“[M]anagement take risks … but the processes that generate those … are somewhat removed from the classical processes of choosing from alternative actions in terms of expected value”.
Discuss this statement in 500 words
In: Accounting
On September 1, the balance of the Accounts Receivable control account in the general ledger of Montgomery Company was $10,520. The customers’ subsidiary ledger contained account balances as follows: Hurley $1,450, Andino $2,290, Fowler $2,080, and Sogard $4,700. At the end of September, the various journals contained the following information. Sales journal: Sales to Sogard $750, to Hurley $1,100, to Giambi $1,360, and to Fowler $1,120. Cash receipts journal: Cash received from Fowler $1,370, from Sogard $2,130, from Giambi $330, from Andino $1,710, and from Hurley $1,190. General journal: An allowance is granted to Sogard $110. -Set up control and subsidiary accounts and enter the beginning balances. -Post the various journals. Post the items as individual items or as totals, whichever would be the appropriate procedure. -Prepare a schedule of accounts receivable and prove the agreement of the controlling account with the subsidiary ledger at September 30, 2017. -
In: Accounting
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $112 per machine hour. Production information follows.
Type A | Type B | |||||
Anticipated volume (units) | 22,400 | 42,000 | ||||
Direct-material cost per unit | $ | 24 | $ | 36 | ||
Direct-labor cost per unit | 29 | 29 | ||||
The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow.
Type A | Type B | Total | |||||||
Setups | 132 | 92 | 224 | ||||||
Machine hours | 44,800 | 63,000 | 107,800 | ||||||
Outgoing shipments | 200 | 150 | 350 | ||||||
The firm’s total overhead of $12,073,600 is subdivided as follows: manufacturing setups, $2,634,240; machine processing, $7,244,160; and product shipping, $2,195,200.
Required:
1. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.
2. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing.
3. Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much?
4. Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.
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Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing. (Round activity based application rates, overhead application and the final answers to 2 decimal places.)
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Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? (Do not round intermediate calculations. Round activity based application rates, overhead application and the final answers to 2 decimal places.)
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Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?
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In: Accounting
Q) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.
Required:
a. Classify each of the following costs as either direct or indirect with respect to production process.
b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.
Direct | Indirect | Fixed | Variable | |
Admin & Security | ||||
Tools & Accessaries | ||||
Employee Wages | ||||
Employees Transportation | ||||
Plant & Machinery |
In: Accounting
Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics: Sales price $80.00 per radio Variable costs $32.00 per radio Fixed costs $360,000.00 per month Crest is subject to an income tax rate of 40.00% a. How many receivers must Crest sell every month to break even? b. How many receivers must Crest sell to earn a monthly operating profit of $90,000.00 after taxes?
2. Cesar's Bottlers bottle soft drinks in a factory that can operate either one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $2.00 per case bottled and the variable cost of $0.90 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices: Daily Volume Range Total Fixed (# of cases bottled) Costs per Day 1 Shift 0 - 2,000 $1,980.00 2 Shifts 2,001 - 3,600 $3,740.00 3 Shifts 3,601 - 5,000 $5,170.00 a. Calculate the break-even point(s). b. If Cesar's Bottlers can sell all the units it can produce, should it operate at one, two or three shifts?
In: Accounting
Q.1) Emirates Steel Company reported the following accounting values:
Revenues | OR 4,500,500 |
Variable manufacturing costs | 20.18% of revenue |
Variable nonmanufacturing costs | 18.09 % of revenue |
Fixed manufacturing costs | 14.50 % of revenue |
Fixed nonmanufacturing costs | 12.11 % of revenue |
Required:
Part 1:
a. Compute contribution margin.
b. Compute contribution margin percentage.
c. Compute gross margin.
d. Compute gross margin percentage.
e. Compute operating income.
Part-2:
Write a note on the above retrieved ratios and give comments whether investment in the shares of M/s Emirates Steel Company is a prudent decision as an investor or not? In both cases, respond why you taken decision of ‘Yes’ or ‘No’ (give reasons)?
Q.2) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.
Required:
a. Classify each of the following costs as either direct or indirect with respect to production process.
b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.
Direct | Indirect | Fixed | Variable | |
Admin & Security | ||||
Tools & Accessaries | ||||
Employee Wages | ||||
Employees Transportation | ||||
Plant & Machinery |
In: Accounting
What two companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved.
In: Accounting
LaBBC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under average cost method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
Inventory Schedule - Average Cost | |||||||||
PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
ABC Company has provided the following information from their records:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Mar 1 Beginning inventory 100 $50
3 Purchase 60 $60
4 Sales 70 $100
10 Purchase 200 $70
16 Sales 80 $110
19 Sales 80 $110
25 Sales 50 $110
30 Purchase 40 $75
Using the inventory and sales data above, to complete the below inventory schedule under FIFO method and prepare the journal entries to record the sales on March 4. All sales are made on credit.
Inventory Schedule - FIFO | |||||||||
PURCHASES | COST OF GOODS SOLD | BALANCE | |||||||
Date | Units | Cost | Total | Units | Cost | Total | Units | Cost | Total |
In: Accounting
The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year.
Administrative costs | $ | 1,654 | |
Building and machine depreciation (75% of this amount is for factory) | 800 | ||
Building utilities (90% of this amount is for factory) | 1,350 | ||
Direct labor | 845 | ||
Direct materials inventory, December 31 | 16 | ||
Direct materials inventory, January 1 | 11 | ||
Direct materials purchases | 3,700 | ||
Factory supervision | 478 | ||
Finished goods inventory, December 31 | 61 | ||
Finished goods inventory, January 1 | 53 | ||
Indirect factory labor | 915 | ||
Indirect materials and supplies | 690 | ||
Marketing costs | 865 | ||
Property taxes on building (85% of this amount is for factory) | 900 | ||
Sales revenue | 12,960 | ||
Work-in-process inventory, December 31 | 26 | ||
Work-in-process inventory, January 1 | 33 | ||
Required:
1. Prepare a cost of goods sold statement.
2. Prepare an income statement.
Prepare a cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)
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Prepare an income statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)
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In: Accounting
Determining Cost Relationships
Midstate Containers Inc. manufactures cans for the canned food industry. The operations manager of a can manufacturing operation wants to conduct a cost study investigating the relationship of tin content in the material (can stock) to the energy cost for enameling the cans. The enameling was necessary to prepare the cans for labeling. A higher percentage of tin content in the stock increases the cost of material. The operations manager believed that a higher tin content in the can stock would reduce the amount of energy used in enameling. During the analysis period, the amount of tin content in the stell can stock was increased for every month, from April to September. The following operating reports were available from the controller:
April | May | June | July | August | September | |
Materials | $14,000 | $34,800 | $33,000 | $21,700 | $28,800 | $33,000 |
Energy | 13,000 | 28,800 | 24,200 | 14,000 | 17,100 | 16,000 |
Total Cost | $27,000 | $63,600 | $57,200 | $35,700 | $45,900 | $49,000 |
Units Produced | ÷ 50,000 | ÷ 120,000 | ÷ 110,000 | ÷ 70,000 | ÷ 90,000 | ÷ 100,000 |
Cost Per Unit | $0.54 | $0.53 | $0.52 | $0.51 | $0.51 | $0.49 |
Differences in materials unit costs were entirely related to the amount of tin content. In addition, inventory changes are negligible and are ignored in the analysis.
A) Calculate the Total cost per unit for each month. Round your answers to the nearest cent
Total Cost Per Unit | |
April | ? |
May | ? |
June | ? |
July | ? |
August | ? |
September | ? |
B) Interpret your results
The calculations reveal that the tin content and energy costs are _________ related. That is, as the materials cost increased due to higher tin content, the energy costs ________ by more. Thus, the recommendation should be to __________ raw can stock with the tin content at the $0.33-per-unit level (September level). This is the material that __________ the total production cost for this set of data. Additional data could be used to determine the optimal tin content or the point where energy cost savings fail to overcome additional material costs.
In: Accounting
What assets are not in the Quick Ratio that are in the Current Ratio? What makes these assets different? Please explain
In: Accounting
Compare planning budgets vs flexible budgets.
Be thorough in describing what each is, and the differences between them. Conclude with what the best use is for each.
In: Accounting
1) Briefly explain what are the advantages and disadvantages of
shared leadership?
In: Accounting
Method 1 |
Method 2 |
Method 3 |
|
First Cost, $ |
20,000 |
18,000 |
25,000 |
Salvage Value, $ |
1,000 |
3,000 |
1,500 |
Annual Income, $ |
5,000 |
5,000 |
7,000 |
In: Accounting