The following are BAC Bhd.’s year end statement of financial position and statement of profit and loss for 2016 and 2017:

Related items:

2017 Total dividends paid $70,075 ,   Stock price per share $15.60

2016 Total dividends paid $15.60 ,   Stock price per share $21.80

Required:

1. Calculate the after tax operating income (i.e. after-tax EBIT) for 2016 and 2017.   
2. Calculate the net working capital (NWC) that is supported by non-free sources for 2016 and 2017, and the changes in NWC between these two years.                             
3. What is free cash flow (FCF)? Calculate the FCF for 2017. Is a negative FCF always a bad sign?   
4. Calculate the following for the company for 2017:
   1. Earnings per share   
   2. Dividends per share   
   3. Book value per share

calculate the contribution margin ratio , break even dollar sales, margin of safety (dollars) safety margin % of sales

Prepare the adjustment entry as of 30/06/2012 under the following

E.            According to the balance sheet, the inventory was $223,500. At the end of the financial year stock take, you have been advised that the inventory value is only $210,000.

F.           On 30/06/2012, the company aged receivables which have a total of $306,400. The company estimated       2% of 90 days receivable and 10% of over 90 days will not be able to be collected.

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:

The following additional information is available:  

1. The company’s plant has a capacity of 114,750 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

2. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year.

3. Fixed manufacturing costs total $540,000 per year. Variable overhead costs are $4 per direct labor-hour.

4. All of the company’s nonmanufacturing costs are fixed.

5. The company’s finished goods inventory is negligible and can be ignored.

Required:

1. How many direct labor hours are used to manufacture one unit of each of the company’s five products?

2. How much variable overhead cost is incurred to manufacture one unit of each of the company’s five products?

3. What is the contribution margin per direct labor-hour for each of the company’s five products?

4. Assuming that direct labor-hours is the company’s constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?

5. Assuming that the company has made optimal use of its 114,750 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)?

Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $40,300 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.

The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.

Required:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented income statement.

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?

Exercise

Assume your Company sells to merchandisers in three different states—Oregon, Texas and Colorado The following profit analysis by state was prepared by the company:

                                                                        Oregon                       Texas                        Colorado

Revenue                                                         4,500,000                    4,000,000                   4,000,000

Cost of Goods Sold                                        2,500,000                      2,000,000                  2,000,000

Gross profit                                                     2,000,000                      2,000,000                  2,000,000

Selling Expenses                                               500,000                         700,000                      700,000

Net profit                                                         1,500,000                      1,300,000                  1,300,000

Following are the fixed portion within the costs provided above:

Fixed manufacturing Costs                             300,000                         500,000                        1,000,000

Fixed Selling and Admin Costs                      300,000                         200,000                           400,000

Now, Management believes it could increase state sales by 20%, without increasing any of the fixed costs, by spending an additional $50,000 per state on advertising. No change in inventories.  

1. Prepare a contribution margin statement by state to determine how much each state operating profit would be for the additional $50000 advertising.

2. Which state will provide the greatest profit return for a $50000 increase in advertising?

3. Why?

Complete the problems below on process costing and variance analysis.

Part 1: You must prepare two process costing cost reports – one using the weighted average method and one using the fifo method.  
Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Data for the Assembly Department for August 2017 are:
Work in process, beginning inventory: 2600 units
Direct materials (100% complete)
Conversion costs (35% complete)

Units started during August 715 units

Work in process, ending inventory: 520 units
Direct materials (100% complete)
Conversion costs (55% complete)

Costs for August:
Standard costs for Assembly:
Direct materials $18 per unit
Conversion costs $35.50 per unit

Work in process, beginning inventory:
Direct materials $12,600
Conversion costs $8250

Part 2A: Variance Problem
Castleton Corporation manufactured 36,000 units during March. The following fixed overhead data relates to March:
Actual Static Budget
Production 36,000 units 34,000 units
Machine-hours 6,960 hours 6,800 hours
Fixed overhead costs for March $164,700 $156,400
Compute the fixed overhead variances.

Part 2B: Variance Problem
Russo Corporation manufactured 21,000 air conditioners during November. The overhead cost-allocation base is $34.50 per machine-hour. The following variable overhead data pertain to November:

Actual Budgeted
Production 21,000 units 23,000 units
Machine-hours 12,700 hours 13,800 hours
Variable overhead cost per machine-hour:
$34.00 $34.50
Compute the variable overhead variances.

1. Discuss the arguments for and against cost allocation

2. What are the differences between revenue and capital expenditures? In your explanation, discuss the accounting procedures for each type of expenditure.

Schrader Cellars uses the FIFO method in its two department process costing system: Fermenting (grape sorting is part of the fermentation process) and Packaging. Direct materials (grapes) are added at the beginning of the fermenting process and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. Data from the month of March for the Fermenting Department are below:

Beginning work in process inventory:

            Units in beginning work in process inventory            3,000 gallons

            Materials costs                                                            $122,000

            Conversion costs                                                         $7,000

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        50%

Units started into production during the month                      5,000 gallons

Materials costs added during the month                                 $250,000

Conversion costs added during the month                             $30,000

Ending work in process inventory:

            Units in ending work in process                                 2,000 gallons

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        75%

REQUIRED:

1. Prepare a FIFO production report for the Fermentation Department for Schrader Cellars for the month ended December 31, 2018.

The difference between the actual variable overhead cost and the standard variable overhead cost for the actual volume of the overhead activity base is known as the

Select one:

A. variable overhead efficiency variance.

B. fixed overhead budget variance.

C. variable overhead spending variance.

D. fixed overhead volume variance.

shareholders contributed 60 grand.
land was purchased for 40 grand
I borrowed 18 grand from a bank
I provided services on credit for 16 grand which should be paid back to me in a year.
I paid 11 grand for operating expenses.
I paid a grand cash dividends to shareholders.

place the appropriate amounts in the corresponding T accounts: cash, accounts receivable, land, notes payable, common stock (shareholders equity), service revenue and operating expenses.

what is the revenue amount on the income statement? what is the operating expenses on the income statement? what is the net income on the income statement?

is there a beginning retained earnings balance?
on the statement of retained earnings, what is the net income, dividends and ending retained earnings?

on the balance sheet : what are the cash assets, account receivable assets and land asset? what is the total in assets? what is the liability amount for notes payable? for equity, what is the amount of common stock? what is the amount of retained earnings? what is the total liability and equity?

Explain the usefulness of a flexible budget in specific business cases. Give a real example of a flexible budget in an organization

Use the following data to prepare a common-size comparative income statement for Old Mill Corporation on December 31, 2016. Round percentages to one-tenth percent.

Exercise 19-19 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds [LO19-5,19-6, 19-7, 19-8, 19-9] On December 31, 2017, Berclair Inc. had 480 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $750 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value. Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018(Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)