BOR CPAs, Inc. is a closely held corporation owned by three stockholders who used the initials of their last names to form the corporation’s name: Cyrus Bailey, John Ogden, and Samuel Rogers. The firm’s Certified Public Accountants (CPAs) perform audits of both public companies and privately owned companies. BOR’s CPAs also provide tax services to both individuals and businesses.

The corporation is divided into two profit centers: the Audit Division and the Tax Division. Each division is composed of two cost centers. The Audit Division is composed of two cost-center departments: Public Company Audits and Private Company Audits. The Tax Division is composed of two cost-center departments also: Individual Tax and Business Tax.

BOR, a decentralized organization, is interested in evaluating the performance of the two divisions. The stockholders are responsible for deciding on investment in the two divisions. Cyrus Bailey is in charge of the performance evaluation, and turns to you for assistance. Mr. Bailey is only interested in evaluating operations at the profit center (division) level, and not at the cost center (department) level.

Mr. Bailey is considering temporarily using some of the staff from the Tax Division to assist the Audit Division during the upcoming busy audit season, and would like to evaluate the effect of this on net income. The Tax Division is estimated to have 800 hours of excess capacity.

The unit for determining sales revenue in both divisions is the "engagement", which means the total agreed-upon work for a given client in either audit or tax for a given year. The company charges on average a fee of $75,000 per audit engagement, and $15,750 per tax engagement.

The company has its own Payroll Office, which provides payroll services to both divisions and will allocate its total expenses to the two divisions as service department charges.

The following chart shows some basic data for the company:

Mr. Bailey would like you to start by analyzing the Payroll Office expenses, and allocating the total expenses to each division. He has decided to use the number of payroll checks as the activity base for the allocation.

Fill in the following blanks, allocating the total expense for the Payroll Office to each of the two divisions.

Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column.

Complete the following Income Statements with your data from the Payroll panel. Enter all amounts as positive numbers.

Mr. Bailey asks that you prepare Divisional Income Statements showing what 20Y1 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a market transfer price. The divisional managers tell you that, with the excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more audits during the year, and the Tax Division would charge the Audit Division the market rate of $110.00 per hour for the additional hours required, selling all its excess capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employees.

Complete the following Income Statements. Enter all amounts as positive numbers. If there is no amount or an amount is zero, enter “0”.

Mr. Bailey asks that you prepare Divisional Income Statements showing what 20Y1 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a cost transfer price. The divisional managers tell you that, with the excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more audits during the year, and the Audit Division would pay the Tax Division's internal hourly rate of $60.00 per hour for the additional hours required, with the Tax Division selling all its excess capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employees.

Complete the following Income Statements. Enter all amounts as positive numbers. If there is no amount or an amount is zero, enter “0”.

How do you adjust your own interpersonal communication styles to meet the organisation’s cultural diversity and ethical environment and guide and support the work team in their personal adjustment process?

Ridgecrest Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers quickly after receiving customers’ orders. There are many other manufacturers who produce similar motors. Ridgecrest believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2015.

1. Is Ridgecrest’s 2015 strategy one of product differentiation or cost leadership? Explain briefly.

2. Indicate a measure you would expect to see in Ridgecrest’s balanced scorecard for 2015.

Ratio Analysis - Use the 2019 numbers

This assignment includes calculating the 10 ratios for two different companies (Lockheed and Boeing) in the industry which can be found attached to this assignment. Then, tell me which company you would invest in and why.  Ratios (10 x 10 x 2 = 200) + 40 (explanation) = 240 points

The 10 ratios to be calculated are the

Current Ratio, Quick Ratio, Debt Ratio, Debt to Net Worth Ratio, Net Sales to Total Assets Ratio, Net Profit on Sales Ratio, Net Profit on Assets, Net Profit on Equity, Average Inventory Turnover Ratio, Accounts Receivables Ratio.

Use the materials from the Instructional Materials Area for Tesla and Toyota.

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 61 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,700 per month plus $45 per course plus $7 per student. The company’s sales should average $890 per student.

The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 59 students. The actual operating results for September appear below:

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

Riveria Co. makes and sells a single product. The current selling price is $39 per unit. Variable expenses are $17 per unit, and fixed expenses total $39,500 per month. Sales volume for May totaled 4,550 units. Required: a. Calculate operating income for May. b. Calculate the break-even point in terms of units sold and total revenues. (Round your intermediate calculations to the nearest whole dollar.) c. Management is considering installing automated equipment to reduce direct labor cost. If this were done, variable expenses would drop to $11 per unit, but fixed expenses would increase to $64,100 per month. c-1. Calculate operating income at a volume of 4,550 units per month with the new cost structure. c-2. Calculate the break-even point in units with the new cost structure. c-3. Why would you suggest that management seriously consider investing in the automated equipment and accept the new cost structure? As sales volume moves above the break-even point, contribution margin and operating income will? By a relatively greater amount than under the old cost structure.

On December 31, 2017, Berclair Inc. had 260 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $200 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.

Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.

Simple Plan Enterprises uses a periodic inventory system. Its records showed the following:

Inventory, December 31, using FIFO → 44 Units @ $17 = $748
Inventory, December 31, using LIFO → 44 Units @ $13 = $572

Required:

1. Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO.
2. Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods.
3. Does the inventory method used make a significant difference in the inventory turnover ratio?

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Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services Co. has been prepared on the following end-of-period spreadsheet for the year ended October 31, 2016:

The data for year-end adjustments are as follows:

Prepare the adjusting entries for Alert Security Services Co. Refer to the Chart of Accounts for correct wording of account titles.

Chart of Accounts

Journal

Prepare the adjusting entries for Alert Security Services Co. Refer to the Chart of Accounts for correct wording of account titles.

PAGE 10

JOURNAL

The Koski Company has established standards as follows:

Direct material                                                     3 pounds @ P4/pound = P12 per unit

Direct labor                                                           2 hours @ P8/hour = P16 per unit

Variable overhead                                              2 hours @ P5/hour = $10 per unit

Actual production figures for the past year were as follows:

Units produced                                                                                    500

Direct material used                                                                           1,600 pounds

Direct material purchased (3,000 pounds)                                    $12,300

Direct labor cost (950 hours)                                                             $ 7,790

Variable overhead cost incurred                                                      $ 4,655
  

30. The materials price variance is:
    A. P160 U
    B. P6,300 U
    C. P300 U
    D. P150 U

31. The materials quantity variance is:
   A. P400 U
    B. P410 F
   C. P410 U
    D. P6,000 U

32. The labor efficiency variance is:
    A. P400 F
    B. P800 F
    C. P800 U
    D. P500 F

33. The variable overhead rate variance is:
    A. P345 F
   B. P95 F
    C. P655.50 F
    D. P345 U

Imagine that a coworker wants to circumvent an internal control to steal money from your company. Speculate on two (2) internal controls that your coworker might attempt to circumvent in order to steal the money. Recommend two (2) actions that the company could take in order to prevent the theft.

o   Outline an anti-fraud program that you would implement at your company (current or previous). Suggest the approach you would take to sell this program to your senior executives.

Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows:

* The mortgage is attached to the building and land.

Ernesto was asking for $518,350 for the company. His tax basis in the BLI stock was $122,000. Included in the sales price was an unrecognized customer list valued at $162,000. The unallocated portion of the purchase price ($83,250) will be recorded as goodwill. (Negative amounts should be indicated by a minus sign.)

a. What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amount of corporate-level tax does BLI pay as a result of the transaction?

b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a direct asset sale to Amy and Brian, and BLI distributes the after-tax proceeds [computed in part (a)] to Ernesto in liquidation of his stock?

1. c1. What are the tax benefits, if any, to Amy and Brian as a result of structuring the acquisition as a direct asset purchase?
2. c2. What is the tax basis in the assets received by Amy and Brian?

Church Company completes these transactions and events during March of the current year (terms for all its credit sales are 2/10, n/30).

Assume the following ledger account amounts Inventory (March 1 beg. bal. is $63,000), Z. Church, Capital (March 1 beg. bal. is $63,000) and Church Company uses the perpetual inventory system.

Required:
2-a. Enter the transactions in a sales journal.
2-b. Enter the transactions in a purchases journal.
2-c. Enter the transactions in a cash receipts journal.
2-d. Enter the transactions in a cash disbursements journal.
2-e. Enter the transactions in a general journal.

Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company’s products. The company now is planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:

1. The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 10,600 units.

2. The raw materials inventory on hand at the end of each month must equal one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 66,000 cc of solvent H300.

3. The company maintains no work in process inventories.

A monthly sales budget for Supermix for the third and fourth quarters of the year follows.

Required:

1. Prepare a production budget for Supermix for the months July, August, September, and October.

3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.

QUESTIONS

1. For each of the following accounts, signify which part of the accounting equation

    would include the account balance.

1.1 Merchandise inventory

a) Liabilities            b) Owner's equity            c) Assets      

1.2 Freight out expense

   a) Liabilities           b) Owner's equity            c) Assets      

1.3 Sales revenue

     a) Liabilities            b) Owner’s equity           c) Assets      

1.4 Cost of goods sold

     a) Liabilities            b) Owner's equity            c) Assets      

1.5 Sales returns and allowances

      a) Liabilities            b) Owner’s equity            c) Assets      

1.6 Sales discounts

      a) Liabilities            b) Owner's equity           c) Assets      

1.7 Accounts receivable

      a) Liabilities            b) Owner's equity            c) Assets      

1.8 Owner's capital

     a) Liabilities            b) Owner’s equity            c) Assets      

1.9 Owner's withdrawals

      a) Liabilities            b) Owner's equity            c) Assets      

1.10 Accounts payable

   a) Liabilities            b) Owner's equity            c) Assets      

2. For each of the following accounts, signify DEBIT or CREDIT to indicate the normal balance

    of the account.

2.1 Merchandise inventory

  a) Debit            b) Credit      

2.2 Freight out expense

  a) Debit            b) Credit      

2.3 Sales revenue

   a) Debit            b) Credit      

2.4 Cost of goods sold

   a) Debit            b) Credit      

2.5 Sales returns and allowances

   a) Debit            b) Credit      

2.6 Sales discounts

     a) Debit            b) Credit      

2.7 Accounts receivable

     a) Debit            b) Credit      

2.8 Owner's capital

     a) Debit            Credit      

2.9 Owner's withdrawals

      a) Debit            b) Credit      

2.10 Accounts payable

      a) Debit            b) Credit      

3. For each of the following items, signify the effect the item will ultimately have on the TOTAL

    COST of merchandise inventory on the books of the business recording the item.

3.1 Purchase returns

  a) No effect            b) Decrease           c) Increase      

3.2 Purchase allowances

   a) No effect            b) Decrease            c) Increase      

3.3 Purchase discounts

   a) No effect            b) Decrease            c) Increase      

3.4 Incoming freight costs

  a) No effect            b) Decrease            c) Increase      

3.5 Sales returns

a) No effect            b) Decrease            c) Increase      

3.6 Sales allowances

  a) No effect            b) Decrease            c) Increase      

3.7 Sales discounts

  a) No effect            b) Decrease            c) Increase      

3.8 Outgoing freight costs

  a) No effect            b) Decrease            c) Increase