Valentine Accessories Plus produces brass handles for the furniture industry in a four-stage process –Mixing, Moulding, Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows: WIP - Polishing Process A/C

Normal losses are estimated to be 2½% of input during the period. Inspection takes place during the processing operation, at which point damaged handles are separated from good handles and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion: Transfer from Moulding 100% Direct material added 40% Conversion costs 20%

Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion: Transfer from Moulding 100% Direct material added 80% Conversion costs 50%

Direct materials added and conversion costs are incurred uniformly throughout the process. Required:

(a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs.

(b) Compute the:  cost of the unexpected losses  total cost of the handles completed and transferred out of the Packaging Department  cost of ending work in process inventory in the Polishing Department (3 marks

(c) Complete the Work in Process Inventory – Polishing Process T-account, clearly showing the ending balance.

(d) Prepare the journal entries for the:  assignment of direct materials, direct labour incurred and the manufacturing overhead applied to the Polishing Process  cost of the units completed and transferred out to the Packaging Process

(e) Given that 30% of the unexpected losses were as a result of pilferage, calculate Valentine Accessories true loss for the Polishing Department. (2

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 2.50 ounces $ 19.00 per ounce $ 47.50 Direct labor 0.70 hours $ 15.00 per hour 10.50 Variable manufacturing overhead 0.70 hours $ 4.00 per hour 2.80 Total standard cost per unit $ 60.80 During November, the following activity was recorded related to the production of Fludex: Materials purchased, 12,500 ounces at a cost of $223,125. There was no beginning inventory of materials; however, at the end of the month, 3,250 ounces of material remained in ending inventory. The company employs 21 lab technicians to work on the production of Fludex. During November, they each worked an average of 150 hours at an average pay rate of $12.50 per hour. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $5,100. During November, the company produced 3,500 units of Fludex. Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 21 technicians employed in the production of Fludex consisted of 4 senior technicians and 17 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances.

5. Logan’s Enterprises, a manufacturer, reported the following data for May.

Required:

a. How much direct materials were used in production?

b. What were the current manufacturing costs for the month of May?

c. What was the ending balance in the Finished Goods Inventory account?

6. Bluegill, Inc. produces spincast reels. The company’s controller has provided you with the following information.

Beginning balance, Direct Materials Inventory $75,000

Ending balance, Direct Materials Inventory $69,000

Beginning balance, Work in Process Inventory $122,000

Ending balance, Work in Process Inventory $125,000

Direct Labor $757,000

Manufacturing Overhead $347,000

Direct materials purchased $847,000

Required:

Using the above cost information, prepare a cost of goods manufactured schedule.

7. The following data has been taken from the accounting records of Curtis Manufacturing Company for the current year:

Sales $600,000

Purchases of raw materials $350,000

Direct labor cost during period $120,000

Manufacturing overhead incurred during period $60,000

Raw Materials Inventory, beginning $20,000

Raw materials Inventory, ending $25,000

Work in Process Inventory, beginning $47,000

Work in Process Inventory, ending $32,000

Finished Goods Inventory, beginning $75,000

Finished Goods Inventory, ending $82,000

Required:

a. Compute the amount of raw materials moved into production during the period.

b. Compute the amount transferred to finished goods during the period.

c. Compute the amount of goods sold during the period.

8. Classify the following costs incurred by Roper Dress Manufacturing Company by both behavior and function by placing an “X” in the appropriate columns.

Suppose Stuart Company has the following results related to cash flows for 2018:

Net Income of $5,600,000
Increase in Accounts Payable of $600,000
Decrease in Accounts Receivable of $900,000
Depreciation of $1,900,000
Increase in Inventory of $200,000
Other Adjustments from Operating Activities of -$800,000

Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands.

What is the Net Cash Flow from Operating Activities?

Please specify your answer in the same units as the statement of cash flows.

Operating Leverage

Beck Inc. and Bryant Inc. have the following operating data:

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.

c. The difference in the increases  of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher  operating leverage means that its fixed costs are a larger  percentage of contribution margin than are Bryant Inc.'s.

E7-5 Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2

Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:

Required:

Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.)

1. Discuss in 2 pages format APA, privacy issues of the internet of things (IoT) facing accounting departments in the U.S, and what policies and/or controls may need to be added/strengthened to protect privacy.

19. Under sum-of-the-years’-digits depreciation . . .

a. the book value remains the same each year.

b. the depreciation rate changes each year.

c. the denominator of the SYD fraction changes each year.

d. all of the above.

20. For assets acquired during the year, the sum-of-the-years’-digits method requires that the same depreciation rate be used . . .

a. for the remaining months of the year of acquisition, then again in the final year of the asset’s estimated life for any months not depreciated in Year 1.

b. for 12 consecutive months, even if that results in the same rate being used in two different calendar years.

c. throughout the life of the asset.

d. until the end of the calendar year, then recomputed for the next calendar year.

21. Company records show that an employee provided with a company car drove it 80% for business and 20% for personal use. The company reports the personal use as income on the employee’s W-2. As a result . . .

a. the company can depreciate 80% of the car’s cost basis.

b. the company cannot depreciate the car.

c. the company can depreciate 100% of the car’s cost basis.

d. the company can depreciate the car without IRS limits on annual depreciation.

22. On which of the following assets can a company take a Sec. 179 deduction?

a. a warehouse

b. a computer

c. a rental apartment building

d. an office building

X Company is planning to stop the production and sale of Product Q, which lost $8,000 last year. If Product Q is dropped, two things will happen in each of the next three years: 1) last year's loss will be avoided, and 2) sales of Product R will be increased, contributing $10,000 to annual profits. In addition, if Product Q is dropped, the company will be able to sell some equipment immediately for $14,000. Assuming a discount rate of 4%, what is the net present value of stopping the production and sale of Product Q?

Could you give me an answer as fast as you can? Please..! Thank You!

Learning Objectives: CHAPTER 7

1. Measure and account for the cost of plant assets
2. Distinguish a capital expenditure from an immediate expense
3. Measure and record depreciation on plant assets
4. Analyze the effect of a plant asset disposal
5. Apply GAAP for natural resources and intangible assets
6. Explain the effect of an asset impairment on the financial statements
7. Analyze rate of return on assets
8. Analyze the cash flow impact of long-lived asset transactions

EXAMPLE OF WHAT I'M LOOKING FOR:

One thing I found challenging was the credits and debits concept from chapter two and matching them up, (common stock would be a cash debit and stock credit). Once I got it down it was one of those "why didn't it make sense to me sooner" moments but at the time I didn't understand and would switch things. How I approached the chapter was really to make sure I understood all the terms, ie notes payable, accounts receivable, etc. Being able to understand them without going back to the textbook made the process a bit faster and overall easier. Another thing was really taking advantage of the internet and that if there was something in the textbook I didn't understand, looking it up on Google and going through different websites and tutorials. While going through the problems I made sure to take as thorough notes as I could with information that I knew would help me moving forward, targeting the problems that were difficult for me. Being able to go back and read through something that was written in a way that made the most sense to me as an individual definitely proved helpful. I also Skyped a friend who is currently enrolled in a financial accounting class and we would work through problems together.

Imagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on the most advantageous capital structure of a new corporation. Your client formed the corporation in question to provide technology to the medical profession to facilitate compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your client is very excited because of the ability to secure several significant contracts with enough capital.

Use the Internet and Strayer Library to research the advantages and disadvantages of debt for capital formation versus equity for capital formation of a corporation. Prepare a formal letter to the client using the six (6) step tax research process in Chapter 1 that was demonstrated in Appendix A on page 7 of your textbook as a guide.

Write a one to two (1-2) page letter in which you:

1. Compare the tax advantages of debt versus equity capital formation of the corporation for
   the client.
2. Recommend to the client whether he / she should use debt or equity for capital formation of the new corporation, based on your research. Provide a rationale for the response.

Exercise 12-25 (Algorithmic)
Fair Value and Equity Methods

Nadal Corporation purchased 8,800 common shares of Beck Inc., on January 1, 2018, for $107,000. During 2018, Beck declared and paid cash dividends to Nadal in the amount of $7,000. Nadal's share of Beck's net income for 2018 was $5,700. At December 31, 2018, the fair value of the 10,000 shares was $122,000. This is Nadal's only investment.

Required:

1. Assume that Beck has 66,000 common shares outstanding. What journal entries will Nadal make during 2018 relative to this investment?

2. Assume that Beck has 35,200 common shares outstanding. What journal entries will Nadal make during 2018 relative to this investment?

Could you write detailed calculation getting 2018 Dec 31 Investments-Equity Method and Investment Income-Equity Method

Ripit Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors The outlay required is $480,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

Year               Cash Revenues       Cash Expenses

1                      $780,000                   $600,000

2                        780,000                     600,000

3                        780,000                     600,000

4                        780,000                     600,000

5                        780,000                     600,000

Required:

1. Compute the payback period for the NC equipment.

2. Compute the NC equipment's ARR.

3. Compute the investment's NPV, assuming a required rate of return of 10 percent.

4. Compute the investment's IRR.

9. Younger Corporation reports that at an activity level of 8,700 units, its total variable cost is $653,109 and its total fixed cost is $658,416.

Required:

For the activity level of 8,800 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.

10. Match the following terms to the appropriate statement by placing the letter to the left of each statement.

a.Committed fixed cost b. Fixed Cost c. Variable Cost d. Total Cost e. Discretionary Fixed Cost f. High-low method g. Mixed Cost h. Relevant Range i. Scattergraph j. Step cost

1. Cost that does not change in total as long as production is in the relevant range.

2. Fixed costs that cannot be changed over the short run.

3. Cost that changes in total as production changes but remains unchanged per unit.

4. The sum of fixed costs and variable costs

5. The normal level of operating activity.

6. Fixed costs that can be changed over the short run.

7. A cost that has both a fixed and variable component.

8. A cost that is fixed over only a small range of activity.

9. A graph that shows total costs in relation to volume, or activity level.

10. A method of estimating the fixed and variable cost components of a mixed cost that requires using only two data points, the lowest point of activity and the highest point of activity.

11. Indicate which of the following costs are classified as mixed or step costs.

12. Vest Construction Company’s cost of renting a crane for the last four months is as follows:

Using the high-low method, what is the company’s estimated variable and fixed component of operating expenses? What is the total cost equation? What would be the estimated total cost if a crane is rented for 60 hours per month?

Financial statements for Askew Industries for 2021 are shown below (in thousands):

Required:
Calculate the following ratios for 2021. (Consider 365 days a year. Do not round intermediate calculations and round your final answers to 2 decimal places.)
1. inventory turn over ratio:________

2. Average days in inventory:_______ days

3. Receivables turnover rate:_______

4. Average collection period:________days

5. Asset turnover ratio:_________

6. Profit margin on sales:______%

7. Return on assets:__________%

8. Return on equity:________%

9. Equity multiplier:____________times

10. Return on equity (using the DuPoint framework):_________%