QUESTION 2

1. Wilson Party Equipment Company manufactures the components needed in the production of its primary product, Computer Controlled Self-Tapping Beer Kegs (widely used at parties sponsored by college students). The per unit cost for the computer component is as follows:
   

   Direct materials	$40
   Direct labor	14
   Variable factory overhead	34
   Allocated facility level fixed overhead (1,000 unit annual volume)	25
   Total cost per unit	$113

   
   Assume that Wilson Party Equipment Company can buy 1,000 of the computer units from another producer for $100 each. The financial aspects of the situation suggest that Wilson Party Equipment Company should consider

   	a.	outsourcing the computer unit production as this would save $13,000 per year.
   	b.	outsourcing the computer unit production as this would save $12,000 per year.
   	c.	continuing to make the computer unit as this would save $13,000 per year.
   	d.	continuing to make the computer unit as this would save $12,000 per year

On January 1, 2018, Bishop Company issued 8% bonds dated January 1, 2018, with a face amount of $20.1 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to the nearest whole dollar.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2018.
3. Prepare the journal entry to record interest on June 30, 2018, using the effective interest method.
4. Prepare the journal entry to record interest on December 31, 2018, using the effective interest method

Briar Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $208,000. The equipment will have an initial cost of $1,208,000 and have an 8 year life. The salvage value of the equipment is estimated to be $208,000. The hurdle rate is 6%. Ignore income taxes. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.)


a. What is the accounting rate of return? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)



b. What is the payback period? (Round your answer to the nearest whole number.)

c. What is the net present value? (Round your answer to nearest dollar amount.)



d. What would the net present value be with a 14% hurdle rate? (Negative value should be indicated by a minus sign. Round your answer to nearest dollar amount.)



e. Based on the NPV calculations, in what range would the equipment’s internal rate of return fall? (Round your answer to 2 decimal places.)

why Act of parliament override common law in australia ?

A contract to purchase a car contains the following clause. if you are not completely satisfied with the car ,return it in good condition within 7 days and we will give you your money back. is this clause a condition precedent or a condition subsequent ? explain your answer

Mason Corporation began operations at the beginning of the current year. One of the company’s products, a refrigeration element, sells for $195 per unit. Information related to the current year’s activities follows.

Variable costs per unit:

Direct material $ 20

Direct labor 36

Manufacturing overhead 46

Annual fixed costs:

Manufacturing overhead $ 600,000

Selling and administrative 860,000

Production and sales activity:

Production (units) 24,000

Sales (units) 20,000 ________________________________________

Mason carries its finished goods inventory at the average unit cost of production and is subject to a 30 percent income tax rate. There was no work in process at year-end.

1. Determine the cost of the December 31 finished goods inventory.

2. Compute Mason’s net income for the current year ended December 31

. 3. If next year’s production decreases to 23,000 units and general cost behavior patterns do not change, what is the likely effect on:

a. The direct-labor cost of $36 per unit? • No change • Increase • Decrease

b. The fixed manufacturing overhead cost of $600,000? • No change • Increase • Decrease

c. The fixed selling and administrative cost of $860,000? • No change • Increase • Decrease

d. The average unit cost of production? • No change • Increase • Decreas

The following data were taken from the Adjusted Trial Balance columns of the end-of-period spreadsheet for April 30 for Abigail Trucking:

Required:

Prepare a classified balance sheet. Be sure to complete the statement heading. Refer to the lists of Accounts in the information given, Labels, and Amount Descriptions for the exact wording of the answer choices for text entries. Enter property, plant, and equipment in the order of land, building, and equipment. You will not need to enter colons (:) on the Balance Sheet. For any amount which is subtracted, use a minus sign.

Alternative Financing Plans

Frey Co. is considering the following alternative financing plans:

Income tax is estimated at 40% of income.

Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $300,000.

Enter answers in dollars and cents, rounding to two decimal places.

Jeffery Company purchased 10% of the outstanding common stock (75,000 shares) of Another Company on January 1, 2020 for $750,000. The investment was not sufficient to give Jeffery Company the ability to significantly influence the operations of Another Company. On January 1, 2020, the fair value of the percentage of Another Company’s net assets purchased by Jeffery Company exceeded book value by $20,000. The difference was attributable to plant assets with remaining useful life of five years. During 2020, Another Company reported net income of $150,000 and paid dividends of $40,000. The fair value of Another Company’s common stock on December 31, 2020 was $15 per share.

The entry to record the purchase of the stock on January 1, 2020 would include?

The entry to record the dividends Jeffery Company received from Another Company would include? check figure; A credit to investment revenue for $4,000

As a result of the investment, Jeffery Company's income before income tax for the year ended December 31, 2020 would increase by? check figure;$379,000

The entry on December 31, 2020 to recognize changes in fair value would include? check figure: A credit to unrealized holding gain for $375,000

Jeffery Company would report an investment in Another Company on the balance sheet as of December 31, 2020 of?

Please explain in detail the answers I would appreciate the help thanks.

A manufacturer sells two types of products. Product 1 is sold at a price of $50 per unit and product 2 at a price of $60 per unit. Three units of raw material and 1.5 labor hours are needed to manufacturer one unit of product 1. Six units of raw material and 2 labor hours are need to manufacture one unit of product 2. The unit variable cost for product 1 is $30, and for product 2 is $20. A total of 15,000 units of raw material and 10,000 labor hours are available. If any product 1 is produced, a setup cost of $20,000 is incurred; if any product 2 is produced, a setup cost of $35,000 is incurred. Determine how to maximize the manufacturer’s profit.

a) What is the effective capacity for product 1 and product 2, respectively?

b) In the optimal solution, which product(s) will be manufactured? What is the optimal production quantity? What is the optimal profit?

Wagner Company developed the following standard costs for its product for 2011:

Direct Materials - 4 pounds at $4.50 per pound

Direct Labor - 2 hours at $10.50 per hour

Based on their flexible budget, budgeted Manufacturing Overhead costs are $80,000 of fixed costs plus variable costs of $4 per direct labor hour. Normal capacity is set at 20,000 units of product OR 40,000 DIRECT LABOR HOURS. (20,000 units x 2 labor hours per unit).

Actual costs for 2011 were as follows:

a. 19,000 units of product were actually produced

b. Direct labor costs were $362,700 for 37,200 direct labor hours actually worked.

c. Actual direct materials purchased and used during the yeear cost $361,900 for 77,000 pounds.

d. Total actual manufcaturing overhead costs were $227,000.

Compute the following yearly variances for Wagner company for 2011 and indicate whether the variance is favorable (F) or unfavorable (U):

1. Direct Materials Price Variance

2. Compute the Direct Materials Quantity Variance

3. Compute the total Direct Materials Variance.

4. Compute the Direct Labor Price Variance

5. Compute the Direct Labor Quantity Variance

6. Compute the total Direct Labor Variance

7. Compute the Variable Overhead Controllable Variance

8. Compute the Fixed Overhead Volume Variance

9. Compute the total Manufacturing Overhead Variance

10. Compute the total cost variance and indicate if favorable or unfavorable.

Understanding Relationships, Cash Budget, Pro Forma Balance Sheet

Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year:

1. Sales:

   May (actual)	$100,000
   June (actual)	120,000
   July (estimated)	90,000
   August (estimated)	100,000
   September (estimated)	135,000
   October (estimated)	110,000

2. Each month, 30% of sales are for cash and 70% are on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale.
3. Each month, the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost.
4. Inventory purchases are paid for in the month following the purchase.
5. Recurring monthly expenses are as follows:
   

   Salaries and wages	$10,000
   Depreciation on plant and equipment	4,000
   Utilities	1,000
   Other	1,700

6. Property taxes of $15,000 are due and payable on July 15.
7. Advertising fees of $6,000 must be paid on August 20.
8. A lease on a new storage facility is scheduled to begin on September 2. Monthly payments are $5,000.
9. The company has a policy to maintain a minimum cash balance of $10,000. If necessary, it will borrow to meet its short-term needs. All borrowing is done at the beginning of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000.
10. A partially completed balance sheet as of June 30 follows. (Note: Accounts payable is for inventory purchases only.)

    Cash	$     ?
    Accounts receivable	?
    Inventory	?
    Plant and equipment, net	425,000
    Accounts payable				$     ?
    Common stock				210,000
    Retained earnings				268,750
    Total	$    ?			$    ?

Required:

1. Complete the balance sheet given in Item j.

Feedback

1. Use the accounting equation (assets = liabilities and owners' equity).

2. Prepare a cash budget for each month in the third quarter and for the quarter in total (the third quarter begins on July 1). Prepare a supporting schedule of cash collections. If an amount is zero, enter "0" or leave the entry box blank.

3. Prepare a pro forma balance sheet as of September 30.

Cash Budget

Dr. Roger Jones is a successful dentist but is experiencing recurring financial difficulties. For example, Dr. Jones owns his office building, which he leased to the professional corporation that housed his dental practice. (He owns all shares in the corporation.) After the corporation’s failure to pay payroll taxes for the past 6 months, however, the Internal Revenue Service is threatening to impound the business and sell its assets. Also, the corporation has had difficulty paying its suppliers, owing one of them over $200,000 plus interest. In the past, Dr. Jones had borrowed money on the equity in either his personal residence or his office building, but he has grown weary of these recurring problems and has hired a local consultant for advice.

According to the consultant, the financial difficulties facing Dr. Jones have been caused by the absence of proper planning and control. Budgetary control is sorely needed. The following financial information is available for a typical month:

Benefits include Dr. Jones’s share of social security and a health insurance premium for all employees. Although all revenues billed in a month are not collected, the cash flowing into the business is approximately equal to the month’s billings because of collections from prior months. The office is open Monday through Thursday from 9:00 a.m. to 4:00 p.m. and on Friday from 9:00 a.m. to 12:30 p.m. A total of 32 hours are worked each week. Additional hours could be worked, but Dr. Jones is reluctant to do so because of other personal endeavors that he enjoys.

Dr. Jones has noted that the two dental assistants and receptionist are not fully utilized. He estimates that they are busy about 65 to 70% of the time. His wife spends about 5 hours each week on a monthly newsletter that is sent to all patients. She also maintains a birthday list and sends cards to patients on their birthdays.

Dr. Jones recently attended an informational seminar designed to teach dentists how to increase their revenues. An idea from that seminar persuaded him to invest in promotion and public relations (the newsletter and the birthday list).

Required:

1. Prepare a monthly cash budget for Dr. Jones. Enter amounts as positive numbers unless there is a deficiency.

Feedback

Calculate monthly cash collections and cash available by multiplying average fees by quantity for each type if service shown in the revenue data. Next enter cash disbursements and total cash needs. Subtract cash needs from available cash to show either excess cash or a deficiency in cash.

2a. Dr. Jones must either increase revenues or cut costs or a combination of the two.

Consider this recommendation:

Extend office hours so that a total of 40 hours are worked each week. This could increase revenues by as much as $5,340. Dr. Jones would need to inform his assistants and receptionist of the increased time and indicate that each will receive a 25% increase in salary for the additional time. Benefits (primarily FICA and unemployment insurance benefits) would also increase. Other expenses that will likely increase with an increase in sales are dental supplies, lab fees, and utilities (representing about 31% of sales). The remaining expenses are fixed.

Prepare a cash budget that reflects this recommendation. Round intermediate calculations to the nearest dollar. Enter amounts as positive numbers unless there is a deficiency.

Feedback

Start with the cash budget prepared in Requirement 1 and incorporate the changes needed assuming an increased work week increases revenue.

Allocate the increase to dental supplies, lab fees, and utilities by using the proportion of each:

Increase dental supplies, lab fees, and utilities = 31% x Increase in sales (Round to the nearest dollar.)

Increase dental supplies = (Dental supplies / Dental supplies, lab fees, and utilities) x Increase dental supplies, lab fees, and utilities

2b. Consider this recommendation:

Cut one dental assistant, eliminate the salary to Mrs. Jones and the activities she does, and cut Dr. Jones’s salary back by $1,000 per month. Do not round intermediate calculations for the benefits savings. Enter amounts as positive numbers unless there is a deficiency.

Prepare a cash budget that reflects this recommendation.

Feedback

Start with the cash budget prepared in Requirement 1 and incorporate the cost savings to salaries and benefits. Remember that Dr. and Mrs. Jones are owners and benefits do not apply to their salaries which are owner withdrawals.

2c. A third possibility is to increase the fees charged for the various dental services.

What amount of increase in revenues is needed to cover the deficiency from Requirement 1?  $

[The following information applies to the questions displayed below.]

Morganton Company makes one product and it provided the following information to help prepare the master budget:

a) The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units, respectively. All sales are on credit.

b) Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.

c) The ending finished goods inventory equals 20% of the following month’s unit sales.

d) The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.

e) Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.

f) The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.

g) The variable selling and administrative expense per unit sold are $1.80. The fixed selling and administrative expense per month are $62,000.

Required:

13. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what are the estimated cost of goods sold and gross margin for July?

14. What are the estimated total selling and administrative expense for July?