Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,500 automobile tires:

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

b. The direct materials price variance should normally be reported to the  . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the  . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

The following data are for the pension plan for the employees of Lockett Company.

12/31/14 1/1/14 12/31/15

Accumulated benefit $2,500,000 $2,600,000 $3,400,000 Obligation Projected benefit 2,700,000 2,800,000 3,700,000 Plan assets (at fair value) 2,300,000 3,000,000 3,300,000 AOCL – net loss 0 480,000 500,000 Settlement rate (for year) 10% 9% Expected rate of return (for year) 8% 7%

Lockett’s contribution was $420,000 in 2015 and benefits paid were $375,000. Lockett estimate that the average remaining service life is 15 years.

(a) What was Lockett’s 2015 actual return on plan assets?

(b) What amount, if any, of the AOCL-Net Loss is amortized in 2015

(c) What amount, if any, was Lockett’s actuarial gain or loss in 2015?

(d) What was Lockett’s service cost for 2015?

Solve problem

Net present value analysis

Emery communications company is considering the production and marketing of a communications system that will increase the efficiency of messaging for small businesses or branch offices of large companies .Each unit hooked into the system is assigned a mailbox number, which can be matched to a telephone extension number providing access to messages 24 hours a day . Up to 20 people .Personal codes can be reviewed recorded ,cancelled replied or deleted all during the same message play back . Indicators wired to the telephone blink whenever new messages are are present .

to produce this product , a $1.75 million investment in new equipment is required .The equipment will last 10 years but will need major maintaince costing $150,000 at the end of its sixth year . The salvage value of the equipment at the end of 10 years is estimated to be $100,000 . if this new system is produced , working capital must be increased by 90,000 . This capital will be restored at the end of the products 10 year life cycle .Revenue from the sale of the product are estimated at 1,65 million per year . cash operating expenses estimated at 1.32million per year .

Required

1- prepare sechdule of cash flows for the proposed project (Assume that no income tax) ?

2- Assuming that Emery's cost of capital is 12%. compute the project NPV.Should the product be produced ?

Kiley Company had a $600 credit balance in Allowance for Doubtful Accounts at December 31, 2018, before the current year's provision for uncollectible accounts. Aging of the accounts receivable revealed the following:

(a)   Prepare the adjusting entry on December 31, 2018, to recognize bad debts expense.

(b)   Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.

(c)   Assume that the company has a policy of providing for bad debts at the rate of 1% of Sales, that Sales for 2014 were $400,000, and that Allowance for Doubtful Accounts had a $550 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.

Corporation issues $400,000, 10%, five-year bonds at 95. The total interest expense over the life of the bonds is? with explanation

Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th. The following information is available Deacon Company Balance Sheet March 31 Assets Cash $ 59,200 Accounts receivable 31,600 Inventory 47,500 Buildings and equipment, net of depreciation 119,000 Total assets $ 257,300 Liabilities and Stockholders’ Equity Accounts payable $ 76,400 Common stock 70,000 Retained earnings 110,900 Total liabilities and stockholders’ equity $ 257,300 Budgeted Income Statements April May June Sales $ 125,000 $ 135,000 $ 155,000 Cost of goods sold 75,000 81,000 93,000 Gross margin 50,000 54,000 62,000 Selling and administrative expenses 17,500 19,000 22,000 Net operating income $ 32,500 $ 35,000 $ 40,000 Budgeting Assumptions: 60% of sales are cash sales and 40% of sales are credit sales. Twenty percent of all credit sales are collected in the month of sale and the remaining 80% are collected in the month subsequent to the sale. Budgeted sales for July are $165,000. 10% of merchandise inventory purchases are paid in cash at the time of the purchase. The remaining 90% of purchases are credit purchases. All purchases on credit are paid in the month subsequent to the purchase. The accounts payable at March 31 will be paid in April. Each month’s ending merchandise inventory should equal $10,000 plus 50% of the next month’s cost of goods sold. Depreciation expense is $1,150 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred. Required: 1. Calculate the expected cash collections for April, May, and June. 2. Calculate the budgeted merchandise purchases for April, May, and June. 3. Calculate the expected cash disbursements for merchandise purchases for April, May, and June. 4. Prepare a budgeted balance sheet at June 30th. (Hint: You need to calculate the cash paid for selling and administrative expenses during April, May, and June to determine the cash balance in your June 30th balance sheet.)

Noland Boat Company's bank statement for the month of September showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $4,667 on September 30. Other information is as follows:

(1)    Cash receipts for September 30 recorded on the company's books were $4,200 but this amount does not appear on the bank statement.

(2)    The bank statement shows a debit memorandum for $40 for check printing charges.

(3)    Check No. 119 payable to Lynch Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Lynch Company and that the payment to them should have been for $284.

(4)    The total amount of checks still outstanding at September 30 amounted to $5,800.

(5)    Check No. 138 was correctly written and paid by the bank for $429.  The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $492.

(6)    The bank returned an NSF check from a customer for $550.

(7)    The bank included a credit memorandum for $1,260 which represents collection of a customer's note by the bank for the company; principal amount of the note was $1,200 and interest was $60. Interest has not been accrued.

Instructions

(a)     Prepare a bank reconciliation for Noland Boat Company at September 30.

(b)    Prepare any adjusting entries necessary as a result of the bank reconciliation.

Specifically the allowance method of accounting for the net realizable value of this current asset.

Please provide journal entries for the following: (assume there are no beginning balances)

3/31: $100,000 of merchandise was sold on account. The gross profit rate is 50%.

4/10: $20,000 of these receivables were paid within the discount period. The payment terms were 2%,10,n30.

4/30: $65,000 of the receivables were paid outside of the discount period,

4/30: $120,000 of new credit sales and $20,000 of cash sales were made this month

5/30: The credit manager "ages" the receivables (see slide #27 in the lecture slides .ppt in the class Files). He creates an allowance for debt debts of $26,610.

6/30:    $800 of receivables are determined to be uncollectible and are written off.

What the ending balances are in the allowance for bad debts and accounts receivable.

Show how this assets would be reported on the balance sheet?

How would net sales be reported on the income statement?

You must label each answer with the number of question. Each question must have at least three sentence answers. There is no maximum sentence, use as many as you wish to thoroughly answer the question. All answers must be complete sentences using proper grammar and spelling.

Assume you are opening a furniture store. You have some decisions about how to do the accounting for the business.

1. Which type of inventory system will you use? Explain your reasons.

   • specific, LIFO, FIFO, or weighted average?

   • perpetual or periodic?

2. How often do you plan to do a physical count of inventory on hand? Explain your reason.

3. Inventory costs are rising. Which inventory costing method would have the effect of maximizing net income?

4. Inventory costs are rising. Which inventory costing method would have the effect of minimizing the amount of income tax?

5. What do you think will be the biggest accounting issues you will encounter with running your business?

Gabriela and Johnny are married and filed a joint tax return. They had the following items for 2018:

Gabriela's car was completely destroyed in a hurricane, which had been declared a federal disaster area. At the time of the hurricane, the car had a fair market value of $30,000 and an adjusted basis of $40,000. She used the car 100% of the time for personal use. She received an insurance recovery of $25,000.

1. Provide a detailed calculation of the couple's AGI.

Your Answer must:

(a) explain the rule for § 1244 small business stock and how it applies to the facts;

(b) show a detailed netting capital item;

(c) explains the rule for worthless stock;

(d) explains the rule for the tax treatment of nonbusiness bad debts.

2.(a) What is the rule for calculating the amount of the casualty loss?

(b) Apply the rule to the facts and show a detailed calculation of the loss.

(c) Which schedule does the casualty loss total appear on?

Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)):

The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place:

The U.S dollar ($) exchange rates for 1 NGN are as follows:

1. Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017?

2. Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017?

The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives:

At the end of three years, the fleet could be sold for one-half of the original purchase price.

Riteway Ad Agency’s required rate of return is 17%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:    

1. What is the net present value of the cash flows associated with the purchase alternative?

2. What is the net present value of the cash flows associated with the lease alternative?

3. Which alternative should the company accept?

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.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company’s performance over the last four months.

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.

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.

For its three investment centers, Gerrard Company accumulates the following data:

I II III

Sales $1,920,000 $4,013,000 $4,033,000

Controllable margin 833,510 2,486,510 4,083,400

Average operating assets 4,903,000 8,021,000 12,010,000

The centers expect the following changes in the next year: (I) increase sales 14%; (II) decrease controllable fixed costs $404,000; (III) decrease average operating assets $534,000.

Compute the expected return on investment (ROI) for each center. Assume center has a contribution margin percentage of 74%. (Round ROI to 1 decimal place, e.g. 1.5.)