An investment will pay $20,500 at the end of the first year, $30,500 at the end of the second year, and $50,500 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1)(Use the appropriate factor(s) from the tables provided.)
Determine the present value of this investment using a 8% annual interest rate. (Round your answer to nearest whole dollar.)
In: Accounting
QUESTION: What are the IDENTIFY CHARACTERISTICS that define successful budgeting processes and best practices?
Instructions:
(1). MUST Use Strategic Planning & Budgeting strong vocabularies
(2). MUST Include Citations and References. Original work - No plagiarism allow
In: Accounting
Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.)
Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
In: Accounting
Diane Corporation is preparing its year-end balance sheet. The
company records show the following selected amounts at the end of
the year:
Total assets | $ | 590,000 | |
Total noncurrent assets | 354,000 | ||
Liabilities: | |||
Notes payable (8%, due in 5 years) | 20,000 | ||
Accounts payable | 54,000 | ||
Income taxes payable | 12,000 | ||
Liability for withholding taxes | 5,000 | ||
Rent revenue collected in advance | 10,000 | ||
Bonds payable (due in 15 years) | 99,000 | ||
Wages payable | 10,000 | ||
Property taxes payable | 6,000 | ||
Note payable (10%, due in 6 months) | 13,000 | ||
Interest payable | 500 | ||
Common stock | 290,000 | ||
In: Accounting
The CDG Carlos, Dan, and Gail Partnership has decided to liquidate as of December 1, 20X6. A balance sheet on the date follows: CDG PARTNERSHIP Balance Sheet At December 1, 20X6 Assets Cash $ 32,500 Accounts Receivable (net) 90,000 Inventories 115,000 Property, Plant and Equipment (net) 330,000 Total Assets $ 567,500 Liabilities and Capital Liabilities: Accounts Payable $ 292,500 Capital: Carlos, Capital $ 135,000 Dan, Capital 65,000 Gail, Capital 75,000 Total Capital 275,000 Total Liabilities and Capital $ 567,500 Additional Information Each partner’s personal assets (excluding partnership capital interests) and personal liabilities as of December 1, 20X6, follow: Carlos Dan Gail Personal assets $ 265,000 $ 315,000 $ 365,000 Personal liabilities (237,500 ) ( 232,500 ) (343,900 ) Personal net worth $ 27,500 $ 82,500 $ 21,100 Carlos, Dan, and Gail share profits and losses in the ratio 20:40:40. CDG sold all noncash assets on December 10, 20X6, for $273,500.
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In: Accounting
Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below:
April | May | June | Total | |
Budgeted sales (all on account) | $440,000 | $640,000 | $220,000 | $1,300,000 |
From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $370,000, and March sales totaled $400,000.
Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
2. What is the accounts receivable balance on June 30th?
In: Accounting
In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits.
profits.
Case | ||||
A | B | |||
Division X: | ||||
Capacity in units | 90,000 | 106,000 | ||
Number of units being sold to outside customers | 90,000 | 81,000 | ||
Selling price per unit to outside customers | $ | 54 | $ | 30 |
Variable costs per unit | $ | 28 | $ | 13 |
Fixed costs per unit (based on capacity) | $ | 7 | $ | 6 |
Division Y: | ||||
Number of units needed for production | 25,000 | 25,000 | ||
Purchase price per unit now being paid to an outside supplier |
$ | 50 | $ | 26 |
1. Refer to the data in case A above. Assume in this case that $1 per unit in variable selling costs can be avoided on intracompany sales.
a. What is the lowest acceptable transfer price from the perspective of the selling division?
b. What is the highest acceptable transfer price from the perspective of the buying division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place?
2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales.
a. What is the lowest acceptable transfer price from the perspective of the selling division?
b. What is the highest acceptable transfer price from the perspective of the buying division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place?
In: Accounting
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
Year 1 | 550,700 | ||
Year 2 | 477,500 | ||
Year 3 | 375,300 | ||
Year 4 | 390,000 | ||
Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
b. Compute the depreciation expense for each of the four years, using units-of-production depreciation.
Depreciation Expense
Year 1
Year 2
Year 3
Year 4
Total accumulated depreciation$0
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
Year 1 | 550,700 | ||
Year 2 | 477,500 | ||
Year 3 | 375,300 | ||
Year 4 | 390,000 | ||
Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
c. Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods.
DDB =
Units-of-production=
In: Accounting
Requirements
Identify a macro theme of accounting that you would like to investigate.
Explain why you selected the topic. .
Perform a brainstorming exercise to delimit the topic.
Brainstorming should include at least 10 concepts or ideas.
Specifies what the central theme is and what the secondary themes are
In: Accounting
SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system:
Driver and guard wages | $ | 860,000 |
Vehicle operating expense | 290,000 | |
Vehicle depreciation | 170,000 | |
Customer representative salaries and expenses | 200,000 | |
Office expenses | 60,000 | |
Administrative expenses | 360,000 | |
Total cost | $ | 1,940,000 |
The distribution of resource consumption across the activity cost pools is as follows:
Travel | Pickup and Delivery |
Customer Service |
Other | Totals | ||||||
Driver and guard wages | 50 | % | 35 | % | 10 | % | 5 | % | 100 | % |
Vehicle operating expense | 70 | % | 5 | % | 0 | % | 25 | % | 100 | % |
Vehicle depreciation | 60 | % | 15 | % | 0 | % | 25 | % | 100 | % |
Customer representative salaries and expenses | 0 | % | 0 | % | 90 | % | 10 | % | 100 | % |
Office expenses | 0 | % | 20 | % | 30 | % | 50 | % | 100 | % |
Administrative expenses | 0 | % | 5 | % | 60 | % | 35 | % | 100 | % |
Required:
Complete the first stage allocations of costs to activity cost pools.
In: Accounting
Static Budget versus Flexible Budget The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown Company Machining Department Monthly Production Budget Wages $426,000 Utilities 35,000 Depreciation 58,000 Total $519,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May $490,000 122,000 June 469,000 111,000 July 448,000 100,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May–July have been significantly less than the monthly static budget of 519,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour $16.00 Utility cost per direct labor hour $1.30 Direct labor hours per unit 0.20 Planned monthly unit production 133,000 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June July Units of production 122,000 111,000 100,000 Wages $ $ $ Utilities Depreciation Total $ $ $ Supporting calculations: Units of production 122,000 111,000 100,000 Hours per unit x x x Total hours of production Wages per hour x $ x $ x $ Total wages $ $ $ Total hours of production Utility costs per hour x $ x $ x $ Total utilities $ $ $ Feedback For each level of production, show wages, utilities, and depreciation. b. Compare the flexible budget with the actual expenditures for the first three months. May June July Total flexible budget $ $ $ Actual cost Excess of actual cost over budget $ $ $ What does this comparison suggest? The Machining Department has performed better than originally thought. No The department is spending more than would be expected. Yes
In: Accounting
Exact Photo Service purchased a new color printer at the
beginning of Year 1 for $39,700. The printer is expected to have a
four-year useful life and a $3,700 salvage value. The expected
print production is estimated at $1,770,500 pages. Actual print
production for the four years was as follows:
Year 1 | 550,700 | ||
Year 2 | 477,500 | ||
Year 3 | 375,300 | ||
Year 4 | 390,000 | ||
Total | 1,793,500 | ||
The printer was sold at the end of Year 4 for $4,100.
Required
a. Compute the depreciation expense for each of the four
years, using double-declining-balance depreciation.
epreciation Expense
Year 1
Year 2
Year 3
Year 4
Total accumulated depreciation$0
In: Accounting
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments—Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
Molding | Fabrication | Total | |||||||
Estimated total machine-hours used | 2,500 | 1,500 | 4,000 | ||||||
Estimated total fixed manufacturing overhead | $ | 12,250 | $ | 16,350 | $ | 28,600 | |||
Estimated variable manufacturing overhead per machine-hour | $ | 2.30 | $ | 3.10 | |||||
Job P | Job Q | |||||
Direct materials | $ | 22,000 | $ | 12,500 | ||
Direct labor cost | $ | 28,200 | $ | 11,100 | ||
Actual machine-hours used: | ||||||
Molding | 2,600 | 1,700 | ||||
Fabrication | 1,500 | 1,800 | ||||
Total | 4,100 | 3,500 | ||||
Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.
Required:
For questions 1-9, assume that Sweeten Company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments and Job P included 20 units and Job Q included 30 units. For questions 10-15, assume that the company uses a plantwide predetermined overhead rate with machine-hours as the allocation base.
1. What were the company’s predetermined overhead rates in the Molding Department and the Fabrication Department? (Round your answers to 2 decimal places.)
2. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)
3. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)
4. What was the total manufacturing cost assigned to Job P? (Do not round intermediate calculations.)
5. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
6. What was the total manufacturing cost assigned to Job Q? (Do not round intermediate calculations.)
7. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
8. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
9. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)
10. What was the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)
11. How much manufacturing overhead was applied to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)
12. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
13. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
15. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)
In: Accounting
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.80 per Ib.) $ 144.00 Direct labor (6 hrs. @ $14 per hr.) 84.00 Factory overhead—variable (6 hrs. @ $7 per hr.) 42.00 Factory overhead—fixed (6 hrs. @ $9 per hr.) 54.00 Total standard cost $ 324.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 57,000 units per quarter. The following flexible budget information is available. Operating Levels 70% 80% 90% Production in units 39,900 45,600 51,300 Standard direct labor hours 239,400 273,600 307,800 Budgeted overhead Fixed factory overhead $ 2,462,400 $ 2,462,400 $ 2,462,400 Variable factory overhead $ 1,675,800 $ 1,915,200 $ 2,154,600 During the current quarter, the company operated at 90% of capacity and produced 51,300 units of product; actual direct labor totaled 304,800 hours. Units produced were assigned the following standard costs. Direct materials (1,539,000 Ibs. @ $4.80 per Ib.) $ 7,387,200 Direct labor (307,800 hrs. @ $14 per hr.) 4,309,200 Factory overhead (307,800 hrs. @ $16 per hr.) 4,924,800 Total standard cost $ 16,621,200 Actual costs incurred during the current quarter follow. Direct materials (1,519,000 Ibs. @ $7.30 per lb.) $ 11,088,700 Direct labor (304,800 hrs. @ $13.00 per hr.) 3,962,400 Fixed factory overhead costs 2,337,000 Variable factory overhead costs 2,187,800 Total actual costs $ 19,575,900 Required: 1. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price 2. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate 3. Compute the overhead controllable and volume variances.
In: Accounting
In three units of study, there will be application-focused cases due at the beginning of the class that will be provided by the instructor. These cases will be complex in nature and will require the application of course concepts to real-word business situations. Each case will have an associated rubric to highlight expectations. All submissions must be of professional quality and done in Microsoft Word, Microsoft Excel, or submitted as a PDF.
Case: Investment Proposals for Ontario Coffee Home
It is January 1, 2019. You are a Senior Analyst at Ontario Coffee Home (OCH), one of the leading coffee chains and wholesaler of coffee/bakery products in Ontario. The CEO of Ontario Coffee Home, Jerry Donovan, has reached out to you to draft a report to evaluate two investment proposals.
Requirements
1. Identify which revenues and costs are relevant to your analysis, and which costs are irrelevant. Summarize all the information that will be required for each investment proposal, including describing the proposal and identifying the time horizon for each proposal evaluation.
2. Calculate the after-tax cash flows during the life of each of the projects.
3. Utilizing the after-tax cash flows from question 2, evaluate each investment proposal utilizing the following criteria (unless directed otherwise):
a. Payback
b. NPV
4. Clearly indicate whether any of the above criteria support each of the project proposals, and what the company should ultimately decide to do.
Investment Proposals
Jerry Donovan, CEO of OCH, wants you to evaluate two investment proposals that the company is considering:
1. The purchase of a coffee roaster plant in Cuba.
2. The re-development of coffee shops to accommodate the selling of frozen yogurt.
Mr. Donovan reminds you that only relevant costs and revenues should be considered. “Relevant costs have to be occurring in the future,” explained Mr. Donovan. “And have to differ from the status quo. For example, if we choose to buy the roaster plant, it is only the incremental revenue and costs related to the purchase that should be considered. We also need to take into account the opportunity cost associated with the alternatives.”
More details on each investment proposal are included below. Mr. Donovan wants you to recommend if OCH should invest in one, both, or none of the investment proposals.
Required Return
Mr. Donovan wants you to use 7% as the discount rate (i.e., the required return).
Investment in Roasted Coffee Plant
Mr. Donovan is considering purchasing a coffee plant in Cuba where labour is cheap and there are proximal coffee farms to help lower transportation costs.
The acquisition price of the plant is $6M, which includes roasting equipment that originally cost $14M when it was purchased 8 years ago. Some of the equipment is on its last legs, so an additional $2M of equipment has to be purchased. The roaster plant currently has $2M of available tax shield left, excluding any tax shield related to the equipment to be purchased.
The direct materials and direct labour used to manufacture these products are 8% and 7% of sales, respectively. The actual roasting processing costs are approximately 17% of sales. These costs as a percentage of sales are expected to remain consistent over the time horizon. The plant also requires two managers with fixed salaries of $50,000 each per year. Insurance for the plant and equipment is $40,000 per year.
Other incremental manufacturing overhead costs (property taxes, maintenance, security, etc.) excluding depreciation are estimated to be $75,000 annually. Wages are expected to increase with inflation (estimated to be 2%) over the time period, while other fixed costs are expected to remain steady.
Transportation variable costs (gas, variable overhead, etc.) are estimated to be 12% of revenue, and include transportation of raw materials to the roaster and finished products to the port for delivery to OCH coffeehouses.
The roasted coffee plant is expected to produce 1.1M pounds of coffee for the first two years, with production dipping by 100,000 pounds per year after this due to lower productivity from the deteriorating equipment. Each pound of roasted coffee can be sold at $3.25 per pound (either to retail cafes, franchise cafes, or to wholesale partners), with the price expected to rise with inflation over time. Each pound of coffee can make 30 cups of coffee that can sell at an average retail price of $4.00 per cup. Mr. Donovan has stressed that the profitability of the plant base has to be looked at on a stand-alone basis, i.e., from the sales from the plant to buyers, not from retail cafés to customers.
Mr. Donovan wants to see if the project will reach profitability after 5 years, as significant reinvestment will be needed after five years to keep the plant operational, so he wants you to evaluate the return on investment in that period using the investment criteria of payback period, NPV, and IRR. The following table will help in the calculations of the tax shield for the new equipment:
Class |
CCA Rate |
Description |
43 |
30% |
Machine and equipment to manufacture and process goods for sale |
Assume no salvage value when calculating the tax shield, and that the half-year rule applies for Class 43. The tax rate Mr. Donovan wants you to utilize is 25%. When calculating the tax shield, the present value should be in the same period as the initial investment (Year 0), which also means that deprecation (i.e., CCA) should not be taken from the cash flows in subsequent years since their tax shelter effects are already accounted for in the tax shield.
Redevelopment of Coffee Shops
Mr. Donovan also wants you to evaluate the potential of developing several hundred stores into new store models with frozen yogurt services. Five hundred stores have been selected as candidates for development. It will cost $80,000 to convert each store, including modifications to refrigeration equipment, with these costs being capitalized with a 6% applicable CCA rate. The average modified coffee shop is expected to generate an additional $30,000 in after-tax cash flow every year. However, OCH is also estimated to lose about $15,000 in annual after-tax cash flow from these cafés due to yogurt sales cannibalizing existing coffee shops. In other words, some customers who normally would have purchased coffee would instead purchase yogurt.
The five hundred stores have average annual rent of $36,000 each. Mr. Donovan wants you to evaluate the profitability of this investment after a seven-year period using the investment criteria of NPV.
In: Accounting