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:

The distribution of resource consumption across the activity cost pools is as follows:

Required:

Complete the first stage allocations of costs to activity cost pools.

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

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:

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

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):

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.)

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 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:

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.

The standard cost of product 5252 includes 2.80 hours of direct labor at $14.00 per hour. The predetermined overhead rate is $20.00 per direct labor hour. During July, the company incurred 3,700 hours of direct labor at an average rate of $13.53 per hour and $81,400 of manufacturing overhead costs. It produced 1,300 units. Compute the total, price, and quantity variances for labor.

A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021:

According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses, while Porthos receives 30 percent, and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation of fair value.

For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership.

1. Porthos, with permission of the other partners, decides to sell half of his partnership interest to D’Artagnan for $88,000 in cash. No asset revaluation or goodwill is to be recorded by the partnership.

2. All three of the present partners agree to sell 10 percent of each partnership interest to D'Artagnan for a total cash payment of $40,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result of the transaction.

3. D'Artagnan is allowed to become a partner with a 10 percent ownership interest by contributing $52,000 in cash directly into the business. The bonus method is used to record this admission.

4. Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method.

5. D'Artagnan is allowed to become a partner with a 15 percent ownership interest by contributing $60,000 in cash directly to the business. The goodwill method is used to record this transaction.

6. Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a current fair value of $426,000. Goodwill is to be recorded. Aramis will then be given the exact amount of cash that will close out his capital account.

Ray Inc. sponsors a defined benefit pension plan for its employees. At January 1, 2018, Ray Inc. has unrecognized prior service cost of $24 million (amortized $4 per year) and net gains in AOCI of $30 million (amortized over 10 years). Ray Inc. reported Net Pension Asset of $10 million on its balance sheet as of December 31, 2017. Additional information for Ray’s pension plan follows (the fiscal year ends in December):

Record the journal entry for pension expense for 2018. Write step by step

Record the journal entry for gain or losses in PBO for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for gain or losses in plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for cash contribution to plan assets for 2018 if necessary. Write no entry if unnecessary.

Record the journal entry for benefits paid to employees for 2018 if necessary. Write no entry if unnecessary.

What is the balance of Net gain–AOCI at December 31, 2018 and what will be the “amortization of net gain–OCI” amount in 2019?

Please explain step by step.

1. If a company uses a periodic inventory system, it will use all of the following accounts during the year to record normal transactions  except: A. costs of goods sold; B. purchase returns; C. sales revenue; D. purchases.

2. Which of the following would be included in the Cost of Goods Sold account on a merchandising company's income statement? A. sales commissions; B. shipping costs from the manufacturer to the merchandiser; C. costs of advertising; D. sales taxes.

3. A manager of Company X gets a bonus if net income of a certain amount is achieved. If she had her 'druthers', she would love to use what method of inventory costing (in most situations and if permitted)? A. FIFO; B. LIFO; C. Specific identification; D. weighted-average

4. For most property, plant, and equipment, depreciation is caused by which of the following: A. changes in fair value; B. the process of valuation; C. obsolescence; D. setting aside cash to replace the assets when they wear out

5. Which of the following would not be included in the Machinery account? The cost of: A. freight costs; B. Tearing down a factory wall in order to get the large machine into the factory; C. Extra cost because the company didn't have the cash last year when machine prices were cheaper; D. Paying duty to American authorities for the American product

Topic 6. Solving a problem

Prompt

There are THREE methods in calculating Hire Purchase Interest:

• Sum-of-the-Years’- Digit (SYD)
• Straight Line Method (SLM)
• Reducing Balance Method (RBM)

Examples of calculating hire purchase interest

a) Sum of the Years’ Digit Method (SYD)

     Number the installment, given the highest digit to the first installment and the digit 1 to the last installment;

-          Add up the digits;

-          The interest proportion to each Accounting period is the:

Digit given to the installment     X                Interest

                     Sum of digits

Method of calculating HP Interest using SYD

Under a Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by a deposit of $500 and a 5 monthly installment starting from January. The interest is $400.

                  The apportioning of hire purchase interest is as follows:

                  Step 1:

                  Cash price                              $2,500

                  -) Deposit                               $500       

                  Outstanding liability                $2,000

                  Interest                                      $400       

                  Total installment                    $2,400

Step 2:

The installments are numbered as follows:

January       5

February     4

March         3

April           2

May            1

                           15

Step 3:

Apportion the interest according to each Accounting period:

January                5/15 x $400 =       $133

February              4/15 x $400 =       $107

March                  3/15 x $400 =       $80

April                    2/15 x $400 =       $53

May                     1/15 x $400 =       $27

                                                               $400

b) Straight Line Method (SLM)

-      under this method, the interest is deemed to accrue evenly over the period of the  Hire Purchase Agreement.

Under a Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by s deposit of $500 and a 24 monthly installments of $100.

                  The apportioning of hire purchase interest is as follows:

                  Cash price                              $2,500

                  -) Deposit                                   $500       

                  Outstanding liability                $2,000

                   Interest                                       $400       

                  Total installment                     $2,400

                  Therefore;

                  Installment/ month =       $2,400/24    =       $100

                  Interest/ month      =       $400/24       =       $16.70

c) Reducing Balance Method (RBM)

-        under this method, simple interest is calculated based on outstanding debt after each installment becomes payable.

Under the Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by a deposit of $500 and 4 annual installments of $631. Interest rate is at 10% per annum.

The apportioning of Hire Purchase is as follows:

Cash price                              $2,500

-) Deposit                               ($500)

Outstanding liability                $2,000

+) 10% Interest                          $200       

                                                      $2,200

-) 1^st installment                      ($631)

                                                      $1,569       

+) 10% Interest                          $157       

                                                      $1,726

-) 2^nd installment                     ($631)

                                                      $1,095

+) 10% Interest                       $110

                                                      $1,205

-) 3^rd installment                      ($631)

                                                      $574

+) 10% Interest                           $57

                                                      $631

-) 4^th installment                      ($631)

-        Therefore, the apportioning for the interest is as follows:

1^st year        =       $200

2^nd year       =       $157

3^rd year        =       $110

4^th year        =          $57

                                    $524

Pr   

P Problem specification: the task is to calculate hire purchase payment using all three methods

ds McBook Air with a cash price $1000 and deposit $200 ; 4 annual installement ,interest rate -10%

Summary Payroll Data

In the following summary of data for a payroll period, some amounts have been intentionally omitted:

a. Calculate the amounts omitted in lines (1), (3), (8), and (12).

b. Journalize the entry to record the payroll accrual. If an amount box does not require an entry, leave it blank.

c. Journalize the entry to record the payment of the payroll.

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 210 units @ $53.20 per unit Mar. 5 Purchase 280 units @ $58.20 per unit Mar. 9 Sales 370 units @ $88.20 per unit Mar. 18 Purchase 140 units @ $63.20 per unit Mar. 25 Purchase 260 units @ $65.20 per unit Mar. 29 Sales 240 units @ $98.20 per unit Totals 890 units 610 units 4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 120 units from beginning inventory and 250 units from the March 5 purchase; the March 29 sale consisted of 100 units from the March 18 purchase and 140 units fr

I am sorry. I thought I posted everything. My requirement is below.

Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 120 units from beginning inventory and 250 units from the March 5 purchase; the March 29 sale consisted of 100 units from the March 18 purchase and 140 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Give examples of three depreciation methods and their formulas. Explain why each would be used over the others.

1. Straight‐line
2. Declining‐balance
3. Units‐of‐activity

The following is the current balance sheet for a local partnership of doctors:

The following questions represent independent situations:

1. E is going to invest enough money in this partnership to receive a 20 percent interest. No goodwill or bonus is to be recorded. How much should E invest?

2. E contributes $60,000 in cash to the business to receive a 10 percent interest in the partnership. Goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: A, 30 percent; B, 10 percent; C, 40 percent; and D, 20 percent. After E makes this investment, what are the individual capital balances?

3. E contributes $60,000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. The four original partners share all profits and losses equally. After E makes this investment, what are the individual capital balances?

4. E contributes $84,000 in cash to the business to receive a 20 percent interest in the partnership. No goodwill or other asset revaluation is to be recorded. Profits and losses have previously been split according to the following percentages: A, 10 percent; B, 30 percent; C, 20 percent; and D, 40 percent. After E makes this investment, what are the individual capital balances?

5. C retires from the partnership and, as per the original partnership agreement, is to receive cash equal to 115 percent of her final capital balance. No goodwill or other asset revaluation is to be recognized. All partners share profits and losses equally. After the withdrawal, what are the individual capital balances of the remaining partners?