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?

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $27.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $168 on December 8, including $44 on credit and $124 collected in cash.
9. Recognized salaries and wages expense on December 9, $89 paid in cash.
10. Collected accounts receivable on December 10, $28.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $4.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

Required:

2. Record journal entries for transactions (a) through (j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
3. 1, 3, 5 and 8. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry. (Enter your answers in thousands of dollars.)
4. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)
5. Record the adjusting journal entries (k) through (p). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $27.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $168 on December 8, including $44 on credit and $124 collected in cash.
9. Recognized salaries and wages expense on December 9, $89 paid in cash.
10. Collected accounts receivable on December 10, $28.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $4.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019. Adjusted trail balance is $346

17. 6-a. Prepare an income statement.

18. 6-b. Prepare the statement of retained earnings.

19. 6-c. Prepare the balance sheet.

20. Prepare the closing journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

21. Post the closing entry from requirement 4 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.

QUESTION ONE

Mila, a travel consultant, was doing her shopping at the local supermarket, Buckleys. When walking in the milk and dairy section in Buckleys, Mila slipped on the floor and hit her knees on a trolley.

While on the floor, Mila looked at the bottom of her shoes and found some squashed cheese which had fallen from the refrigerated display shelves.

Ben, an employee of Buckleys, came to help Mila. Ben told Mila that he was on his tea break and didn’t have the time to clean up the cheese that had fallen onto the floor.

Mila admitted that she was not looking at the floor as she walked, and told Ben, “I was looking around for items to purchase”.

Due to her falling and hitting her knees on the supermarket trolley, Mila suffers from soft tissue injuries and is not able to sit or walk for a long time. Mila’s injuries have become worse due to her taking up binge eating as a means of dealing with her symptoms. Mila is claiming compensation for medical expenses, economic loss and domestic assistance.

REQUIRED:

Advise Mila as to whether she would be successful in negligence against Buckleys supermarket. Please explain fully, using relevant legal authority.

QUESTION TWO

On the 2^nd of March, Jack offers to sell his collection of Persian rugs to his friend Liam for $30,000 by telephone. This was considerably less than the $50,000 that Jack had advertised his collection for in the local newspaper. Liam asked for a little time to think it over and was told by Jack: “Sure, I will leave the offer open until Tuesday the 5^th of March”.

On Monday the 4^th of March, Liam sends Jack an email agreeing to buy the Persian rugs at the specified price subject to Jack’s assurance that the rugs were genuine, hand-made rugs.

Later that same Monday, Jack was approached by Zoe who offered to purchase Jack’s Persian rugs for $50,000 as advertised in the newspaper. Jack immediately accepted Zoe’s offer and then sent Liam a text message withdrawing his offer to sell the rugs to Liam.

Jack read Liam’s “agreement” email on Tuesday the 5^th of March and Liam read Jack’s withdrawal text message on Wednesday the 6^th of March.

REQUIRED:

Advise Jack whether he has an enforceable contract with either Liam or Zoe.

Tree Seedlings has the following current-year purchases and sales for its only product.

Required:
The company uses a periodic inventory system.

a. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
b. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
c. Compute the gross margin for each method.

In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 30 persons working an average of 2,500 hours each at an average wage rate of $30 per hour. The manager also estimated the following manufacturing overhead costs for 2017.

At the end of 2017, records show the company incurred $1,566,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $608,000; Job 202, $567,000; Job 203, $302,000; Job 204, $720,000; and Job 205, $318,000. In addition, Job 206 is in process at the end of 2017 and had been charged $21,000 for direct labor. No jobs were in process at the end of 2016. The company’s predetermined overhead rate is based on direct labor cost.

Required
1-a. Determine the predetermined overhead rate for 2017.
1-b. Determine the total overhead cost applied to each of the six jobs during 2017.
1-c. Determine the over- or underapplied overhead at year-end 2017.
2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of 2017.

Question 1 a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework. b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain. c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets? d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 percent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple? f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognized as an asset within the financial statements? Briefly explain.

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2017 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $30,000 $432,000 During 2018, credit sales were $1,750,000, cash collections from customers $1,830,000, and $35,000 in accounts receivable were written off. In addition, $3,000 was collected from a customer whose account was written off in 2017.

An aging of accounts receivable at December 31, 2018, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible

0–60 days 65 % 4 %

61–90 days 20% 15%

91–120 days 10% 25%

Over 120 days 5% 40%

Required:

1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off.

2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: Bad debt expense is estimated to be 3% of credit sales for the year. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)–(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

Research, define, describe, and explain the above-mentioned (Minimum 250 words answer for each questions)

Describe and explain the regulatory environment.