Outback Outfitters sells recreational equipment. One of the company’s products, a small camp stove, sells for $100 per unit. Variable expenses are $70 per stove, and fixed expenses associated with the stove total $144,000 per month.

Required:

1. What is the break-even point in unit sales and in dollar sales?

2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.)

3. At present, the company is selling 20,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes.

4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $77,000 per month?

The general model for calculating a quantity variance is:

Multiple Choice

• Actual price × (Actual quantity of inputs used − Standard quantity allowed for output).

• Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

• (Actual quantity of inputs used × Actual price) − (Standard quantity allowed for output × Standard price).

• Actual quantity of inputs used × (Actual price − Standard price).

The following standards have been established for a raw material used to make product O84:

The following data pertain to a recent month's operations:

The direct materials purchases variance is computed when the materials are purchased.

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month?

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Handerson Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in August.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead rate variance for August is:

Multiple Choice

• $825 U

• $825 F

• $1,375 F

• $1,375 U

Old Tyme Soda produces one flavor of a popular local soft drink. It had no work-in-process on October 31 in its only inventory account. During November, Old Tyme started 10,300 barrels. Work-in-process on November 30 is 1,350 barrels. The production supervisor estimates that the ending work-in-process inventory is 20 percent complete. An examination of Old Tyme’s accounting records shows direct material costs of $14,980 and conversion costs of $21,900 for November. All production is sold as it is produced. Required: a. Compute cost of goods sold for November. (Do not round intermediate calculations.) b. What is the value of work-in-process inventory on November 30? (Do not round intermediate calculations.)

Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4.02 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5.09 million in automated equipment for test machine assembly. The division’s expected income statement at the beginning of the year was as follows.

A sales representative from LSI Machine Company approached Oscar in October. LSI has for $5.07 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a three-year life. Depreciation would be net of the $600,000 salvage value of the new machine. The new equipment meets Pitt's 12 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though, Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year.

The old machine, which has no salvage value, must be disposed of to make room for the new machine.

Pitt has a performance evaluation and bonus plan based on residual income. Pitt uses a cost of capital of 12 percent in computing residual income. Income includes any losses on disposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes.

Required:

a. What is Forbes Division’s residual income if Oscar does not acquire the new machine?

b. What is Forbes Division’s residual income this year if Oscar acquires the new machine?

c. If Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year?

(Enter your answers in thousands of dollars. Negative amounts should be indicated by a minus sign. Round your answers to the nearest whole dollars)

Swanson, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

a. The Marketing Department has estimated sales as follows for the remainder of the year (in pairs of swim fins). The selling price of the swim fins is $21 per pair.

July 6,400 October 4,400  

August 7,400 November 3,400  

September 5,400 December 3,400  

b. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:

43% in the month of sale

48% in the month following sale

9% uncollectible

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $154,000.

c.

The company maintains finished goods inventories equal to 9% of the following month’s sales. The inventory of finished goods on July 1 will be 576 pairs.

d.

Each pair of swim fins requires 4 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month’s production needs. The inventory of geico compound on hand on July 1 will be 5,192 pounds.

e.

Geico compound costs $2.50 per pound. Crydon pays for 60% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for geico compound purchases will be $13,400 on July 1.

Required:

1a.

Prepare a sales budget, by month and in total, for the third quarter.

1b.

Prepare a schedule of expected cash collections, by month and in total, for the third quarter. (Do not round intermediate calculations.)

2. Prepare a production budget for each of the months July through October.

3a.

Prepare a direct materials budget for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

3b.

Prepare a schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

Six Company sells an asset with a $1 million fair value to A Company. A Company agrees to make six equal payments, each to be paid one year apart, commencing on the date of sale. The payments include principal and 6% annual interest. What is the amount of the annual payments? can u solve this using the financial calculator method (pv= fv= n= pmt= )and is this gonna be using beginning mode (annuity due) or end mode (ordinary annuity)

On December 31, 2015, Berclair Inc. had 442 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. Net income for the year ended December 31, 2016, was $1,050 million.

Also outstanding at December 31 were incentive stock options granted to executives. The options were exercisable for 30 million common shares at an exercise price of $56 per share. During 2016, the market price of the common shares averaged $70 per share.

Required: Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2016.

Look up the definition: Tax Court

Post the word and you're definition with a couple of paragraphs about what you learned and why the tax court is new to you?

from previous question, copy over the following U.S Treasury Yields. Specify the maturity in months

Using the looked-up U.S Treasury Yields from the previous question, plot its Yield Curve. Hint: you might want to use Excel's Chart Wizard, using the XY (scatter plot) option. which is a result of Treasury prices transacted in the market. These prices are "bootstrapped" to derive its. Spot Rates z1, z2, z10, …, z30.

1. The sales method for estimating bad debts is calculated using ________.

A) aging of accounts receivable

B) a percentage of credit sales

C) a percentage of net accounts receivable

D) the current balance in accounts receivable

2. Team Shirts had a balance in its allowance for uncollectible accounts of $(200). Aging the accounts receivable showed that the allowance should be $(1,800). Bad debts expense should be ________.

A) $1,400

B) $1,600

C) $1,800

D) $2,000

Learning Objective 4-4

3. Credit card sales benefit companies because ________.

A) the risk of uncollectible accounts is transferred to credit card companies

B) fewer customers will be able to buy products or services

C) the credit card company is not responsible for evaluating customers’ credit-worthiness

D) they will receive less than the full amount of the sale from the credit card company

4. Timmy’s Tires sold $18,750 worth of tires to customers using VISA. The credit card fee is 4% of sales. The amount of sales Timmy’s Tires should recognize is ________.

A) $750

B) $19,500

C) $18,750

D) $18,000

5. Team Shirts decided to accept bankcards from credit customers. Team Shirts should expect ________.

A) an increase in its allowance for uncollectible accounts

B) a decrease in its bad debts expense

C) a decrease in its credit card expense

D) an increase in its write-off of specific customer accounts

6. Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. MasterCard will directly deposit the cash from this sale within 24 hours. How much cash will MasterCard deposit?

A) $5,000

B) $4,850

C) $150

D) $5,150

7. Sally has a new VISA card that was issued by MBNA (Maryland Bank of North America). Sally used her VISA card to buy five kegs of beer at Crock‘n’ Keg. Three months later, Sally still has not paid her VISA bill. Which company carries the account receivable from this sale?

A) MBNA

B) Sally

C) Crock‘n’ Keg

D) both Sally and Crock‘n’ Keg

8. Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. How much sales revenue will Magic Cow record?

A) $5,000

B) $4,850

C) $150

D) $5,150

Learning Objective 4-7

9. Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. What is the amount of interest that will be paid at the end of the six-month period?

A) $120

B) $240

C) $60

D) $2,060

10. Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. When Ace first accepts the note, it should record interest receivable of ________.

A) $120

B) $0

C) $60

D) $240

11. Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. What is the amount of interest that will be paid at the end of the four-month period?

A) $300

B) $100

C) $600

D) $5,000

Sandhill Windows manufactures and sells custom storm windows for three-season porches. Sandhill also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Sandhill enters into the following contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,340 and chooses Sandhill to do the installation. Sandhill charges the same price for the windows irrespective of whether it does the installation or not. The customer pays Sandhill $1,960 (which equals the standalone selling price of the windows, which have a cost of $1,100) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Sandhill completes installation on October 15, 2017, and the customer pays the balance due.

1. Sandhill estimates the standalone selling price of the installation based on an estimated cost of $410 plus a margin of 20% on cost.

Prepare the journal entries for Sandhill in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answer to 0 decimal places, e.g. 5,125.)

2. Given uncertainty of finding skilled labor, Sandhill is unable to develop a reliable estimate for the standalone selling price of the installation.

Prepare the journal entries for Sandhill in 2017.

Why does the write-off of uncollectible accounts have no effect on the accounts receivable on the balance sheet if bad debts are estimated? If not directly written off as bad debts expense how does a company properly recognize uncollectible receivable activity on the income statement? Why are controls over the cash asset so important? What risks exist if adequate controls are not in place? Why is it important to distinguish between current assets and long term assets? What concerns would you have if a company’s current assets increased dramatically? What concerns would you have if current assets decreased while long term assets increased dramatically?

Craig Phillips is a buyer at Socon, a manufacturer of large industrial pumps. He has a requirement for a customized subassembly that his preferred supplier, Oriel, is building for the first time. He is preparing for negotiation with Oriel, where a key issue will be the price of a subassembly. Given the unique nature of this subassembly, Craig expects to incorporate into the contract price reduction targets based on learning curve estimates.

While Craig does not have specific data for Oriel, he has accumulated data for a subassembly that was similar in design and manufacturing complexity.

Assignment:

1. Given the above data, calculate the average labour per unit given the cumulative total hours provided.
2. Calculate the appropriate learning rate and the overall average improvement rate for this data set.
3. Are gains from learning realized early in production or at a later point?
4. A learning curve applies to improvements in the direct labour portion of a process. How does the learning curve differ from the experience curve

Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics.

Assume that the projected number of units sold for the month is 6,000. Consider requirements (b), (c), and (d) independently of each other.

Required:

a. What will the operating profit be?

b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent?

c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent?

d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?

The contribution format income statement for Huerra Company for last year is given below:

The company had average operating assets of $493,000 during the year.

Required:

1. Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover.

For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above.

2. Using Lean Production, the company is able to reduce the average level of inventory by $91,000. (The released funds are used to pay off short-term creditors.)

3. The company achieves a cost savings of $11,000 per year by using less costly materials.

3a. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $126,000. Interest on the bonds is $14,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year.