Mckoy Leasing leased a car to a customer. Mckoy will receive $325 a month, at the end of each month, for 60 months. Use the PV function in Excel Superscript ® to calculate the answers to the following questions

1. What is the present value of the lease if the annual interest rate in the lease is 12 %? (Do not round intermediary computations, but round your final answer to the nearest cent.)

2. What is the present value of the lease if the car can likely be sold for $5,000 at the end of five years? (Do not round intermediary computations, but round your final answer to the nearest cent.)

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,080 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is limited to 5,100 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums:

Management believes 6,100 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an alternative to adding another welding machine, management has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier of quality products, would be able to provide up to 4,100 WVD-type drums per year at a price of $150 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate relabeling.

Megan Flores, TufStuff’s production manager, has suggested that the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.5 hours of welding machine time per frame and yet sell for far more than the drums. Megan believes that TufStuff could sell up to 1,680 bike frames per year to bike manufacturers at a price of $259 each. The accounting department has provided the following data concerning the proposed new product:

The bike frames could be produced with existing equipment and personnel. Manufacturing overhead is allocated to products on the basis of direct labor-hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building, but some of it is variable. The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90 per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier.

Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $.75 per WVD drum whether made or purchased and would be $1.70 per bike frame.

All of the company’s employees—direct and indirect—are paid for full 40.00-hour work weeks and the company has a policy of laying off workers only in major recessions.

As soon as your analysis was shown to the top management team at TufStuff, several managers got into an argument concerning how direct labor costs should be treated when making this decision. One manager argued that direct labor is always treated as a variable cost in textbooks and in practice and has always been considered a variable cost at TufStuff. After all, “direct” means you can directly trace the cost to products. “If direct labor is not a variable cost, what is?” Another manager argued just as strenuously that direct labor should be considered a fixed cost at TufStuff. No one had been laid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40.00-hour workweek and overtime has not been necessary since the company adopted Lean Production techniques. Whether the welding machine is used to make drums or frames, the total payroll would be exactly the same. There is enough slack, in the form of idle time, to accommodate any increase in total direct labor time that the bike frames would require.

Required:

1. Would you be comfortable relying on the financial data provided by the accounting department for making decisions related to the WVD drums and bike frames?

2. Compute the contribution margin per unit. [assume direct labor is a fixed cost]

3. Compute the contribution margin per welding hour. [assume direct labor is a fixed cost]

4. Assuming direct labor is a fixed cost:

a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured.

b. What is the increase (decrease) in net operating income that would result from this plan over current operations?

5. Compute the contribution margin per unit. [assume direct labor is a variable cost]

6. Compute the contribution margin per welding hour. [assume direct labor is a variable cost]

7. Assuming direct labor is a variable cost:

a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. [Assume direct labor is a variable cost]

b. What is the increase (decrease) in net operating income that would result from this plan over current operations?

The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation:

Cash and cash equivalents $ 5,000
Accounts receivable (net) 22,000
Inventory 62,000
Property, plant, and equipment (net) 130,000
Accounts payable 41,000
Salaries payable 13,000
Paid-in capital 110,000

The only asset not listed is short-term investments. The only liabilities not listed are $32,000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.7:1.
Required:
Determine the following at December 31, 2021:
1. Total current assets
2. Short-term investments
3. Retained earnings

Net Present Value Method—Annuity

E & T Excavation Company is planning an investment of $222,900 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five years. Customers will be charged $130 per hour for bulldozer work. The bulldozer operator costs $26 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $34 per hour of bulldozer operation.

a. Determine the equal annual net cash flows from operating the bulldozer. Enter all amounts as positive numbers.

b. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the table of present value of an annuity of $1 above. If required, round to the nearest dollar and use the minus sign to indicate a negative net present value.

c. E & T Excavation should Selectsupportnot supportItem 14 the investment because the bulldozer cost is SelectgreaterlessItem 15 than the present value of the cash flows at the SelectmaximumminimumItem 16 desired rate of return of 10%.

Q. Explain why double-entry bookkeeping is so profoundly important in the world of accounting. (no copy paste please/300-400 words/also quote references)

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold.

Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows:

*Primarily depreciation on storage facilities.

As Barbara handed the statement to Karl Vecci, Pittman’s president, she commented, “I went ahead and used the agents’ 15% commission rate in completing these statements, but we’ve just learned that they refuse to handle our products next year unless we increase the commission rate to 20%.”

“That’s the last straw,” Karl replied angrily. “Those agents have been demanding more and more, and this time they’ve gone too far. How can they possibly defend a 20% commission rate?”

“They claim that after paying for advertising, travel, and the other costs of promotion, there’s nothing left over for profit,” replied Barbara.

“I say it’s just plain robbery,” retorted Karl. “And I also say it’s time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?”

“We’ve already worked them up,” said Barbara. “Several companies we know about pay a 7.5% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $2,625,000 per year, but that would be more than offset by the $3,500,000 (20% × $17,500,000) that we would avoid on agents’ commissions.”

The breakdown of the $2,625,000 cost follows:

“Super,” replied Karl. “And I noticed that the $2,625,000 equals what we’re paying the agents under the old 15% commission rate.”

“It’s even better than that,” explained Barbara. “We can actually save $80,500 a year because that’s what we’re paying our auditors to check out the agents’ reports. So our overall administrative expenses would be less.”

“Pull all of these numbers together and we’ll show them to the executive committee tomorrow,” said Karl. “With the approval of the committee, we can move on the matter immediately.”

Required:

1. Compute Pittman Company’s break-even point in dollar sales for next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.

2. Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year.

3. Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force.

4. Compute the degree of operating leverage that the company would expect to have at the end of next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.

Use income before income taxes in your operating leverage computation.

Textron Manufacturing Inc. assembles industrial testing instruments in two departments, assembly and testing. Operating data for the current and prior year follow:

The firm assembled and tested 30,000 instruments in both years.

Required:

1. Calculate the direct labor rate and efficiency variances for both departments in both years.

2. Calculate the direct labor partial operational productivity ratio for both departments in both years. (Round your answers to 4 decimal places.)

3. Calculate the partial financial productivity ratio for both departments in both years. (Round your answers to 4 decimal places.)

Kay Company receives a cash payment of $4,000 on November 12 for services it will perform in December. Assume that December 31 is Kay Company’s fiscal year end. What adjusting journal entry should Kay record at December 31 related to the payment received in November?

Question 3 options:

Question 4 (1 point)

The employees of Kay Company work during the last week of the December and earn $5,000 of wages. Kay Company’s regular payroll cycle will pay the paychecks for the December work in January. According to the expense recognition principle (accrual accounting), when will Kay Company recognize the expense from the employees’ labor?

Question 4 options:

Seth Erkenbeck, a recent college graduate, has just completed the basic format to be used in preparing the statement of cash flows (indirect method) for ATM Software Developers. All amounts are in thousands (000s).

Listed below in random order are line items to be included in the statement of cash flows.

Required:

Prepare the statement of cash flows for ATM Software Developers using the indirect method. (List cash outflows and any decrease in cash as negative amounts. Enter your answers in thousands (i.e., 10,000,000 should be entered as 10,000).)

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

a. Prepare an income statement using absorption costing.

b. Prepare an income statement using variable costing.

P10–10 NPV: Mutually exclusive projects Hook Industries is considering the replacement of
one of its old drill presses. Three alternative replacement presses are under consideration.
The relevant cash flows associated with each are shown in the following table.
The firm’s cost of capital is 15%.
LG 3
LG 2 LG 3
LG 3
Press A Press B Press C
Initial investment (CF0) $85,000 $60,000 $130,000
Year (t) Cash inflows (CFt)
1 $18,000 $12,000 $50,000
2 18,000 14,000 30,000
3 18,000 16,000 20,000
4 18,000 18,000 20,000
5 18,000 20,000 20,000
6 18,000 25,000 30,000
7 18,000 — 40,000
8 18,000 — 50,000
a. Calculate the net present value (NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.
d. Calculate the profitability index (PI) for each press.
e. Rank the presses from best to worst using PI.

what is meant by a taxpayer's "preservation age" and why is this concept important?

Man's Clothing is a manufacturer of designer suits. For June 2016, each suit is budgeted to take 3 ​labor-hours. The budgeted number of suits to be manufactured in June 2016 is 1,160. Man's Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing​ labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2016 are​ budgeted, $52,200​, and​ actual, $63,870. In June 2016 there were 1,200 suits started and completed. There were no beginning or ending inventories of suits.

Requirements

1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.

2. Compute the​ production-volume variance for June 201. What inferences can the clothing company draw from this​ variance?

Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows:

a. Estimated sales for July by sales territory:

b. Estimated inventories at July 1:

c. Desired inventories at July 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

Required:

1. Prepare a sales budget for July.

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

3. Prepare a direct materials purchases budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4. Prepare a direct labor cost budget for July.

Feedback

Remember to take into account expected units to be sold, desired units in ending inventory and estimated units in beginning inventory when calculating total units to be produced.

Once sales quantities are estimated, the expected sales revenue can be determined.

Remember to take into account materials required for production, desired ending materials inventory and estimated beginning materials inventory when calculating direct materials to be purchased.

Learning Objective 4.

Thunder Creek Company is preparing budgets for the first quarter of 2018.

#1 Create a sales budget.

Thunder Creek Company expects sales of 18,000 units in January 2018, 24,000 units in February, 30,000 units in March, 34,000 in April, and 36,000 in May. The sales price is $48 per unit.

#2 Create a production budget.

Thunder Creek wants to finish each month with 20% of next month's sales in units.

#3 Create a Direct Materials Budget

Thunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25% of next month's materials requirements