Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies:

• Ending finished goods inventory should be 40 percent of next month’s sales.
• Ending raw materials inventory should be 30 percent of next month’s production.

Expected unit sales (frames) for the upcoming months follow:   

Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold.

     Iguana, Inc., had $10,500 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale.

     Of raw materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Raw materials purchases for March 1 totaled $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $240 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment.

Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies:

• Ending finished goods inventory should be 40 percent of next month’s sales.
• Ending raw materials inventory should be 30 percent of next month’s production.

Expected unit sales (frames) for the upcoming months follow:   

Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold.

     Iguana, Inc., had $10,500 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale.

Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance. (Leave no cell blank enter "0" wherever required. Round your answers to 2 decimal places.)

Construction project requires an intial investment of $900,000, has a nine-year life, and salvage value is Zero. Sales are projected at 75,000 units per year. Price per unit is $47, variable cost per unit is $34, and fixed costs are $825,000 per year. The tax rate is 35%, and discount rate is 15%. Using straight-line depreciation method:
1. Calculate the accounting break-even point in number of units, what is the degree of operating leverage at the accounting break-even point
2. Calculate the OCF, NPV
3. Calculate the financial break-even point in number of units

Q1) Pennell Company gathered the following information for the year ended December 31, 2014:

During the year, Pennell produced and sold 70,000 units of product at a sale price of $15.00 per unit. There was no beginning inventory of product on January 1, 2014.

Required:

1. Prepare Contribution Margin Income Statement.
2. Compute BEP (in units and TL)
3. Compute Operating Leverage
4. Compute Safety Margin (in units)
5. Compute the amount that must be sold to increase operating income (net incom 70 %.
6. Marketing manager believes there will be 10 % increase in sales if Company decreases price by 10 %. Should price is decreased?
7. If Company decreases price by 10%, how many units must be sold to maintain current profit?

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Q2)Print House, Inc., produces and sells laser jet printers for $1,400 each. The variable costs of each printer total $1,000 while total annual fixed costs are $300,000. Company’s profit for 2008 is $200,000.

Required:  

            a) Compute the Company’s break-even point in units and dollars.

   b) What is the Company’s margin of safety in units, dollars, and percentage?

            c) Compute the Company’s Sales for 2008.

Selected ratios for 2018 for two companies in the same industry are presented below:

REQUIRED: Answer each of the following questions providing the ratio(s) to support your answer, explain.

1) Comment on how successful each company appears to managing its accounts receivable. Terms are net 30 for both companies
2) How well does each company appear to be managing its inventory?
3) Which company is more solvent, explain using ratios?  
4) Which company is more profitable, explain using ratios?
5) The gross profit margin for Draco is higher than Potter's and the industry average. Provide two reasons why this would be the case?
6) Which company would investors believe would have greater prospects for seeking growth?
7) Why is Basic Earnings per Share not comparable between companies?

3. What is the new "pass thru" tax deduction? Which entities does it apply to?

4. Do you think that by reducing the corporate tax rate it will help or hurt the United States?

Question 4:

Lucy is trying on clothes in the dressing room of Federal Department Store. Lucy goes home, but leaves her purse in the dressing room. A Federal employee, Beth, finds the purse in the dressing room and gives it to the storeowner. Assuming Lucy never returns to claim the purse, who is entitled to title to the purse and its contents, assuming the purse is (a) lost, (b) mislaid, or (c) abandoned?

Please show work:

Minnesota Financial is a subsidiary of Mayberry Enterprises. Processing loan applications is the main task of the corporation. They charge a $500 fee for every loan application processed. Next year's fixed costs have been projected as follows: sales and advertising $40,000; building rental, $18,000; Depreciation of computers and office equipment $27,000; and other fixed costs, $5,000. The projected variable costs include: loan officer’s wages, $27 per hour (a loan application takes 5 hours to process); supplies $16.40 per application; and other variable costs, $8.60 per application. (Round all answers to the closest full number)

Questions:

1. Determine the number of loan applications the company must process to (a) break even and (b) earn a profit of $50,000 (round to the closest full number).

2. Determine the number of loan applications the company must process to earn a target profit of $50,000 if fixed costs increase by $10,000.

3. Assuming the original fixed cost information and assuming that 500 loan applications are processed, compute the loan application fee the company must charge if the target profit is $75,000.

4. If 750 loan applications is the maximum number her staff can handle. How much more (less) can be spent on promotional costs if the highest fee tolerable to the customer is $600, if variable costs cannot be reduced, and if the target net income for such an application load is $100,000?

Exercise 16-13 Multiple differences; calculate taxable income [LO16-1, 16-4, 16-6]

Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $120,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $520,000, which includes interest revenue of $60,000 from municipal bonds. The enacted tax rate is 40%.

Assuming no differences between accounting income and taxable income other than those described above:

Required:
1. Complete the following table given below and prepare the journal entry to record income taxes in 2018.
2. What is Southern Atlantic’s 2018 net income?

P5-1A. Journal Entries For Merchandise Transactions on Seller's and Buyer's Books-Perpetual System

The following transactions occurred between the Decker Company and Mann Stores, Inc., during March:

Mar. 8    Decker sold $14,000 worth of merchandise ($9,600 cost) to Mann Stores with items of 2/10, n/30.

   10 Mann Stores paid freight charges on the shipment from Decker Company, $500.

   12 Mann Stores returned $2,000 of the merchandise ($1,600 cost) shipped on March 8.

   17 Decker Received full payment for the net amount due from the March 8 sale.

   20 Mann Stores returned goods that had been billed originally at $800 ($600 cost). Decker issued a check for $784.

Required

Prepare the necessary journal entries for (a) the books of Decker Company and (b) the books of Mann Stores, Inc. Assume that both companies use the perpetual inventory system.

It seems as though outsiders are always looking for more detailed information while companies are always trying to keep information confidential. Who’s right? Where do you draw the line?

1.If you were considering investing in a company, what non-financial information related to the company would you want to learn about? Why?

2.If you were a majority shareholder in a company, would you be willing to spend a considerable amount of money (which could otherwise be productively invested) to track and report non-financial information? Why?

14. Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Determine the net present value of the projects based on a zero percent discount rate.

b. Determine the net present value of the projects based on a discount rate of 11 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.)

c. If the projects are not mutually exclusive, which project(s) would you accept if the discount rate is 11 percent?

1. What kind of Business problem does 0x( Blockchain solution) solving?  

The following transactions and events took place at MRI Company during its recent calendar-year reporting period.

1. In September 2011, MRI sold $140,000 of merchandise covered by a 180-day warranty. Prior experience shows that costs of the warranty equal 5% of sales. Compute September’s warranty expense and prepare the adjusting journal entry for the warranty.
2. On October 12, 2011, MRI arranged with a supplier to replace MRI’s overdue $10,000 account payable by paying $2,500 cash and signing a note for the remainder.  The note matures in 90 days and has a 12% interest rate.  Prepare the entries recorded on October 12, December 31, and January 10, 2010 related to this transaction.
3. For this calendar year, MRI’s net income is $1,000,000, its interest expense is $275,000, and its income taxes expense is $225,000.  Calculate the Times Interest Earned Ratio. How would you assess the credit risk of this company?

Riverbed Corp operates in the province of Ontario and sells merchandise on which HST must be charged at a rate of 13%. Riverbed uses a perpetual inventory system and has a calendar year end.
Transactions for the business for the month of March are shown below:

1) Prepare the journal entries to record the March transactions of Riverbed Corp.

2) Repeat part (a) assuming that Riverbed now operates in the province of Manitoba where PST is charged at the rate of 8% and GST is at the rate of 5%. Also assume that Riverbed has a perpetual inventory system

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2018. The options permit holders to acquire 7 million of the company’s $1 par common shares for $27 within the next six years, but not before January 1, 2021 (the vesting date). The market price of the shares on the date of grant is $29 per share. The fair value of the 7 million options, estimated by an appropriate option pricing model, is $8.1 per option.

Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2018, 2019, and 2020. Record the exercise of the options if all of the options are exercised on May 11, 2022, when the market price is $30 per share.