Describe the distribution strategy for a specific company that you choose. What missed opportunities or problems are you seeing in this distribution approach? Make recommendations about a future distribution strategy for this company based on the following: What are the best distribution channels and methods for this company to use, and why? Does this company sell through a retail outlet(s) and if not should it? If the company added retail locations in what type(s) of facility should they be located? In what geographic area(s) should this product/service be available?

Flexible Overhead Budget Carson Wood Products Company prepared the following factory overhead cost budget for the Press Department for April of the current year, during which it expected to require 9,000 hours of productive capacity in the department: Variable overhead cost: Indirect factory labor $70,200 Power and light 2,610 Indirect materials 25,200 Total variable overhead cost $98,010 Fixed overhead cost: Supervisory salaries $34,300 Depreciation of plant and equipment 21,560 Insurance and property taxes 13,720 Total fixed overhead cost 69,580 Total factory overhead cost $167,590 Assuming that the estimated costs for May are the same as for April, prepare a flexible factory overhead cost budget for the Press Department for May for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $310,000, $80,000, and $185,000, respectively. WLKT Partners contributed an additional $80,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $179,800 during 20Y2. The members’ equity accounts are also credited with 15% interest on each member's January 1 capital balance. Any remaining income is to be shared in the ratio of 4:3:3 among the three members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,017,799, $487,799 and $530,000 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.

b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank.

c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank.

d What are the advantages of an income-sharing agreement for the members of this LLC?

Without an income-sharing agreement, each member   be credited with an equal proportion of the total earnings, or one-third each. Separate contributions   be acknowledged in the income-sharing formula.

Target’s Note 23 indicates that “We have not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely invested outside the U.S. These accumulated net earnings relate to certain ongoing operations and were $685 million at January 30, 2016 and $328 million at January 31, 2015.” Are these amounts treated as temporary or permanent differences by Target? If Target decides to repatriate earnings in the future, what will be the effect on net income in the year of repatriation.

The following transactions apply to Jova Company for Year 1, the first year of operation:

1. Issued $15,500 of common stock for cash.
2. Recognized $64,500 of service revenue earned on account.
3. Collected $57,600 from accounts receivable.
4. Paid operating expenses of $36,000.
5. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account.

The following transactions apply to Jova for Year 2:

1. Recognized $72,000 of service revenue on account.
2. Collected $65,600 from accounts receivable.
3. Determined that $890 of the accounts receivable were uncollectible and wrote them off.
4. Collected $300 of an account that had previously been written off.
5. Paid $48,400 cash for operating expenses.
6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1 percent of sales on account.

Required
Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2.

c. Organize the transaction data in accounts under an accounting equation for each year.

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. (Round your answers to 1 decimal place.)

1-b. Compute the manufacturing cycle efficiency (MCE) for each month. (Round your answers to 1 decimal place.)

1-c. Compute the delivery cycle time for each month. (Round your answers to 1 decimal place.)

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. (Round your answers to 1 decimal place.)

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. (Round your answers to 1 decimal place.)

1. A corporate bond has 2 years to maturity, a coupon rate of 8%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 9.5%.

a. What is the bond's duration in years?

b. If yields fall by 0.8 percentage points, what is the new expected bond price based on its duration (in $)?

c. What is the actual bond price after the change in yields (in $)?

d. What is the difference between the two new bond prices (in absolute $)?

2. A corporate pension plan has to make the following payments over the next few years:

The appropriate interest rate is 8%.

a. What is the duration of the liability?

b. What is the duration of a perpetuity if the yield is 8%?

c. The fund wants to immunize its interest rate risk by investing in a perpetuity and a 1-year zero coupon bond. To do so, how much should it invest in the perpetuity (in $ million)?

Santana Rey created Business Solutions on October 1, 2017. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2017. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. No. Account Title Debit Credit 101 Cash $ 48,522 106.1 Alex’s Engineering Co. 0 106.2 Wildcat Services 0 106.3 Easy Leasing 0 106.4 IFM Co. 3,070 106.5 Liu Corp. 0 106.6 Gomez Co. 2,808 106.7 Delta Co. 0 106.8 KC, Inc. 0 106.9 Dream, Inc. 0 119 Merchandise inventory 0 126 Computer supplies 730 128 Prepaid insurance 1,989 131 Prepaid rent 905 163 Office equipment 8,180 164 Accumulated depreciation—Office equipment $ 220 167 Computer equipment 20,600 168 Accumulated depreciation—Computer equipment 1,100 201 Accounts payable 1,110 210 Wages payable 700 236 Unearned computer services revenue 1,330 301 S. Rey, Capital 82,344 302 S. Rey, Withdrawals 0 403 Computer services revenue 0 413 Sales 0 414 Sales returns and allowances 0 415 Sales discounts 0 502 Cost of goods sold 0 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 0 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 0 676 Mileage expense 0 677 Miscellaneous expenses 0 684 Repairs expense—Computer 0 In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Also, Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2018. Its transactions for January through March follow: Jan. 4 The company paid cash to Lyn Addie for five days’ work at the rate of $175 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $23,300 cash in the company. 7 The company purchased $7,200 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. 9 The company received $2,808 cash from Gomez Co. as full payment on its account. 11 The company completed a five-day project for Alex’s Engineering Co. and billed it $5,450, which is the total price of $6,780 less the advance payment of $1,330. 13 The company sold merchandise with a retail value of $4,000 and a cost of $3,470 to Liu Corp., invoice dated January 13. 15 The company paid $740 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,050 cash from Delta Co. for computer services provided. 17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount. 20 Liu Corp. returned $600 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $290 cost, is discarded. (The policy of Business Solutions is to leave the cost of defective products in cost of goods sold.) 22 The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise. 24 The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice cost, net of the discount, was $486. 26 The company purchased $9,500 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,620 cost for $5,880 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days’ work at $175 per day. Feb. 1 The company paid $2,715 cash to Hillside Mall for another three months’ rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $486 amount in the credit memorandum. 5 The company paid $430 cash to the local newspaper for an advertising insert in today’s paper. 11 The company received the balance due from Alex’s Engineering Co. for fees billed on January 11. 15 Santana Rey withdrew $4,700 cash from the company for personal use. 23 The company sold merchandise with a $2,460 cost for $3,410 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days’ work at $175 per day. 27 The company reimbursed Santana Rey for business automobile mileage (700 miles at $0.32 per mile). Mar. 8 The company purchased $2,850 of computer supplies from Harris Office Products on credit, invoice dated March 8. 9 The company received the balance due from Delta Co. for merchandise sold on February 23. 11 The company paid $860 cash for minor repairs to the company’s computer. 16 The company received $5,260 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due to Harris Office Products, consisting of amounts created on December 15 (of $1,110) and March 8. 24 The company billed Easy Leasing for $9,177 of computing services provided. 25 The company sold merchandise with a $2,082 cost for $2,820 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,168 cost for $2,400 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (1,000 miles at $0.32 per mile). The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: The March 31 amount of computer supplies still available totals $2,095. Three more months have expired since the company purchased its annual insurance policy at a $2,652 cost for 12 months of coverage. Lyn Addie has not been paid for seven days of work at the rate of $175 per day. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $905. Depreciation on the computer equipment for January 1 through March 31 is $1,100. Depreciation on the office equipment for January 1 through March 31 is $220. The March 31 amount of merchandise inventory still available totals $674.

Pockets lent $20,000 to Lego Construction on January 1, 2018. Lego signed a three-year, 5% installment note to be paid in three equal payments at the end of each year.

Required:

(1.)    Prepare the journal entry on January 1, 2018, for Pockets' lending the funds.

(2.)    Calculate the amount of one installment payment.

(3.)    Prepare an amortization schedule for the three-year term of the installment note.

(4.)    Prepare Pockets' journal entry for the first installment payment on December 31, 2018.

(5.)    Prepare Pockets' journal entry for the third installment payment on December 31, 2020.

The Watts Company is a publicly traded corporation that produces different types of commercial food processors. My name is Alan Smith and I have worked for this company for the last ten years in the controller’s office. I was both an accounting and finance major in university. The company currently produces 300 products and does not anticipate any new products coming out over the next three years. I have previously mentioned to my superiors that it is not appropriate for our firm to use a traditional accounting system (where overhead costs are allocated across products at a rate of $100 per direct labor hour) when different products require different amounts of indirect overhead resources. For example, under the traditional system all costs associated with testing of products for quality assurance purposes are part of overhead costs and therefore allocated across products based on direct labor hours. Yet, some of our products require as much as 5 hours of testing whereas some products require less than 1 minute of testing with no connection to direct labor hours. Given that traditional costing systems result in significant cost distortions when determining products costs and given that the firm now has revenues of over $100 million a year, Watts has decided to adopt activity based costing over the next year or two.

Watts’s management has hired Deloitte Consulting to help us implement activity based costing. I will be acting as the liaison between our firm and Deloitte. As part of the initial implementation phase, I have asked Deloitte to derive the costs and product margins associated with two of our products, Classic and Artisan, so that these costs and product margins could be compared with the costs and product margins under our current traditional accounting system. I picked these products since Watts management believe they have very different demands on indirect overhead resources. Further, Classic is sold in large quantities whereas Artisan is sold in small quantities and traditional accounting systems can cause large cost distortions in different directions for products sold in large and small quantities.

Current information from our existing system on a per unit basis is shown in Exhibit 1.

Exhibit 1

My staff has identified for Deloitte five activity cost pools. Information on those cost pools and the related activity measures are provided in Exhibit 2.

Exhibit 2

Although fixed costs are lumped in with variable costs across the five different cost pools, I am aware that machining related costs consists almost exclusively of depreciation costs. Hence, with respect to all questions asked in this case, machining costs will be treated as entirely fixed with respect to machine hours. Each machine is used in the production of multiple product lines. The resale value of machines is only affected by the passage of time and not by how much they are used in a given year.

In all questions asked in this case, the firm will assume that costs associated with equipment setups, purchase orders, testing, and packaging & shipping are variable with respect to their respective activity measures. Currently, we believe our assumptions on cost behavior patterns are quite reasonable.

All products are produced in batches, where the size of a batch differs across products. For example, if we produce 80 units of a product in batch sizes of 40, then the product will be produced in two batches. An equipment setup must be performed before producing each batch of a product. Hence, in the example above, two equipment setups would be performed. Units of product are packaged in containers and sent to distributors.

Production volumes are set equal to sales volumes since the company only produces products that they have orders for. Consequently, the firm never has a beginning or ending work in process inventory, and it does not have a beginning or ending finished goods inventory.

Further information on our two products is provided in Exhibit 3

Exhibit 3

Prepare an income statement for Classic and an income statement for Artisan using activity based costing. (For simplicity, SG&A expenses for the firm are not included in the income statement for the two products.) The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance:

3) Classic                                     Artisan

Sales                                                                $$$                              $$$     

Direct materials                                  $$$                                   $$$            

Direct labor                                        $$$                                   $$$            

Equipment Setups                              $$$                                   $$$            

Purchase orders                                  $$$                                 $$$            

Machining                                          $$$                                 $$$            

Testing                                               $$$                                 $$$            

Packaging and shipping                      $$$                                 $$$                  

Total Costs                                                      $$$                              $$$                 

Net operating income                                     $$$                              $$$                 

Average net operating income

    per unit                                                        $$$                              $$$

Background:  As a district sales representative for a medical supplies vendor, "Mark Price" sold medical supplies directly to doctors at local hospitals.  

1. Identify the internal control(s) involved for each activity.

2. Describe the internal control you would implement to prevent the fraudulent activity from occurring in the future.

Mark's Activities

a. Mark had a falling-out with his employer and was fired.

Internal Control:

Description of new control:

b. Mark continued to work with his district hospitals as if he were still a representative of the vendor, while his former employer searched for a new sales rep. Mark hand-delivered false invoices printed on stationery he had kept after his termination.

Internal Control:

Description of new control:

c. One hospital refused to pay the false invoices because receipt of the invoiced items could not be verified.

What voucher system document controls were in place at this hospital?

d. Another hospital paid the false invoices, giving the checks directly to Mark when he met them at his usual time, rather than mailing the checks to the supplier.

Internal Control:

Description of new control:

e. Mark endorsed the hospital checks with the name of his former company's cashier and used a "For deposit only" stamp purchased at a local office supply store to stamp each check. He deposited the checks into his personal bank account.

Internal Control:

Description of new control:

Which do you think is more important: the internal auditor or the external auditor?  Why?

1. The Accountant at EZ Toys, Inc. is analyzing the production and costs data for its Trucks

Division. For October, the actual results and the master budget data are presented below.

Actual Results

Budget Data

Produced and sold

10,000

Production and sales

12,000

Unit Selling Price

$15

Unit Selling Price

$15

Variable Costs:

Unit Variable Costs:

Direct materials

$52,800

Direct materials

$5

Direct labor

51,000

Direct labor

4

Variable OH

23,000

Variable OH

2

Total variable Costs $126,800

Total unit variable costs $11

Fixed Overhead

$9,000

Fixed Overhead

$9,600

Required: Prepare a variance analysis to compare actual results and master budget.

2. Required: Use the data above to determine the flexible budget variance and the sales volume

variance.

3. Required: Calculate the direct materials variances for October using the following

Information regarding the use of direct materials at EZ Toys’ Trucks Division for October:

Standard Costs

2 units per truck @ $2.5 per unit

Trucks produced in October = 10,000

Actual Materials purchased and used 22,000 units @ $2.4 per unit

4. Required: Calculate the direct labor variances for October using the following Information

regarding the use of direct labors at EZ Toys’ Trucks Division for October:

Standard Costs

0.4 hours per truck @ $10 per hour

Trucks produced in October = 10,000

Actual Direct Labor costs

Actual hours worked = 5,000 hours

Total actual labor cost = $51,000

Average cost per hour = $10.20

What might be causing these variance

On January 1, 2018, Morris Production leased a machine from Werner Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Morris. Portions of the Werner Leasing's lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease Outstanding in Balance Balance 374,596 2018 40,000 40,000 334,596 2018 40,000 33,460 6,540 328,056 2019 40,000 32,806 7,194 320,861 2020 40,000 32,086 7,914 312,947 2021 40,000 31,295 8,705 304,242 2022 40,000 30,424 9,576 294,666 2023 40,000 29,467 10,533 284,133 – –– – – – –– – – – –– – – 2035 40,000 9,948 30,052 69,422 2036 40,000 6,942 33,058 36,364 2037 40,000 3,636 36,364 0 Required: 1. What is Morris's lease liability at the beginning of the lease (after the first payment)? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?