SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2018. The options permit holders to acquire 7 million of the company’s $1 par common shares for $27 within the next six years, but not before January 1, 2021 (the vesting date). The market price of the shares on the date of grant is $29 per share. The fair value of the 7 million options, estimated by an appropriate option pricing model, is $8.1 per option.

Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2018, 2019, and 2020. Record the exercise of the options if all of the options are exercised on May 11, 2022, when the market price is $30 per share.

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $200. Data for last year’s operations follow:

Required:

1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill.

2. Assume that the company uses variable costing. Prepare a contribution format income statement for last year.

3. What is the company’s break-even point in terms of the number of barbecue grills sold?

In order to get a good rating, please explain how you arrived at each answer. Thank you.

P. 9-1

Enterprise funds are accounted for like comparable businesses; nevertheless, they have their quirks.

The Green Hills Water District was established on January 1 to provide water service to a suburban development. It accounts for its operations in a single enterprise fund. During the year it engaged in the following transactions:

1. It issued $6,000,000 of revenue bonds.
2. For $4,500,000, it purchased the plant and equipment of the private water company that previously served the area.
3. It incurred $500,000 in costs to improve and expand its plant and equipment.
4. It billed customers for $1.8 million, of which it collected $1.5 million.
5. It billed and collected $200,000 in tap connection fees from developers. The actual cost of the hookups (paid in cash) was $140,000.
6. It incurred the following operating costs (all paid in cash):

• Purchases of water, $850,000
• Labor and contract services, $320,000
• Interest, $80,00
• Supplies and miscellaneous, $60,000

7. It recognized depreciation of $350,000 on its capital assets.

1. Prepare journal entries to record the transactions.
2. Prepare a year-end statement of revenues, expenses, and changes in net position.
3. Prepare a year-end balance sheet.
4. In some jurisdictions, water districts may account for their operations entirely in an enterprise fund or in several funds, as if they were full-service governments. If a water district chose the latter, then it would report all revenues and operating expenditures in its general fund, and it would maintain other funds as appropriate. Describe briefly how the financial statements of the Green Hills Water District would differ if it chose to prepare its financial statements as if it were a full-service government. Be specific (note changes in capital assets, long-term debt, etc.).

ACC 154- Managerial Accounting

Cost-Volume-Profit Analysis Excel Assignment

Introduction:

Congratulations! You have finally been promoted to the position of Division Manager with your long time employer Solar Co., a manufacturer of solar panels.  It is now your responsibility to take the lead for corporate planning, analysis and oversight of the company’s soleproduct- solar panels. Much of the company’s future success or failure rides with your insight and leadership.  

Your analysis for the coming year is extremely challenging given current economic conditions, random government programs and competition from lower cost non-U.S. manufacturers.  You will be required to forecast changes in the company’s fixed and variable costs for 2019 to determine its break even point, and then proceed to completing its Master Budget for 2016 based upon these forecasts.

As a wholly owned subsidiary of a large diversified company, management is under pressure to deliver an increase of 8 % over 2018’s Income Before Taxes.

Situation as of Year-End 2018:

Sales Price:  1 (one) Solar Panel sells for $400.

Sales Volume: 200,000 Solar Panels were sold this past year.

Current capacity: 220,000 units (there is no plan (or budget) to expand operating capacity for 2018)

Fixed Costs:

            ManufacturingOverhead:

                        Facility Rent:$400,000

Management Salaries: $1,200,000

Depreciation, machinery: $40,000

                        Maintenance and repair:  $60,000

                        Other overhead expenses:  $24,000

Selling and Administrative Costs:

Taxes and insurance:  $600,000

Sales salaries:  $180,000

Variable Costs:

Manufacturing Costs:

                        Materials: $180 per Solar Panel

                        Labor:$70 per Solar Panel

                        Employee Benefits: $20 per Solar Panel

                        Utilities:  $5 per Solar Panel

Selling and Administrative Costs:

Delivery expenses:  $60 per Solar Panel

Sales commissions:  $15 per Solar Panel

You have pondered the future for Solar Co. and have identified three very possible scenarios in which your company may have to operate:

Scenario 1:  The government institutes a program to support wind power that makes wind power relatively less expensive than other sources of energy.

Scenario 2:  One of raw materials used to make a solar panel increases dramatically forcing Solar Co. to increase their selling price per unit.

Scenario 3:  The “go green” mantra catches on (supported by government consumer tax credits) increasing demand for the company’s solar panels.

REQUIRED: Cost-Volume-Profit Analysis Current vs Projected

1.  2018 CVP:Using the Excel spreadsheet file perform the following calculations using the information as of the end of 2018:

(8 Points)

1. Contribution Margin
2. Break Even in Units
3. Break Even in Dollars
4. Total Sales
5. Income Before Taxes
6. Margin of Safety in Dollars
7. Margin of Safety in Units
8. Degree of Operating Leverage

2. Projected 2019 CVP:Selectone of the three scenarios on the previous page and then provide the following projected calculations for 2019:

(8 Points)

1. Contribution Margin
2. Break Even in Units
3. Break Even in Dollars
4. Total Sales
5. Income Before Taxes
6. Margin of Safety in Dollars
7. Margin of Safety in Units
8. Degree of Operating Leverage
   
   
   
   
   

Cortez Company is planning to introduce a new product that will sell for $107 per unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year: Direct materials $ 800,000 Direct labor 640,000 (= $16 per hour × 40,000 hours) Manufacturing overhead costs have not yet been estimated for the new product, but monthly data on total production and overhead costs for the past 24 months have been analyzed using simple linear regression. The following results were derived from the simple regression and provide the basis for overhead cost estimates for the new product. Simple Regression Analysis Results Dependent variable—Factory overhead costs Independent variable—Direct labor-hours Computed values Intercept $ 110,000 Coefficient on independent variable $ 5.00 Coefficient of correlation .916 R2 .839 Required: a. What percentage of the variation in overhead costs is explained by the independent variable? 83.90% 92.30% 100.70% 75.50% None of the above b. What is the total overhead cost for an estimated activity level of 60,000 direct labor-hours? $410,000 $420,000 $400,000 $430,000 None of the above c. How much is the variable manufacturing cost per unit, using the variable overhead estimated by the regression (assuming that direct materials and direct labor are variable costs)? $82.00 $90.00 $98.00 $74.00 None of the above d. What is the expected contribution margin per unit to be earned during the first year on 20,000 units of the new product? (Assume that all marketing and administrative costs are fixed.) $25.00 $28.00 $30.00 $23.00 None of the above e. What is the manufacturing cost equation implied by these results? Total cost = $640,000 + ($5.00 × Number of units) Total cost = $110,000 + ($107.00 × Number of units) Total cost = $110,000 + ($16.00 × Number of units) None of the above Next Visit question mapQuestion 3 of 5 Total3 of 5

if a person has 0 withholding allowances do they still get a withholding subtracted from their paycheck?

Common-Sized Income Statement

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages.

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The company is managing the cost of manufacturing product   than the industry, and has slightly   selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be   than the industry average.

Income statements and balance sheets data for Virtual Gaming Systems are provided below.

Required:

1. Calculate the following risk ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

Receivables turnover ratio,Inventory turnover ration, Current ration and Debt to equity ratio.

2. Calculate the following profitability ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

Gross profit ratio, Return on assets, Profit margin and Asset turnover

The Directors of Lolipop Ltd are currently considering two mutually exclusive investment projects. Both projects are concerned with the purchase of new plant. The following data are available for each project

Project A Project B

$'m

Cost( immediate outlay ) 100 60

Expected annual net profit (loss)

Year 1 29 18

Year 2 (1) (2)

Year 3 2 4

Estimated residual value of the plant 7 6

The minimum expected return by the shareholders is 10%. the Industrial average cost of capital is 12%. The company uses the straight line method of depreciation for all non-current (fixed )assets when calculating profit. Neither project would increase the working capital of the business. The business has sufficient funds to meet all capital expenditure requirements . The company expects to pay a total constant dividend of $ million per year for the next three ( 3) years.

Required

a) Calculate for each project

1. Accounting Rate of Return

2. The PayBack period

3. The NPV

4. The approximate IRR

Advise the directors which project should be undertaken

b) State which method of investment appraisal in (a) above you consider to b e most appropriate for calculating investment projects and why

c) Explain three (3) factors that may affect the dividend policy of Lolipop Ltd

Suppose that you are the manager of a local deli. Give an example of each of the following decisions that you might have to make and identify three factors that would be relevant to each decision:

1. Special order.
2. Make or buy.
3. Keep or drop.

1.  XYZ Company, a manufacturer of computer peripheries, assembles a particular product line at a wholly owned facility in Singapore. The product is designed at XYZ’s headquarters in the United States, but the different components used in the assembly process are manufactured throughout Asia and shipped to Singapore for final assembly. Some of the components are manufactured in multiple locations, so the customer can actually designate where XYZ should source the components. The final product is assembled in Singapore and then shipped via Emery Freight to customers throughout Asia. XYZ Singapore does not buy any components from the United States, but it invoices all of the components purchased from Asian suppliers in U.S. dollars. In addition, it sells the product to Asian customers in U.S. dollars. However, all of its expenses in Singapore are paid in Singapore dollars. Most of the key marketing decisions are made by the U.S. marketing staff, although the Singapore staff acts as a liaison with Emery Freight personnel and deals with the local workers, most of whom come from Sri Lanka on short-term work visas.

     XYZ prefers to translate the results of their Singapore subsidiary into dollars using the current rate method. What is the advantage to XYZ of using the current rate method? As their auditor, what do you think of their decision? If their decision is wrong and they should be using the temporal method, is it possible for them to change?

You are a nonprofit manager and you are preparing for the upcoming fiscal year. You are in charge of leading the budget process for the organization. Briefly describe how you would start to prepare the organization’s budget. What considerations would you need to take into account? Who would you involve in the process? What are the timeline and key activities of the budget process? Once your budget is developed, what steps would you take to ensure the organization is on track to meet its budget?

Preparing a Budget

o Describe the key steps you would take to prepare your nonprofit organization’s budget. Cite at least one academic source to support your response.

o Discuss the considerations that you would need to take into account when preparing the nonprofit organization’s budget. Cite at least one academic source to support your response.

o Describe individuals involved in the budgeting process. o Outline the budgeting process timeline and key activities.

 Ongoing

o Describe the steps you would take to ensure the organization is on track to meet its budget.

Process Co has two divisions, A and B. Division A produces three types of chemicals: products L, M and S, using a common process. Each of the products can either be sold by Division A to the external market at split-off point (after the common process is complete) or can be transferred to Division B for individual further processing into products LX, MX and SX.

In November 20X1, which is a typical month, Division A’s output was as follows:

Product             Kg

     L               1,200

     M              1,400

     S               1,800

The market selling prices per kg for the products, both at split-off point and after further processing, are as follows:

                         $                            $

     L               5.60        LX            6.70

     M              6.50        MX           7.90

     S               6.10        SX           6.80

The specific costs for each of the individual further processes are:

Variable cost of $0.50 per kg of LX

Variable cost of $0.70 per kg of MX

Variable cost of $0.80 per kg of SX

Further processing leads to a normal loss of 5% at the beginning of the process for each of the products being processed.

Required

1. Calculate and conclude whether any of the products should be further processed in Division B in order to optimise the profit for the company as a whole.

It has been suggested that Division A should transfer products L and M to Division B for further processing, in order to optimise the profit of the company as a whole. Divisions A and B are both investment centres and all transfers from Division A to Division B would be made using the actual marginal cost. As a result, if Division A were to make the transfers as suggested, their divisional profits would be much lower than if it were to sell both products externally at split-off point. Division B’s profits, however, would be much higher.

Required

       (b) Discuss the issues arising from this suggested approach to transfer pricing.

3. A student comes up with a new ratio to measure performance: she calls it profit
ratio: ROCE/WACC
o What does it measure? Interpret it.
o Do you consider it a good performance measure? Explain.
o Can you think of a better name for it? Why?

On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $960,000 to the various types of assets along with estimated useful lives and residual values are as follows:

On June 29, 2019, machinery included in the March 31, 2018, purchase that cost $96,000 was sold for $76,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service.

Required:

1. Compute depreciation expense on the building, machinery, and equipment for 2018.
2. Prepare the journal entries to record the depreciation on the machinery sold on June 29, 2019, and the sale of machinery.
3. Compute depreciation expense on the building, remaining machinery, and equipment for 2019.