Sunshine Co. Ltd. is a manufacturing company. It manufactures 2 products, known as ‘A’ and ‘Z’. The following information is given for the year 2017: -
The standard direct materials and direct labour used for each product is as follows:
‘A’ ‘Z’
Material 1 10 units 8 units
Material 2 5 units 9 units
Direct Labour 10 hours 15 hours
Standard direct materials and direct labour costs:
($)
Material 1 8.20 per unit
Material 2 17.00 per unit
Direct Labour 14.00 per hour

ICLBAT/JANUARY 2019
4

Other important data is as follows for the year 2017:
Direct material
Material 1 Material 2
Opening inventory (units) 9,000 8,500
Closing inventory required (units) 10,000 2,000

Finished product
‘A’ ‘Z’
Forecast sales (units) 8,500 1,600
Selling price per unit $ 500 $ 660
Ending inventory required (units) 2,000 100
Beginning inventory (units) 200 90

Required:
Prepare the following budgets for the year 2017: -
(a) Sales budget

(b) Production budget

(c) Direct materials usage budget

(d) Direct materials purchase budget

(e) Direct labour budget

20-3 20-16 Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

Pond Corporation holds 75 percent of the voting shares of Spring Services Company. During 20X7, Pond sold inventory costing $63,000 to Spring Services for $105,000, and Spring Services resold one-third of the inventory in 20X7. The remaining inventory was resold in 20X8. Also in 20X7, Spring Services sold land with a book value of $140,000 to Pond for $240,000. Pond continues to hold the land at the end of 20X8. The companies file separate tax returns and are subject to a 40 percent tax rate.

Required:
Prepare the consolidation entries relating to the intercorporate sale of inventories and land needed in the consolidation worksheet at the end of 20X8. Assume that Pond uses the equity method in accounting for its investment in Spring Services.

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 22,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:

1. Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?
2. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of the exchange rate fluctuations on reported income in 2017?
3. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018?

(Input all amounts as positive values.)

Effect of Exchange Rate Fluctuations

a.2017

2018

b.2017

c.2017

2018

Dorman Products Company uses a job order cost system and applies overhead to production on the basis of direct labor cost. On January 1, 2018, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $30,000; direct labor $15,000; and manufacturing overhead $25,000. Job No. 49 had been completed at a cost of $100,000 and was part of finished goods inventory. There was a $35,000 balance in the Raw Materials inventory account.

         During the month of January, the company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were sold on account during the month for $120,000 and $150,000, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $270,000 on account.

2. Incurred factory labor costs of $61,000. Of this amount $11,000 is related to employer payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $5,000; indirect labor $17,000; depreciation expense $22,000 and accounts payable $9,000 (for utilities and repairs).

4. Assigned direct materials and direct labor to jobs as follows.

                        Job No.                        Direct Materials                     Direct Labor

                        50                                $ 8,000                                   $    7,000

                        51                                29,000                                       16,000

                        52                                32,000                                       20,000

5. The company uses direct labor cost as the activity base to assign overhead.

Instructions

PLEASE ONLY DO E & F (Everything has already been solved in separate questions)

(a) Calculate the predetermined overhead rate for the year 2018, assuming Dorman Products Company Manufacturing estimates total manufacturing overhead costs of $863,600 and direct labor costs of $680,000.

(b) Complete the job cost sheets for Jobs 50, 51, and 52. (This can be done also when you get to parts d. and e.)

(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.

(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.

(e) Prepare the journal entry to record the completion of Job 50 and Job 51 during the month.by using the total from the job cost sheets that were completed during the month.

(f) Prepare the journal entries to record the sale of Job 49 and Job 50 during the month.

(g) What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of? (For example which Job and what specific costs.)

(h) What is the amount of over- or underapplied overhead for the month?

Identify the three basic rules that apply to the REA model pattern.

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.70 feet of leather and predicts leather will cost $2.90 per foot. Suppose Perfect Pet made 65 collars during February. For these 65 collars, the company actually averaged 1.90 feet of leather per collar and paid $2.40 per foot.

Required:
1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.)



2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable.



3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable.



6. Calculate the direct materials price and quantity variances. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Prepare general journal entries for the following transactions.

If an amount box does not require an entry, leave it blank. When required, enter amounts to the nearest cent. Assume 360 days in a year.

An existing turning operation in an small parts manufacturing plant is currently generating 25% scrap. The value of the scrap including material, labor and overhead costs is $20.00/unit. The current rate of process is 2000 units / month of both good an bad product. The existing equipment was purchased 5 years ago for $500,000. Current operating costs are $20,000 per year. The equipment's market value currently is $150,000. It has 4 more years of life remaining.

A quality improvement team has determined that the scrap rate can be reduced to 7% if new tooling and major overhaul work could be performed and some of the major components be replaced. The improvements would also reduce the annual operating costs to $15,000 per year.

If the organization requires a 20% IRR what is the maximum that could be spent on the equipment to reduce the scrap rate?

The following transactions and adjusting entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles.

Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 and 3 of the journal.

Journalize the Year 1 transactions and adjusting entries on Page 1.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Journalize the Year 2 transactions and adjusting entries on Page 2.

PAGE 2

JOURNAL

ACCOUNTING EQUATION

Journalize the Year 3 transactions and adjusting entries on Page 3.

PAGE 3

JOURNAL

ACCOUNTING EQUATION

Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $240,845. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7:

The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379,800. This new equipment would require maintenance costs of $94,900 at the end of the fifth year. The cost of capital is 9%.



Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Calculate the net present value

20-03 20-16

Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

Multiple choice questions. No need to explain.

Question 21

Sandstrom Corporation has an extraordinary loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%. At what amount should Sandstrom report each item?

Question 22

The approach most companies use to provide information related to the components of other comprehensive income is a

Question 23

The following information applied to Howe, Inc. for 2010:

What is ending inventory?

Question 24

The following information was derived from the 2010 accounting records of Perez Co.:

What is the cost of sales for 2010?

Question 25

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

Question 26

The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its

Question 27

Trade discounts are

Question 28

Under the cash basis of accounting, revenues are recorded

Question 29

Under which section of the balance sheet is "cash restricted for plant expansion" reported?

A dynamometer test lab currently has 45 computers with 20 printers. The computers cost $3,500 each and the printers were $350 each when purchased 2 years ago. The market value of the computers is estimated at $750 each today and the printers $75 each today. It is expected that the current equipment will last another 4 years and have no salvage value at that time. Operating expenses are $350 for each computer and $150 for each printer per year.

A new networked system is being considered that would have 45 terminal with a cost of $2.500 each; 7 printers would be purchased at $1000 each. The life of the new system is 6 years with a salvage value of $500 for the terminals and $400 for the printers at the end of that time. Operating expenses for the networked system are $6,000 per year.

A) What are the sunk costs at this point? (5 points)

B) If the firm desires a 15% IRR, determine the best alternative. (20 points)

Show ALL work.

Estimating Share Value Using the ROPI Model The following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Refer to the information in the table to answer the following requirements. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,469 $ 3,989 $ 4,587 $ 5,275 $ 6,066 $ 6,187 NOPAT 152 319 367 422 485 495 NOA 1,032 1,173 1,349 1,551 1,784 1,820 Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 87.2 million, and net nonoperating obligations (NNO) of $(858) million. (Negative NNO reflects net nonoperating assests such as investments rather than net obligations) (a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period ROPI (NOPAT - [NOABeg × rw]) Answer 216 Answer 250 Answer 287 Answer 330 Answer 317 Discount factor [1 / (1 + rw)t ] (round 5 decimal places) Answer 0.90909 Answer 0.82645 Answer 0.75131 Answer 0.68301 Present value of horizon ROPI Answer 196 Answer 206 Answer 216 Answer 225 Cum present value of horizon ROPI Answer 842 Present value of terminal ROPI Answer 2,703 NOA Answer 1,032 Total firm value Answer 4,577 NNO Answer 858 Firm equity value Answer 3,719 Shares outstanding (millions) Answer 872 (round one decimal place) Stock price per share Answer 42.65 (round two d