Sole Purpose Shoe Company
Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.
Direct Materials
Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $61,321 for 6,890 units of direct materials in the production of 2,200 pairs of shoes.
Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Quantity |
X | Actual Price |
Actual Quantity |
X | Standard Price |
Standard Quantity |
X | Standard Price |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Unfavorable Direct Materials Price Variance: |
Favorable Direct Materials Quantity Variance: |
|||||||||
| $ | $ | |||||||||
| Favorable Total Direct Materials Cost Variance: |
||||||||||
| $ | ||||||||||
Direct Labor
Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,610 for 7,290 hours of direct labor in the production of 2,300 pairs of shoes.
Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Hours |
X | Actual Rate |
Actual Hours |
X | Standard Rate |
Standard Hours |
X | Standard Rate |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Unfavorable Direct Labor Rate Variance: |
Unfavorable Direct Labor Time Variance: |
|||||||||
| $ | $ | |||||||||
| Unfavorable Total Direct Labor Cost Variance: |
||||||||||
| $ | ||||||||||
Budget Performance Report
Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,500 pairs of shoes that required 12,250 units of material purchased at $8.20 per unit and 9,450 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $28,350. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.
Manufacturing Costs |
Standard Price |
Standard Quantity |
Standard Cost Per Unit |
| Direct materials | $8.40 per unit | 3.60 units per pair | $30.24 |
| Direct labor | $8.50 per hour | 2.80 hours per pair | 23.80 |
| Factory overhead | $2.70 per hour | 2.80 hours per pair | 7.56 |
| Total standard cost per pair | $61.60 |
| Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30 |
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Manufacturing Costs |
Actual Costs |
Standard Cost at Actual Volume |
Cost Variance - (Favorable) Unfavorable |
| Direct materials | $ | $ | $ |
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | $ | $ | $ |
In: Accounting
Adams Manufacturing Inc. buys $11.9 million of materials (net of
discounts) on terms of 2/10, net 50; and it currently pays after 10
days and takes the discounts. Adams plans to expand, which will
require additional financing. If Adams decides to forgo discounts,
how much additional credit could it obtain? Assume 365 days in year
for your calculations. Do not round intermediate calculations.
Round your answer to the nearest cent.
$
What would be the nominal and effective cost of such a credit?
Assume 365 days in year for your calculations. Do not round
intermediate calculations. Round your answer to two decimal
places.
Nominal cost: %
Effective cost: %
If the company could receive the funds from a bank at a rate of
8.2%, interest paid monthly, based on a 365-day year, what would be
the effective cost of the bank loan? Do not round intermediate
calculations. Round your answer to two decimal places.
%
In: Accounting
|
Château Beaune is a family-owned winery located in the Burgundy region of France, headed by Gerard Despinoy. The harvesting season in early fall is the busiest time of the year for the winery, and many part-time workers are hired to help pick and process grapes. Despinoy is investigating the purchase of a harvesting machine that would significantly reduce the amount of labour required in the picking process. The harvesting machine is built to straddle grapevines, which are laid out in low-lying rows. Two workers are carried on the machine just above ground level, one on each side of the vine. As the machine slowly crawls through the vineyard, the workers cut bunches of grapes from the vines, and the grapes fall into a hopper. The machine separates the grapes from the stems and other woody debris. The debris is then pulverized and spread behind the machine as a rich ground mulch. Despinoy has gathered the following information relating to the decision of whether to purchase the machine (the French currency is the euro, denoted by €): |
|
| a. |
The winery would save €190,000 per year in labour costs with the new harvesting machine. In addition, the company would no longer have to purchase and spread ground mulch—at an annual savings of €10,000. |
| b. |
The harvesting machine would cost €480,000. It would have an estimated 12-year useful life and zero salvage value. The winery uses straight-line depreciation. |
| c. |
Annual out-of-pocket costs associated with the harvesting machine would be insurance, €1,000; fuel, €9,000; and a maintenance contract, €12,000. In addition, two operators would be hired and trained for the machine, and they would be paid a total of €70,000 per year, including all benefits. |
| d. | Despinoy feels that the investment in the harvesting machine should earn at least a 16% rate of return. |
|
Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. |
| Required: | |
| (Ignore income taxes.) | |
| 1. |
Determine the annual net savings in cash operating costs that would be realized if the harvesting machine were purchased. |
| 2. |
Compute the SRR expected from the harvesting machine. (Hint: This is a cost reduction project.) (Round your answer to 1 decimal place (i.e., 0.123 should be considered as 12.3%).) |
| 3-a. | Compute the payback period on the harvesting machine. (Round your answer to 1 decimal place.) |
| 3-b. |
Despinoy will not purchase equipment unless it has a payback period of five years or less. Under this criterion, should the harvesting machine be purchased? |
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| 4-a. |
Compute (to the nearest whole percent) the IRR promised by the harvesting machine. (Round discount factor(s) to 3 decimal place and final answer to the nearest whole number (i.e., 0.123 should be considered as 12%).) |
| 4-b. |
On the basis of this computation, does it appear that the SRR is an accurate guide in investment decisions? |
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In: Accounting
discuss the purposes for planning the audit and identify the steps that are performed during this phase of the engagement? A couple of paragraphs about this third phase. Accounting audit
In: Accounting
|
Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows: |
| Android | Bio-Mutant | Cyclops | |||||||
| Selling price | $ | 100 | $ | 55 | $ | 125 | |||
| Direct labor | 48 | 24 | 60 | ||||||
| Direct materials | 9 | 8 | 16 | ||||||
| Variable overhead | 7 | 4 | 9 | ||||||
|
At the present time, demand for each of the company's products far exceeds its capacity to produce them. Thus, management is trying to determine which of its games to concentrate on next week in filling its backlog of orders. Gunst's direct labor rate is $12 per hour, and only 1,000 hours of direct labor are available each week. |
|
Determine the maximum total contribution margin the company can make by its best use of the 1,000 available hours. (Do not round intermediate calculations.) |
In: Accounting
Why are inventories and prepaid expenses excluded in computing the acid-test ratio?
In: Accounting
Imagine that you are a leader of a company that wants to change to more of a B corporation. However, many of the current employees have been with the company for over five years and have established a culture that may not be in line with your new vision. Your job is to analyze your own leadership style and what changes you will need to make to see your vision become reality. You will also need to investigate other companies and how they changed their corporate culture.
In: Accounting
Flexible Budget for Selling and Administrative Expenses for a Service Company
Morningside Technologies Inc. uses flexible budgets that are based on the following data:
| Sales commissions | 9% of sales |
| Advertising expense | 17% of sales |
| Miscellaneous administrative expense | $1,750 per month plus 2% of sales |
| Office salaries expense | $17,000 per month |
| Customer support expenses | $2,500 plus 3% of sales |
| Research and development expense | 4,400 per month |
Prepare a flexible selling and administrative expenses budget for April for sales volumes of $110,000, $140,000, and $165,000. Enter all amounts as positive numbers.
| Morningside Technologies Inc. | |||
| Flexible Selling and Administrative Expenses Budget | |||
| For the Month Ending April 30 | |||
| Total sales | $110,000 | $140,000 | $165,000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneous administrative expense | |||
| Customer support expenses | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expenses | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrative expenses | $ | $ | $ |
In: Accounting
Kubin Company’s relevant range of production is 13,000 to 18,000 units. When it produces and sells 15,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.40 Direct labor $ 4.40 Variable manufacturing overhead $ 1.90 Fixed manufacturing overhead $ 5.40 Fixed selling expense $ 3.90 Fixed administrative expense $ 2.90 Sales commissions $ 1.40 Variable administrative expense $ 0.90 Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 15,500 units? b. What is the total indirect manufacturing cost incurred to make 15,500 units? 2. Assume the cost object is the Manufacturing Department and that its total output is 15,500 units. a. How much total manufacturing cost is directly traceable to the Manufacturing Department? b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? 3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $44,950 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation. a. When the company sells 15,500 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 15,500 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?
In: Accounting
Bonita Corp. has 150,240 shares of common stock outstanding. In
2017, the company reports income from continuing operations before
income tax of $1,210,400. Additional transactions not considered in
the $1,210,400 are as follows.
| 1. | In 2017, Bonita Corp. sold equipment for $38,300. The machine had originally cost $83,600 and had accumulated depreciation of $31,900. The gain or loss is considered non-recurring. | |
| 2. | The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,900 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $90,100 before taxes; the loss from disposal of the subsidiary was $101,800 before taxes. | |
| 3. | An internal audit discovered that amortization of intangible assets was understated by $38,400 (net of tax) in a prior period. The amount was charged against retained earnings. | |
| 4. | The company had a non-recurring gain of $125,400 on the condemnation of some of its property (included in the $1,210,400). |
Analyze the above information and prepare an income statement for
the year 2017, starting with income from continuing operations
before income tax. Compute earnings per share as it should be shown
on the face of the income statement. (Assume a total effective tax
rate of 38% on all items, unless otherwise indicated.)
(Round earnings per share to 2 decimal places, e.g.
1.47.)
In: Accounting
Depreciation by Three Methods; Partial Years Razar Sharp Company purchased equipment on July 1, 2014, for $70,200. The equipment was expected to have a useful life of three years, or 6,480 operating hours, and a residual value of $2,160. The equipment was used for 1,200 hours during 2014, 2,300 hours in 2015, 1,900 hours in 2016, and 1,080 hours in 2017.
Required: Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
a. Straight-line method Year Amount 2014 $ 2015 $ 2016 $ 2017 $
b. Units-of-output method Year Amount 2014 $ 2015 $ 2016 $ 2017 $
c. Double-declining-balance method Year Amount 2014 $ 2015 $ 2016 $ 2017 $
In: Accounting
Roy Reds Ltd is a Manufacturing Company.The Following Ledger account balances were extracted from the books of the company for the year ended December 31,2004
stocks as at January1,2004:
Raw materials$40000,Partly manufactured good (WIP) $50000,Finished Goods $37000
Stocks as at December 31,2004:
Raw Materials $30000,Partly Manufactured goods (WIP) $60000 Finished Goods $45000
Other balances:
Purchases of raw materials$136000,freight and carriage on raw materials $5000,production workers salary $170000,Rent and Rates$8000,Gas and Fuel $15000,office workers pay $20000,Depreciation of productive machinery and plant $10000,sales $550000
Notes:
Rent and rates,gas and fuel must be apportioned 60% to factory and 40% to office.
Required:
Prepare the Manufacturing,Trading and Profit and loss Accounts for the period ending 31December 2004(clearly indicate the following in your answer)
1 Prime Cost
2 Factory Overheads
3 Cost of Production
4 Gross Profit
5 Net Profit
In: Accounting
| Stuart Company Balance Sheet As of January 24, 2019 (amounts in thousands) |
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|---|---|---|---|
| Cash | 8,400 | Accounts Payable | 2,800 |
| Accounts Receivable | 4,700 | Debt | 3,400 |
| Inventory | 4,200 | Other Liabilities | 900 |
| Property Plant & Equipment | 17,200 | Total Liabilities | 7,100 |
| Other Assets | 2,800 | Paid-In Capital | 6,700 |
| Retained Earnings | 23,500 | ||
| Total Equity | 30,200 | ||
| Total Assets | 37,300 | Total Liabilities & Equity | 37,300 |
Record the transactions in a journal, transfer the journal entries to T-accounts, compute closing amounts for the T-accounts, and construct a balance sheet to answer the question.
Jan 25. Borrow $52,000 from a bank
Jan 26. Purchase equipment for $48,000 in cash
Jan 27. Issue $85,000 in stock
What is the final amount in Total Assets?
In: Accounting
Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ for 2018 under both the daily allocation and the specific identification allocation method? Refer to the following table for the timing of SleepEZ’s income.
| Period | Income | |
| January 1 through April 4 (94 days) | $ | 139,000 |
| April 5 through December 31 (271 days) | 405,000 | |
| January 1 through December 31, 2018 (365 days) | $ | 544,000 |
(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
a. There are no sales of SleepEZ stock during the year.
b. On April 4, 2018, Blinkin sells his shares to Nod.
c. On April 4, 2018, Winkin and Nod each sell their shares to Blinkin.
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In: Accounting
The partnership of Hendrick, Mitchum, and Redding has the following account balances:
| Cash | $ | 61,000 | Liabilities | $ | 30,000 | |||
| Noncash assets | 160,000 | Hendrick, capital | 150,000 | |||||
| Mitchum, capital | 95,000 | |||||||
| Redding, capital | (54,000 | ) | ||||||
This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of all profits and losses with the remaining 20 percent going to Redding.
What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance?
How should the $31,000 cash that is presently available in excess of liabilities be distributed?
If the noncash assets are sold for a total of $75,000, what is the minimum amount of cash that Hendrick could receive?
In: Accounting