Assume the following data for the following wells commingled production tanks on the Wilmington Ranch located inLaVaca County, Texas. Measured production is 2,228 barrels from Lease C and 2,280 barrels from Lease D. Aftertreatment at the central tank battery, 4,500 barrels are sold.Lease C Wells24-Hr Test (bbl)Days ProducedWell 13028Well 24030Lease D Wells24-Hr Test (bbl) Days ProducedWell 12030Well 23530Well 35026Current Spot Oil PriceSeverance Tax RateWorking Interest$46.00/bbl5%100%1/8thRoyalty interestPrepare entries recognizing revenue at time of sale if the OPERATOR assumes the responsibility of distributingseverance taxes and royalty.What amount of gross revenue, royalty, severance taxes and net revenue should the Operator record for eachwell (Lease C- Well 1 & Well 2 and Lease D - Well 1, Well 2, & Well 3)?

Detailed Solution for Lease C and Lease DLease C:1. Gross Revenue:• Well 1:• Production: 28 barrels…

Answered: Assume the following data for the…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 13E

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Assume the following data for the following wells commingled production tanks on the Wilmington Ranch located in LaVaca County, Texas. Measured production is 2,228 barrels from Lease C and 2,280 barrels from Lease D. After treatment at the central tank battery, 4,500 barrels are sold. Lease C Wells Well 1 24-Hr Test (bbl) 30 Days Produced 28 Well 2 40 30 Lease D Wells 24-Hr Test (bbl) Days Produced Well 1 20 30 Well 2 35 30 Well 3 50 26 Current Spot Oil Price Severance Tax Rate $46.00/bbl 5% Working Interest Royalty interest 100% 1/8th Prepare entries recognizing revenue at time of sale if the OPERATOR assumes the responsibility of distributing severance taxes and royalty. English (United States)
Lord Company purchased a machine on January 2, Year 1, for $70,000. The machine had an expected residual value of $10,000, an expected life of 8 years or 24,000 hours, and a capacity to produce 100,000 units. During Year 1, Lord produced 12,000 units in 2,500 hours. In Year 2, Lord produced 15,000 units in 3,000 hours. Required: Question Content Area 1 a. Prepare a schedule showing depreciation expense for Year 1 and Year 2 and the book value of the asset at the end of Year 1 and Year 2 for the Straight-line method. LORD COMPANY Deprecation Schedule Straight-line Beginning Book Value Depreciation Ending Book Value Year 1 $fill in the blank fc5106fc9014fdd_1 $fill in the blank fc5106fc9014fdd_2 $fill in the blank fc5106fc9014fdd_3 Year 2 $fill in the blank fc5106fc9014fdd_4 $fill in the blank fc5106fc9014fdd_5 $fill in the blank fc5106fc9014fdd_6
Iraq Inc. makes recyclable pots for plants and uses JIT to manage inventories and production. The following are standards for a typical 1-gallon pot: Annual Material Standards 32 ounces of Component X* $0.02 2 ounces of Component Y * $0.05 $0.64 0.10 $0.74 Current Material Standards 27 ounces of Component X* $0.02 . 4 ounces of Component Y* $0.05 $0.54 0.20 $0.74 In-house experiments indicated that changing the material standard would make the pots stronger, so the company issued an engineering change order for the product in February; this ECO established the current material standards. March production was 8,000 pots. Usage of raw material (all purchased at standard price) in March was 220,000 ounces of Component X and 31,000 ounces of Component Y. Required: a. Calculate the material quantity variance. b. Calculate the ECO variance. c. Summarize the company's effectiveness in managing March production costs. d. Comment on the circumstances in which a company would institute an ECO…
In a cost center, the manager has responsibility and authority for making decisions that affect a. costs b. investments in assets c. both costs and revenues d. revenues Keating Co. is considering disposing of equipment with a cost of $68,000 and accumulated depreciation of $47,600. Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a. $11,160 b. $7,812 c. $16,740 d. $13,392 If sales are $828,000, variable costs are 68% of sales, and operating income is $278,000, what is the contribution margin ratio? a. 64% b. 36% c. 68% d. 32%
Texas Oil Company (TOC) paid $3,000,000 for an oil reserve estimated to hold 50,000 barrels ofoil. Oil production is expected to be 10,000 barrels in year 1, 30,000 barrels in year 2, and 10,000barrels in year 3. TOC expects to begin selling barrels from its oil inventory in year 4.Required:Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulateddepletion, and oil inventory accounts in each of the three years. What effect does this yearly depletion have on the income statement?
An asset for driling was purchased and placed in service by a petroleum production company Its cost basis is $65.000, and it has an estimated MV of $13,000 at the end of an estimated useful life of 16 years Compute the depreciation amount in the fourth year and the BV at the end of the sixth year of life by each of these methods a. The SL method b. The 200% DB method with switchover to SL c. The GDS. d. The ADS Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates () a. Using the SL method the depreciation amount in the fourth year is S (Round to the nearest dollar)
batch are as TOROWS! Chemical Echol Protex Benz CT-40 Total Echol Protex Benz CT-40 Total Denz CT-40 Total Chemical Echol The quantities of chemicals purchased and used during the current production period are shown in the following schedule. A total of 120 batches of Gas Gain were manufactured during the current production period. Energy Products determines its cost and chemical usage variations at the end of each production period, Chemical Quantity Used 22,800 sters 11,040 32,400 6,480 72,720 liters Protex Benz CT-40 Total 200 liters 100 Mix 250 Usage variance Mix variance 50 Yield variance 600 liters Required: Compute the total direct materials usage variance, and then break down this variance into its mix and yield components. Do not round intermediate computations and round final answers to the nearest cent. (CMA adapted) 250 50 $0.200 600 liters SP 0.425 0.150 0.300 0.150 0.300 The quantities of chemicals purchased and used during the current production period are shown in the…
A plastic manufacturing company produces a product from polystyrene. Two mixing processes, batch and continuous are available with the following data for each process. Batch Continuous Initial Cost Php 50,000 Php 100,000 Maintenance cost/year Php 10,000 Php 36,000 Salvage value Php 6,000 Php 12,000 Life time 5 years 5 years Capacity (units/year) 1,000,000 2,000,000 Depreciation 8,800 17,600 The company uses straight line depreciation, pays 48% of its net income as income tax, and has an after-tax minimum attractive rate of return of 15%. The company has an infinite market and can sell all of the products it produces at Php 0.5 per unit. What is the net income for both options assuming present worth method?
ournal Entries Use the data in Exhibit 14.5. On October 7, Schmidt Machinery Company purchased 720 pounds of PVC at $41.00 per pound. On October 9, Schmidt’s production departmentused 720 pounds of PVC for the 780 units of XV-1 it manufactured.Required Make the necessary journal entries to record the purchase and usage of PVC during October.(Round all amounts to nearest whole dollar.)
On January 1, year 1, Camella Company purchased a gas detoxificationfacility for 5,850,000. The cost of cleaning up the routine contamination caesed by the initial location of gas on the property is estimated to be 975,000. This cost will be incurred in 10 years when all of the existing stockpile of gas is detoxified and the facility is decommissioned. Additional contamination may occur in succeeding years that the facility is in operation. On January 1, year 3, additional contamination clean up cost is estimated at 130,000. The appropriate discount rate is 6%.The present value of 1 at 6% is 0.63 for 8 periods and 0.56 for 10 periods.On December 31, year 10, the entity paid a contractor an amount of 1,300,000 for the decommissioning of the detoxification facility. Required:1. Prepared journal entries in year 1 in relation to the detoxification facility and decommissioning liability.
On January 1, year 1, Camella Company purchased a gas detoxificationfacility for 5,850,000. The cost of cleaning up the routine contamination caesed by the initial location of gas on the property is estimated to be 975,000. This cost will be incurred in 10 years when all of the existing stockpile of gas is detoxified and the facility is decommissioned. Additional contamination may occur in succeeding years that the facility is in operation. On January 1, year 3, additional contamination clean up cost is estimated at 130,000. The appropriate discount rate is 6%.The present value of 1 at 6% is 0.63 for 8 periods and 0.56 for 10 periods.On December 31, year 10, the entity paid a contractor an amount of 1,300,000 for the decommissioning of the detoxification facility. Required:1. . Prepare journal entries in year 3 in relation to the detoxification facility and decommissioning liability.
On January 1, year 1, Camella Company purchased a gas detoxificationfacility for 5,850,000. The cost of cleaning up the routine contamination caesed by the initial location of gas on the property is estimated to be 975,000. This cost will be incurred in 10 years when all of the existing stockpile of gas is detoxified and the facility is decommissioned. Additional contamination may occur in succeeding years that the facility is in operation. On January 1, year 3, additional contamination clean up cost is estimated at 130,000. The appropriate discount rate is 6%.The present value of 1 at 6% is 0.63 for 8 periods and 0.56 for 10 periods.On December 31, year 10, the entity paid a contractor an amount of 1,300,000 for the decommissioning of the detoxification facility. Required:1. Prepare journal entries on December 31, year 10 to record the derecognition of the detoxification facility and the settlement of the decommissioning liability.

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