Cassi Cronin is the Women’s head varsity hockey coach at USGB University. She has enjoyed considerable success over the years and is considering starting a summer hockey camp. USGB University would charge Coach for rooms, meals and ice-rink time for participants, plus a 10% commission based upon the price charged to campers. Coach Cassi has heard of the CVP experts in Acct 2220 and is asking for your help (and she is willing to pay!). You state that some of the important factors in analyzing such an opportunity involve setting fees, predicting enrollments and estimating the behavior of costs. Accordingly, planning ahead involves estimates and assumptions. Coach has provided estimates as follows:
|
Expected/Planned enrollments each week |
90 campers |
|
Average price to be charged for one-week of camp |
$225 per camper |
|
Estimated Costs: |
|
|
Asst coaches’ salaries |
$550 per coach per week |
|
Campus food/dining for campers |
$40 per camper |
|
Health insurance and fancy USGB T-shirts |
$15 per camper |
|
Room rent charged by university |
$28 per camper |
|
Ice Arena & locker room charge (by University) |
$2,000/week, plus 10% of camper fee |
|
Admin, marketing brochures, mailings, etc. |
$2,700 for each week |
Coach Cassi states that other camps have typically employed one assistant coach for each 15 campers, excluding the director (Cassi in this case). One problem is that you need to hire the coaches before you know the enrollments, although it is usually possible to find one or two at the last minute. It is, however, important to hire most of the assistant coaches early so you can use their names in the marketing brochures. Further, while the enrollment and prices given are averages, variations exist, with enrollments generally ranging from 60 to 110 and weekly camper fees ranging from $160 to $330. As might be expected, the better-known camps have higher enrollments at higher prices, but they also pay more for more well-known coaches. Coach Cassi will keep any profits (or suffer any losses), so she wants to be fairly confident before proceeding with this venture.
Required: Use the CVP Equation Method (& template) to Analyze:
In: Accounting
Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 160,000 shares of Silva Company directly from one of the founders for a price of $44 per share. Silva has 400,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $432,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $1,494,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva.
a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
| Year 1, Jan. 4 | Investment in Silva Company Stock | ||
| Cash | |||
| Year 1, July 2 | Cash | ||
| Investment in Silva Company Stock | |||
| Year 1, Dec. 31 | Investment in Silva Company Stock | ||
| Investment in Silva Company Stock |
Feedback
a.
Jan 4: Record the investment at cost.
July 2: Calculate the ownership percentage. Under the equity method of accounting for investments, the dividends earned affect the investment account.
Dec. 31: Calculate the ownership percentage. Under the equity method of accounting for investments, the share of income affects the investment account.
b. Determine the December 31, Year 1, balance
of Investment in Silva Company Stock.
$
Feedback
b. Set up a T account for the Investment account and calculate the ending investment using your answers from requirement (a).
Feedback
Partially correct
Check My Work1 more Check My Work uses remaining.
In: Accounting
What is Cost-Volume-Profit analysis and how might it be used?
Explain Margin of Safety and how it is calculated.
Compute the Contribution Margin and describe what it reveals about a company’s cost structure.
What is Operating Leverage and how is it used to analyze changes in sales and profitability?
In: Accounting
In: Accounting
Schedule of Cash Collections on Accounts Receivable and Cash Budget
Bennett Inc. found that about 45% of its sales during the month were for cash. Bennett has the following accounts receivable payment experience:
| Percent paid in the month of sale | 25 | ||
| Percent paid in the month after the sale | 68 | ||
| Percent paid in the second month after the sale | 5 |
Bennett's anticipated sales for the next few months are as follows:
| April | $250,000 | ||
| May | 290,000 | ||
| June | 280,000 | ||
| July | 295,000 | ||
| August | 300,000 |
Required:
1. Calculate credit sales for May.
$
Calculate credit sales for June.
$
Calculate credit sales for July.
$
Calculate credit sales for August.
$
Feedback
1. Calculate credit sales for each month.
2. Prepare a schedule of cash receipts for July and August. Round your answers to the nearest whole dollar, if necessary. If an amount box does not require an entry, leave it blank or enter "0". Be sure to enter percentages as whole numbers.
| Bennett Inc. Schedule of Cash Receipts For July and August |
||||||
| July | August | |||||
| Cash sales | $ | $ | ||||
| Payments on account: | ||||||
| From May credit sales: | ||||||
| $ × % | ||||||
| From June credit sales: | ||||||
| $ × % | ||||||
| $ × % | ||||||
| From July credit sales: | ||||||
| $ × % | ||||||
| $ × % | ||||||
| From August credit sales: | ||||||
| $ × % | ||||||
| Cash receipts | $ | $ | ||||
In: Accounting
[Taxation]Historically, taxpayers have implemented strategies to mitigate or eliminate the effects of double taxation. Why might taxpayers think twice before implementing such strategies today? Explain.
In: Accounting
3.
TylerTyler
PhillipsPhillips
works for
RamirezRamirez
Company all year and earns a monthly salary of
$ 3 comma 500$3,500.
There is no overtime pay. Based on
TylerTyler's
W-4,
RamirezRamirez
withholds income taxes at
2020%
of his gross pay. As of July 31,
TylerTyler
had
$ 24 comma 500$24,500
of cumulative earnings.
LOADING...
(Click the icon to view payroll tax rate information.)Journalize the accrual of salary expense for
RamirezRamirez
Company related to the employment of
TylerTyler
PhillipsPhillips
for the month of August. (Record debits first, then credits. Round all amounts to the nearest cent. Select the explanation on the last line of the journal entry table.)
Date
Accounts and Explanation
Debit
Credit
For all payroll calculations, use the following tax rates and round amounts to the nearest cent:
|
Employee: |
OASDI:
6.26.2% on first$ 118 comma 500$118,500 earned; Medicare:1.451.45% up to$200,000, 2.35% on earnings above $200,000. |
|
Employer: |
OASDI:
6.26.2% on first$ 118 comma 500$118,500 earned; Medicare:1.451.45%; FUTA:0.60.6% on first$ 7 comma 000$7,000 earned; SUTA:5.45.4% on first$ 7 comma 000$7,000 earned. |
In: Accounting
Compose a memo addressing the allocation of profits to three partners of a new business: Alan, Bob, and Carol. It is your responsibility to address the potential ways in which the first-year profits can be divided among these partners, including whether the partners should be taking a salary, how the partners’ capital accounts may be affected by various decisions, and the most ethical way that the profits could be divided. Your memo should answer the following prompt: A new business client comes to your office. There are three owners of the business. The three individuals, Alan, Bob, and Carol, are thinking about forming a partnership. Alan is only investing $1 million in cash. He will not have anything to do with the daily activities of the business. Bob has had some experience in the business and will be responsible for the day-to-day operations of the business. Carol has a great deal of experience and many contacts within the business. She will be responsible for attracting new clients. Neither Bob nor Carol are investing cash into the partnership. During the first year of operation, the partnership generated a profit of $150,000. None of the partners received distributions during the year. Answer the following: E. How do the payment of salary and the allocation of profit affect entries and the financial bottom line? Be sure to support your explanation with concrete examples. F. How could the payment of salary and allocation of profit be a more effective method of splitting the company’s profits for the three partners? Explain a scenario in which the three partners would all be compensated fairly, and support your answer with logical reasoning. G. What would be the value of each partner’s capital account at the end of the year, given your proposed fair allocation method? Support your answer with quantitative data and an explanation of how you came to this conclusion.
In: Accounting
The shareholders’ equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 6 million shares; issued and outstanding, 1 million shares $ 1,000,000 Paid-in capital—excess of par 4,000,000 Retained earnings 15,000,000 On April 1, 2018, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies’ common stock was $34 on April 1, 2018, and $44 on June 1, 2018.
Required: Complete the below table to calculate the stock dividend. Prepare the journal entries to record the declaration and distribution of the stock dividend.
The shareholders’ equity of Core Technologies Company on June
30, 2017, included the following:
| Common stock, $1 par; authorized, 6 million shares; issued and outstanding, 1 million shares |
$ | 1,000,000 | |
| Paid-in capital—excess of par | 4,000,000 | ||
| Retained earnings | 15,000,000 | ||
In: Accounting
In: Accounting
APR = 15.99%
Carry-Over balance for month 1 = $793.16
Minimum payment is $50 or 8%, whichever is greater
In: Accounting
Simmons Inc. has an expected net income of 4 million Euros at the end of the year. The company is currently all equity financed but it is planning to buy back equity and undertake some debt so that the debt- to-equity ratio will become 0.5. The debt-to-equity ratio will be kept constant. The assets will be fully depreciated in the next three years, with annual depreciation installments of 1,000,000 Euro each. The company does not plan to acquire any asset. The expected return on unlevered equity for Simmons is 9.25% and the cost of debt is 5.25%. The tax rate on corporate earnings is 32%. What is the value of Simmons’ debt, if the expected EBITDA of the company is perpetual and constant every year? (Assume that the depreciation tax shield is as risky as the rest of the unlevered cash flow)
(a) 15,829,380 Euro
(b) 16,032,251 Euro
(c) 17,987,342 Euro
(d) 18,223,172 Euro
The answer is D: 18,223,171 Euro
Thumb up for correct step-by-step solution. Many thanks.
In: Accounting
Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of directors and suggested the Percy Division be eliminated. “If the Percy Division is eliminated,” she said, “our total profits would increase by $26,500.”
| The Other Five Divisions |
Percy Division |
Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Sales | $1,663,000 | $100,000 | $1,763,000 | |||||
| Cost of goods sold | 978,100 | 76,800 | 1,054,900 | |||||
| Gross profit | 684,900 | 23,200 | 708,100 | |||||
| Operating expenses | 529,000 | 49,700 | 578,700 | |||||
| Net income | $155,900 | $ (26,500 | ) | $129,400 |
In the Percy Division, cost of goods sold is $60,500 variable and
$16,300 fixed, and operating expenses are $29,100 variable and
$20,600 fixed. None of the Percy Division’s fixed costs will be
eliminated if the division is discontinued.
Is Veronica right about eliminating the Percy Division? Prepare a
schedule to support your answer. (Enter negative
amounts using either a negative sign preceding the number e.g. -45
or parentheses e.g. (45).)
| Continue | Eliminate | Net Income Increase (Decrease) |
|||||
|---|---|---|---|---|---|---|---|
| Sales | $enter sales in dollars | $enter sales in dollars | $enter sales in dollars | ||||
| Variable costs | |||||||
| Cost of goods sold | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | ||||
| Operating expenses | enter operating expenses in dollars | enter operating expenses in dollars | enter operating expenses in dollars | ||||
| Total variable | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | ||||
| Contribution margin | enter contribution margin in dollars | enter contribution margin in dollars | enter contribution margin in dollars | ||||
| Fixed costs | |||||||
| Cost of goods sold | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | ||||
| Operating expenses | enter operating expenses in dollars | enter operating expenses in dollars | enter operating expenses in dollars | ||||
| Total fixed | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | ||||
| Net income (loss) | $enter net income or loss in dollars | $enter net income or loss in dollars | $enter net income or loss in dollars |
| Veronica is select an optioncorrectincorrect correctincorrect |
In: Accounting
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows.
| Direct materials, ? kilograms at $8 per kilogram | $ | ? | per game |
| Direct labor, 0.75 hours at ? per hour | ? | per game | |
| Overhead, 0.75 hours at ? per hour | ? | per game | |
| Total costs | $ | 39 | per game |
Assume that the following data appeared in J&W’s records at the end of the past month.
| Actual production | 46,500 | units | |
| Actual sales | 43,500 | units | |
| Materials (115,500 kilograms) | ? | ||
| Materials price variance | 42,000 | U | |
| Materials efficiency variance | 31,200 | U | |
| Direct labor price variance | 28,800 | U | |
| Direct labor (32,000 hours) | 534,400 | ||
| Underapplied overhead (total) | 18,300 | U | |
There are no materials inventories.
Required:
a-1. Complete the standard cost sheet for a game console given below.
|
||||||||||||||||||||||||||
a-2. Prepare a variance analysis for direct materials and direct labor.
|
||||||||||||||||||
b. Assume that all production overhead is fixed and that the $18,300 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?
|
In: Accounting
Multiple Production Department Factory Overhead Rates
The total factory overhead for Bardot Marine Company is budgeted for the year at $945,000, divided into two departments: Fabrication, $585,000, and Assembly, $360,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require one direct labor hour in Fabrication and two direct labor hours in Assembly. The bass boats require four direct labor hours in Fabrication and four direct labor hours in Assembly. Each product is budgeted for 6,000 units of production for the year.
When required, round all per unit answers to the nearest cent.
a. Determine the total number of budgeted direct labor hours for the year in each department.
| Fabrication | direct labor hours |
| Assembly | direct labor hours |
b. Determine the departmental factory overhead rates for both departments.
| Fabrication | $ per dlh |
| Assembly | $ per dlh |
c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.
| Speedboat: | $ per unit |
| Bass boat: | $ per unit |
In: Accounting