ACCT 322 SEU Accounting Department Reports Questions

I’m working on a accounting multi-part question and need an explanation and answer to help me learn.

Assignment Question(s):             (Marks 10)

Q 1 K. Corporation Use Part A43 in one of products. The company’s Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year.

Particulars 

Per Unit

Direct Materials

$ 4.50

Direct Labor 

$ 1.20

Variable Overhead

$ 2.70

Supervisor’s Salary

$ 3.00

Depreciation of Special Equipment

$ 2.30

Allocated General Overhead 

$ 1.80

An outside supplier has offered to make the part and sell it to the company for $14.70 each. If this offer is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted, only $5,000 of these allocated general overhead costs will be bear. .

Required:
a. Prepare a report that shows the effect on the company’s total net operating income of buying part A43 from the supplier rather than continuing to make it inside the company.
b. Which alternative should the company choose?                 (3 Marks)

Answer..

Q2. Define in Your words
a. Cost Centre
b. Profit Centre
c. Investment Centre       (2 Marks)

Answer: 

Q.3 KK Industries is a division of a major corporation. Last year the division had total sales of $23,380,000, net operating income of $2,828,980, and average operating assets of $7,000,000. The company’s minimum required rate of return is 12%.
Required:
a. What is the division’s margin?
b. What is the division’s turnover?
c. What is the division’s return on investment (ROI)?   (2 Marks )

Answer

Q 4.The following standards have been established for a raw material used in the production of product 44:

Standard quantity of the material per unit of output

2.6 

pounds

Standard price of the material

$14.50 

per pound

The following data pertain to a recent month’s operations:

Actual material purchased

7,600 

Pounds

Actual cost of material purchased

$110,960

Actual material used in production

7,300

Pounds

Actual output

2,800

units of product O99

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month?(3 Marks )

Answer: