Cost Accounting 

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About This Assignment Imagine you are the new CFO for a furniture manufacturer named American Furniture Company (AFC) that has only been in business for a few years. The company manufactures three products: wooden chairs, tables and dressers. AFC started off as a ‘Mom & Pop’ shop but has grown rapidly. AFC uses one assembly line to build all three products, and each product is hand-assembled before going through an automated painting process. You have been tasked with modernizing the company’s accounting methods towards their future goals. The four different parts of this assignment should be submitted together. While outside sources are NOT required for this assignment, formatting and citations for all parts of this assignment should be done in APA format. For more information on APA format, please see the section on APA Formatting below. Part #1 Justify to the CEO what type of costing method (job-order, process costing, variable costing and/or activity-based costing) you would recommend AFC use. Assume that all of the items produced are sold. Use the following accounting data in your analysis. (see part 1 screenshot) Production & Cost DescriptionProduction & Cost AmountsAnnual Production5000 chairs/10 batches; 4000 tables/20 batches; 3000 dressers/20 batchesRaw materials in board feet (BF) per unit1 chair = 10 BF; 1 table = 15 BF; 1 dresser = 20 BFRaw materials price per unit$2 per BFAssembly labor time (hours per unit)1 chair = 5 hours; 1 table = 7 hours; 1 dresser = 10 hoursLabor pay rate$15 per hourAssembly department overhead per direct labor hour$5Painting process machine hours (MH)1 chair = 0.5 MH; 1 table = 1.5 MH; 1 dresser = 2 MHPainting department overhead per MH$20Changeover cost per batch1 chair = $100; 1 table = $150; 1 dresser = $200Sales price1 chair = $180; 1 table = $270; 1 dresser = $270Fixed Cost$50,000Variable SG&A$5 per unitFixed SG&A$25,000 Within your analysis, make sure to include the following: Briefly discuss the advantages and disadvantages of the four costing methods.Narrow the choice down to two cost methods you would most recommend and provide your justification.Demonstrate how each of the two costing methods you chose would allocate overhead and administrative costs by calculating product costs using each method.Provide an income statement for each of the two methods.Recommend one of the two final costing methods, providing justification for your final costing method selection. Your justification should be between 1,000 to 1,500 words in length. Part #2 Determine what inventory cost flow assumption (weighted average, FIFO and/or LIFO) would be best suited for valuing inventory near the current replacement cost. You will make your analysis based on the following inventory transactions involving chairs only. Remember that the sales price of chairs is $180 per unit according to the table in Part 1. (see part 2 screenshot) TransactionGoodsPrice1/1 Beginning Inventory120 chairs$120/unit1/15 Transferred into finished goods140 chairs$130/unit3/15 Sold110 chairs$180/unit4/15 Transferred into finished goods100 chairs$140/unit6/15 Sold90 chairs$180/unit7/15 Transferred into finished goods130 chairs$150/unit9/15 Sold120 chairs$180/unit10/15 Transferred into finished goods140 chairs$160/unit12/15 Sold110 chairs$180/unit Within your analysis, make sure to include the following: Briefly discuss the advantages and disadvantages of each inventory costing assumption.Calculate the cost of goods sold and ending inventory for each cost flow assumption.Demonstrate which of these should be used to net the highest income during inflationary periods.Provide justification on what inventory costing assumption you choose.Record journal entries for each purchase and sales transaction listed. Your justification should be between 500 to 750 words in length. Part #3 You will need to submit a budget report to the CEO, including an explanation of the utility of master budgets. You will also submit a variance report that shows how the company is performing versus budgeted amounts. Use the following data. (see part 3 screenshot) Amount of Goods Sold Per Quarter: Q1Q2Q3Q4Chairs sold per quarter1150120012501400Tables sold per quarter90095010001150Dressers sold per quarter650700750900 Target Sales Goal Per Quarter: GoodsQuantityChairs1300Tables1100Dressers800 Q1 beginning inventory: GoodsQuantityChairs120Tables90Dressers70 Assume that the material and labor costs from Part 1 are standards. Compare those standard costs to the actual amounts listed below. These are the actual amounts used for the entire fiscal year: Actual amount of wood purchased and used46,120 bd. ft.Actual cost of wood purchased and used$80,028Actual amount of direct labor hours17,900Actual cost of direct labor$275,550 Within your analysis, make sure to include the following: Create variance reports for Q1, Q2, Q3, and Q4 against the Quarterly Budget.Generate a quarterly budget for the upcoming year that includes sales, production, materials and labor budgets. Assume a 10% increase in sales.Explain how a master budget can be a useful tool in aligning a company’s operations to its long-term goals.Discuss how a variance report can be used to direct management toward production issues. Your explanations of master budgets and variance reports should be 500 to 750 words in length. Part #4 Use the following data to generate a quote model for future business. This can be accomplished by performing a high-low or regression analysis to generate an equation relating direct labor hours to product cost: (see part 4 screenshot) YearQuarterDirect labor hrs.Manufacturing cost2014Q12,512$224,9502014Q22,432$214,1002014Q32,645$226,8402014Q42,723$228,7602015Q12,355$211,950 Within your analysis, make sure to include the following: Explain how jobs can be estimated by using a quote model based on previous data.Discuss the different methods of cost estimation.Prepare a bid for a job that would require 2,700 direct labor hours. Your justification should be between 350 to 500 words in length