E8-24 The Whole Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two​ direct-cost categories: direct materials and direct manufacturing labor. The Whole Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing​ labor-hours.

Requirements 1. Prepare a variance analysis of fixed manufacturing overhead cost. 2. Is fixed overhead underallocated or​ overallocated? By what​ amount? 3. Comment on your results. Discuss the variances and explain what may be driving them.

The following is some budget data for the Whole Bread Company for 2017 and additional infomation for the year ended Decmeber​ 31, 2017​:

Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Data Table Planned (budgeted) output 2,800,000 baguettes Actual production 2,700,000 baguettes Budgeted direct manufacturing labor 56,000 hours Actual direct manufacturing labor 48,500 hours Actual fixed manufacturing overhead $284,000 Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Same Budgeted Lump Sum Actual Costs Regardless of Flexible Allocated Incurred Output Level Budget Overhead Fixed MOH

On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $39,000, $67,000, and $69,000, respectively. Over the next three years, the business reported net income and (loss) as follows:

During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018.

At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:

• Each partner is entitled to interest computed at the rate of 10 percent per year based on the individual capital balances at the beginning of that year.
• Because of prior work experience, Angela is entitled to an annual salary allowance of $10,000 per year and Diaz is entitled to an annual salary allowance of $9,900 per year.
• Any remaining profit will be split as follows: Angela, 20 percent; Diaz, 35 percent; and Krause, 45 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 30 percent; Diaz, 45 percent; and Krause, 25 percent.

Determine the ending capital balance for each partner as of the end of each of these three years. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

Laraia Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

   Sales (3,000 units)   $150,000     
   Variable expenses   90,000     
   Contribution margin   60,000     
   Fixed expenses   48,000     
   Net operating income   $12,000     

g. If the variable cost per unit increases by $5, spending on advertising increases by $3,000, and unit sales increase by 450 units, what would be the estimated net operating income?
h. What is the break-even point in unit sales?
i. What is the break-even point in dollar sales?
j. Estimate how many units must be sold to achieve a target profit of $54,000.
k. What is the margin of safety in dollars?
l. What is the margin of safety percentage?
m. What is the degree of operating leverage?
n. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Given answer from Cheggs expert for quick ratio: Quick Ratio (QR) = (Cash&Cash Equivalents + Current Receivables+Prepaid Expenses or (CA-Inventory)/CL where CA: Current Assets and CL: liabilities

Given answer from Cheggs expert for Days’ Sales in Inventory = (Ending Inventory * 365) / Cost of Goods Sold

Given answer from Cheggs expert for Operating cycle:

Operating Cycle = Days of Sales Inventory + Days of Sales Outstanding - Days payable outsatanding

My Questions:

1) For quick ratio calculation why weren't 'prepaid expenses' substructed, too?

2) I have the impression that the 'Operating cycle' was asked to be calculated not the 'net operating cycle'. Can you please help since all the formula used in the answer confused me? I did not find any reference for the formula day payable outstanding and the average inventory can be found only for year 2018....

3) Can 'Days' sales in inventory' be calculated by using 'sales' instead of CoGs? (that was our tutor's suggestion)

Explain the usefulness of a flexible budget in specific business cases.: Explanation clearly details the usefulness of a flexible budget and why it provides more useful information than a static budget report.

The following is the unadjusted trial balance for Panorama Resort Inc. at its year end, December 31, 2018. The company adjusts its accounts annually.

Additional information is provided below:

1. A count of supplies on December 31st shows $4,150 of supplies on hand.
2. The building has an estimated 20 year life with no residual value and straight-line depreciation is used.
3. Salaries of $1,640 were unpaid on December 31st.
4. Rental revenue for 5 nights at $150 per night during the last week of December has not been paid (received) or recorded.
5. A two year insurance policy was purchased September 1, 2018.
6. Income tax payable is estimated to be $1,920.
7. Of the unearned revenue, it was determined that $28,500 remains unearned.
8. Interest on the note payable is $785 per month and was last paid on October 31, 201
9. The December utility bill of $3,380 has not year been recorded or paid.

REQUIRED:

Prepare all necessary adjusting journal entries for their year-end, December 31, 2018. Omit explanations but show calculations. Round all calculations to the nearest dollar.

Should setting a transfer pricing rule differ between national and multinational companies?

Produce a direct materials budget with the following additional information.

Units = 83,000

Direct material Cost    Usage

Steel    $8.00/lb 12.100 oz/unit

Plastic    $3.50/lb 10.897 oz/unit

What is the total direct materials cost?

Note: lb = pound = 16 oz

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $910. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 300 Units sold 265 Units in ending inventory 35 Variable costs per unit: Direct materials $ 115 Direct labor $ 325 Variable manufacturing overhead $ 45 Variable selling and administrative $ 20 Fixed costs: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative $ 34,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 241,150 Cost of goods sold 192,125 Gross margin 49,025 Selling and administrative expense 39,300 Net operating income $ 9,725 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.

FINE WOOD MACHINING IS CONSIDERING REPLACING AN EXISTING LATHE WITH A MORE EFFICIENT LATH. THE NEW LATHE COST $55,000 AND REQUIRES $5,000 IN INSTALLATION COST. THE OLD LATHE WAS PURCHASED 2 YEARS AGO FOR AN INSTALLED COST OF $35,000 AND HAS A BOOK VALUE OF $16,800. IT CAN BE SOLD TODAY FOR $20,000. ASSUME THE NEW MACHINE INCREASES WORKING CAPITAL BY $2,000. THE FIRM IS IN THE 21% TAX BRACKET. THE NEW MACHINE WILL PROVIDE $15,000/YEAR OF INCREMENTAL OPERATING CASH FLOWS FOR 4 YEARS AND THE COMPANY’S COST OF CAPITAL IS 10%.

I HAVE THE BA II PLUS AND THE TI-84 PLUS, PLEASE SHOW YOUR CALCULATED WORK. THANKS!

A: WHAT IS THE INITIAL INVESTMENT FOR THE PROPOSED PROJECT?

B: COMPUTE THE NET PRESENT VALUE FOR THE PROJECT.

C: COMPUTE THE IRR.

D: MAKE A RECOMMENDATION TO ACCEPT OR REJECT THE PROJECT AND EXPLAIN.

Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.53 ($60,000/17,000), and the December unit materials cost is $10.42 ($500,000/48,000). The equivalent units in BWIP are 17,000, and the FIFO equivalent units are 48,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

What is a good example of a company that uses job costing and another company that uses process costing? Also, what type of products do these companies make or provide services for and why would one company use one method over the other?

In five years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan determined the following:

1. A building in which a car wash could be installed is available under a five-year lease at a cost of $3,800 per month.
2. Purchase and installation costs of equipment would total $210,000. In five years the equipment could be sold for about 9% of its original cost.
3. An investment of an additional $3,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere.
4. Both a wash and a vacuum service would be offered. Each customer would pay $1.35 for a wash and $.90 for access to a vacuum cleaner.
5. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity.
6. In addition to rent, monthly costs of operation would be: cleaning, $2,300; insurance, $75; and maintenance, $1,795.
7. Gross receipts from the wash would be about $2,295 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum.

Mr. Duncan will not open the car wash unless it provides at least a 15% return.

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

Required:

1. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation.

2-a. Determine the net present value using the net present value method of investment analysis.

2-b. Would you advise Mr. Duncan to open the car wash?