places) | 0.00 | ||||
Factory Supervisor Salaries | 0.12 | B) Break-even sales dollars | 0.00 | ||||
Bakers wages | 2.29 | C) Contribution Margin | 0.00 | ||||
Rent for Executive Offices | 3,000 | D) Contribution Margin Ratio (%) | 0.00 | ||||
Sales Commissions | 3500 | ||||||
Utilities used in the factory | 0.50 | Part II Complete the following requirements | |||||
Advertising costs | 1000 | A) If Bravo requires a profit of $5,000 how many units must it sell? | 0.00 | ||||
Delivery truck depreciation | 400 | B) What is the total revenue from A above? | 0.00 | ||||
Depreciation on bake ovens | 0.07 | C) If Bravo actually sells 8,000 units | |||||
Interest on bank loan | 500 | 1) What is the margin of safety in Dollars? | 0.00 | ||||
2) What is the margin of safety percentage? | 0.00 | ||||||
Total Costs | $5.26 | $8,400.00 | |||||
Price Charged per unit | $7.89 | ||||||
Total Correct | |||||||
Points | 0 | 0.00 | |||||
Hint: use spreadsheet formulas to compute your answers | |||||||
Tab 4 Incremental Analysis
ACCT 346 | ||||||||||||
Student Name | ||||||||||||
Bravo Baking Co has expanded its product line to include several other specialty breads. The operating results for the last quarter are provided below. | (TCO 7) | 40 Points | ||||||||||
Product | Hi-Lo | Whole Grain | Fruit & Nuts | Total | ||||||||
Revenues | $67,575 | $31,800 | $15,900 | $115,275 | ||||||||
Variable product costs | $27,030 | $12,720 | $6,360 | $46,110 | ||||||||
Variable Selling & Administrative costs | $13,515 | $6,360 | $3,180 | $23,055 | ||||||||
Contribution Margin | $27,030 | $12,720 | $6,360 | $46,110 | ||||||||
Fixed Product Costs | $5,000 | $5,000 | $5,000 | $15,000 | ||||||||
Fixed Selling and Administrative Costs | $5,700 | $2,850 | $2,850 | $11,400 | ||||||||
Allocated Common Costs | $5,000 | $2,500 | $2,500 | $10,000 | ||||||||
Net Income | $11,330 | $2,370 | -$3,990 | $9,710 | ||||||||
Required: Bravo wants to know the effect on Net Income if it decides to discontinue the Fruit & Nuts product. | ||||||||||||
If Bravo eliminates Fruit & Nuts 50% of fixed costs can be avoided. | ||||||||||||
Prepare and incremental analysis showing the Net Income Effect of eliminating the Fruit & Nuts product. | ||||||||||||
What woud you advise Bravo to do? | ||||||||||||
Using the Table below, compute the Net Income for Bravo Baking after eliminating the Fruit & Nuts product. | ||||||||||||
Product | Hi-Lo | Whole Grain | Fruit & Nuts | Total | ||||||||
Revenues | 0 | |||||||||||
Variable product costs | 0 | |||||||||||
Variable Selling & Administrative costs | 0 | |||||||||||
Contribution Margin | 0 | |||||||||||
Fixed Product Costs | 0 | |||||||||||
Fixed Selling and Administrative Costs | 0 | |||||||||||
Allocated Common Costs | 0 | |||||||||||
Net Income | 0 | |||||||||||
Points | 0 | 0 |
Tab 5 Capital Budgeting
ACCT 346 | |||||||||||
Student Name | |||||||||||
Bravo Baking Co is considering replacing an older freezer with a larger unit to freeze some of its bread. | |||||||||||
The new unit has a larger capacity and Bravo estimates it can produce and sell an more bread each year. From these additional sales | |||||||||||
the after tax cash flow is expected to be $4,000. In addition to more sales, the new freezer will save $1,200 in electricity each year. | TCO 9 | ||||||||||
However, the new freezer will cost an additional $2,000 each year for maintenance. The cost of the new unit is $25,000 and it is | 40 Points | ||||||||||
expected to last 10 years. The salvage value at the end of its life is $6,000. The old unit is fully depreciated and can be disposed at cost. | |||||||||||
Determine the Net Present Value of purchasing the new freezer using a required rate of return of 14%. Should Bravo purchase the freezer? | |||||||||||
Use the format below to complete the NPV computations: | |||||||||||
(Note: Use PV Tables on pages 342 and 343. Also, be sure to show costs as negative values) | |||||||||||
Cash Flow | PV Factors | PV Amounts | |||||||||
Cost of new refrigeration unit | 0 | ||||||||||
After tax cash flow | 0 | ||||||||||
Annual electricity savings | 0 | ||||||||||
Additional annual maintenance costs | 0 | ||||||||||
Amount collected from disposal of unit | 0 | ||||||||||
Net present value | 0 | ||||||||||
Points | 0 | 0 |
Tab 6 Variance Analysis
ACCT 346 | TCO 10 | |||||||||||
Student Name | 40 Points | |||||||||||
Bravo Baking uses standard costing to analyze its performance. The data below is provided for your use in determining Bravo's variances. | ||||||||||||
Standard Cost per unit | Cost /Unit | Amount/Unit | Standard Cost | |||||||||
Material Cost (Ingredients) (.5 lbs) | 2.29 | .5 lbs | $4.58 | |||||||||
Direct Labor( .25 hrs * $9/hr) | 2.25 | .25 hrs | $9.00 | |||||||||
Overhead | 0.57 | |||||||||||
Total | 5.11 | |||||||||||
During the month, Bravo sold 9,000 loaves of bread and used 4,650 pounds of ingredients. Also during the month, Bravo | ||||||||||||
purchased 5,000 pounds of ingredients at a cost of $22,500. Employees worked a total of 2200 hours and actual labor costs were $19,998 | ||||||||||||
Required: | ||||||||||||
Part a. Compute the material price and quantity variance. | ||||||||||||
Material Price Variance = | ||||||||||||
= ( | - | ) * | ||||||||||
= | Fav/Unf > | |||||||||||
0 | 0 | |||||||||||
Material Quantity Variance = | ||||||||||||
= ( | - | ) * | ||||||||||
= | Fav/Unf | |||||||||||
0 | 0 | |||||||||||
Labor Rate Variance = | ||||||||||||
= ( | - | ) * | ||||||||||
= | Fav/Unf > | |||||||||||
0 | 0 | |||||||||||
Labor Efficiency Variance = | ||||||||||||
= ( | - | ) * | ||||||||||
= | Fav/Unf | |||||||||||
Points | 0 | 0 | 0 | |||||||||
0 |
1
2
3
4
5
6
7
A
B
ACCT 346
Student Name
Table C
Materials used in baking bread
Factory Supervisor Salaries
Bakers wages
Use the information provided below to prepare the Cost of Good Manufactured Schedule:Bravo had the following costs as of Dec 31, 2010. Enter the correct
values in the
Green
shaded cells.
Instructions
ACCT 346 | ||||||
Student Name | BINISH MAROOF | |||||
Bravo Baking Company began operations in May of 2010 with the production and sales of speciality breads. | ||||||
The company has experienced a good market demand for its high protein, low carbohydrate product called "Hi-Lo" | ||||||
Hi-Lo's success has required that Bravo continue to make only this one product, however, Bravo's customers, | ||||||
the local retailers, have been asking for more specialty breads from the company. The decision to expand will be made | ||||||
in the coming weeks. | ||||||
Weekly Assignments: Complete the assigned Tab each week. | ||||||
In each worksheet there are several Green colored cells. These cells must be filled in with your response. | ||||||
Due | Points Available | Points Earned | ||||
Tab1) Product vs. Period Costs | Week 1 | 10 | 10.00 | |||
Tab 2) Cost of Goods Manufactured Schedule | Week 2 | 30 | 30.00 | |||
Tab 3) Break Even Analysis | Week 3 | 40 | 0.00 | |||
Tab 4) Incremental Analysis | Week 5 | 40 | 40.00 | |||
Tab 5) Capital Budgeting | Week 6 | 40 | 40.00 | |||
Tab 6) Variance Analysis | Week 7 | 40 | 40.00 | |||
200 | 160.00 | Total |
Tab 1 ProductPeriod
ACCT 346 | |||||||||||||
Student Name | |||||||||||||
For Tables A : From the list below, identify if the cost item is a "Product Cost" or "Period Cost" by typing "Product" or "Period" in the appropriate box. | 10 points | For Table B: From the list below, identify if the cost item is a "Direct Cost" or "Indirect Cost" by typing "Direct" or "Indirect" in the appropriate box. | |||||||||||
Table A | Enter either "Product" or "Period" | Table B | Enter either "Direct" or "Indirect" | ||||||||||
Flour used in baking bread | Product | 1 | Correct | Flour used in baking bread | Direct | Correct | 1 | ||||||
Factory Supervisor Salaries | Product | 1 | Correct | Factory Supervisor Salaries | Indirect | Correct | 1 | ||||||
Bakers wages | Product | 1 | Correct | Bakers wages | Direct | Correct | 1 | ||||||
Rent for Executive Offices | Period | 1 | Correct | Factory Insurance | Indirect | Correct | 1 | ||||||
Sales Commissions | period | 1 | Correct | Rent for Factory | Indirect | Correct | 1 | ||||||
Utilities used in the factory | Product | 1 | Correct | Utilities used in the factory | Indirect | Correct | 1 | ||||||
Advertising costs | Period | 1 | Correct | Cleaning Bake Ovens | Indirect | Correct | 1 | ||||||
Delivery truck costs | Period | 1 | Correct | Insurance on Factory | Indirect | Correct | 1 | ||||||
Paper wrappers for bread | Product | 1 | Correct | Paper wrappers for bread | Direct | Correct | 1 | ||||||
Depreciation on bake ovens | Product | 1 | Correct | Depreciation on bake ovens | Indirect | Correct | 1 | ||||||
Eggs, salt, water used for baking | Product | 1 | Correct | Eggs used for baking | Direct | Correct | 1 | ||||||
Interest on bank loan | Period | 1 | Correct | Small amounts of salt used | Indirect | Correct | 1 | ||||||
Factory Insurance | Product | 1 | Correct | Factory Insurance | Indirect | Correct | 1 | ||||||
13 | Points | 10.00 | 13 | ||||||||||
Tab 2 COGM&COGS
ACCT 346 | |||||||||||||
Student Name | |||||||||||||
Use the information provided below to prepare the Cost of Good Manufactured Schedule:Bravo had the following costs as of Dec 31, 2010. Enter the correct values in the Green shaded cells. | (TCO 2) | 30 points | |||||||||||
Table C | Cost of Goods Manufactured Schedule | 1 | |||||||||||
Materials used in baking bread | 32,000 | Correct | Beginning Work In Process | $8,000 | Correct | 1 | |||||||
Factory Supervisor Salaries | 20,000 | Materials | |||||||||||
Bakers wages | $32,000 | Beginning Inventory Materials | $10,000 | Correct | 1 | ||||||||
Rent for Executive Offices | 36,000 | Plus: Purchases | $26,000 | Correct | 1 | ||||||||
Sales Commissions | 10000 | Materials Available | $36,000 | Correct | 1 | ||||||||
Utilities used in the factory | 5000 | Less: Ending Inventory Materials | $4,000 | Correct | 1 | ||||||||
Advertising costs | 12000 | Materials Used | $32,000 | Correct | 1 | ||||||||
Delivery truck costs | 25000 | Direct Labor | $32,000 | Correct | 1 | ||||||||
Depreciation on bake ovens | 500 | Overhead | |||||||||||
Interest on bank loan | 250 | Factory Rent | $7,500 | Correct | 1 | ||||||||
Beginning Inventory Materials | 10,000 | Depreciation on bake ovens | $500 | Correct | 1 | ||||||||
Beginning Work in Process | 8000 | Utilities used in Factory | $5,000 | Correct | 1 | ||||||||
Ending Inventory Materials | 4000 | Other Overhead costs | $1,200 | Correct | 1 | ||||||||
Inventory Purchases | 26000 | Total Overhead | $14,200 | Correct | 1 | ||||||||
Ending Work in Process | 2500 | Total Manufacturing Costs | $78,200 | Correct | 1 | ||||||||
Other Overhead costs | 1200 | Total Work in Process | $86,200 | Correct | 1 | ||||||||
Beginning Finished Goods Inventory | 7500 | Less: Ending Work in Process | $2,500 | Correct | 1 | ||||||||
Ending Finished Goods Inventory | 6000 | Cost of Goods Manufactured | $83,700 | Correct | 1 | ||||||||
Rent for Factory | 7500 | ||||||||||||
Complete only the Green cells. Values in Red are from the schedule above. | |||||||||||||
Cost of Goods Sold Schedule | |||||||||||||
Beginning Finished Goods Inventory | $7,500 | Correct | 1 | ||||||||||
Beginning Work In Process | $8,000 | Correct | |||||||||||
Materials | |||||||||||||
Beginning Inventory Materials | $10,000 | Correct | |||||||||||
Plus: Purchases | $26,000 | Correct | |||||||||||
Materials Available | $36,000 | Correct | |||||||||||
Less: Ending Inventory Materials | $4,000 | Correct | |||||||||||
Materials Used | $32,000 | Correct | |||||||||||
Direct Labor | $32,000 | Correct | |||||||||||
Overhead | |||||||||||||
Factory Rent | $7,500 | Correct | |||||||||||
Depreciation on bake ovens | $500 | Correct | |||||||||||
Utilities used in Factory | $5,000 | Correct | |||||||||||
Other Overhead costs | $1,200 | Correct | |||||||||||
Total Overhead | $14,200 | Correct | |||||||||||
Total Manufacturing Costs | $78,200 | Correct | |||||||||||
Total Work in Process | $86,200 | Correct | |||||||||||
Less: Ending Work in Process | $2,500 | Correct | |||||||||||
Cost of Goods Manufactured | $83,700 | Correct | |||||||||||
Goods Available for Sale | $91,200 | Correct | 1 | ||||||||||
Less: Ending Finished Goods Inventory | $6,000 | Correct | 1 | ||||||||||
Cost of Goods Sold Schedule | $85,200 | Correct | 1 | ||||||||||
Points | 30.00 | 21 |
Tab 3 CVP
ACCT 346 | |||||||
Student Name | |||||||
Bravo Baking identified the costs below to determine its cost of one unit of product and its monthly operating costs. (TCO 4) | 40 Points | ||||||
Units produced | 14,000 | ||||||
Part I Enter your solution in the green cells for each of the following: | |||||||
Table A | Variable | Fixed | Using the costs from Table A compute | ||||
Materials used in baking bread | 2.29 | A) Breakeven units (rounded to 2 decimal places) | 0.00 | ||||
Factory Supervisor Salaries | 0.12 | B) Break-even sales dollars | 0.00 | ||||
Bakers wages | 2.29 | C) Contribution Margin | 0.00 | ||||
Rent for Executive Offices | 3,000 | D) Contribution Margin Ratio (%) | 0.00 | ||||
Sales Commissions | 3500 | ||||||
Utilities used in the factory | 0.50 | Part II Complete the following requirements | |||||
Advertising costs | 1000 | A) If Bravo requires a profit of $5,000 how many units must it sell? | 0.00 | ||||
Delivery truck depreciation | 400 | B) What is the total revenue from A above? | 0.00 | ||||
Depreciation on bake ovens | 0.07 | C) If Bravo actually sells 8,000 units | |||||
Interest on bank loan | 500 | 1) What is the margin of safety in Dollars? | 0.00 | ||||
2) What is the margin of safety percentage? | 0.00 | ||||||
Total Costs | $5.26 | $8,400.00 | |||||
Price Charged per unit | $7.89 | ||||||
Total Correct | |||||||
Points | 0 | 0.00 | |||||
Hint: use spreadsheet formulas to compute your answers | |||||||
Tab 4 Incremental Analysis
ACCT 346 | ||||||||||||
Student Name | ||||||||||||
Bravo Baking Co has expanded its product line to include several other specialty breads. The operating results for the last quarter are provided below. | (TCO 7) | 40 Points | ||||||||||
Product | Hi-Lo | Whole Grain | Fruit & Nuts | Total | ||||||||
Revenues | $67,575 | $31,800 | $15,900 | $115,275 | ||||||||
Variable product costs | $27,030 | $12,720 | $6,360 | $46,110 | ||||||||
Variable Selling & Administrative costs | $13,515 | $6,360 | $3,180 | $23,055 | ||||||||
Contribution Margin | $27,030 | $12,720 | $6,360 | $46,110 | ||||||||
Fixed Product Costs | $5,000 | $5,000 | $5,000 | $15,000 | ||||||||
Fixed Selling and Administrative Costs | $5,700 | $2,850 | $2,850 | $11,400 | ||||||||
Allocated Common Costs | $5,000 | $2,500 | $2,500 | $10,000 | ||||||||
Net Income | $11,330 | $2,370 | -$3,990 | $9,710 | ||||||||
Required: Bravo wants to know the effect on Net Income if it decides to discontinue the Fruit & Nuts product. | ||||||||||||
If Bravo eliminates Fruit & Nuts 50% of fixed costs can be avoided. | ||||||||||||
Prepare and incremental analysis showing the Net Income Effect of eliminating the Fruit & Nuts product. | ||||||||||||
What woud you advise Bravo to do? | ||||||||||||
Using the Table below, compute the Net Income for Bravo Baking after eliminating the Fruit & Nuts product. | ||||||||||||
Product | Hi-Lo | Whole Grain | Fruit & Nuts | Total | ||||||||
Revenues | $67,575 | $31,800 | $0 | $99,375 | Correct | 1 | ||||||
Variable product costs | $27,030 | $12,720 | $0 | $39,750 | Correct | 1 | ||||||
Variable Selling & Administrative costs | $13,515 | $6,360 | $0 | $19,875 | Correct | 1 | ||||||
Contribution Margin | $27,030 | $12,720 | $0 | $39,750 | Correct | 1 | ||||||
Fixed Product Costs | $5,000 | $5,000 | $2,500 | $12,500 | Correct | 1 | ||||||
Fixed Selling and Administrative Costs | $5,700 | $2,850 | $1,425 | $9,975 | Correct | 1 | ||||||
Allocated Common Costs | $5,000 | $2,500 | $1,250 | $8,750 | Correct | 1 | ||||||
Net Income | $11,330 | $2,370 | -$5,175 | $8,525 | Correct | 1 | ||||||
Points | 40 | 8 |
Tab 5 Capital Budgeting
ACCT 346 | |||||||||||
Student Name | |||||||||||
Bravo Baking Co is considering replacing an older freezer with a larger unit to freeze some of its bread. | |||||||||||
The new unit has a larger capacity and Bravo estimates it can produce and sell an more bread each year. From these additional sales | |||||||||||
the after tax cash flow is expected to be $4,000. In addition to more sales, the new freezer will save $1,200 in electricity each year. | TCO 9 | ||||||||||
However, the new freezer will cost an additional $2,000 each year for maintenance. The cost of the new unit is $25,000 and it is | 40 Points | ||||||||||
expected to last 10 years. The salvage value at the end of its life is $6,000. The old unit is fully depreciated and can be disposed at cost. | |||||||||||
Determine the Net Present Value of purchasing the new freezer using a required rate of return of 14%. Should Bravo purchase the freezer? | |||||||||||
Use the format below to complete the NPV computations: | |||||||||||
(Note: Use PV Tables on pages 342 and 343. Also, be sure to show costs as negative values) | |||||||||||
Cash Flow | PV Factors | PV Amounts | |||||||||
Cost of new refrigeration unit | -25000 | 0 | -25000 | Correct | 1 | ||||||
After tax cash flow | 4000 | 5.216 | Try Again | 20864.4 | Correct | 1 | |||||
Annual electricity savings | 1200 | 5.216 | Try Again | 6259.32 | Correct | 1 | |||||
Additional annual maintenance costs | -2000 | 5.216 | Try Again | -10432.2 | Correct | 1 | |||||
Amount collected from disposal of unit | 6000 | 0.27 | Try Again | 1618.2 | Correct | 1 | |||||
Net present value | -6690.28 | Correct | 1 | ||||||||
Points | 40.0000000002 | 6 |
Tab 6 Variance Analysis
ACCT 346 | TCO 10 | |||||||||||
Student Name | 40 Points | |||||||||||
Bravo Baking uses standard costing to analyze its performance. The data below is provided for your use in determining Bravo's variances. | ||||||||||||
Standard Cost per unit | Cost /Unit | Amount/Unit | Standard Cost | |||||||||
Material Cost (Ingredients) (.5 lbs) | 2.29 | .5 lbs | $4.58 | |||||||||
Direct Labor( .25 hrs * $9/hr) | 2.25 | .25 hrs | $9.00 | |||||||||
Overhead | 0.57 | |||||||||||
Total | 5.11 | |||||||||||
During the month, Bravo sold 9,000 loaves of bread and used 4,650 pounds of ingredients. Also during the month, Bravo | ||||||||||||
purchased 5,000 pounds of ingredients at a cost of $22,500. Employees worked a total of 2200 hours and actual labor costs were $19,998 | ||||||||||||
Required: | ||||||||||||
Part a. Compute the material price and quantity variance. | ||||||||||||
Material Price Variance = | ||||||||||||
= ( | 22500.00 | - | $5,000.00 | ) * | 4.58 | |||||||
= | (400.00) | Fav/Unf > | Fav | |||||||||
Correct | Correct | 1 | 1 | |||||||||
Material Quantity Variance = | ||||||||||||
= ( | 21,297.00 | - | 4,500.00 | ) * | 4.58 | |||||||
= | $687.00 | Fav/Unf | unf | |||||||||
Correct | Correct | 1 | 1 | |||||||||
Labor Rate Variance = | ||||||||||||
= ( | 20000.00 | - | $2,200.00 | ) * | 9.00 | |||||||
= | 200.00 | Fav/Unf > | Unf | |||||||||
Correct | Correct | 1 | 1 | |||||||||
Labor Efficiency Variance = | ||||||||||||
= ( | 19,800.00 | - | 2,250.00 | ) * | 9.00 | |||||||
= | ($450.00) | Fav/Unf | fav | |||||||||
Correct | Correct | Points | 40 | 1 | 1 | |||||||
8 |