# accounting 4535871 2

January 15, 2021
###### Interprofessional Practice and Collaboration
January 15, 2021

CVP Analysis (5 points)

In the month of September, Browning Company sold 800 units of product. The average sales price was \$45. During the month, fixed costs were \$7,200 and variable costs were 60% of sales.

Instructions

(a)   Determine the contribution margin in dollars, per unit, and as a ratio.

(b)   Using the contribution margin technique, compute the break-even point in dollars and in units.

Derrick Browning Inc. designs high-fashion clothes. Recently the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s fashion apparel. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing \$2,000,000 of 11% term corporate bonds on March 1, 2007, due on March 1, 2022, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%.

Instructions

1)   As the controller of the company, determine the selling price of the bonds.  (6 pts)

2)   Record the journal entry to record the bond issue. (3 pts)

Present Value Interest Factor of an Ordinary Annuity of 30 periods at 5% = 15.37245

Present Value Interest Factor of a Lump Sum of 30 periods at 5% = 0.23138

Present Value Interest Factor of an Ordinary Annuity of 15 periods at 10% = 7.60608

Present Value Interest Factor of a Lump Sum of 15 periods at 10% = 0.23939

Standard Cost Analysis (6 points)

The following direct materials and direct labor data pertain to the operations of Goddess Cher Manufacturing Company for the month of August.

 Costs Quantities Actual labor rate \$14 per hour Actual hours incurred and used 4,120 hours Actual materials price \$130 per ton Actual quantity of materials purchases and used 1,278 tons Standard labor rate \$10 per hour Standard hours used 4,380 hours Standard materials price \$132 per ton Standard quantity of materials used 1,180 tons

Instructions

Compute the total, price, and quantity variances for materials and labor and tell whether they are favorable or unfavorable.

 Total materials variance Materials price variance Materials quantity variance Total labor variance Labor price variance Labor quantity variance