National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $55; white, $85; and blue, $110. The per unit variable costs to manufacture and sell these products are red, $40; white, $60; and blue, $80. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $150,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $10; white, by $20; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $20,000.

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 86,400 units per year is: Direct materials $ 1.90 Direct labor $ 3.00 Variable manufacturing overhead $ 1.00 Fixed manufacturing overhead $ 5.25 Variable selling and administrative expenses $ 1.10 Fixed selling and administrative expenses $ 2.00 The normal selling price is $20.00 per unit. The company’s capacity is 118,800 units per year. An order has been received from a mail-order house for 2,700 units at a special price of $17.00 per unit. This order would not affect regular sales or the company’s total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units?

Discuss three different types of business leases and the merit of each one.

Perkins Company provides the following data developed for its master budget:

Sales price 11.00 per unit

Costs:
Direct materials 3.00 per unit

Direct labor 4.25 per unit

Variable overhead 0.50 per unit

factory depreciation is 12,000 per month

supervision is 11,000 per month

selling expense is 0.25 per unit

administrative cost 9,000 per month

Required:
Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

Water Closet Co. wholesales bathroom fixtures. During the current year ending December 31, Water Closet received the following notes:

On January 1, Pulse Recording Studio (PRS) had the following account balances.

The following transactions occurred during January.

1. Received $2,490 cash on 1/1 from customers on account for recording services completed in December.
2. Wrote checks on 1/2 totaling $4,380 for amounts owed on account at the end of December.
3. Purchased and received supplies on account on 1/3, at a total cost of $200.
4. Completed $3,900 of recording sessions on 1/4 that customers had paid for in advance in December.
5. Received $4,750 cash on 1/5 from customers for recording sessions started and completed in January.
6. Wrote a check on 1/6 for $4,080 for an amount owed on account.
7. Converted $1,030 of cash equivalents into cash on 1/7.
8. On 1/15, completed EFTs for $1,420 for employees’ salaries and wages for the first half of January.
9. Received $2,880 cash on 1/31 from customers for recording sessions to start in February.

Required:

1. Prepare journal entries for the January transactions. Review the 'General Ledger' and the unadjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances.
2. Prepare journal entries for items (j)–(n) from the bank reconciliation.
   j. The bank deducted $500 for an NSF check from a customer deposited on January 5.
   k. The check written January 6 has not cleared the bank, but the January 2 payment has cleared.
   l. The cash received and deposited on January 31 was not processed by the bank until February 1.
   m. The bank added $3 cash to the account for interest earned in January.
   n. The bank deducted $3 for service charges.
3. Prepare adjusting journal entries on 1/31 in 'General Journal' Tab. (these are shown as items 15-21).
   o. Depreciation for the month is $170.
   p. Salaries and wages totaling $1,900 have not yet been recorded for January 16–31.
   q. Prepaid Rent will be fully used up by March 31.
   r. Supplies on hand at January 31 were $500.
   s. Received $200 invoice for January electricity charged on account to be paid in February but is not yet recorded.
   t. Interest on the promissory note of $48 for January has not yet been recorded or paid.
   u. Income tax of $1,200 on January income has not yet been recorded or paid.
4. Review the adjusted 'Trial Balance' as of January 31.
5. Prepare an income statement for the period ended January 31 in the 'Income Statement' Tab.
6. Prepare a bank reconciliation in the 'Bank Reconciliation' Tab.
7. Prepare a classified balance sheet as of January 31 in the 'Balance Sheet' Tab.
8. Using the information from the requirements above, complete the 'Analysis' tab.

REQUIREMENTS:

1. General Journal tab - Prepare the journal entries to record the transactions that occurred from January 1-31. Review the accounts as shown in the General Ledger and Trial Balance tabs. Then prepare the necessary adjusting entries at January 31 to correctly report net income for the period.

2. General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted and adjusted balances in the General Ledger.

3. Trial Balance tab - You may view either the unadjusted and adjusted trial balance by choosing from the drop-down.

4. Income Statement tab - Use the drop-down to select the accounts properly included on the income statement. The unadjusted and adjusted balances will appear for each account based on your selection.

5. Statement of Retained Earnings tab - Prepare the bank reconcilation for the year ended January 31.

6. Balance Sheet tab - Use the drop-down to select the accounts to properly included on the balance sheet. The unadjusted and adjusted balances will appear for each account, based on your selection.

7. Analysis tab - Using the information from the requirements above, complete the 'Analysis' tab.

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.50 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,300?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $58,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,200 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,200)?

Dwyer​,Inc. is a privately held furniture manufacturer. For August 2014​, Dwyer had the following standards for one of its​ products, a wicker​ chair:

The following data were compiled regarding actual

performance​:

actual output units​ (chairs) produced, 2,200​; square yards of input purchased and​ used, 6,300​; price per square​ yard, $6.00​; direct manufacturing labor​ costs, $10,165​; actual hours of​ input, 950​; labor price per​ hour, $10.70.

Read the requirements

Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred.

​Let's begin by determining the formula used to calculate the actual costs of direct​ materials, then enter the amounts in the formula and calculate the cost.

Next we will calculate the actual input at the budgeted price.

Determine the formula and calculate the costs for the flexible budget.

Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable​ (F) or unfavorable​ (U).

Now give a plausible explanation of why each variance occurred. Begin with the direct material variances.

Many high-end earners such as athletes, entertainers and surgeons have a maximum federal tax rate of up to 40.5% with the Medicare surtax, while entrepreneurs and business executives can often structure their compensation to get capital gains treatment and pay a maximum tax rate virtually half of that at 23.8%. Discuss the equity, risks and opportunities involved in tax planning executive compensation using some the the laws and tools you learned in chapters 5 & 6. Once again label and citations you use and clearly state opinions as such. Alternatively you may discuss tax planning for small business owners and how to best maximize tax savings utilizing the new QBI deduction and managing itemized deductions.

Buzzy Company sold $400,000 worth of 10%, ten year bonds on July1st, 2019, at a time when the market rate of interest on similar investments was 12%. The semiannual bonds pay interest on December 31st and June 30th .Using the interest method of bond amortization, journalize the payments of interest on December 31, 2019 and June 30, 2020

Evan Corporation’ charter authorized the following capital stock: Preferred stock: 8 percent, par $11, authorized 10,000 shares. Common stock: par $2.3, authorized 50,000 shares. Since inception, Skyhawk sold 6,058 shares of the common stock at $3.4per share and 1,845 shares of the preferred stock at $15. The ending retained earnings was $81,790 On the statement of stockholders' equity, the total stockholders' equity would be reported as $_____

On January 1, 2011, Courier Inc. purchased new equipment that had a total cost (including shipping and installation) of $81,000. The equipment is expected to have a useful life of four years or produce a total of 121,000 units. At the end of its life, the equipment is expected to have a residual value of $4,600. The equipment is expected to produce 22,990 units in 2011; 32,670 units in 2012; and 35,090 units in 2013; and 30,250 units in 2014. Courier Inc.'s fiscal year ends on December 31.

In the table below, fill in the missing depreciation expense and accumulated depreciation amounts using the straight-line, double-declining-balance, and units-of-production methods. Do not round your intermediate calculation. When required, round your answers to the nearest dollar.

Better Fitness Gear applies overhead on the basis of direct labor hours. Five direct labor hours are required for each unit produced. Planned production for the period was set at 8,000 units. Budgeted fixed manufacturing overhead for the period is budgeted at $20,000 and variable manufacturing overhead is budgeted at $100,000. The 48,500 hours worked during the period resulted in production of 9,500 units. Actual manufacturing overhead cost incurred was $156,000. Required: Calculate the three overhead variances:

a. Total Spending Variance

b. Total Efficiency Variance

c. Total Volume Variance

d. Proof: Total Factory Overhead Variances

e. Interpret your variances

Sales mix, multiple product breakeven, business risk, quality of information Keener produces
two products: regular boomerangs and premium boomerangs. Last month 1,200 units of regular and 2,400 units of premium were produced and sold. Average prices and costs per unit for the month are displayed here.
REGULAR PREMIUM

SELLING PRICE $22.15 $45.30

VARIABLE COSTS $4.31 $6.91

PRODUCT LINE FIXED COST $8.17 $24.92

CORPORATE FIXED COST $5.62 $5.62

OPERATING PROFIT $4.05 $7.85

A. Assuming the sales mix remains constant, how many units of premium will be sold each time a unit of regular is sold?
B. What are the total fixed product line costs for each product?

C. What are the total corporate fixed costs?

D. What is the overall corporate breakeven in total revenue and for each product, assuming thesales mix is the same as last month’s?

E.  What is the breakeven in revenues for regular boomerangs, ignoring corporate fixed costs?

F. Why is the breakeven for regular boomerangs different when we calculate the individual product breakeven versus the combined product breakeven?

Horizontal Analysis of the Income Statement

Income statement data for Boone Company for two recent years ended December 31, are as follows:

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

b. The net income for Boone Company increased by 79% between years. This increase was the combined result of an   in sales of 28% and   percentage   in cost of goods sold. The cost of goods sold increased at a   rate than the increase in sales, thus causing the percentage increase in gross profit to be   than the percentage increase in sales.