ABA 202A Answer of Problem 48 (Chapter 2)a. Number of units sold = $324,000 ÷ $12 = 27,000Number of units completed = Units in FG Inventory + Units Sold= 3,000 + 27,000 = 30,000

b. Direct material used $ 93,000Direct labor 67,000Overhead:Factory rent $1,800Factory utilities 8,100Factory depreciation 7,900Supervisor salary 3,200 21,000Total costs to account for $181,000Ending WIP Inventory (17,500)Cost of goods manufactured $163,500

c. $163,500 ÷ 30,000 = $5.45 per unit

d. Raw Material Inventory 124,000Accounts Payable 124,000

To purchase direct material on account

Work in Process Inventory 93,000Raw Material Inventory 93,000

To issue direct material to production

Work in Process Inventory 67,000Wages Payable 67,000

To accrue direct labor payroll

Manufacturing Overhead Control 1,800Cash 1,800

To pay factory rent

Manufacturing Overhead Control 8,100Utilities Payable 8,100

To accrue factory utilities

Manufacturing Overhead Control 7,900Accumulated Depreciation 7,900

To record depreciation on factory equipment

Manufacturing Overhead Control 3,200Cash 3,200

To pay supervisor’s salary

Work in Process Inventory 21,000Manufacturing Overhead Control 21,000

To assign actual overhead to WIP (see part b)

Finished Goods Inventory 163,500Work in Process Inventory 163,500

To transfer completed good to FG (see part b)

Cost of Goods Sold 147,150Finished Goods Inventory 147,150

To record cost of goods sold ($5.45 x 27,000)

Accounts Receivable 324,000Sales 324,000

To record sales on account

Answer of Problem 28 (Chapter 3)

a. 250 300 350 400Variable costs:Supplies @ $4.00 per DLH $1,000 $1,200 $1,400 $1,600Direct labor @ $7.00 per DLH 1,750 2,100 2,450 2,800Utilities @$5.40 per DLH 1,350 1,620 1,890 2,160Fixed costs:Direct labor 500 500 500 500Utilities 350 350 350 350Rent 450 450 450 450Advertising 75 75 75 75Total cost $5,475 $6,295 $7,115 $7,935b. Cost per DLH $21.90 $20.98 $20.33 $19.84

c. $20.33 x 1.4 = $28.46 hourly charge$28.46 x 1.25 hours per repair = $35.58 or $36 per customer repair

Answer of Problem 38 (Chapter 9)

38. a. Total variable costs = $56 + $24 + $16 = $96Contribution margin per unit = $140 - $96 = $44 per unitContribution margin ratio = $44 ÷ $140 = 31.43%Total fixed costs = $20,000 + $48,000 = $68,000Break-even point in units = $68,000 ÷ $44 per unit = 1,546 units (rounded)Break-even point in dollars = $68,000 ÷ 0.3143 = $216,354 (rounded)b. ($80,000 + $68,000) ÷ .3143 = $470,888 (rounded)

($470,888 ÷ $140) = 3,364 units (rounded)

c. Convert after-tax earnings to pretax earnings: $80,000 ÷ (1 - .40) = $133,333.Required sales = ($133,333 + $68,000) ÷ .3143 = $640,576 (rounded)$640,576 ÷ $140= 4,576 units (rounded)

d. Convert the after-tax rate of earnings to a pretax rate of earnings:

[20% ÷ (1 - 0.40)] = 33.33%.Because the CM% is only 31.43%, no level of sales would generate net income equal to, on a pretax basis, 33.33% of sales.

e. Variable cost savings (5,000 x $12.00) $60,000Additional fixed costs (8,000)

Additional profit $52,000Yes, the company should buy the sewing machine.

f. Existing CM per unit = $44CM under proposal = ($140 x 0.90) - $96 = $30

Total CM under proposal 3,000 x 1.30 x $30 = $117,000Existing CM (3,000 x $44) = (132,000)

Change in CM $(15,000)Change in fixed costs (20,000)

Change in net earnings before taxes $(35,000)

No, these two changes should not be made because they would lower pretaxprofits by $35,000 relative to existing levels.