A company manufactures three products using the same production process. The costs incurred up to the slit-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the slit-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows: Product Number of Units Produced Selling Price at Split-Off Selling price after processing additional processing cost D 4,000 $10.00 $15.00 $14,000 E 6,000 11.60 16.20 20,000 F 2,000 19.40 22.60 9,000

Instructions (a) Which information is relevant to the decision on whether or not to process the products further? Explain why this information is relevant. (b) Which product(s) should be processed further and which should be sold at the spli-off point? (c) Would your decision be different is the company was using the quantity of output to allocate joint costs? Explain.

Question 1: You are required to produce an amortisation table for a home loan and a diagram demonstrating the link between loan repayments and principal outstanding. Please see slide 31 from Topic 2 (or p146 from text) for an example of the layout of the table. The home loan is for $200,000 and is to be amortised over a time period of 30 years requiring annual payments. All calculations should be executed in excel. From your table produce a diagram that demonstrates the relationship between the outstanding principal and the number of years into the loan.

The interest rate to be used is 12% plus the last digit of your student number. Assume that interest rates do not change over the life of the laon.

Alexandra Bay Ltd has five employees. According to their particular employment award, long-service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks’ leave. If an employee were to leave before the completion of 12 years’ service, no entitlement would be paid.

High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them.

The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest—that is, for a total of 12 years—are as follows:

REQUIRED

(a)Calculate Alexandra Bay’s current obligation for long-service leave.

(b)If the opening provision for long-service leave is $12 500, provide the journal entry to record Alexandra Bay’s long-service leave expense

Is the President correct about the increase in overall company profits?

What classification of cost is most likely to be able to be increased on the cost-plus jobs? Why?

Is what the President proposes ethical? Why or why not?

What would you do if you were Sally? Why?

If Sally does go along with this proposal, are there risks to the company? What are they?

Job Costs At the end of August, Ingram Company had completed Jobs 40 and 42. Job 40 is for 1,000 units, and Job 42 is for 500 units. The following data relate to these two jobs: On August 4, raw materials were requisitioned for production as follows: 800 units for Job 40 at $10 per unit and 1,500 units for Job 42 at $20 per unit. During August, Ingram Company accumulated 800 hours of direct labor costs on Job 40 and 500 hours on Job 42. The total direct labor was incurred at a rate of $12 per direct labor hour for Job 40 and $20 per direct labor hour for Job 42. The predetermined factory overhead rate is $6.00 per direct labor hour.

a. Determine the balance on the job cost sheets for Jobs 40 and 42 at the end of August.

Job 40 $_______- Job 42 $_________

b. Determine the cost per unit for Jobs 40 and 42 at the end of August. If required, round your answers to the nearest cent.

Job 40 $ _________- Job 42 $__________

A company is considering two mutually exclusive projects requiring an initial cash outlay of $100 each and with a useful life of 5 years. The company required rate of return is 10% and the appropriate corporate tax rate is 40%. The projects will be depreciated on a straight line basis. The before depreciation and taxes cash flows expected to b generated by the projects are as follows.

Required
a) Determine the cashflow associated with the projects?

b) Which project should be accepted by using the appraisal method below;

1. Payback period
2. Net present value

Required

You are asked to provide the shareholders with an assessment of the firm's asset management ,profitability,efficiency,solvency and leverage .Be as complete as possible given the above information ,but do not use any irrelevant information

Calculate the project cash flow generated for Project A and Project B using the NPV method.

• Which project would you select, and why?
• Which project would you select under the payback method? The discount rate is 10% for both projects.
• Use Microsoft^® Excel^® to prepare your answer.
• Note that a similar problem is in the textbook in Section 5.1.

Sample Template for Project A and Project B:

“Table showing investments and returns for Project A and Project B. Project A has $10,000 initial investment with $5,000 returns in each of the first 3 years. Project B has $55,000 initial investment with $20,000 in each of the first 3 years.”

I am looking for the formulas to use. I believe I am using them incorrectly. Thanks!

                                                                                    $                                             $

Purchases                                                                60 000    

Inventory at 1 July 2016                                         10 000

Sales                                                                                                                     120 000

Distribution costs                                                    13 200

Administrative and selling expenses                        5 600

Trade receivables                                                    12 200

Discount allowed                                                      1 550

Bank balance                                                                                                            4 150

Capital account at 1 July 2016                                                                               73 100

Discount received                                                                                                    2 500

6% Bank loan                                                                                                         10 000

Non-current assets at carrying amount                 102 500                

Capital introduced in the year                                                                                   5 000

Loan interest paid                                                      300

Drawings                                                                 8 000

Trade payables                                                                                                         5 600

Wages                                                                   15 000

Suspense                                                                                                                    8 000

                                                                              228 350                                   228 350

The following is to be taken into account.

Inventory valuation at 30 June 2017 was $12 000

Jay decided to write off an irrecoverable receivable of $1 000. This should be accounted for as an administrative and selling expense.

The wages cost should be split equally between cost of sales and administrative and selling expenses.

Discounts allowed should be accounted for as an administrative and selling expense.

The bank loan was taken out on 1 July 2016

The depreciation charge for the year of $5 000 on property, plant and equipment has not yet been accounted for. It should be classified as a cost of sale.

The balance on the suspense account represents the proceeds from the disposal of an item of property, plant and equipment. At the date of disposal, that item had a net carrying amount of $10 000. The gain or loss on disposal should be accounted for as a cost of sale.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.75 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $349,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $142.50 (600 square feet @ $23.75 per hundred square feet). Calculate the customer margin earned on this job.

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 8%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $108 to purchase these supplies.

For years, Worley believed that the 8% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $37,000 to buy from manufacturers):

Required:

1. Compute the total revenue that Worley would receive from University and Memorial.

2. Compute the activity rate for each activity cost pool.

3. Compute the total activity costs that would be assigned to University and Memorial.

4. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $37,000 cost of goods sold that Worley incurred serving each hospital.)

At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

By the end of the first year, each machine had been operating 6,000 hours.

Required:

1. Compute the cost of each machine.
2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value).

Flexible Budget for Varying Levels of Activity Nashler Company has the following budgeted variable costs per unit produced: Direct materials $7.20 Direct labor 1.54 Variable overhead: Supplies 0.23 Maintenance 0.19 Power 0.18 Budgeted fixed overhead costs per month include supervision of $98,000, depreciation of $76,000, and other overhead of $245,000. In March, Nashler Company produced 170,000 units and had the following actual costs: Direct materials $1,220,000 Direct labor 268,300 Supplies 39,600 Maintenance 32,250 Power 30,520 Supervision 99,400 Depreciation 76,000 Other overhead 244,300 Required: 1. Prepare a performance report for Nashler Company comparing actual costs with the flexible budget for actual units produced. If there is no variance, enter "0" for the amount and select "NA" in the last column. Nashler Company Performance Report Actual Cost Flexible Budget Cost Variance Direct materials $ $ $ Favorable Direct labor Unfavorable Supplies Unfavorable Maintenance Favorable Power Favorable Supervision Unfavorable Depreciation NA Other overhead Favorable Total cost $ $ $ Unfavorable Feedback Budgets can be used to examine the efficiency and effectiveness of a company. 2. What if Nashler Company’s actual direct materials cost were $1,224,000? How would that affect the variance for direct materials? If an amount is zero, enter "0". The materials variance would be $ . The total cost variance would increase by $ .