Q.1) Emirates Steel Company reported the following accounting values:
| Revenues | OR 4,500,500 |
| Variable manufacturing costs | 20.18% of revenue |
| Variable nonmanufacturing costs | 18.09 % of revenue |
| Fixed manufacturing costs | 14.50 % of revenue |
| Fixed nonmanufacturing costs | 12.11 % of revenue |
Required:
Part 1:
a. Compute contribution margin.
b. Compute contribution margin percentage.
c. Compute gross margin.
d. Compute gross margin percentage.
e. Compute operating income.
Part-2:
Write a note on the above retrieved ratios and give comments whether investment in the shares of M/s Emirates Steel Company is a prudent decision as an investor or not? In both cases, respond why you taken decision of ‘Yes’ or ‘No’ (give reasons)?
Q.2) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.
Required:
a. Classify each of the following costs as either direct or indirect with respect to production process.
b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.
| Direct | Indirect | Fixed | Variable | |
| Admin & Security | ||||
| Tools & Accessaries | ||||
| Employee Wages | ||||
| Employees Transportation | ||||
| Plant & Machinery |
In: Accounting
What two companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved.
In: Accounting
LaBBC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under average cost method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
| Inventory Schedule - Average Cost | |||||||||
| PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
| Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
ABC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under FIFO method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
| Inventory Schedule - FIFO | |||||||||
| PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
| Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year.
| Administrative costs | $ | 1,654 | |
| Building and machine depreciation (75% of this amount is for factory) | 800 | ||
| Building utilities (90% of this amount is for factory) | 1,350 | ||
| Direct labor | 845 | ||
| Direct materials inventory, December 31 | 16 | ||
| Direct materials inventory, January 1 | 11 | ||
| Direct materials purchases | 3,700 | ||
| Factory supervision | 478 | ||
| Finished goods inventory, December 31 | 61 | ||
| Finished goods inventory, January 1 | 53 | ||
| Indirect factory labor | 915 | ||
| Indirect materials and supplies | 690 | ||
| Marketing costs | 865 | ||
| Property taxes on building (85% of this amount is for factory) | 900 | ||
| Sales revenue | 12,960 | ||
| Work-in-process inventory, December 31 | 26 | ||
| Work-in-process inventory, January 1 | 33 | ||
Required:
1. Prepare a cost of goods sold statement.
2. Prepare an income statement.
Prepare a cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepare an income statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Determining Cost Relationships
Midstate Containers Inc. manufactures cans for the canned food industry. The operations manager of a can manufacturing operation wants to conduct a cost study investigating the relationship of tin content in the material (can stock) to the energy cost for enameling the cans. The enameling was necessary to prepare the cans for labeling. A higher percentage of tin content in the stock increases the cost of material. The operations manager believed that a higher tin content in the can stock would reduce the amount of energy used in enameling. During the analysis period, the amount of tin content in the stell can stock was increased for every month, from April to September. The following operating reports were available from the controller:
| April | May | June | July | August | September | |
| Materials | $14,000 | $34,800 | $33,000 | $21,700 | $28,800 | $33,000 |
| Energy | 13,000 | 28,800 | 24,200 | 14,000 | 17,100 | 16,000 |
| Total Cost | $27,000 | $63,600 | $57,200 | $35,700 | $45,900 | $49,000 |
| Units Produced | ÷ 50,000 | ÷ 120,000 | ÷ 110,000 | ÷ 70,000 | ÷ 90,000 | ÷ 100,000 |
| Cost Per Unit | $0.54 | $0.53 | $0.52 | $0.51 | $0.51 | $0.49 |
Differences in materials unit costs were entirely related to the amount of tin content. In addition, inventory changes are negligible and are ignored in the analysis.
A) Calculate the Total cost per unit for each month. Round your answers to the nearest cent
| Total Cost Per Unit | |
| April | ? |
| May | ? |
| June | ? |
| July | ? |
| August | ? |
| September | ? |
B) Interpret your results
The calculations reveal that the tin content and energy costs are _________ related. That is, as the materials cost increased due to higher tin content, the energy costs ________ by more. Thus, the recommendation should be to __________ raw can stock with the tin content at the $0.33-per-unit level (September level). This is the material that __________ the total production cost for this set of data. Additional data could be used to determine the optimal tin content or the point where energy cost savings fail to overcome additional material costs.
In: Accounting
What assets are not in the Quick Ratio that are in the Current Ratio? What makes these assets different? Please explain
In: Accounting
Compare planning budgets vs flexible budgets.
Be thorough in describing what each is, and the differences between them. Conclude with what the best use is for each.
In: Accounting
1) Briefly explain what are the advantages and disadvantages of
shared leadership?
In: Accounting
|
Method 1 |
Method 2 |
Method 3 |
|
|
First Cost, $ |
20,000 |
18,000 |
25,000 |
|
Salvage Value, $ |
1,000 |
3,000 |
1,500 |
|
Annual Income, $ |
5,000 |
5,000 |
7,000 |
In: Accounting
1. Over what period should the following be included as an expense in the income statement?
(a) The interest paid on a five-year corporate bond.
(b) The cost of a truck with an estimated fifteen-year economic life.
(c) The annual bonus earned by chief executive officers and paid in the following year.
(d) The one-time premium paid on a 10-year insurance policy.
(e) What basic accounting concepts do your answers reflect?
In: Accounting
Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 40,000 speaker sets:
| Sales | $ | 3,280,000 | |
| Variable costs | 820,000 | ||
| Fixed costs | 2,310,000 | ||
Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,986,000. (In the following requirements, ignore income taxes.)
Required:
Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. (Do not round intermediate calculations and round your final answers to nearest whole dollar.)
Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. (Do not round intermediate calculations and round your final answers to nearest whole dollar.)
|
Determine the break-even point in speaker sets if operations are shifted to Mexico. (Do not round intermediate calculationsand round your final answer up to nearest whole number.)
|
Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.
a. If variable costs remain constant, by how much must fixed costs change? (Round your intermediate unit calculations to the nearest whole number and round your final answers to the nearest whole dollar.)
b. If fixed costs remain constant, by how much must unit variable cost change? (Round your intermediate unit calculations to the nearest whole number and round your final answer to 2 decimal places.)
Show less
|
Determine the impact (increase, decrease, or no effect) of the following operating changes.
|
In: Accounting
Is the 2018 IASB Framework useful in its present form?
Accounting standards and regulations should aim to state how all situations should be dealt with. Discuss.
If you were to develop an accounting conceptual framework from scratch, where would you start and how would you structure it?
In: Accounting
Early in its fiscal year ending December 31, 2018, San Antonio
Outfitters finalized plans to expand operations. The first stage
was completed on March 28 with the purchase of a tract of land on
the outskirts of the city. The land and existing building were
purchased for $820,000. San Antonio paid $210,000 and signed a
noninterest-bearing note requiring the company to pay the remaining
$610,000 on March 28, 2020. An interest rate of 6% properly
reflects the time value of money for this type of loan agreement.
Title search, insurance, and other closing costs totaling $21,000
were paid at closing.
During April, the old building was demolished at a cost of $71,000,
and an additional $51,000 was paid to clear and grade the land.
Construction of a new building began on May 1 and was completed on
October 29. Construction expenditures were as follows: (FV of $1,
PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
(Use appropriate factor(s) from the tables
provided.)
| May 1 | $ | 1,350,000 | |
| July 30 | 1,550,000 | ||
| September 1 | 960,000 | ||
| October 1 | 1,860,000 | ||
San Antonio borrowed $3,000,000 at 6% on May 1 to help finance
construction. This loan, plus interest, will be paid in 2019. The
company also had the following debt outstanding throughout
2018:
| $2,100,000, 7% long-term note payable |
| $4,100,000, 4% long-term bonds payable |
In November, the company purchased 10 identical pieces of equipment
and office furniture and fixtures for a lump-sum price of $610,000.
The fair values of the equipment and the furniture and fixtures
were $426,000 and $284,000, respectively. In December, San Antonio
paid a contractor $290,000 for the construction of parking lots and
for landscaping.
Required:
1. Determine the initial values of the various
assets that San Antonio acquired or constructed during 2018. The
company uses the specific interest method to determine the amount
of interest capitalized on the building construction.
2. How much interest expense will San Antonio
report in its 2018 income statement?
In: Accounting
The following selected data were taken from the accounting records of Metcalf Manufacturing. The company uses direct-labor hours as its cost driver for overhead costs.
| Month | Direct-Labor Hours |
Manufacturing Overhead |
||
| January | 37,000 | $ | 701,000 | |
| February | 39,000 | 740,000 | ||
| March | 52,000 | 899,000 | ||
| April | 40,000 | 754,250 | ||
| May | 44,000 | 805,500 | ||
| June | 42,000 | 802,500 | ||
March’s costs consisted of machine supplies ($296,400), depreciation ($32,500), and plant maintenance ($570,100). These costs exhibit the following respective behavior: variable, fixed, and semivariable.
The manufacturing overhead figures presented in the preceding table do not include Metcalf’s supervisory labor cost, which is step-fixed in nature. For volume levels of less than 15,000 hours, supervisory labor amounts to $77,500. The cost is $155,000 from 15,000–29,999 hours and $232,500 when activity reaches 30,000 hours or more.
Required:
1. Determine the machine supplies cost and depreciation for January.
2. Using the high-low method, analyze Metcalf’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per direct-labor hour.
3. Assume that present cost behavior patterns continue into the latter half of the year. Estimate the total amount of manufacturing overhead the company can expect in November if 29,900 direct-labor hours are worked.
1-
Determine the machine supplies cost and depreciation for January.
|
Using the high-low method, analyze Metcalf’s plant maintenance cost and calculate the monthly fixed portion and the variable cost per direct-labor hour. (Round your "Variable cost per hour" answer to 2 decimal places.)
|
Assume that present cost behavior patterns continue into the latter half of the year. Estimate the total amount of manufacturing overhead the company can expect in November if 29,900 direct-labor hours are worked.
|
In: Accounting