capacity 99000

customer 1 customer 2
annual order 54000 24000

variable cost 28
annual fc 561000

two seasons customer 1 customer 2

Holiday 20400 24000
Non Holiday 44400

Capacity cost each season 280500

561000/2 seasons

a)
Non Holiday
Overhead rate $ 6.32 per gallon
280500/44400
Product cost
Variable cost $ 28.00 per gallon
Add:overhead rate $ 6.32 per gallon
Product cost $ 34.32 per gallon

Holiday
Overhead rate $ 6.32 per gallon
280500/44400
Product cost
Variable cost $ 28.00 per gallon
Add:overhead rate $ 6.32 per gallon
Product cost $ 34.32 per gallon

b)
excess capacity costs assigned to season requiring it
then to product cost
Non Holiday
Overhead rate $ 3.16 per gallon
((280500*50%)/44400
Product cost
Variable cost $ 28.00 per gallon
Add:overhead rate $ 3.16 per gallon
Product cost $ 31.16 per gallon

Holiday
Overhead rate $ 9.48 per gallon
(280500+(280500*50%))/(20400+24000)
Product cost
Variable cost $ 28.00 per gallon
Add:overhead rate $ 9.48 per gallon
Product cost $ 37.48 per gallon
1 Donor A gave an NFPO a $50,000 cash gift in June 2012, stipulating that the NFPO could not
use the gift until 2013.
Answers: temporarily restricted, unrestricted (soon as New Year arrives can be used)

2 Donor B gave an NFPO a $25,000 cash gift in July 2012, telling the NFPO the gift could be used
only for research on a specific project.
Answers: temporarily restricted, unrestricted

3 In response to an NFPO’s fund-raising campaign for a new building, a large number of individuals
promised to make cash contributions totaling $2 million in 2012. The NFPO believes it will actually
collect 80 percent of the promised cash.
Answers: temporarily restricted, unrestricted

4 Donor C gave an NFPO several investments having a fair value of $3 million in March 2012. Donor C
stipulated that the NFPO must hold the gift in perpetuity, but it could use the income from the gift
for any purpose the trustees considered appropriate. Between March and December, the investments
produced income of $100,000.
Answers: permantly restricted ($3,000,000 is the permantly restricted), unrestricted (investments income)

5 Using the funds raised in transaction 3, an NFPO paid an architect $50,000 in 2012 to make preliminary
designs for a new building.
Answers: temporarily restricted, unrestricted
 NFPO
JOURNAL ENTRIES
DECEMBER 31, 2012
Date Accounts Title Debit Credit
1 June 2012 Cash 50,000
Temporarily restricted support- contributions 50,000
To record temporarily restricted gifts (do not used until 2013) that Donor A donated.
Date Accounts Title Debit Credit
2 July 2012 Cash 25,000
Temporarily restricted support- contributions 25,000
To record Donor B' donation temporarily restricted gifts (to use only for research on specific projects).
Date Accounts Title Debit Credit
3 December 2012 Contributions receivable 2,000,000
Allowance for uncollectible contributions 400,000
Temporarily restricted support-contributions 1,600,000

To record receipt of promises to give cash this year, less provision for estimated (80%) uncollectible promises. (2,000,000x.80=1,600,000)
Date Accounts Title Debit Credit
4a March 2012 Investments 3,000,000
(Time of investment) Permanently restricted support-contributions 3,000,000
To record permanently restricted contribution.
Date Accounts Title Debit Credit
4b December 2012 Cash 100,000
Investments income 100,000
To record unrealized gain on investments.
Date Accounts Title Debit Credit
5a December 2012 Expenses-architect fees 50,000
Cash 50,000
To record payment of architect's fee for the new building.
Date Accounts Title Debit Credit
5b December 2012 Temporarily restricted assets reclassifications out-satisfaction of purpose restrictions 50,000
Unrestricted assets reclassifications in-satisfaction of purpose restrictions 50,000
To record satisfaction of purpose restriction on 5a.