The following is a list of various costs of producing T-shirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold. a. Ink used for screen printing Variable
b. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used Mixed
c. Thread Variable
d. Electricity costs of $0.038 per kilowatt-hour Variable
e. Janitorial costs of $4,000 per month Fixed
f. Advertising costs of $12,000 per month
g. Accounting salaries
h. Color dyes for producing different colors of T-shirts Variable
i. Salary of the production supervisor
j. Straight-line depreciation on sewing machines Fixed
k. Salaries of internal pattern designers
l. Hourly wages of sewing machine operators Variable
m. Property taxes on factory, building, and equipment Fixed
n. Cotton and polyester cloth
o. Maintenance costs with sewing machine company (the cost is $2,000 per year plus $0.001 for each machine hour of use.) Mixed
B) Magnolia, Inc. manufactures bedding sets. The budgeted production is for 31,800 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 5,320 yards with the desired ending balance of 4,100 yards of material. If the material costs $6.80 per yard, determine the materials budget for the year.
$
C) Gleason invested $90,000 in the James and Kirk partnership for ownership equity of $90,000. Prior to the investment, land was revalued to a market value of $425,000 from a book value of $200,000. James and Kirk share net income in a 1:2 ratio.
a. Provide the journal entry for the revaluation of land. If an amount box does not require an entry, leave it blank.
b. Provide the journal entry to admit Gleason.
D) If the contribution margin ratio for France Company is 37%, sales were $413,000, and fixed costs were $106,000, what was the income from operations?
$152,810
$106,000
$37,448
$46,810
E) Cash and accounts receivable for Adams Company are provided below:
Current Year Prior Year
Cash $70,000 $50,000
Accounts receivable (net) 70,400 80,000
Based on this information, What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?
Account Dollar Change Percent Change
Cash $ %
Accounts Receivable $
%

A. Production and Sales Cost Classification:

Variable

a. Ink used for screen printing

c. Thread

d. Electricity costs of $0.038 per kilowatt-hour

h. Color dyes for producing different colors of T-shirts

k. Salaries of internal pattern designers

l. Hourly wages of sewing machine operators

n. Cotton and polyester cloth

Mixed

b. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used

o. Maintenance costs with sewing machine company (the cost is $2,000 per year plus $0.001 for each machine hour of use.)

Fixed

e.Janitorial costs of $4,000 per month Fixed

f. Advertising costs of $12,000 per month

g. Accounting salaries

i. Salary of the production supervisor

j. Straight-line depreciation on sewing machines

m. Property taxes on factory, building, and equipment

B. The materials budget for the year is:

= $1,505,384.

C. James, Kirk, and Gleason Partnership

Debit Land $225,000

Credit Land revaluation gain $225,000

To record land revaluation.

a. Debit Land Revaluation gain $225,000

Credit James, capital $75,000

Credit Kirk, Capital $150,000

To share the revaluation gain.

b. Debit Cash $90,000

Credit Gleason, Capital $90,000

To record Gleason's admission as a partner.

Debit James, Capital $30,000

Debit Kirk, Capital $60,000

Credit Cash $90,000

To reduce James and Kirk's capital accounts.

D. France Company

Income from operations = $46,810

E. Adams Company:

Account                               Dollar Change    Percent Change

Cash                                        $20,000                  40%

Accounts Receivable               ($9,600)                 (12%)

Explanation:

a) Data and Calculations:

A) Variable costs vary in total and are fixed per units.  Fixed costs vary per units but are fixed in total within the relevant production capacity.  Mixed costs have variable and fixed costs combined.

B) Magnolia, Inc.

Budgeted production of comforters for this year = 31,800

Materials required by each comforter = 7 yards

Total materials required for production =222,600 (31,800 * 7)

Beginning inventory = 5,320 yards

Ending balance = 4,100 yards

Total materials to be bought = 221,380 (222,600 + 4,100 - 5,320)

Material costs $6.80 per yard

Materials budget for the year = $1,505,384 (221,380 * $6.80)

$

C) Gleason invested $90,000 in the James and Kirk partnership for ownership equity of $90,000.

Land $225,000

Land revaluation $225,000

a. Land Revaluation $225,000

James, capital $75,000

Kirk, Capital $150,000

b. Cash $90,000 Gleason, Capital $90,000

James, Capital $30,000 Kirk, Capital $60,000 Cash $90,000

D) France Company

Contribution margin ratio = 37%

Sales $413,000

Contribution margin = $152,810 ($413,000 * 37%)

Fixed costs  $106,000

Income from operations = $46,810

E) Adams Company:

                                    Current Year   Prior Year

Cash                                 $70,000      $50,000

Accounts receivable (net) 70,400         80,000

Account                              Dollar Change    Percent Change

Cash                                               $20,000        40%

Accounts Receivable                     ($9,600)       (12%)

answer; break-even analysis;