Hickory Company manufactures two products—13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all $813,600 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

8. Which of the four activities is a product-level activity?

Product design activity

Machine setups activity

General factory activity

Machining activity

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round all intermediate calculations to 2 decimal places.)

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)

12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)

Job Cost Sheet

Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $2,632 to carpet the consulting firm’s newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation were completed on October 10.

The related materials requisitions and time tickets are summarized as follows:

Required:

Enter amounts as positive numbers.

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. Record the costs incurred, and complete the job order cost sheet.

What is the best explanation for the variances between actual costs and estimated costs. (For this purpose, assume that the additional meters of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.)

1. The direct materials cost exceeded the estimate by $120 because 4 meters of materials were spoiled. The direct labor cost exceeded the estimate by $80 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $60 of factory overhead was allocated because of the increase in direct labor.
2. Management didn't provide enough direction to complete tasks on budget.
3. The direct materials cost exceeded the estimate by $75 because 3 meters of materials were spoiled.
4. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inexperienced employee.

Select the correct answer from the above choices.

Case 9-31 Master Budget with Supporting Schedules [LO9-2, LO9-4, LO9-8, LO9-9, LO9-10]

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.

Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$18 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $5.4 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $23,000 in new equipment during May and $54,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $25,500 each quarter, payable in the first month of the following quarter.

A listing of the company’s ledger accounts as of March 31 is given below:

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $64,000 in cash.

REQUIRED:

2. A cash budget. Show the budget by month and in total. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

Two Hollywood companies had the following balance sheet accounts as of December 31, 20X7 ($ in millions):

                                         Lexia   Hudson                                        Lexia       Hudson
Cash and receivables       $60   $44        Current liabilities               $100       $40
Inventories                         240   6            Common stock                   200       20
Plant assets, net                300   190        Retained earnings              300       180
Total assets                      $600   $240     Total liab. and stk. eq.       $600       $240
Net income for 20X7         $38     $8

On January 4, 20X8, these entities combined. Lexia issued $360 million of its shares (at market value) in exchange for all the shares of Hudson, a motion picture division of a large company. The inventory of films acquired through the combination had been fully amortized on Hudson's books.

During 20X8, Hudson received revenue of $42 million from the rental of films from its inventory.
Lexia earned $40 million on its other operations (i.e., excluding Hudson) during 20X8. Hudson
broke even on its other operations (i.e., excluding the film rental contracts)
during 20X8.

1. Prepare a consolidated balance sheet for the combined company immediately after the combination. Assume $160 million of the purchase price was assigned to the inventory of films. The fair values of all other Hudson assets and liabilities were equal to their book values.

2. Prepare a comparison of Lexia's consolidated net income between 20X7 and 20X8, where the cost of the film inventories would be amortized on a straight-line basis over 4 years. What would be the net income for 20X8 if the $160 million were assigned to goodwill instead of the inventory of films and goodwill was not amortized?

Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has retired at the age of 60 and has begun to draw a comfortable pension check every month. He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an initial payment of $160,000. The following table presents the estimated cash inflows for the two alternatives:

Mr. Kearns decides to use his past average return on mutual fund investments as the discount rate; it is 8 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Required

1. Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach?

2. Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach?

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? (Round your intermediate calculations and final answer to two decimal places.)

• Required B

Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach?

Problem Match The Appropriate Terms With Statements. A. Absorption Costing B. Contribution Margin C. ...

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Question: Match the appropriate terms with statements. A. Absorption costing B. contribution margin &n...

Match the appropriate terms with statements.

A. Absorption costing B. contribution margin   C. External reporting      D. fixed overhead  E. Full costing F. Internal reporting G. period costs   H. product costs   I. Traditional J. variable costing k. Ability to bear approach L. Activity based costing M. cause and effect relationship N. Cost Allocation E. Cost Driver P Cost -plus contract Q. Direct method R. non controllable costs S. Relative benefits approach T. Unitized fixed costs U. activity- based management V. Arbitrary allocation W. controllable cost X. Cost-benefit decision Y. Cost Objective Z. Cost pool. AA. Equity approach BB. Lump-sum allocation CC. Responsibility accounting DD. Volume-related base

1. Is another name for full costing

2. Treats fixed overhead as a product cost

3. is the income statement format used with variable costing

4. selling and administrative expenses

5. variable costing can only be used for this type of reporting

6. Is considered a period cost under variable costing

7. Direct materials + direct labor+ variable overhead

8. Can only be used for internal reporting purposes.

9. full costing must be used for this type of reporting

10. is the income statement format used wit full costing

11. An approach that allocates cost to the cost objectives that benefit most from incurring the cost.

12. Cost that a manager cannot influence.

13. Used to measure an activity.

14. An approach that allocates more cost to the cost objectives that generate the most profit.

15. Payment includes production costs plus a specified percentage of cost.

16. What should exist between the allocation base and the costs to be allocated.

17. when fixed costs appear to behave like a variable costs.

18. a method used to allocate service department costs to production departments.

19. Focuses on activities with the goal of measuring the costs of products and services produced by them.

20. Assigning indirect costs to some cost objective.

21. Focuses on way to improve the efficiency and effectiveness of activities.

22. The product, service, or department that is to receive an allocation.

23. Direct labor hours or machine hours.

24. A group of similar or homogenous costs

25. an allocation that a manager feels is unjustified

26. allocation based on the long-run needs of users

27. An allocation that is perceived as being fair

28. Costs that a manger should be evaluated on.

29. A consideration that needs to be made when deciding how many cost pools are appropriate.

30. When performance evaluation is based on the revenues and costs a manager can influence.

You are the chief executive officer of a multinational corporation that operates wholly owned subsidiaries in several countries. One of the company's manufacturing plants is located in Europe. As CEO, respond to the following questions in 400 words or more: What types of internal and external accounting reports will be use in the process of making decisions? How will the reports differ for a multi-national corporation?

Information for Question: The ExpressEspresso Company roasts and sells high quality certified sustainable coffee beans. The final one pound bags of roasted whole coffee beans has two direct materials – coffee beans and packaging. ExpressEspresso is preparing budgets for the 4th quarter ending December 31, 2019. For each requirement below prepare budgets by month for October, November, and December, and a total budget for the quarter.

The previous year’s sales for the corresponding period were:

October 50,000 bags

November 55,000 bags

December 90,000 bags

January 75,000 bags

February 60,000 bags

The company expects the above volume of coffee sales to increase by 8% for the period October 2019 – February 2020. The budgeted selling price for 2019 is $19.50 per bag. The company expects 35% of its sales to be cash (COD) sales. The remaining 65% of sales will be made on credit.

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Question: The company desires to have finished goods inventory on hand at the end of each month equal to 10 percent of the following month's budgeted unit sales. On September 30, 2019, ExpressEspresso expects to have 5,350 bags of roasted coffee on hand.

Prepare a Production budget

our accounts receivable clerk, Mitra Adams, to whom you pay a salary of $2,715 per month, has just purchased a new Acura. You decide to test the accuracy of the accounts receivable balance of $148,420 as shown in the ledger.

The following information is available for your first year in business.

Compute an estimate of the ending balance of accounts receivable from customers that should appear in the ledger and any apparent shortages. Assume that all sales are made on account.

Rosie Learns, Inc. manufactures robots and uses an activity-based costing system. Rosie Learns’ activities and related data are listed below:

*The number of units receiving the finish activity, not the number of units transferred to Finished Goods Inventory.

Rosie Learns produces two models of robots, the Rosie V and the Rosie X. The Rosie X has fewer parts and requires no finishing work.

Requirements:

1. Compute the manufacturing product costs per unit of each model of robot.
2. Suppose that pre-manufacturing activities, such as product design were assigned to Roxie V at $8 each and to Rosie X at $5 each. Similar analyses were done on post-manufacturing actives such as distribution, marketing, and customer service. The post-manufacturing costs were $18 for Rosie V and $14 for Rosie X. What is the full product costs per unit?
3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? What is the difference?
4. What price should Rosie Learns set for Rosie X to earn a target net profit of $20 per robot?

Describe one type of cognitive bias (one or two sentences). Provide at least one specific example of how this type of bias could lead to suboptimal accounting decision making.

Discuss why databases are important in accounting information systems. Describe primary and foreign keys, normalization and database cardinalities. Why are each important to the database design? Your initial posting should be 250-500 words and must be submitted by Thursday, 11:59 pm MST, of this week.

Refer to FASB 162 (the hierarchy of accounting information). Why is this hierarchy important, and how can it be applied to conducting research?

Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 92,500 $ 69,000 Accounts receivable, net 102,500 76,000 Inventory 88,800 124,000 Prepaid expenses 6,900 10,400 Total current assets 290,700 279,400 Equipment 149,000 140,000 Accum. depreciation—Equipment (39,500 ) (21,500 ) Total assets $ 400,200 $ 397,900 Liabilities and Equity Accounts payable $ 50,000 $ 67,500 Wages payable 8,500 20,000 Income taxes payable 5,900 8,800 Total current liabilities 64,400 96,300 Notes payable (long term) 55,000 85,000 Total liabilities 119,400 181,300 Equity Common stock, $5 par value 270,000 185,000 Retained earnings 10,800 31,600 Total liabilities and equity $ 400,200 $ 397,900 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 803,000 Cost of goods sold 436,000 Gross profit 367,000 Operating expenses Depreciation expense $ 83,600 Other expenses 92,000 Total operating expenses 175,600 191,400 Other gains (losses) Gain on sale of equipment 4,500 Income before taxes 195,900 Income taxes expense 46,390 Net income $ 149,510 Additional Information A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $82,600 cash. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit. rev: 12_05_2017_QC_CS-111198 (2) Compute the company's cash flow on total assets ratio for its fiscal year 2017.