2. Suppose Manufacturing is operating at full capacity when Assembly requests an additional 21500 units to produce a special order. What transfer price would you recommend?

3. Suppose Manufacturing is operating at 205000 units when Assembly requests an additional 21500 units to produce a special order. What transfer price would you recommend?

Cornell Corporation manufactures faucets. Several weeks ago, the firm received a special-order inquiry from Yale, Inc. Yale desires to market a faucet similar to Cornell's model no. 55 and has offered to purchase 3,000 units. The following data are available:

• Cost data for Cornell's model no. 55 faucet: direct materials, $48; direct labor, $30 (2 hours at $15 per hour); and manufacturing overhead, $70 (2 hours at $35 per hour).

• The normal selling price of model no. 55 is $180; however, Yale has offered Cornell only $124 because of the large quantity it is willing to purchase.

• Yale requires a modification of the design that will allow a $7 reduction in direct-material cost.

• Cornell's production supervisor notes that the company will incur $6,433 in additional set-up costs and will have to purchase an $21,700 special device to manufacture these units. The device will be discarded once the special order is completed.

• Total manufacturing overhead costs are applied to production based on direct labor hours. Total budgeted overhead is $840,000. This figure is based on budgeted yearly fixed overhead of $624,000, a budgeted variable overhead of $216,000, and a budgeted activity level of 24,000 direct labor hours.

• Cornell will allocate $8,000 of existing fixed administrative costs to the order as “…part of the cost of doing business.

” Required: A. One of Cornell's staff accountants wants to reject the special order because “financially, it's a loser.” Do you agree with this conclusion if Cornell currently has excess capacity? Show calculations to determine the incremental profit or loss on this special order to support your answer.

B.If Cornell currently has no excess capacity, should the order be rejected? (Assume for part B that Cornell cannot acquire excess capacity via overtime or any other way.) Briefly explain.

Review Apple Inc.'s financial statements in 2018 10K form and write two paragraphs about Apple's horizontal financial analysis.

The PC Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows: Variable Costs per card Fixed Costs per Month Manufacturing Direct materials $0.30 Direct labor 0.25 Factory overhead 0.25 0.80 Factory overhead $4,000 Selling and admin. 0.15 Selling and admin. 3,000 Total $0.95 Total $7,000 PC Supply produced and sold 10,000 cards during October 2010. There were no beginning or ending inventories.

a. Prepare a contribution income statement for the month of October.

b. Determine PC Supply’s monthly break-even point in units.

c. Determine the effect on monthly profit of a 1,100 unit increase in monthly sales.

d. If PC Supply is subject to an income tax of 28 percent, determine the dollar sales volume is required to earn a monthly after-tax profit of $22,000.

La Femme Accessories Inc. produces women's handbags. The cost of producing 1,180 handbags is as follows:

The selling and administrative expenses are $27,400. The management desires a profit equal to 18% of invested assets of $498,000.

If required, round your answers to nearest whole number.

a. Determine the amount of desired profit from the production and sale of 1,180 handbags.
$

b. Determine the product cost per unit for the production of 1,180 handbags.
$per unit

c. Determine the product cost markup percentage for handbags.
%

d. Determine the selling price of handbags. Round your answers to nearest whole value.

On January 1, 20X8 , Bond Corporation acquired 80 percent of Gale Company's voting stock. On the date of acquisition, the book value and fair value of Gale's net assets were equal. Bond uses the equity method of accounting for its ownership of Gale, and includes the amount of accumulated depreciation prior to acquisition in its elimination entries on the consolidation worksheet.

On December 31, 20X8, the trial balances of the two companies are as follows :

a)   What amount did Bond Corporation pay for its investment in Gale Company on January 1, 20X8?
b)   Prepare the elimination entries required to prepare the consolidated financial statements as of December 31, 20X8.
c)   Determine the amount reported on the consolidated financial statements as of December 31, 20X8 for retained earnings .
d)   Determine the amount reported on the consolidated financial statements as of December 31, 20X8 for depreciable assets.

Cliffhangers Company had the following product information for March 2019:

Selling Price $149 per unit
Direct Materials $35 per unit
Direct Labor $29 per unit
Variable Manufacturing Overhead $13 per unit

Variable selling $6 per unit

  
Fixed Manufacturing Overhead . $129,000

Fixed Selling $164,000
Production 5,800 units
Sales (units) 4,400 units

REQUIRED:

1. What is the product cost per unit under absorption costing?

2. What is the product cost per unit under variable costing?

3. Prepare an income statement using absorption costing.

4. Prepare an income statement using variable costing.

What are two methods of conducting business in the U.S. Compare the tax advantages and disadvantages. Provide examples to support the advantages and disadvantages identified.

Luo Inc. had the following statement of financial position at December 31, 2014 (amounts in thousands).

During 2015, the following occurred.

1. Luo liquidated its non-trading equity investment portfolio at a loss of ¥5,000.

2. A tract of land was purchased for ¥38,000.

3. An additional ¥30,000 in ordinary shares were issued at par.

4. Dividends totaling ¥10,000 were declared and paid to shareholders.

5. Net income for 2015 was ¥35,000, including ¥12,000 in depreciation expense.

6. Land was purchased through the issuance of ¥30,000 in additional bonds.

7. At December 31, 2015, Cash was ¥70,200, Accounts Receivable was ¥42,000, and Accounts Payable was ¥40,000.

Instructions

Prepare a statement of cash flows for the year 2015 for Luo.

Dan is Single, Age 47 and has a new business on 1/15/2018, he provides service for a summer camp for children.

Dan's 2018 transactions related to business:

Income    $100,000

Mortgage Interest 8,000

Property Taxes 3,000

Utilities    5,000

Supplies    7,000

Telephone fees 2,000

Estimated Federal Tax
Payments    15,000

Dan Purchased a commercial building on 2/1/2018 for $300,000 in which (building=80% of the cost and land= 30% of the cost).
Dan also purchased a computer for his business on 2/15/2018 for $2000. Dan does not take section 179 deduction or bonus depreciation.

Question 1) are the business expense deductions FOR AGI or FROM AGI ?
Question 2) List any non deductible expenses
Question 3) If Dan Sells the computer on 9/20/19 for $600, what is his gain of loss?

Discuss the successful application of the Balanced Scorecard of the computer industry or sector. Find and list the reasons for the success and at least two factors that posed a problem.

Valotic Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows (in thousands):

Question not attempted.

During January, the costs incurred in the Consumer Products Division were as follows:

Question not attempted.

Financial data for Beaker Company for last year appear below:

The company paid dividends of $199,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:

a. Compute the company's margin, turnover, and return on investment for last year.

b. The Board of Directors of Beaker Company has set a minimum required return of 45%. What was the company's residual income last year?

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,350 for the Sleepeze, 12,280 for the Plushette, and 5,400 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $65,000, a marketing research assistant at $41,400, and an administrative assistant at $27,450) are budgeted for $133,850 next year.
2. Depreciation on the offices and equipment is $22,750 per year.
3. Office supplies and other expenses total $23,500 per year.
4. Advertising has been steady at $22,850 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 6 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads—placing print and television ads for the Sleepeze and Plushette lines

Ultima ads—choosing and working with the advertising agency on the Ultima account

Office management—operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $23,500 for office supplies and other expenses, $4,800 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,600 per year is attributable to Internet connections and fees, and the bulk of these costs (85 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

• Gene should focus on the most costly activities: salaries, Ultima advertising and commissions to jobbers.
• Gene should focus on the most costly activities: shipping, basic advertising and commissions to jobbers.
• Gene should focus on the most costly activities: shipping, Ultima advertising and commissions to jobbers.

Perry plc is a large conglomerate company structured on a divisional basis. It seeks to maximise investor wealth. Head office avoids day to day involvement in divisional affairs and only intervenes if performance is considered unsatisfactory. Divisional performance is measured by residual income.

One of Perry’s larger divisions operates a chain of high-class hotels throughout the United Kingdom. The division’s mission statement is ‘To be the hotel of the first choice for business users and tourists’. Although the chain has generally been popular with tourists it is not proving quite so popular with business users and conference organisers. Competition in the top segment of the hotel market is fierce, with customers expecting the highest standards of facilities, service, and catering. Over the last two years, the division has invested a large amount of money in modernising its hotels including the improvement of bedrooms and public rooms, installation of gymnasia and swimming pools and the information technology features required by business travelers. A large amount of money has also been spent on staff training to improve service levels and on a television advertising campaign to promote improved hotels to business users.

Head office is concerned that the performance of the hotel chain appears to have declined over the last few years despite this expenditure.

         The following figures are available

The cost of capital applicable to the hotel division is 20% per annum

Required:

1. Calculate the residual income for the hotel chain for each of the three years.
2. Discuss three advantages and four disadvantages of residual income as a divisional performance measure.                                                                                                     ( 7 marks)