Elmo Clinic has identified three activities for daily maternity care: occupancy and feeding, nursing, and nursing supervision. The nursing supervision oversees 150 nurses, 25 of whom are maternity nurses (the other nurses are located in other care areas such as emergency room and intensive care). The nursing supervisor has three assistants, a secretary, several offices, computers, phones, and furniture. The three assistants spend 75% of their time on the supervising activity and 25% of their time as surgical nurses. They each receive a salary of $60,000. The nursing supervisor has a salary of $80,000. She spends 100% of her time supervising. The secretary receives the salary of $35,000 per year. Other costs directly traceable to the supervisory activity (depreciation, utilities, phone, etc.) average $170,000 per year.

Daily care output is measured as “patient days.” The clinic has traditionally assigned the cost of daily care by using a daily rate (a rate per patient day). Daily rates can differ between units, but within units the daily rates are the same for all patients. Under the traditional approach, the daily rate is computed by dividing the annual costs of occupancy and feeding, nursing, and a share of supervision by the unit’s capacity expressed in patient days. The cost of supervision is assigned to each care area based on the number of nurses. A single driver (patient days) is used to assign the costs of daily care to each patient.

A pilot study has revealed that the demands for nursing care vary within the maternity unit, depending on the severity of a patient’s case. Assume that the maternity unit has three levels of increasing severity: normal patients, cesarean patients, and patients with complications. The pilot study provided the following activity and cost information:

Activity                                            Annual Cost                     Activity Driver                                Annual Quantity

Occupancy and Feeding               $1,500,000                       Patient days                                    10,000

Nursing Care (maternity)             $1,200,000                       Hours of nursing care                  50,000

Nursing Supervision                                        ?                       Number of nurses                                  150

The pilot study also revealed the following information concerning the three types of patients and their annual demands:

Patient Type                                                 Patient Days Demanded                           Nursing Hours

Demanded

Normal                                                           7,000                                                              17,500

Cesarean                                                       2,000                                                              12,500

Complications                                              1,000                                                              20,000

Total                                                               10,000                                                           50,000

Required:

1. Calculate the maternity cost per patient day by using a functional-based approach. This is a traditional approach that costs maternity cases by patient day as a whole based on the total cost of maternity care.
2. Calculate the cost per patient day by using an activity-based approach. (Round rates and unit cost to two decimal places.) Assume two cost pools: occupancy and feeding and nursing care. Determine the cost per patient day by type of patient.
3. The hospital processes 1,250,000 pounds of laundry per year. The cost of laundering activity is $600,000 per year. In a functional-based cost system, the cost of the laundry department is assigned to each user department in proportion to the pounds of laundry produced. Typically, maternity produces 240,000 pounds per year. How much would this change the cost per patient day calculated in Requirement 1? Now, describe what information you would need to modify the calculation made in Requirement 2. Under what conditions would this activity calculation provide a more accurate cost assignment?

Beetroots (Pty) Ltd is a company that buys fresh veggies in bulk and sell it direct to the public after packaging it in smaller quantities.

The following cost data is available for six months:

The financial manager is of the opinion that the total cost for the month is related t the quantity of veggies that is packaged (measured in kilograms).

Required:

1.1 Compile a cost formula (cost function) by making use of the High-Low method.

1.2 Compile a cost formula (cost function) by making use of the Least-Square method (Simple Regression Analysis). SHOW ALL CALCULATIONS

1.3 Explain why there is a difference between the cost formula according to the High-Low method and the cost formula according to the Least-Square method, and advise the best method to use.

1.4 Calculate the budgeted cost for July and August according to both cost formulas if the expected quantity of veggies that will be packaged is 950kg and 1 020kg respectively.

Greenwood 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 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:

Activity cost pool Activity measure Estimated overhead cost Expected activity

machining Machine Hours $228,000 12,000MHs

machine setup Number of set ups $40,000 100 setups

production design Number of products $74,000 2 products

general factory Direct labor hours $288,000 12,000DLHs

Activity measure Product Y Product Z

Machining 7,000 5,000

Number of setups 40 60

Number of products 1 1

Direct labor hours 7,000 5,000

Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

total overhead cost Y%- Z%-

Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

Machining costs Y%- Z%-

Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

Machine setups Y%- Z%-

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

Product Design Y%- Z%-

Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?

general factory cost Y%- Z%-

Intermediate, Inc. enters into a lease agreement with Irving, LLC to lease an automobile with a fair value of $75,000 under a 5-year lease on December 20, 2018. The lease commences on January 1, 2019, and Incentive will return the automobile to Bumble on December 31, 2023. The automobile has an estimated useful life of 7 years. Incentive made a lease payment of $10,000 on December 20, 2018. In addition, the lease agreement stipulates annual payments of $10,000, due on January 1 of 2019, 2020, 2021, 2022, and 2023. The implicit rate of the lease is 7% and is known by Intermediate, and Intermediate incurs initial direct costs of $2,000. Required: 1. Determine the type of lease to Intermediate and Irving. 2. Complete any amortization schedule needed. 3. Prepare journal entries needed for the five-year lease for both lessor and lessee.

What information is contained in a bond indenture? What purpose does it serve?

Read the Case: Lehman Brothers: Subprime Accounting? and respond to questions 4 and 7. 4. Assume that Lehman's accounting for the Repo 105 transactions met the requirements of GAAP. However, also assume that the entire purpose of the transaction was to intentionally manage the amount of debt shown on the balance sheet. Do you agree with Lehman Brothers and EY that the financial statements are presented fairly in this situation? 7. EY did not modify the 2007 audit opinion of Lehman Brothers for going-concern uncertainty, yet the entity filed for bankruptcy less than a year later. In your opinion, is this indicative of audit failure? Why or why not?

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 65 on December 31, 20Y2.

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

Maryville Cleaners has the opportunity to invest in one of two dry cleaning machines. Machine A has a four-year expected life and a cost of $30,000. It will cost an additional $6,500 to have the machine delivered and installed, and the expected residual value at the end of four years is $4,000. Machine B has a four-year expected life and a cost of $55,000. It will cost an additional $7,000 to have machine delivered and installed, and the expected residual value at the end of four years is $6,000. The company has a required rate of return of 14 percent. Additional cash flows related to the machines are as follows:

Machine A

Machine B

Required

1. Compute the payback period for each of the two machines.
2. Compute the net present value for each of the two machines.
3. Determine the internal rate of return for each of the two machines.
4. Which machine purchase do you recommend that the company pursue based on the results of your calculations?

Required:

Transaction takes place when one party exchanges or promise to exchange good or service with another party for money. Identify the difference between revenue expenditure and capital expenditure and provide the examples

1. Going concern is a basic underlying assumption in accounting. Explain why the going concern basis is important in understanding financial statement; Support your answer with evidences

Four drive theory is conceptually different from the Maslow’s needs hierarchy (as well as ERG theory) in
several ways. Describe these differences. At the same time, needs are based on drives, so the four drives
should parallel the seven needs that Maslow identified (five in the hierarchy and two additional needs).
Map Maslow’s needs onto the four drives in four-drive theory.

1. There are different basis approaches to valuing inventory that are allowed by GAAP, explain the principal’s methods of valuation required by IAS2 inventories, provide some evidence which could be applied in annual reports