Net income is $40,000 raw materials Nov 1 $ 17,000 Nov 30? WIP Nov 1 $14,00 Nov 30 12,000 Finished goods Nov 1 ? Nov 30 9,000 sales revenue 102,000 Direct labor 10,000 Manufacturing OH 12,000 selling expenses 14,000 Administrative expenses 16,000 Cost of goods manufactured 40,000 raw materials purchased 10,000 What is ending raw material? What is beginning finished goods?

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 64 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,900 per month plus $42 per course plus $5 per student. The company’s sales should average $870 per student.

The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 60 students. The actual operating results for September appear below:

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

Appendix: Adjustment Data on an End-of-Period Spreadsheet Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services Co. has been prepared on the following end-of-period spreadsheet for the year ended October 31, 2019. In addition, the data for year-end adjustments are as follows: Fees earned, but not yet billed, $34. Supplies on hand, $8. Insurance premiums expired, $42. Depreciation expense, $17. Wages accrued, but not paid, $17. Enter the adjustment data, and place the balances in the Adjusted Trial Balance columns. If a box does not require an entry, leave it blank. Alert Security Services Co. End-of-Period Spreadsheet (Work Sheet) For the Year Ended October 31, 2019 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash 126 Accounts Receivable 336 Supplies 34 Prepaid Insurance 50 Land 420 Equipment 168 Accum. Depr.-Equipment 17 Accounts Payable 151 Wages Payable 0 Brenda Schultz, Capital 789 Brenda Schultz, Drawing 34 Fees Earned 378 Wages Expense 84 Rent Expense 50 Insurance Expense 0 Utilities Expense 25 Supplies Expense 0 Depreciation Expense 0 Miscellaneous Expense 8 Totals 1,335 1,335

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given below:

The Rets normally sell for $50 each. Fixed manufacturing overhead is $270,000 per year within the range of 25,000 through 30,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 25,000 Rets through regular channels next year. A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 5,000 units. This machine would cost $10,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order?

2. Refer to the original data. Assume again that Polaski Company expects to sell only 25,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 5,000 Rets. The Army would pay a fixed fee of $1.80 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 5,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

1.Financial advantageselected answer correctnot attempted2.Financial advantageselected answer correctnot attempted3.Financial (disadvantage)selected answer correctnot attempted

4b. On June 30, 2020, Lansing Company was notified by its only customer that the

Customer will no longer order its product. All existing orders are expected to be completed by May 2021. From July through December 2020, Lansing Company continued efforts to raise additional financing from venture capital groups and secure new customers. By December 15, 2020, it was evident that these efforts would not be successful.

On March 1, 2021, Lansing Company obtains the required shareholder approval for a plan of liquidation that will be completed by May 2021. Upon ceasing its operations, all employees will be terminated, and Lansing Company’s assets will be liquidated to repay its creditors. The criteria for liquidation being imminent are met under FASB ASC 205 on October 29, 2021.

Required:

a. How should Lansing Company report these facts on its December 31, 2020 financial

statements?

b. How should Lansing Company report these facts during 2021?

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

1.

Calculate the markup rate based on selling price for the following item. Round percents to the nearest whole percent.

2.

Complete the following word problem.

What is the cost if the markup is 55% of the selling price and the selling price is $128? Round dollar amounts to the nearest cent.
$

3.   Complete the following word problem.

What is the cost of an item that sells for $130 and 60% markup is based on selling price? Round dollar amounts to the nearest cent.
$

4. Complete the following word problem.

An item's selling price is $19.99 and the markup amount is $12.12. What is the cost? Round dollar amounts to the nearest cent.
$

5. Complete the following word problem.

A lamp sells for $125.50 and costs $59.80. What is the markup rate based on selling price? Round percents to the nearest whole percent.
%

6.

Calculate the selling price when cost and markup rate are based on selling price for the following item. Round dollar amounts to the nearest cent.

1. Financial Statements from the End-of-Period Spreadsheet

   Bamboo Consulting is a consulting firm owned and operated by Lisa Gooch. The following end-of-period spreadsheet was prepared for the year ended July 31, 2019:

   	Bamboo Consulting
   	End-of-Period Spreadsheet
   	For the Year Ended July 31, 2019
   	Unadjusted						Adjusted
   	Trial Balance		Adjustments				Trial Balance
   Account Title	Dr.	Cr.		Dr.		Cr.	Dr.	Cr.
   Cash	11,580						11,580
   Accounts Receivable	27,570						27,570
   Supplies	2,920				(a)	2,450	470
   Office Equipment	22,060						22,060
   Accumulated Depreciation		3,060			(b)	1,460		4,520
   Accounts Payable		7,440						7,440
   Salaries Payable					(c)	360		360
   Lisa Gooch, Capital		28,120						28,120
   Lisa Gooch, Drawing	3,580						3,580
   Fees Earned		51,980						51,980
   Salary Expense	20,680		(c)	360			21,040
   Supplies Expense			(a)	2,450			2,450
   Depreciation Expense			(b)	1,460			1,460
   Miscellaneous Expense	2,210						2,210
   	90,600	90,600		4,270		4,270	92,420	92,420

   Based on the preceding spreadsheet, prepare an income statement for Bamboo Consulting.

   Bamboo Consulting
   Income Statement
   For the Year Ended July 31, 2019
   		$
   Expenses:
   	$
   Total expenses
   		$

   Based on the preceding spreadsheet, prepare a statement of owner's equity for Bamboo Consulting.

   Bamboo Consulting
   Statement of Owner's Equity
   For the Year Ended July 31, 2019
   		$
   	$
   		$

   Based on the preceding spreadsheet, prepare a balance sheet for Bamboo Consulting.

   Bamboo Consulting
   Balance Sheet
   July 31, 2019
   Assets
   Current assets:
   	$
   Total current assets		$
   Property, plant, and equipment:
   	$
   Total property, plant, and equipment
   Total assets		$
   Liabilities
   Current liabilities:
   	$
   Total liabilities		$
   Owner's Equity
   Total liabilities and owner's equity		$

1. Match the correct term to the following statement.

Cost equals :

cost minus markdown.

markdown minus markup.

net profit minus operating expenses.

selling price minus markup.

cost minus markup.

2.

Use the basic equations to determine the selling price in the following problem. Round your answer to the nearest cent.

3.

Use the basic equations to determine the markup amount in the following problem. Round your answer to the nearest cent.

4.

Complete the following problem. Round your answer to the nearest cent.

If the selling price is $32.99 and the cost is $16.00, the markup is $ =

5.

Complete the following problem. Round your answer to the nearest cent.

If the markup is $22.00 and the cost is $15.50, the selling price is $ =

6.  Match the correct term to the following statement.

________  Incurred by a business, such as rent and utilities

Select =

cost

markdown

markup

net profit

operating expenses

selling price

7.

Use the basic equations to determine the markup amount in the following problem. Round your answer to the nearest cent.

8.  

Match the correct term to the following statement.

___________ Amount manufacturer charges for merchandise.

select=

cost

markdown

markup

net profit

operating expenses

selling price

9.

Use the basic equations to determine the cost in the following problem. Round your answer to the nearest cent.

10.  Match the correct term to the following statement.

Selling Price equals =

cost plus markdown

markdown plus markup

net profit plus operating expenses

selling price plus operating expenses

cost plus markup

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Required:

1-a. Compute the throughput time for each month.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company’s performance over the last four months.

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

One of bills plants predicts a 2019 activity level of 50,000 direct labor hours and total manufacturing overhead costs of $200,000. Actual direct labor hours for 2019 totaled 45,000. What is Ford’s 2019 predetermined overhead rate?

Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5 million in automated equipment for test machine assembly. The division’s expected income statement at the beginning of the year was as follows:

A sales representative from LSI Machine Company approached Oscar in October. LSI has for $6.5 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a three-year life. Depreciation would be net of the $500,000 salvage value of the new machine. The new equipment meets Pitt’s 12 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though, Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year.

The old machine, which has no salvage value, must be disposed of to make room for the new machine.

Pitt has a performance evaluation and bonus plan based on residual income. Pitt uses a cost of capital of 12 percent in computing residual income. Income includes any losses on disposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes.

Required:

a. What is Forbes Division’s residual income if Oscar does not acquire the new machine? (Enter your answer in thousands of dollars. Negative amount should be indicated by a minus sign.)

b. What is Forbes Division’s residual income this year if Oscar acquires the new machine? (Enter your answer in thousands of dollars. Negative amount should be indicated by a minus sign.)

c. If Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year? (Enter your answer in thousands of dollars. Negative amount should be indicated by a minus sign.)

Accounting Theory

What is the role of accounting in corporate governance?–10 mark

Rosseaux manufactures chemicals in a continuous process. The company combines various materials in a specially configured machine at the beginning of the​process, and conversion is considered uniform through the period.​ Occasionally, the chemical reactions among the materials do not work as expected and the output is then considered spoiled.

Normal spoilage is 5​% of the good units that pass inspection. The following information pertains to March 2017​:

requirement

Compute the normal and abnormal spoilage in​ units, assuming the inspection point is at​ (a) the​ 20% stage of​ completion, (b) the​ 45% stage of​ completion, and​ (c) the​100% stage of completion.

Calculate the units to account​ for, then calculate the units accounted for.

How are current investments reported?