Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $1,710,000. Information regarding resources for the month follows.
     

In addition, Leidenheimer spent $63,000 on 45 engineering changes with a cost-driver rate of $1,400 and $59,200 on 8 outside contracts with a cost driver rate of $7,400.

Required:   

Management has requested that you do the following:

a. Prepare a traditional income statement.

b. Prepare an activity-based income statement.

You are a Financial Manager for Dexter Manufacturing. Your sales were $1,000,000 in 2010, and $1,000,000 again in 2011. Your accounting department came to you recently and stated that the cash balance is much lower at the end of 2011 than it was in 2010. You calculate your Accounts Receivable and Inventory Turnover for 2011 and noticed that both of these ratios have DROPPED from 2010 to 2011! Describe in a couple paragraphs what has happened to Accounts Receivable and Inventory. Does this help explain why cash is running low in your opinion? What could you suggest to your management team to help improve these 2 ratios and to help increase cash?

The executives at your firm are discussing alternative pricing and cost strategies for one of your major product lines, but the finance manager is out of town at a conference. They have asked you to join the meeting to explain how cost-volume-profit (CVP) planning and sensitivity analysis might be useful in the decision making process. What would your finance manager say about the use of these financial tools?

Discuss how Fiji Hot Bread Kitchen can link the BSC to its reward system to award bonus payments to its employees

10) Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns interest under these arrangements at a 10% annual rate.
  
The company leased an electronic typesetting machine it purchased for $30,900 to a local publisher, Desktop Inc. on December 31, 2017. The lease contract specified annual payments of $8,000 beginning January 1, 2018, the beginning of the lease, and each December 31 through 2019 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2020, the end of the lease term, for $12,000 when it was expected to have a residual value of $16,000, a sufficient difference that exercise seems reasonably certain. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Show how Universal calculated the $8,000 annual lease payments for this sales-type lease.
2. Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the lease term.
3. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of the lease term.
  

Pfizer Company produced and sold 50,000 units of product and is operating at 75% of plant capacity. Unit information about its product is as follows:

     Sales Price                                                $70

     Variable manufacturing cost                    $45

     Fixed manufacturing cost ($500,000 ÷ 50,000) 10        55

     Profit per unit                                            $15

The company received a proposal from a foreign company to buy 15,000 units of Pfizer Company's product for $50 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of Pfizer Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.

Instructions

a) Prepare a schedule reflecting an incremental analysis of this special order.

b) Should Pfizer accept/reject this order? Why?

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

Beacons Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Beacons Company prepared the following end-of-period spreadsheet at December 31, 20Y5, the end of the fiscal year:

Required:

Blumen Textiles Corporation began April with a budget for 34,000 hours of production in the Weaving Department. The department has a full capacity of 45,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows:

The actual factory overhead was $213,800 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 35,000 hours. Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.

a. Variable factory overhead controllable variance: $  Favorable

b. Fixed factory overhead volume variance: $ Unfavorable

Direct Materials and Direct Labor Variances

At the beginning of June, Bezco Toy Company budgeted 17,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

The standard materials price is $0.5 per pound. The standard direct labor rate is $10 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Bezco Toy Company actually produced 14,800 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

J.M Smucker Company operates two divisions, the Fruit Preserves Division and the Snack Foods Division. The Fruit Preserves Division manufactures and sells jelly and jams to supermarkets. The Snack Foods Division sells its products to theme parks. The company is considering disposing of the Snack Foods Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2017 are presented below:

                             Fruit Preserves    Snack Foods

                                Division       Division             Total

Sales revenue                   $1,500,000         $500,000        $2,000,000

Cost of goods sold                 900,000        350,000       1,250,000

Gross profit                       600,000          150,000           750,000

Selling & admin expenses           250,000          180,000           430,000

Net income                     $   350,000        $(30,000)       $   320,000

In the Snack Foods Division, 60% of the cost of goods sold are variable costs and 25% of selling and administrative expenses are variable costs. The management of the company feels it can save $60,000 of fixed cost of goods sold and $50,000 of fixed selling expenses if it discontinues operation of the Snack Foods Division.

Instructions

(a) Determine whether the company should discontinue operating the Snack Foods Division. Prepare a schedule which supports your decision.

(b) If the company had discontinued the division for 2017, determine what net income would have been.

Downstream Intercompany Equipment Transactions

On July 1, 2015, Pearl Industries sold administrative equipment with a book value of $1,200,000 to its subsidiary, Shiek Shoes, for $1,400,000. At the date of sale, the equipment had a remaining life of five years. It is being straight-line depreciated on Shiek’s books. It is now December 31, 2017, the end of the accounting year, and you are preparing the working paper to consolidate the trial balances of Pearl and Shiek. Shiek still owns the equipment.

Required

(a) Prepare the necessary consolidation eliminating entries at December 31, 2017.

(b) It is now December 31, 2018. Prepare the required eliminating entries for this intercompany equipment transaction for the December 31, 2018, consolidation working paper.

(c) Now assume that Shiek sells the equipment to an outside party for $1,000,000 on January 1, 2019.

What is the consolidated gain on the sale of equipment? $Answer

What is the gain reported by Shiek? $Answer

Prepare the required eliminating entries for the December 31, 2019, consolidation working paper.

CP7-1 (Perpetual Method) Jeter Co. uses a perpetual inventory system and both an accounts receivable
and an accounts payable subsidiary ledger. Balances related to both the general ledger and the
subsidiary ledgers for Jeter are indicated in the working papers presented below. Also following are a
series of transactions for Jeter Co. for the month of January. Credit sales terms are 2/10, n/30. The cost
of all merchandise sold was 60% of the sales price.
GENERAL LEDGER
Account January 1
Number Account Title Opening Balance
101 Cash $35,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Inventory 18,000
126 Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation—Equip. 1,500
201 Accounts Payable 35,000
301 Owner’s Capital 78,700

Schedule of Accounts Receivable Schedule of Accounts Payable
(from accounts receivable subsidiary ledger) (from accounts payable subsidiary ledger)
January 1    January 1
Opening Balance Opening Balance

Customer    R. Beltre $1,500    Creditor S. Meek $ 9,000
   B. Santos 7,500 R. Moses 15,000
   S. Mahay 4,000    D. Saito 11,000

Jan. 3 Sell merchandise on account to B. Corpas $3,600, invoice no. 510, and to J. Revere $1,800,
invoice no. 511.
5 Purchase merchandise from S. Gamel $5,000 and D. Posey $2,200, terms n/30.
7 Receive checks from S. Mahay $4,000 and B. Santos $2,000 after discount period has lapsed.
8 Pay freight on merchandise purchased $235.
9 Send checks to S. Meek for $9,000 less 2% cash discount, and to D. Saito for $11,000 less
1% cash discount.
9 Issue credit of $300 to J. Revere for merchandise returned.
10 Daily cash sales from January 1 to January 10 total $15,500. Make one journal entry for these sales.
11 Sell merchandise on account to R. Beltre $1,600, invoice no. 512, and to S. Mahay $900,
invoice no. 513.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Corpas and J. Revere less cash discounts.
15 Withdraw $800 cash by M. Jeter for personal use.
15 Post all entries to the subsidiary ledgers.
16 Purchase merchandise from D. Saito $15,000, terms 1/10, n/30; S. Meek $14,200, terms
2/10, n/30; and S. Gamel $1,500, terms n/30.
17 Pay $400 cash for offi ce supplies.
18 Return $200 of merchandise to S. Meek and receive credit.
20 Daily cash sales from January 11 to January 20 total $20,100. Make one journal entry for
these sales.
21 Issue $15,000 note, maturing in 90 days, to R. Moses in payment of balance due.
21 Receive payment in full from S. Mahay less cash discount.
22 Sell merchandise on account to B. Corpas $2,700, invoice no. 514, and to R. Beltre $2,300,
invoice no. 515.
22 Post all entries to the subsidiary ledgers.
23 Send checks to D. Saito and S. Meek for full payment less cash discounts.
25 Sell merchandise on account to B. Santos $3,500, invoice no. 516, and to J. Revere $6,100,
invoice no. 517.
27 Purchase merchandise from D. Saito $14,500, terms 1/10, n/30; D. Posey $3,200, terms
n/30; and S. Gamel $5,400, terms n/30.
27 Post all entries to the subsidiary ledgers.
28 Pay $200 cash for offi ce supplies.
31 Daily cash sales from January 21 to January 31 total $21,300. Make one journal entry for
these sales.
31 Pay sales salaries $4,300 and offi ce salaries $3,800.
Instructions

Prepare a multiple-step income statement and an owner’s equity statement for January and a
classifi ed balance sheet at the end of January.
(e) Prepare and post adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the
control accounts in the general ledger.

prepare a complete set of financial statements for Oh So Fake Company using the following adjusted trial balance. Make sure to use good formatting. Oh So Fake Company Adjusted Trial Balance December 31, 20XX Account Name Debit Credit Cash $ 400,300 Accounts receivable 370,100 Merchandise inventory 170,800 Office supplies 10,300 Prepaid rent 10,000 Furniture 63,000 Accumulated depreciation – Furniture $ 31,620 Equipment 197,500 Accumulated depreciation – Equipment 99,180 Goodwill 270,000 Accounts payable 60,300 Salaries payable 20,100 Interest payable 6,000 Unearned revenue 20,400 Notes payable, Long term * 144,000 LT Bond payable 180,000 Capital, Owner 220,200 Sales 2,470,000 Sales returns and allowances 100,000 Sales discounts 80,000 Cost of Goods Sold (COGS) 903,100 Interest revenue 20,100 Salaries expense 520,700 Rent expense 70,700 Utilities expense 50,800 Depreciation expense – Furniture 20,700 Supplies expense 20,200 Interest expense 20,900 Gain on sale of equipment 7,200 TOTALS: $ 3,279,100 $ 3,279,100 *$22,000 of the LT note will be paid within the following 12 months.

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.20 direct labor-hours and direct laborers are paid $16.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $98,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $38,000 per quarter.

Required:

1. Calculate the company’s total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.