ACCT346 Week 6 Homework Assignment
Question 1. The Von Pottasnevitch Company sells office
products and for the most part has a regular group of customers and fairly predictable sales. Many of the company’s customers are offered credit, while other clients do business on a cash basis. The company’s monthly sales are consistently split between 10% cash business and 90% on credit. The credit sales are collected 50% in the same month of the sale and the remaining 50% is due the following month. Sales for the upcoming first quarter of the next year are estimated as follows:
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Calculate the expected cash collections for February.
Question 2. The Walkabout Corporation manufactures boomerangs (its only product). The company’s standards for manufacturing boomerangs are as follows:
|Standard direct labor rate per hour||$ 18.50 per hour|
|Standard direct labor hours per boomerang||0.4 hours|
During the month of January, the company produced 1,800 boomerangs. Actual production data for the month follows:
|Actual direct labor hours worked||700 hours|
|Actual direct labor cost incurred||$ 14,000|
Part A. Calculate the labor rate variance for the month. Is it favorable or unfavorable?
Part B. Calculate the labor efficiency variance for the month. Is it favorable or unfavorable?