Windsor Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Windsor and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,970 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,970 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Windsor’s cash flow problems are due primarily to the company’s desire to finance a $300,080 plant expansion over the next 2 fiscal years through internally generated funds.

The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.

(a)

Compute the following items for Windsor Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)

Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:

Required:

1. What is the overall contribution margin (CM) ratio for the company?

2. What is the company's overall break-even point in dollar sales?

3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products.

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

Laker Company reported the following January purchases and sales data for its only product.

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 280 units, where 260 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Required:
1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification.
2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification.

Han Products manufactures 27,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials $ 3.50 Direct labor 10.00 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 12.00 Total cost per part $ 28.00 An outside supplier has offered to sell 27,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $77,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?

Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. For simplicity, assume that adjusting entries are recorded only once a year on December 31

Boron Chemical Company produces a synthetic resin that is used in the automotive industry. The company uses a standard cost system. For each gallon of output, the following direct manufacturing costs are anticipated:

During December of the current year, Boron produced a total of 2,500 gallons of output and incurred the following direct manufacturing costs:

Boron records price variances for materials at the time of purchase.

Required:

Prepare journal entries for the following events and transactions.

1. Purchase, on credit, of direct materials.

2. Direct materials issued to production.

3. Direct labor cost of units completed this period.

4. Direct manufacturing cost (direct labor plus direct materials) of units completed and transferred to Finished Goods Inventory.

5. Sale (on credit), for $150.00 per gallon, of 2,000 gallons of output. (Hint: You will need two journal entries here.)

(For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Service Department Charges

In divisional income statements prepared for LeFevre Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $41,896, and the Purchasing Department had expenses of $15,370 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. If required, round your answers to two decimal places. Do not round your interim calculations, round your answers to two decimal places, if required.

c. Residential's service department charge is   than the other two divisions because Residential is a   user of service department services. Residential has many employees on a weekly payroll, which translates into a   number of check-issuing transactions.

Gonzalez Tortilla Corporation produces tortillas in large batches and uses a process costing system. Three departments—Mixing, Rolling, and Packaging—are involved in the production process. Gonzalez Tortilla has the following transactions:

1. Direct materials totaling $25,000—$7,500 for the Mixing department, $6,250 for the Rolling department, and $11,250 for the Packaging department—are requisitioned and placed in production.
2. Each production department incurs the following direct labor costs (wages payable):

3. Manufacturing overhead costs are applied to each department as follows:

4. Products with a cost of $6,875 are transferred from the Mixing department to the Rolling department.
5. Products with a cost of $8,000 are transferred from the Rolling department to the Packaging department.
6. Products with a cost of $11,375 are completed and transferred from the Packaging department to the finished goods warehouse.
7. Products with a cost of $10,375 are sold to customers.

Perform the following steps for each transaction:

1. Prepare a journal entry to record the transaction.
2. Summarize the flow of costs through T-accounts (no need to include T-accounts for raw materials inventory, wages payable, or manufacturing overhead). Assume that there are no beginning balances in the work-in-process inventory, finished goods inventory, and cost of goods sold accounts.

The following are BAC Bhd.’s year end statement of financial position and statement of profit and loss for 2016 and 2017:

Related items:

2017 Total dividends paid $70,075 ,   Stock price per share $15.60

2016 Total dividends paid $15.60 ,   Stock price per share $21.80

Required:

1. Calculate the after tax operating income (i.e. after-tax EBIT) for 2016 and 2017.   
2. Calculate the net working capital (NWC) that is supported by non-free sources for 2016 and 2017, and the changes in NWC between these two years.                             
3. What is free cash flow (FCF)? Calculate the FCF for 2017. Is a negative FCF always a bad sign?   
4. Calculate the following for the company for 2017:
   1. Earnings per share   
   2. Dividends per share   
   3. Book value per share

calculate the contribution margin ratio , break even dollar sales, margin of safety (dollars) safety margin % of sales

Prepare the adjustment entry as of 30/06/2012 under the following

E.            According to the balance sheet, the inventory was $223,500. At the end of the financial year stock take, you have been advised that the inventory value is only $210,000.

F.           On 30/06/2012, the company aged receivables which have a total of $306,400. The company estimated       2% of 90 days receivable and 10% of over 90 days will not be able to be collected.

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:

The following additional information is available:  

1. The company’s plant has a capacity of 114,750 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

2. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year.

3. Fixed manufacturing costs total $540,000 per year. Variable overhead costs are $4 per direct labor-hour.

4. All of the company’s nonmanufacturing costs are fixed.

5. The company’s finished goods inventory is negligible and can be ignored.

Required:

1. How many direct labor hours are used to manufacture one unit of each of the company’s five products?

2. How much variable overhead cost is incurred to manufacture one unit of each of the company’s five products?

3. What is the contribution margin per direct labor-hour for each of the company’s five products?

4. Assuming that direct labor-hours is the company’s constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?

5. Assuming that the company has made optimal use of its 114,750 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)?

Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $40,300 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.

The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.

Required:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented income statement.

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?

Exercise

Assume your Company sells to merchandisers in three different states—Oregon, Texas and Colorado The following profit analysis by state was prepared by the company:

                                                                        Oregon                       Texas                        Colorado

Revenue                                                         4,500,000                    4,000,000                   4,000,000

Cost of Goods Sold                                        2,500,000                      2,000,000                  2,000,000

Gross profit                                                     2,000,000                      2,000,000                  2,000,000

Selling Expenses                                               500,000                         700,000                      700,000

Net profit                                                         1,500,000                      1,300,000                  1,300,000

Following are the fixed portion within the costs provided above:

Fixed manufacturing Costs                             300,000                         500,000                        1,000,000

Fixed Selling and Admin Costs                      300,000                         200,000                           400,000

Now, Management believes it could increase state sales by 20%, without increasing any of the fixed costs, by spending an additional $50,000 per state on advertising. No change in inventories.  

1. Prepare a contribution margin statement by state to determine how much each state operating profit would be for the additional $50000 advertising.

2. Which state will provide the greatest profit return for a $50000 increase in advertising?

3. Why?