University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.

The following data appear in the company records for the current period:

Required:

Use the direct method to allocate these service department costs to the operating departments.

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $90,000 of business income from WCC for the year. Jacob’s marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax and 0.9 percent additional Medicare tax. (Round your intermediate calculations to the nearest whole dollar amount.)

Hi-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek produced and sold 60,500 units of B300 at a price of $19 per unit and 12,600 units of T500 at a price of $40 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $55,000 and $103,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:

Required:

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system.

2. Compute the product margins for B300 and T500 under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

AT Corp. opened for business on April 1st. Listed below are the transactions for AT Corp. for the month of April:

April 1 Issued common stock in exchange for $250,000 cash.
April 1 Purchased office equipment for $17,500 cash.
April 1 Borrowed $20,000 from Venn Bank and signed a 10% note. Interest and principal to be paid in 12 months.
April 5 Paid $4,000 rent in advance for the art gallery for the next two months.
April 10 Purchased art supplies from Tacky Art Co. on account for $12,200.
April 12 Received $5,300 from a customer who commissioned a piece of custom art to be completed by the end of the year.
April 15 Paid miscellaneous office expenses totaling $285 in cash.
April 17 Billed customers $3,400 for art classes provided in March.
April 19 Paid $3,600 to Tacky Art Co.
April 25 Received $2,200 from customers on account.
April 30 Recorded $3,800 in salaries for the month of April. Paychecks will be disbursed to employees on May 2nd.

3) Prepare a statement of cash flows. Prepare closing entries.

4) In a one-page memo, provide an explanation to the management team on April's financial performance.

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.50 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,300?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $58,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,200 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,200)?

      Partner revenue$4,492,000 7,900hoursStaff revenue$4,315,000 33,000hours

The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year appear below:

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $249,000 of the fixed manufacturing expenses and $210,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:

Multiple Choice

• $(82,000)

• $95,000

• $82,000

• $(95,000)

Primare Corporation has provided the following data concerning last month’s manufacturing operations. Purchases of raw materials $ 31,000 Indirect materials included in manufacturing overhead $ 4,510 Direct labor $ 58,800 Manufacturing overhead applied to work in process $ 87,100 Underapplied overhead $ 4,040 Inventories Beginning Ending Raw materials $ 11,300 $ 19,100 Work in process $ 54,500 $ 67,800 Finished goods $ 33,500 $ 43,400 Required: 1. Prepare a schedule of cost of goods manufactured for the month. 2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

1. Which of the following is generally false when a consolidation occurs?

           (a) The consolidated entity assumes the debts of the original corporations.

           (b) The consolidated entity takes on the rights of the original companies.

           (c) The consolidated entity obtains the original corporations’ assets.

           (d) The new corporation has independent legal status.

           (e) The original corporations continue to exist legally.

2. Which of the following is true regarding the type of intangible item that may constitute an asset?

          (a) A company name is a type of intangible item that may constitute an asset, but goodwill and a company logo are not.

          (b) Goodwill, a company name, and a company logo all constitute types of intangible items that may constitute assets.

          (c) Goodwill is a type of intangible item that may constitute an asset, but a company name and a company logo are not.

          (d) Goodwill and a company name are types of intangible items that may constitute assets, but a company logo is not.

          (e) A company name and a company logo are types of intangible items that may constitute assets, but goodwill is not.

3.

What key piece of information does an aggressor generally need in order to gain control of a target corporation through proxies?

               (a) The income statements of the target.

               (b) The list of members of the board of directors of the target.

               (c) A list of target shareholders.

               (d) A list of target officers.

               (e) The balance sheet of the target.

4.

In a consolidation, which of the following is true regarding the property of the original corporations?

                 (a) It must be held in trust for at least one year to satisfy claims of creditors.

                 (b) It is acquired by the new corporation.

                 (c) It must be sold and distributed to the respective shareholders.

                 (d) It must be placed within the jurisdiction of the secretary of state for at least one year in order to satisfy the claims of creditors.

                 (e) It must be held in trust for at least six months to satisfy claims of creditors.

5. In a consolidation, which of the following is true regarding the property of the original corporations?.

(a) It must be held in trust for at least one year to satisfy claims of creditors.

(b) It is acquired by the new corporation.

(c) It must be sold and distributed to the respective shareholders.

(d) It must be placed within the jurisdiction of the secretary of state for at least one year in order to satisfy claims of creditors.

(e) It must be held in trust for at least six months to satisfy claims of creditors.

Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.

A report for the company's Assembly Department for the month of March follows:

After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much about the reports.”

For the last several years, the company’s marketing department has chronically failed to meet the sales goals expressed in the company’s monthly budgets.

Required:

1. The company’s president is uneasy about the cost reports, identify at least two reasons.

2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?

3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.

4. Were costs well controlled in March?

The company’s president is uneasy about the cost reports, identify at least two reasons. (Select "X" if the item is one of the reasons.)

What changes, if any, should be made in the reports to give better insight into how well departmental supervisors are controlling costs?

prepare a new performance report for the quarter, (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

How well were costs controlled in the Assembly Department in March?

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 20,000 machine-hours and produced 14,000 units. The company had originally planned to work 22,000 machine-hours during March.

Required:

1. Calculate the activity variances for March.

2. Calculate the spending variances for March.

Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Calculate the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

[The following information applies to the questions displayed below.]

On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $66,500 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $20,078 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $30,590 cash per year.

Problem 7-30 Part b

2. Organize the information in accounts under an accounting equation. (Round your answers to the nearest whole dollar amount. Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles / Retained Earnings, leave the cell blank.)

3. BROWN CO. Effect of Events on the Accounting Equation 2018, 2019, 2020 and 2021 Event Assets = Liabilities + Stockholders' Equity Accounts Titles / Retained Earnings Cash + Land = Notes Payable + Retained Earnings 2018 1/1 + = + 1/1 + = + 12/31 + = + 12/31 + = + Bal. 0 + 0 = 0 + 0 2019 Beg. bal. + = + 12/31 + = + 12/31 + = + End. bal. 0 + 0 = 0 + 0 2020 Beg. bal. + = + 12/31 + = + 12/31 + = + End. bal. 0 + 0 = 0 + 0 2021 Beg. bal. + = + 12/31 + = + 12/31 + = + End. bal. 0 + 0 = 0 + 0

Exercise 11-7

Rinehart Corporation purchased from its stockholders 5,300 shares of its own previously issued stock for $265,000. It later resold 1,600 shares for $53 per share, then 1,600 more shares for $48 per share, and finally 2,100 shares for $42 per share.

Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.

Assignment Topic:

How should an organization treat its employees during a pandemic? – Discuss from both organization and employees’ perspectives.
In our discussion forums, we have discussed employees are the most valuable assets of an organization, even though they are not listed in the Balance Sheet. Without employees, an organization is nothing.

Here, I use the word “organization” instead of “company/firm” because I do not want to limit your thinking on certain well-structured companies/firms (e.g. listed firms), it can be any organizations, no matter big or small, private or listed, profit-oriented or public benefit organizations.

REQUIRED:

1. Explain the main reasons why employees are valuable assets, and why the organization should treat them well. [You could look for journal articles on what benefits employees can bring for the organization, and the Social Responsibilities of an organization towards employees.]

2. Describe what employees expect from the organization and why. [You could get some hints from why people decide (not) to change jobs or resign.]

3. Discuss how the pandemic affects the above two points. Compare what the organization can do and what employees need during a pandemic. [You could read news and organizations’ disclosures; you could discuss the experience from your family, friends, or someone your know.]

4. Provide your suggestions on how to help employees (including those who lost jobs) in Fiji go through the difficult time. [You could talk about anything that you think is helpful, no matter whether or not it is available in Fiji.]

You are the new accountant for ABC, Co. ABC, Co. is a plumbing supply and installation company.

Your boss is the President, Mr. Bigg.

As the accountant, it is your job to explain to Mr. Bigg the following accounting terms.

1. What is a chart of accounts?

2. What are adjusting journal entries?

3. What is an income statement?

Based on your course work of accounting and information systems course (ACC 4310) at your University, what would you recommend to Mr. Bigg to improve his business in regards to the following situations?

1. Accounts Receivables are billed and due at 30 days from invoice, however, most customers tend to pay up to 45 days. The company needs to improve cash flows.

2. Several customers have bounced checks and this causes issues, especially the $25.00 fee charged from the bank?

3. The company needs capital for expansion, to purchase materials, and new equipment. Why would you suggest to Mr. Bigg.