Bertans has received a special order for 1,500 units of its product at a special price of $19. The product normally sells for $33 and has the following manufacturing costs:

Per unit

Direct materials $ 8

Direct labor $4

Variable manufacturing overhead $3

Fixed manufacturing overhead $2

Unit cost $17

Assume that Bertans' production is at full capacity. If Bertans accepts the order, what effect will the order have on the company’s short-term profit?

SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

(a) Prepare the journal entry to record depreciation expense for the equipment in 2018.

(b) Prepare the journal entry to record depreciation expense for the building in 2018

Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance $ 25,000 Legal fees for drawing the contract 9,500 Pro-rated property taxes for the period after acquisition 45,000 State transfer fees 4,900 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $91,000 to construct a parking lot and $49,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $340,000 and the salvaged materials were sold for $5,500. In addition, Samtech spent $88,000 clearing and grading the land in preparation for the construction of a new building.

Brad Simpson is a farmer in the Moscow, Idaho area. Each year he tries to plant the crop that will make him the most money. He has a choice of three crops, barley, wheat or garbanzo beans. The amount he makes on each crop varies based on the amount of rain that comes during the season. A very rainy season is great for garbanzo beans (called garbos) but hurts the profit from barley. Wheat doesn’t vary much based on the rainfall. The estimated profit from each crop, based on the rainfall is in the following table:

Mr. Simpson only wants to plant one crop. Decide on the choice for him based on:

a) Maximin Strategy  

b) Maximax Strategy

c) Minimax Regret Strategy

d) Calculate the value of perfect information.  

Khalifa Computers has 3,000 shares of common stock outstanding. The company also has the following amounts in revenue and expense accounts.

Calculate:                                                                                                                   

1. Gross profits.
2. Operating profits.
3. Net profits after taxes (assume a 30 percent tax rate).
4. Calculate the depreciation using MACRS approach for an asset which costs $85,000 and is being depreciated using a 5-year normal recovery period (depreciation rate is as follows: 20%, 32%, 19%, 12%, 12% and 5%). Will the depreciation amount be difference in case of straight line method when the scrap value of the asset is $5,000?

Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 99,900 units at a price of $66 per unit during the current year. Its income statement for the current year is as follows: Sales $6,593,400 Cost of goods sold 3,256,000 Gross profit $3,337,400 Expenses: Selling expenses $1,628,000 Administrative expenses 1,628,000 Total expenses 3,256,000 Income from operations $81,400 The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $528,000 in yearly sales. The expansion will increase fixed costs by $52,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar. Total variable costs $ Total fixed costs $ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places. Unit variable cost $ Unit contribution margin $ 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units 4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $81,400 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $ 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar. $ Income 8. Based on the data given, would you recommend accepting the proposal? In favor of the proposal because of the reduction in break-even point. In favor of the proposal because of the possibility of increasing income from operations. In favor of the proposal because of the increase in break-even point. Reject the proposal because if future sales remain at the current level, the income from operations will increase. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer. b

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.70 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 38,400 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.

A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2018. Dr. Cr. Supplies $2,700 Salaries and wages payable $1,500 Interest Receivable 5,100 Prepaid Insurance 90,000 Unearned Rent 0 Interest Payable 15,000 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2018, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2018. Accrued salaries and wages on December 31, 2018, amounted to $4,400. 3. The Interest Receivable account was also left unchanged during 2018. Accrued interest on investments amounts to $4,350 on December 31, 2018. 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2018. 5. $28,000 was received on January 1, 2018, for the rent of a building for both 2018 and 2019. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 2. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

2016

2017

Required:
1-a. First, complete the table below to calculate the interest amount at December 31, 2016.
1-b. Use the calculated value to prepare your journal entries for 2016 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for 2017 transactions.

The journal entries for 1 d are listed below:

Received Todd’s payment of principal and interest on the note dated December 16.

Accepted a $6,200, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

Accepted a $3,000, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

Privet dishonored her note when presented for payment.

Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.’s accounts receivable.

Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.

Accepted a $8,150, 90-day, 9% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

Accepted a $3,610, 60-day, 12% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

Received payment of principal plus interest from Carson for the September 3 note.

Received payment of principal plus interest from Mulan for the August 7 note.

Wrote off the Privet account against Allowance for Doubtful Accounts.

Problem 10-2A The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly. Jan. 2 Purchased merchandise on account from Nunez Company, $21,600, terms 3/10, n/30. (Blanco uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $21,600 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,400 in cash and signing a 10%, 3-month, $70,800 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note.

Analyze each transaction.  Under each category in the accounting equation, indicate whether the transaction:

A. increases,

B. decreases, or

C. has no effect.  The item (a) is provided as an example.

1. Provided services to a customer on account.  (Revenue increases causing Stockholders’ Equity to increase, Assets increase, and no effect on Liabilities).

6.  Collected from customers for services provided on account.

7.  Incurred salaries for the month, will pay next week.

8.  Purchased office equipment and will pay vendor later.

9.     At the beginning of January, the balance in the Retained Earnings account is $210,000 for BMJ Corporation.  During the month of January, BMJ had the following external transactions.

$______________Determine ending Retained Earnings for January 31st.

Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Percent Completed Units Mixing Materials Conversion Work in process inventory, September 1 9 100 % 60 % 50 % Work in process inventory, September 30 9 100 % 20 % 10 % Mixing Materials Conversion Work in process inventory, September 1 $ 17,622 $ 531 $ 6,399 Cost added during September $ 190,298 $ 17,984 $ 171,931 Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department. The spiced meat mixture is processed in the Casing and Curing Department in batches; each unit in the above table is a batch and one batch of spiced meat mixture produces a set amount of sausages that are passed on to the Packaging Department. During September, 104 batches (i.e., units) were completed and transferred to the Packaging Department. Required: 1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September. 2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September. 3. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total for September. 4. Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total for September. 5. Prepare a cost reconciliation report for the Casing and Curing Department for September.

Accounts Receivable Turnover

All of the following statements are true for Garrison Company, who has an accounts receivable turnover rate of 10, except:

Select one:

a. Garrison writes off accounts receivables as uncollectible if they are more than 36.5 days old.

b. Garrison’s accounts receivable indicate greater liquidity than those of a business whose accounts receivable turnover rate is 4.

c. Garrison may have less liberal credit terms than a company with an accounts receivable turnover rate of 5.

d. Using a 365 day year, Garrison waits approximately 36.5 days to make collections of its credit sales.

If you were to start your own business, which business entity structure would you choose? Justify why your chosen structure is the best organizational form.

Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation. In your analysis address the following for each business structure:

• Steps to form
• Personal liability for owners
• Taxation
• Advantages and disadvantages
• Your paper must be three to five pages

1. The Hill Company produced 5,000 units of X. The standard time per unit is 0.25 hours. The actual hours used to produce 5,000 units of X were 1,350 hours. The standard labor rate is $12 per hour. The actual labor cost was $18,900. What is the total direct labor cost variance?

a. $1,200 unfavorable

b. $3,900 unfavorable

c. $1,400 unfavorable

d. $2,700 unfavorable

2. The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity is called the:

a. direct materials quantity variance

b. direct materials price variance

c. direct materials volume variance

d. controllable materials variance

3. The cost associated with the difference between the standard hours and the actual hours of direct labor spent producing a commodity is called the:

a. direct labor quantity variance

b. direct labor volume variance

c. direct labor rate variance

d. direct labor time variance

4. The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period is called the:

a. efficiency variance

b. controllable variance

c. volume variance

d. total overhead variance

5. An unfavorable volume variance might be caused by which of the following factors?

a. an uneven work flow

b. machine breakdowns

c. repairs leading to work stoppages d. all of the above

6. Which of the following is an example of a nonfinancial performance measure?

a. number of customer complaints

b. direct labor time variance

c. controllable overhead variance d. all of the above

7. A quantity of 1,200 gallons of Material X is purchased at a price of $4.50 per gallon. The standard price is $4.00 per gallon. The journal entry for this purchase will include a:

a. debit to Materials for $5,400

b. debit to Direct Materials Price Variance for $600

c. credit to Direct Materials Price Variance for $600

d. debit to Work in Process for $4,800