Answer Happy

Abbott Suit (ASC) corporation manufactures BOTH nylon AND cotton
jogging suits.
On 1/1/20, Erin Rogers ESTIMATES the following fixed costs:
Accntant’s salary $10,000
Depreciation on factory equipment $4,000
Rent on Manufacturing Facility $6,000
$20,000
ABBOTT SUIT CORPORATION USES DIRECT LABOR HOURS TO ALLOCATE
DEPRECIATION AND RENT.
Nylon Jogging Suits Cotton Jogging Suits
Std.qty/suit Std.price/input Std.qty/suit Std.price/input
Direct Materials 2.5 yds/suit $20/yd 4 yds/suit $15/yd
Direct Labor 5 dlh/suit $10/dlh 4 dlh/suit $15/dlh
VOH:utilities/grease/janitor 5 mh/suit $10/mh 8 mh/suit
$10/mh
REQUIRED:
1. Calculate the number of nylon and cotton jogging suits that
need to be SOLD to achieve a goal operating income of $100,000. ASC
believes that for every nylon jogging suit sold TWO TIMES AS MANY
cotton jogging suits will be sold (that is if 10 nylon jogging
suits are sold, then 20 cotton jogging suits will be made). ASC
estimates that it can sell nylon jogging suits for $250/nylon
jogging suit and cotton jogging suits for the same price of
$250/cotton jogging suit.
2. ASC currently has the following inventory balances as of the
BEGINNING of the year: 0 nylon jogging suits and 0 cotton jogging
suits. ASC budgets to have 200 nylon jogging suits and 300 cotton
jogging suits by the end of the year. Calculate the BUDGETED # of
suits that need to be produced.
3. Calculate the (FPDOH) FIXED PREDETERMINED OVERHEAD RATE. SHOW
YOUR WORK – REMEMBER Abbott uses DLH to allocate fixed
overhead..
ACTUAL RESULTS FOR JANUARY
4. On 1/1/2020, ASC purchased 10,000 lbs of grease at $100,000
for factory equipment in CASH. Give the journal entry (note: just
because a company purchased grease in January does NOT mean it used
grease in january). GIVE THE JOURNAL ENTRY.
5. Abbott made the following purchases for the year in
January:
Nylon 1,000 yards for $18,000;
Cotton 1,000 yards for $14,000;
Give the journal entry for this transaction and include ANY
variances.
6. ASC workers requisitioned out the following from the RMI
warehouse for JANUARY 2017:
Nylon 150 yards;
Cotton 300 yards;
ASC workers made 50 nylon jogging suits and 80 cotton jogging
suits in JANUARY.
Give the journal entry for this transaction and include ANY
related variances. SHOW YOUR WORK.
7. ASC workers worked the following during January (IN
CASH).
Nylon workers (260 dlh*$15/dlh);
Cotton workers (300 dlh*$20/dlh);
Janitor wages (100 hours for a total of $1,000)
Accountant (200 hours for a total of $2,000).
Give the journal entry for this transaction and include ANY
direct labor-related variances. SHOW WORK
8. ASC paid its vendors the following in CASH during the
JANUARY:
Fisher Properties for rent $500
We Energies for utilities $24,000
9. Abbott has a sewing machine that was purchased in 2018 for
$40,000, with a useful life of 10 years and a salvage value of 0.
Give the MONTHLY depreciation journal entry for this machine.
10. On January 30, Abbott workers requisitioned out 500 pounds
of grease and put it into the sewing machine. Give the journal
entry.
11. Give the journal entry to APPLY overhead in January for BOTH
VOH and FOH. Nylon jogging workers used 350 machine hours and
cotton jogging suit workers used 850 machine hours
12. Create the different MOH/VOH and MOH/FOH clearing accounts.
Indicate if the individual moh t-accounts are OVER- or
UNDER-applied. SHOW YOUR WORK.
13. CALCULATE - BUT DO NOT JOURNALIZE - THE VOH VARIANCES FOR
JANUARY.
14. During January, ASC sells the following: 40 nylon jogging
suits for $250/nylon jogging suits ON ACCOUNT and 75 cotton jogging
suits for $240/cotton jogging suit. Give the journal entry.