Ford Allen, CEO of the Amstelveen Corporation, has some major decisions to make. Seven division managers are clamoring for investment in projects totaling €34,000,000. Allen is working to fund them all, but currently only has €8,000,000 available for Amstelveen to invest.

Amstelveen’s cost of capital is 7%, it uses a payback period cut-off of 2 years, and it calculates depreciation on a straight-line basis with the assumption of a zero salvage value. Allen has tasked you, an employee in the corporate controller’s office, with several tasks.

First, if there are no capital constraints, identify each project as advisable or inadvisable to pursue. Calculate this using the four methods of calculating capital budgeting that we covered in class. If there are any contradictory recommendations (i.e., recommended under payback but not recommended under IRR), explain how this is possible and what you would recommend as the dominant criteria.

Second, give the recommended total that you suggest Amstelveen raise, in addition to the €8,000,000 it already has, in order to invest in your recommended projects.

Third, Allen wants a recommendation on which project(s) the company should pursue if it remains limited to €8,000,000. Make sure to clearly explain the basis for your recommendation.

Note: you cannot recommend abandoning Project D when it becomes negative in Year 4.

Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $9 per unit. Transactions Unit Cost Units Total Cost Inventory, January 1 $ 2.50 260 $ 650 Sale, January 10 (200 ) Purchase, January 12 3.00 310 930 Sale, January 17 (150 ) Purchase, January 26 4.00 55 220 Assume that for Specific identification method the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. Required: Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

1. 2-a. Of the four methods, which will result in the highest gross profit?

• Weighted average cost

• First-in, first-out

• Last-in, first-out

• Specific identification

1. 2-b.Of the four methods, which will result in the lowest income taxes?

• Weighted average cost

• First-in, first-out

• Last-in, first-out

• Specific identification

Describe the construction financing process. How does the money flow and when/what types of loans are needed for a project?

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 121.00 $ 86.00 Direct materials per unit $ 65.30 $ 52.00 Direct labor per unit $ 13.50 $ 9.00 Direct labor-hours per unit 1.5 DLHs 1.0 DLHs Estimated annual production and sales 31,000 units 65,000 units 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: Estimated total manufacturing overhead $ 2,230,000 Estimated total direct labor-hours 111,500 DLHs 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): Estimated Overhead Cost Expected Activity Activities and Activity Measures Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $ 724,750 46,500 65,000 111,500 Batch setups (setups) 975,000 420 330 750 Product sustaining (number of products) 470,000 1 1 2 Other 60,250 NA NA NA Total manufacturing overhead cost $ 2,230,000 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Plug Corporation holds 80 percent of Socket Company’s common stock. The following balance sheet data are presented for December 31, 20X7:

Socket reported net income of $124,000 in 20X7 and paid dividends of $69,000. Its bonds have an annual interest rate of 8 percent and are convertible into 33,000 common shares. Its preferred shares pay an 11 percent annual dividend and convert into 18,000 shares of common stock. In addition, Socket has warrants outstanding for 10,000 shares of common stock at $8 per share. The 20X7 average price of Socket common shares was $40.

Plug reported income of $340,000 from its own operations for 20X7 and paid dividends of $240,000. Its 10 percent bonds convert into 29,000 shares of its common stock. The companies file separate tax returns and are subject to income taxes of 40 percent.

Required:
Compute basic and diluted EPS for the consolidated entity for 20X7. (Round your intermediate calculations and final answers to two decimal places.)
  

Jordan Technologies, Inc. has three divisions. Jordan has a desired rate of return of 12.0 percent. The operating assets and income for each division are as follows:

Jordan headquarters has $129,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs:

Required

1. a-1. Calculate the ROI for each division.

2. a-2. Which division manager is currently producing the highest ROI?

3. b. Based on ROI, which division manager would be most eager to accept the $129,000 of investment funds?

4. c. Based on ROI, which division manager would be least likely to accept the $129,000 of investment funds?

5. d. Which division offers the best investment opportunity for Jordan?

6. g. Calculate the residual income:

1. (1) At the corporate (headquarters) level before the additional investment.

2. (2) At the division level before the additional investment.

3. (3) At the investment level.

4. (4) At the division level after the additional investment.

anson, Mahoney, and Longval, a parmership, is considering admitting Kellan Young as a new parmer. On July 31, 2016, che capical accouncs of the three existing parmers and their profi(-and-loss-sharing ratio is as follows; Learning Objectives 2, 3 2. Clay, Capital $55,000 Partnerships 661 LearningObjective4 4. Longval, Capital $15,400 DR Hanson Mahoney Longval Requirements Capital $ 42,000 84,000 126,000 Profit-and-Loss-Sharing % 20% 25% 55% Journalize che admission of Young as a partner on July 31 for each of the following independent situations: l. Young pays Longval $168,000 cash co purchase Longval's interest. 2. Young conuibutes $84,000 to the parmership, acqu.iring a 1/4 interest in the business. 3. Young contributes $84,000 co the partnership, acqujring a l/6 interest in the business. 4. Young conuibures $84,000 to che parmership, acquiring a 1/3 interest in the business.

On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $414,921 over a 5-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 8.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.0 million. (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. Determine the price at which Builders is “selling” the equipment (present value of the lease payments) at June 30, 2018.

2. What amounts related to the lease would Builders report in its balance sheet at December 31, 2018 (ignore taxes)?

3. What amounts related to the lease would Builders report in its income statement for the year ended December 31, 2018 (ignore taxes)? (For all requirements, enter your answers in whole dollars and not in millions. Round your final answer to nearest whole dollar.)

You have just sat through an informative lecture in your managerial accounting class about the net present value (NPV). However, one of your classmates leaned over to tell you that he is still unclear about this theory and would like for you to provide a summary of what this concept is all about and why it is so important. Explain to your classmate the key arguments for using NPV over other capital investment approaches and why it is the preferred method for making decisions about long-term investment opportunities.

Homestead Oil Corp. was incorporated on January 1, 2019, and issued the following stock for cash: 820,000 shares of no-par common stock were authorized; 150,000 shares were issued on January 1, 2019, at $18.00 per share. 260,000 shares of $90 par value, 9.00% cumulative, preferred stock were authorized; 76,000 shares were issued on January 1, 2019, at $130 per share. Net income for the years ended December 31, 2019 and 2020 was $1,350,000 and $2,660,000, respectively. No dividends were declared or paid during 2019. However, on December 28, 2020, the board of directors of Homestead declared dividends of $1,480,000, payable on February 12, 2021, to holders of record as of January 19, 2021.

1. Use the horizontal model for the issuance of common stock and preferred stock on January 1, 2019. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)

2. Use the horizontal model for the declaration of dividends on December 28, 2020. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)

3. Use the horizontal model for the payment of dividends on February 12, 2021. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)

What is the motivation for a company to legally reorganize? What parties are the “losers” of a reorganization? What parties are the “winners”?

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory   250 $10 $ 2,500 April 15 purchase   400  12   4,800 April 23 purchase   350  13   4,550 1,000 $11,850 Compute the April 30 inventory and the April cost of goods sold using the average-cost method.

Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:

Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 10,000 speakers per year. It has received a quote of $29 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.

Required:

1. Assume the Audio Division is now selling only 47,000 speakers per year to outside customers.

a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?

b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?

c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 10,000 speakers from the Audio Division to the Hi-Fi Division?

d. From the standpoint of the entire company, should the transfer take place?

2. Assume the Audio Division is selling all of the speakers it can produce to outside customers.

a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?

b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?

c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 10,000 speakers from the Audio Division to the Hi-Fi Division?

d. From the standpoint of the entire company, should the transfer take place?

Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.80p per unit. Fixed costs are expected to amount to 56,000p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.30p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 8 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina’s national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina’s peso was worth .104 U.S. dollar.)

1a) Suppose management alters its current plans by spending an additional amount of 4,300p on advertising and increases the selling price to 7.80p per unit. Calculate the profit on 66,000 units. (Do not round intermediate calculations. Enter your answer in pesos.)

1b) The Sorde Company has just approached Corrientes to make a special one-time purchase of 19,000 units. These units would not be sold by the sales personnel, and, therefore, no commission would have to be paid. What is the price Corrientes would have to charge per unit on this special order to earn additional profit of 43,700p? (Round your answer to 2 decimal places. Enter your answer in pesos.)

1c) What is Leno’s current selling price of item no. 8976?

1d) If Leno used target costing for item no. 8976, what must happen to costs if the company desires to meet the market price and maintain its current rate of profit on sales? By how much?

1e) Would the identification of value-added and non-value-added costs assist Leno in this situation? (Yes or No)

1f) Suppose that by previous cost-cutting drives, costs had already been “pared to the bone” on item no. 8976. What might Leno be forced to do with its markup on cost to remain competitive? By how much? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)

1g) In many industries, prices are the result of an interaction between market forces and costs. (True or False)

This is my question from the subject of principles of income tax law below:

Nikki owns and carries on a chain of clothing stores. So far she has 7 of such stores. When she chooses a premises to open a new store on, the most important criterion is where she can maximise the sales of clothes. However, she is also influenced by the potential for the land on which each of the shop premises is located on to grow in capital value. In late 2019, Nikki decides to develop one of the shop premises, because real estate in the area which it is located on had appreciated markedly in recent years. This involved Nikki obtaining a building approval from the local council, demolishing the shop, and building a 6 storey apartment building on the land. As Nikki did not know much about building, this consisted of contracting a major builder to be in charge of the process of building the apartment. These apartments are sold individually to the public through a leading real estate agent.

Ignoring Capital Gains Tax, discuss whether the sales proceeds from the apartments generate ordinary income.

The answer needs approximately 400 words.

Thanks