Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the month. Its actual costs incurred in March are listed below:

Required:

1. Prepare the Production Department’s planning budget for the month.

2. Prepare the Production Department’s flexible budget for the month.

3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.

Answer the following questions:

The launch of a new product is under consideration. Its unit variable costs will be £30 and it is estimated that incremental fixed costs of £250,000 will be incurred if production is commenced. Forecast sales are 50,000 units. If the actual planned selling price is £48 per unit, what will be the organisation’s margin of safety?

The following information is about two organisations, A and B.

Which firm has higher operating gearing?

Which firm is facing more risk in terms of its current sales predictions?

Be sure to demonstrate your numerical workings. Please explain where possible..

Evelyn Walton started Walton Manufacturing Company to make a universal television remote control device that she had invented. The company’s labor force consisted of part-time employees. The following accounting events affected Walton Manufacturing Company during its first year of operation. (Assume that all transactions are cash transactions unless otherwise stated.)

Transactions for January 2018, First Month of Operation

1. Issued common stock for $10,000.

2. Purchased $410 of direct raw materials and $60 of production supplies.

3. Used $385 of direct raw materials.

4. Used 70 direct labor hours; production workers were paid $9.70 per hour.

5. Expected total overhead costs for the year to be $3,000, and direct labor hours used during the year to be 1,000. Calculate an overhead rate and apply the appropriate amount of overhead costs to Work in Process Inventory.

6. Paid $144 for salaries to administrative and sales staff.

7. Paid $22 for indirect manufacturing labor.

8. Paid $215 for rent and utilities on the manufacturing facilities.

9. Started and completed 100 remote controls during the month; all costs were transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

10. Sold 80 remote controls at a price of $21.4 each.

Transactions for Remainder of 2018

11. Acquired an additional $18,000 by issuing common stock.

12. Purchased $3,910 of direct raw materials and $880 of production supplies.

13. Used $3,000 of direct raw materials.

14. Paid production workers $9.70 per hour for 900 hours of work.

15. Applied the appropriate overhead cost to Work in Process Inventory.

16. Paid $1,559 for salaries of administrative and sales staff.

17. Paid $236 of indirect manufacturing labor cost.

18. Paid $2,390 for rental and utility costs on the manufacturing facilities.

19. Transferred 850 additional remote controls that cost $12.74 each from the Work in Process Inventory account to the Finished Goods Inventory account.

20. Determined that $166 of production supplies was on hand at the end of the accounting period.

21. Sold 840 remote controls for $21.40 each.

22. Determine whether the overhead is over- or underapplied. Close the Manufacturing Overhead account to the Cost of Goods Sold account.

23. Close the revenue and expense accounts.

Required

1. For each of the above transactions, post the effects to the appropriate T-accounts.

2. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2018.

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company charges $20 per delivery.

The controller’s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:

Monthly overhead
=
$
26
,
501
+
$
10.70
 
per delivery
Monthly overhead=$26,501+$10.70 per delivery
Your estimate was based on the following data:

Month Overhead Costs Number of Deliveries
  1 $142,860.                  11,430
  2   151,890                     12,180
  3   192,600.                  15,660
  4   141,030                     11,250
  5   203,490.                   12,780
  6   180,630.                  14,730
  7   159,630                     12,510
  8   183,990                     15,060
  9   194,430.                   15,450
10   150,120                     11,970
11   154,080.                   12,630
12   184,800.                  15,300
13   183,120.                   14,580
The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller’s results.

Required

Analyze the data and your results and state your reasons for supporting or rejecting your cost equation.

Write a report that informs management about the correct volume that will generate $10,000 per month in operating profits before taxes.

1. National Comapny issued 7.5% bonds, dated January 1, with a face amount of $600,000 on January 1, 2017. The bonds mature on December 31, 2023. The market yield for bonds of similar risk and maturity was 5.5%. Interest is made semiannually on June 30 and December 31.

Required:

a. Determine the price of the bonds at January 1, 2017 (be certain to include all of the "given" information)

b. Prepare a bond amortization table using the effective interest method and make certain to obtain totals for the columns of Cash Interest Paid, Interest Expense, and Premium Amortization

c. Prepare the journal entry to record their issuance by National Company on January 1, 2017.

d. Prepare the journal entry recordin gthe first interest payment on June 30, 2017.

e. Prepare the journal entry recording the interest payment on December 31, 2017.

f. Prepare journal entries at maturity on December 31, 2023.

g. Prepare the journal entry to record the retirement of the bond at a call price of $640,000 on January 1, 2020.

h. Instead of retirement of the bond as described in "g" above, assume the bond was retired @108 call price on January 1, 2020.

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,510 for the Sleepeze, 12,120 for the Plushette, and 5,430 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $66,650, a marketing research assistant at $44,000, and an administrative assistant at $23,900) are budgeted for $134,550 next year.
2. Depreciation on the offices and equipment is $17,800 per year.
3. Office supplies and other expenses total $20,600 per year.
4. Advertising has been steady at $19,450 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 6 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $50 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads—placing print and television ads for the Sleepeze and Plushette lines

Ultima ads—choosing and working with the advertising agency on the Ultima account

Office management—operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $20,600 for office supplies and other expenses, $5,200 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,300 per year is attributable to Internet connections and fees, and the bulk of these costs (75 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

Why should companies have strong policies in place to protect personally identifying information?

Use the following information for the Problems below. Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow. GOLDEN CORPORATION Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash $ 170,000 $ 113,600 Accounts receivable 92,000 77,000 Inventory 610,000 532,000 Total current assets 872,000 722,600 Equipment 351,100 305,000 Accum. depreciation—Equipment (161,000 ) (107,000 ) Total assets $ 1,062,100 $ 920,600 Liabilities and Equity Accounts payable $ 99,000 $ 77,000 Income taxes payable 34,000 28,100 Total current liabilities 133,000 105,100 Equity Common stock, $2 par value 604,000 574,000 Paid-in capital in excess of par value, common stock 202,000 169,000 Retained earnings 123,100 72,500 Total liabilities and equity $ 1,062,100 $ 920,600 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 1,822,000 Cost of goods sold 1,092,000 Gross profit 730,000 Operating expenses Depreciation expense $ 54,000 Other expenses 500,000 554,000 Income before taxes 176,000 Income taxes expense 30,400 Net income $ 145,600 Problem 16-6A Indirect: Statement of cash flows LO P1, P2, P3 Additional Information on Year 2017 Transactions Purchased equipment for $46,100 cash. Issued 12,600 shares of common stock for $5 cash per share. Declared and paid $95,000 in cash dividends. Required: Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

The Blending Department of Luongo Company has the following cost and production data for the month of April. Costs: Work in process, April 1 Direct materials: 100% complete $118,000 Conversion costs: 20% complete 82,600 Cost of work in process, April 1 $200,600 Costs incurred during production in April Direct materials $944,000 Conversion costs 430,700 Costs incurred in April $1,374,700 Units transferred out totaled 20,060. Ending work in process was 1,180 units that are 100% complete as to materials and 40% complete as to conversion costs. Collapse question part (a) Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April. Materials Conversion Costs The equivalent units of production?

why is it important to have software vendors (such as SAP, Oracle,etc.) use the audit data standards?

I am looking to see how to determine the disposal of noncash assets. They were disposed of for $160,000. The balance before was $150,000. If I am doing a Proposal of Scheduled Liquidation - Subsequent Save House Capital balances would I be putting $10,000 under cash, decrease noncash assets by $150,000 and allocation the difference of $10,000 to the partners?

Jenny Jinglebell has always wished to own her own French macaroons shop. Ever since she tried

her first macaroon, she thought it would be a brilliant idea to have her own shop where she can

sell a multitude of flavors and colors of French macaroons. She purchased a premium site for

the macaroons shop, right across the street from Campus Martius Park in Downtown Detroit.

After extensive research, Jenny decided that it is best for her to open a franchise at first. The

franchise that best fit Jenny’s criteria is François Patisserie. A François Patisserie franchise costs

$30,000, an amount that is amortized over 15 years. As a franchisee, Jenny needs to adhere to

the company’s building specifications. The building would cost an estimated $450,000 and

would result in a $50,000 salvage value at the end of its 15-year life. The equipment needed is

sold as a package by the corporate office at a cost of $200,000, will have a salvage value of

$10,000 at the end of its 5-year life, equipment and must be replaced every 5 years.

Jenny estimates the annual revenue from a François Patisserie franchise at $950,000. Food

costs typically run 36% of revenue. Annual operating expenses, not including depreciation, total

$425,000. For financial reporting purposes, Jenny will use straight-line depreciation and

amortization. Based on past experience, she uses a 16% discount rate.

*Please no handwriting*

Required:

a.

Calculate the shop’s net present value over the franchise’s 15-year life.

b.

Calculate the restaurant’s payback period.

c.

Calculate the restaurant’s simple rate of return.

d.

Should Jenny open a

François Patisserie? Why or why not? Note: for comparison

purposes, you should know that

using Excel or a similar spreadsheet application Jenny

calculates her IRR to be 22.64%.

e.

What potential shortcomings do you see in Jenny’s estimates? How do you recommend she

adjusts her analysis to address those shortcomings?

The information that follows pertains to Richards Refrigeration, Inc.:

1. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following:

2. No temporary differences existed at the beginning of 2018.
3. Pretax accounting income was $211 million and taxable income was $145 million for the year ended December 31, 2018. The tax rate is 40%.

Required:
1. Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2018
2. What is the 2018 net income?

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $170,000 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.)

a. What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income?

b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?

1.

Problem 10-35 (Algorithmic) (LO. 3, 9)

The JM Partnership was formed to acquire land and subdivide it as residential housing lots. On March 1, 2019, Jessica contributed land valued at $888,000 to the partnership in exchange for a 50% interest. She had purchased the land in 2011 for $621,600 and held it for investment purposes (capital asset). The partnership holds the land as inventory.

On the same date, Matt contributed land valued at $888,000 that he had purchased in 2009 for $1,065,600. He became a 50% owner. Matt is a real estate developer, but he held this land personally for investment purposes. The partnership holds this land as inventory.

In 2020, the partnership sells the land contributed by Jessica for $932,400. In 2021, the partnership sells the real estate contributed by Matt for $843,600.

a. What is each partner's initial basis in his or her partnership interest?

Jessica's initial basis is $............?. Matt's initial basis is $..............?

b. What is the amount of gain or loss recognized on the sale of the land contributed by Jessica? What is the character of this gain or loss?

The amount of the.................? recognized on the sale of the land contributed by Jessica is $,................? and the type is ...................?.

c. What is the amount of gain or loss recognized on the sale of the land contributed by Matt? What is the character of this gain or loss?

The amount of the ...........? recognized on the sale of the land contributed by Matt is $............?, and the type is........? .

d. How would your answer in (c) change if the property was sold in 2026?

The amount of the..........? recognized on the sale of the land contributed by Matt is $.............?, and the type is ...................?.