For a process shown below, what is the Activity Efficiency (AE) for unprimed flow?

78.5%

73.3%

60.9%

69.7%

Maize and Blue Co. is a multinational enterprise (MNE) that manufactures many different products as parts for the aerospace industry. The new controller, Mary, has been asked by the president of the company to provide accounting data for decisions she needs to make. Each question is worth 1 point.  

Special Order: Suppose Wolverine Corp. approached your company, Maize and Blue Co., with a special order. Wolverine Corp. wishes to purchase 63,000 "warning" decals for its electrical panels and offers to pay you $0.86 per decal. Your company has enough capacity to handle the special order and its total production cost is $0.56 per decal, as follows:

1. What are the total relevant costs if Maize and Blue accepts the special order?

2. What is the increase or decrease in net operating income from the order if Maize and Blue accepts the special order? Enter an increase as a positive number and a decrease as a negative number.

3. Discontinuing a Product Line: Maize and Blue is considering discontinuing one of its product lines. During the past year, the product line's income statement showed the following:

Fixed manufacturing overhead costs account for 10% of the cost of goods, while only 30% of the operating expenses are fixed. Since the product line is just one of Maize and Blue's products, only $740,000 of total fixed expenses (the majority of which is advertising) will be eliminated if the product line is discontinued. If the company decides to discontinue the product line, how much will the company's net operating income increase or decrease? Enter an increase as a positive number and a decrease as a negative number.

Answer questions 4 and 5 with the following information:

Maize and Blue packages small LED lights for plane instrument panels. Cost data for this packaging process are as follows:  

An outside supplier has offered to do all the packaging for a price of $4 per unit for all packaging-related activities if Maize and Blue signs a one-year contract for a minimum of 143,400 units produced each year. Maize and Blue could use the factory space now occupied by the packaging process to expand production to another product line. This expansion is expected to generate an additional $155,000 in profit per year.  

4. Make or Buy: What are the total relevant costs of continuing to package the products internally; that is, which of the annual costs is avoidable if Maize and Blue outsources the packaging process?

5. Make or Buy: What is the relevant cost of outsourcing the packaging process considering the profit from expanding production of another product?

1.   "The first opinion which one forms of a prince, and of his capability, is by observing the people he has around him." Explain if you agree or not about this chapter’s and book’s suggestions on what the leader must do in order to retain competent partners. Yet, explain why it is important to not just focus on a single leader but also in his/her whole team, and why a business leader must be wise to identify and retain competent partners. (300 words for the answer) ¬   Answer:

LLL Avionics Ltd. has contacted your accounting firm to inquire about the cost of an external audit. The company’s president explained that he feels that “the previous auditor charged too much and only issued a qualified opinion.” Your firm was recommended to LLL by your bank manager. LLL has a large loan request at the bank, and the interest rate of the new loan will depend on the audit opinion. As the partner in charge of this file, you interviewed the president and controller of the company as part of your decision to accept or reject LLL as a client. You have found that the company has a new design for an aircraft and plans to borrow funds from the bank and to issue common shares to finance a prototype plane to test the design. The new funds will also greatly improve the company’s balance sheet by providing the funds to bring the company’s existing bank loan up to date. If the design is successful, more common shares will be issued for more capital.

The controller was very helpful in your discussions, and you note his high level of enthusiasm for the project as this is his first job at this level. However, the president was not so helpful and seemed annoyed with your questions.

Indicate five factors in the above situation that impact the risk of material misstatement. Explain your answer.

Triple J Movers Ltd. is owned by Jacques Tétreault. The company used to be profitable but several new small companies have started to compete with Triple J, off ering very low prices that Triple J cannot match. Jacques thinks he can make his company profi table again if he eliminates his competitors, which will allow him to raise prices. He therefore decided to purchase one of his competitors each year for the next four years. The first company he bought was a proprietorship called Jerry’s Trucking. Jacques has hired your audit firm to review the accounting system and controls at Jerry’s Trucking to see what changes are needed before he can integrate it into Triple J Movers. Jacques hopes there are not many problems. You interviewed the owner of Jerry’s Trucking and the company’s bank manager and learned the following information: The company has customers in both Canada and in the United States, and the owner was not very knowledgeable about customs fees that must be paid and regulations that have to be followed when transporting goods across the borders. Also, the owner, Jerry, often simply took any cash that the business earned and spent it on personal items, instead of taking a salary from the business. There is only one office staff member besides Jerry: Jerry’s cousin, who does all of the bookkeeping. His cousin is not an accountant but has taken some accounting courses. Jerry explained that controls at Jerry’s Trucking are strong because: ● He can trust his cousin completely. (Having honest employees is important for effective control.) ● Jerry personally checks all of the bookkeeping entries, making any corrections he feels are necessary. ● At the year end, Jerry takes the bookkeeping records to a tax preparer, who prepares his tax return. Discuss the inherent risk at Jerry’s Trucking based on the above information. Include six observations in your answer.

Consider this situation. Julie is the owner of an airport shuttle. The shuttle transports passengers between Bowling Green and the Nashville Airport. Most customers pay with cash because there is a big discount. Since she is old and spends most of the time in Florida, she hired Mark, as the only employee and driver. Julie is far away from Bowling Green, therefore she has to believe Mark unless there is an unambiguously clear evidence against Mark’s claim/report. Assume that Mark is rational (in economics, rational is synonymous with selfish) and he will always cheat on Julie if doing so is beneficial (increasing his monetary benefits).

     Julie is considering the following five possible compensation methods:

            I)           Pay Mark a flat salary (e.g., $3,500 each month)

            II)         Pay Mark an amount equal to reported revenue less fixed amount

             (e.g., reported revenue less $3,000; negative pay if reported revenue < $3,000)

            III)       Pay Mark a certain percent of sales (e.g., 30% of reported fares from passengers)

4. Pay Mark on an hourly basis (e.g., $25 per hour * Reported work hours)
5. Pay Mark based on the mileage (e.g., $0.30 for each mile added in the mileage gauge)
6. Pay Mark based on his efforts (how hard he works)

Julie is trying to find the best method in avoiding potential cheating by Mark.

Required:

A. Which of the following methods is the best one as far as the owner Julie is concerned? And why?

B. For each of the other 5 methods (the ones you did not choose in A), explain why it is not good for Julie.

Income Statements under Absorption and Variable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

If required, round interim per-unit calculations to the nearest cent.

a. Prepare an income statement according to the absorption costing concept.

b. Prepare an income statement according to the variable costing concept.

c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

Under the __________ method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under ____________ , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the ___________ income statement will have a higher income from operations than will the variable costing income statement.

Wu Manufacturing produces a single product that sells for $120. Variable costs per unit equal $35. The company expects total fixed costs to be $68,000 for the next month at the projected sales level of 3,000 units. In an attempt to increase sales, management is considering an $51,250 increase in the monthly advertising expense.

Required:

By how many units must Wu’s sales increase to justify this additional advertising expenditure?

he comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:

The following additional information is taken from the records:

1. Land was sold for $28.
2. Equipment was acquired for cash.
3. There were no disposals of equipment during the year.
4. The common stock was issued for cash.
5. There was a $85 credit to Retained Earnings for net income.
6. There was a $26 debit to Retained Earnings for cash dividends declared.

a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

b. Was Olson-Jones Industries Inc.’s net cash flow from operations more or less than net income?

On January 1, Alan King decided to deposit $58,900 in a savings account that will provide funds four years later to send his son to college. The savings account will earn 7% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn). (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Required:

1. How much will be available in four years? (Round your answer to nearest whole dollar.)

2. Prepare the journal entry that Alan should make on January 1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. What is the total interest for the four years? (Round your answer to nearest whole dollar.)

4. Prepare the journal entry that Alan should make on December 31 of the first year and December 31 of the second year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answer to nearest whole dollar.)

Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:

During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company’s product is $57 per unit.

Required:

1. Assume the company uses variable costing:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

2. Assume the company uses absorption costing:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.

Chapter 6, question 2

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $920. Selected data for the company’s operations last year follow:

The absorption costing income statement prepared by the company’s accountant for last year appears below:

Required:

1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year?

2. Prepare an income statement for last year using variable costing.

Budgeted Income Statement and Balance Sheet

As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2017, the following tentative trial balance as of December 31, 2016, is prepared by the Accounting Department of Webster Publishing Co.:

Factory output and sales for 2017 are expected to total 28,000 units of product, which are to be sold at $90 per unit. The quantities and costs of the inventories at December 31, 2017, are expected to remain unchanged from the balances at the beginning of the year.

Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:

Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $199,900 on 2017 taxable income will be paid during 2017. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $150,000 cash in May.

Required:

• Prepare a budgeted income statement for 2017.
• Prepare a budgeted balance sheet as of December 31, 2017.

Selected financial statement information and additional data for Carla Vista Co. is presented below.

Prepare a statement of cash flows for the year ending December 31, 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)