Examine the elements of the cost-volume-profit (CVP) income statement and provide your opinion on the benefits of its use for decision making by the management of the company researched over traditional income statements under generally accepted accounting principles (GAAP).

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

1. The gross margin is 25% of sales.

2. Actual and budgeted sales data:

3. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.

4. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.

5. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory.

6. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $936 per month (includes depreciation on new assets).

7. Equipment costing $1,300 will be purchased for cash in April.

8. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Although alternative approaches of cost assignment are available their usefulness is limited due to different and perhaps unrealistic assumptions. Hence the choice of cost assignment method needs careful attention. Discuss

Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $4 per pound and 0.4 direct labor hours at a rate of $18 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $4,900 per month. The company’s policy is to maintain direct materials inventory equal to 30% of the next month’s materials requirement. At the end of February the company had 5,780 pounds of direct materials in inventory. The company’s production budget reports the following.

(1) Prepare direct materials budgets for March and April.

(2) Prepare direct labor budgets for March and April

(3) Prepare factory overhead budgets for March and April.

While in class, Uliss placed his cell phone under his chair. At the end of class, Uliss could not remember where he placed the phone. Charlie, a classmate, found the phone under the chair and now claims ownership rights under the theory “ Finders are keepers”. In a conflict between Uliss and Charlie, who would win and why?

Fickel Company has two manufacturing departments.- Asembley and testing & packing. The predetermined overhead rates in asembley and testing and packing are $27.00 per direct labor hour and $23 per direct labor hour, respectfully. The companys direct labor wage is $29 per hour. the following pertains to job N-60

Asmebley Testing and packing

direct materials $415 $55

Direct labor $348 $87

What is the total manufacturing cost assigned to Job N-60?

If job N-60 Consists of 10 units, what is the unit product cost for this job?

1. Total Manufacturing cost _____________

2.Unit product cost ___________ per unit

Which of the following is an example of an application control for the purchases and payments system?

A. Management approval is required for large purchases.

B. The purchase order number is automatically assigned.

C. The employee who receives supplier goods must not be the same employee who ordered the goods.

D. Defective items should be returned to suppliers promptly.

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $920. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 275 Units sold 260 Units in ending inventory 15 Variable costs per unit: Direct materials $ 110 Direct labor $ 320 Variable manufacturing overhead $ 40 Variable selling and administrative $ 15 Fixed costs: Fixed manufacturing overhead $ 77,000 Fixed selling and administrative $ 33,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 239,200 Cost of goods sold 195,000 Gross margin 44,200 Selling and administrative expense 36,900 Net operating income $ 7,300 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 22 Direct labor $ 14 Variable manufacturing overhead $ 5 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 270,000 Fixed selling and administrative expenses $ 210,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $52 per unit. Required: 1. Compute the company’s break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3.

In 2018, Wilma Way’s sole proprietorship, WW Bookstore, generated $120,000 net profit. In addition, Wilma recognized a $17,000 gain on the sale of business furniture and shelving, all of which was recaptured as ordinary income. The business checking account earned $960 interest income.

Compute Wilma’s 2018 self-employment tax.

Compute Wilma's allowable Section 199A deduction, assuming $43,000 of W-2 wages and $90,000 unadjusted basis of tangible depreciable property.

Compute Wilma’s 2018 taxable income from her bookstore activity.

The stockholders’ equity accounts of Bramble Corp. on January 1, 2017, were as follows.

During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity.

A. Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Post entries in the order of journal entries posted in the previous part. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)

B Prepare the stockholders’ equity section of the balance sheet at December 31, 2017.

C. Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Round earning per share to 2 decimal places, e.g. $2.66 and all other answers to 1 decimal place. 17.5%.)

Being a franchisor seems to be a mechanism for growth, but what are the growth prospects for entrepreneurs that are franchisees? Isn’t the entrepreneur limited in his or her ability to pursue all the different types of growth strategies? Is being a franchisee simply substituting one type of employment for another type of employment? How can a franchisee grow his or her business (es)?

Hickory Company manufactures two products—13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all $630,000 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

Foundational 7-5

5. What is the activity rate for the Product Design activity cost pool?

6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)

7. Which of the four activities is a batch-level activity?

Machine setups activity

Machining activity

Product design activity

General factory activity

8. Which of the four activities is a product-level activity?

General factory activity

Product design activity

Machine setups activity

Machining activity

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round all intermediate calculations to 2 decimal places.)

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)

12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your

The Geneva Company manufactures the famous Ticktock watch on an assembly-line basis. January 1 work-in-process consisted of 5,000 units partially completed. During the month, an additional 110,000 units were started, and 105,000 units were completed. The ending work-in-process was 60% complete as to conversion costs. Conversion costs are added evenly throughout the process. The following conversion costs were incurred: Beginning costs for work-in-process $1,500 Total current conversion costs $273,920 The conversion costs assigned to ending work-in-process totaled $15,360 using the FIFO method of process costing.

Required information [The following information applies to the questions displayed below.] Washington County’s Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board’s decision appear below. Cost of acquiring additional land for runway $ 82,500 Cost of runway construction 280,000 Cost of extending perimeter fence 19,908 Cost of runway lights 45,000 Annual cost of maintaining new runway 22,500 Annual incremental revenue from landing fees 57,500 In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $180,000. The old snowplow could be sold now for $18,000. The new, larger plow will cost $16,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $94,000 per year in additional tax revenue for the county. In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 18 percent. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 18 percent. The County Board of Representatives believes that if the county conducts a promotional effort costing $28,000 per year, the proposed long runway will result in substantially greater economic development than was projected originally. However, the board is uncertain about the actual increase in county tax revenue that will result. Required: Suppose the board builds the long runway and conducts the promotional campaign. What would the increase in the county’s annual tax revenue need to be in order for the proposed runway’s internal rate of return to equal the county’s hurdle rate of 18 percent? (Round intermediate and final answer to the nearest dollar amount.)