QUESTION THREE

Cartlidge Ltd manufactures and sells plastic kitchen containers through associated retail outlets throughout Australia. To compete more effectively it has recently introduced a budgetary control system to assist with planning and control of operations. Detailed below are the budgeted and actual performance figures for their most popular plastic container sold for the month of December 2018,

                                                BUDGET (static)                     ACTUAL

Output (production and sales)    3000 Units                                3,300 Units

                                                $                                              $                     

Sales                                        $45,000                                    $47,850

                                                (3,000 unit @ $15)                    (3,300 units @ $14.50)

Raw Materials                           ($18,000)                                  ($20,140)            

(36,000 units                             (38000 units                                                 @ 50 cents per unit)                        @ 53 cents per unit)                 

Labour                                      ($6,000)                                    ($7,040)            

                                                (300 hours                                (320 hours

                                                @$20 per hour)                         @22 per hour)

Fixed Overheads                       ($5,000)                                    ($4,700)

Operating Profit                        $16,000                                    $15,970

REQUIRED:  

1. Based on the information above calculate a flexed budget based on actual output / sales levels for the month of December 2018                              

2. Describe the purpose of the flexed budget in identifying deviations from planned performance. (limit 60 words)

3. Based on information above reconcile the operating profit under a static budget to the actual operating profit breaking down the reconciliation and identifying specific variances in as much detail as possible.                                                

4. Assuming that the standards were all well set in terms of labor times and rates and material usage and price, suggest one feasible reason for each variance you have identified in (c), from what you know about the company’s performance in December 2018. (HINT: As part of your answer attempt to explain why a favorable variance in one area might explain an unfavorable variance in another area).      (80 word limit)

Cost can be classified in 5 categories-behavior, traceability, controllability, relevance and function. Briefly explain each category.

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The DeVille Company reported pretax accounting income on its income statement as follows:

Included in the income of 2021 was an installment sale of property in the amount of $58,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $23,200 in 2022, $29,000 in 2023, and $5,800 in 2024.

Included in the 2023 income was $24,000 interest from investments in municipal governmental bonds.

The enacted tax rate for 2021 and 2022 was 40%, but during 2022, new tax legislation was passed reducing the tax rate to 25% for the years 2023 and beyond.

Required:
Prepare the year-end journal entries to record income taxes for the years 2021–2024. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

A company may report high net income through a number of means including normal revenues, one-time tax benefits, or other accounting activities. If a company sales merchandise, it is important to understand their operating revenues which will include income statement reporting of both Cost of Goods Sold and Gross Profit on Sales.

Class, what is Cost of Goods Sold? Provide examples of the types of entries recorded to this account. Next, what is Gross Profit on Sales? Why is understanding this section of the Classified Income Statement so important to managers, investors, and creditors?

Exercise 15-13 Adjusting factory overhead LO P4

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
  

Determine whether there is over or underapplied overhead.
Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.

1. Materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid and assigned to Work in Process Inventory.
4. Indirect labor paid and assigned to Factory Overhead.
5. Overhead costs applied to Work in Process Inventory.
6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
8. Cost of goods sold for Job 306.
9. Revenue from the sale of Job 306.
10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Preparing adjusting entries (annual)—depreciation LO4
Mean Beans, a local coffee shop, has the following assets on January 1, 2017. Mean Beans prepares annual financial statements and has a December 31, 2017 year-end.

On January 1, 2017, purchase equipment costing $15,000 with an estimated life of five years. Mean Beans will scrap the equipment after five years for $0.
On July 1, 2017, purchase furniture (tables and chairs) costing $12,000 with an estimated life of ten years. Mean Beans estimates that it can sell the furniture for $2,000 after ten years.
On January 1, 2015, Mean Beans had purchased a car costing $25,000 with an estimated life of eight years. Mean Beans estimates that it can sell the car for $5,000 after eight years.
Assume Mean Beans, uses Straight Line Method to depreciate the asset.

Required
For each transaction, calculate the annual depreciation expense and record the adjusting entry on December 31, 2017.
For the car, determine the accumulated depreciation as of December 31, 2017.
For the car, determine the carrying amount as of December 31, 2017.

A man is looking to purchase a home in the Cleveland Suburbs. He has enough for a 20% down payment and an income of $70,000 per year. His FICO Score is 660. The prime Interest Rate for 30-year Mortgages is 5%. He has a car payment of $400 per month and a Student Loan Payment of $200 per month. The home he finds has 70 Effective Property Tax Mills and Homeowner’s Insurance Costs $50 per month on every $100,000 of Home Value. How much can the man pay for the home? How large of a mortgage will the bank allow him take out?

Please write steps. thank you

Flounder Corporation leased equipment to Shamrock, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,276 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,600, a book value of $5,600, and Flounder expects a residual value of $5,100 at the end of the lease term. Flounder set the lease payments with the intent of earning a 8% return, though Shamrock is unaware of the rate implicit in the lease and has an incremental borrowing rate of 10%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

What is the amount of the rental payments used in the lease agreement?

Prepare the entries for Flounder for 2020.

How would Flounder’s accounting in part a change if it incurred legal fees of $900 to execute the lease documents and $600 in advertising expenses for the year in connection with the lease?

Please answer the following question:

research “survivor syndrome” and what specific companies have done to successfully

mitigate this response and regain full employee commitment. Provide two companies as examples and discuss your findings.

Selected information from Rockway, Inc.’s U.S. GAAP financial statements for the year ended December 31, included the following (in $):

Cash provided or used by operating activities (CFO) in the year 2005 was closest to:

Group of answer choices

A. $6,300,000.

B. $5,300,000.

C. $4,300,000.

Assume that credit sales "to be received in 90 days" are received in exactly 90 days and that EFT wage payments are made in exactly 7 days. Expected to pay income tax of 35%? And its journal entries CR and DR

1. Internal control procedures are important in every business. At what stage in the development of a business do they become especially critical? Is there one area of the business (cash, receivables, inventory) where the procedures are the most critical, and why do you think that area is the most important?

2. You are investing in a company. Would you rather invest in common stock, convertible preferred stock, non-cumulative preferred stock, or cumulative preferred stock? Please explain your choice.

3. A company can finance their company in many ways - short-term debt, long-term borrowing, selling bonds, issuing stock. What do you think is a good mix for the company to have, and why? What might influence the mix for a company?

McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials include a variety of items such as pharmaceutical drugs, heart valves, artificial hips, and pacemakers. Its direct labor costs (e.g., surgeons, anesthesiologists, radiologists, and nurses) associated with specific surgical procedures and tests are traced to individual patients. All other costs, such as depreciation of medical equipment, insurance, utilities, incidental medical supplies, and the labor costs associated with around-the-clock monitoring of patients are treated as overhead costs. Historically, McCullough has used one predetermined overhead rate based on the number of patient-days (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. Recently a member of the hospital’s accounting staff has suggested using two predetermined overhead rates (allocated based on the number of patient-days) to improve the accuracy of the costs allocated to patients. The first overhead rate would include all overhead costs within the Intensive Care Unit (ICU) and the second overhead rate would include all Other overhead costs. Information pertaining to the hospital’s estimated number of patient-days, its estimated overhead costs, and two of its patients—Patient A and Patient B—is provided below: ICU Other Total Estimated number of patient-days 2,500 22,500 25,000 Estimated fixed overhead cost $ 4,122,500 $ 22,005,000 $ 26,127,500 Estimated variable overhead cost per patient-day $ 286 $ 117 Patient A Patient B Direct materials $ 5,000 $ 6,700 Direct labor $ 26,250 $ 37,000 Total number of patient-days (including ICU) 14 19 Number of patient-days spent in ICU 0 7 Required: 1. Assuming McCullough uses only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. 2. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: a. The ICU and Other overhead rates. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B.

Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 128,000 $ 128,000 Accounts receivable 333,000 490,000 Inventory 579,000 475,000 Plant and equipment, net 870,000 857,000 Investment in Buisson, S.A. 410,000 432,000 Land (undeveloped) 249,000 246,000 Total assets $ 2,569,000 $ 2,628,000 Liabilities and Stockholders' Equity Accounts payable $ 371,000 $ 337,000 Long-term debt 981,000 981,000 Stockholders' equity 1,217,000 1,310,000 Total liabilities and stockholders' equity $ 2,569,000 $ 2,628,000

Joel de Paris, Inc. Income Statement Sales $ 5,211,000 Operating expenses 4,481,460 Net operating income 729,540 Interest and taxes: Interest expense $ 115,000 Tax expense 201,000 316,000 Net income $ 413,540

The company paid dividends of $320,540 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%. Required: 1. Compute the company's average operating assets for last year. 2. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.) 3. What was the company’s residual income last year?

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,400 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $88,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.80 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,300?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,900 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,900)?