Assume you are trying to explain the different methods to value inventory to a family member that is self-employed and knows nothing about accounting.

Her comment to you is: "The cost of inventory can only be one number. How can you suggest it can be one of 4 different numbers. Sounds like you are cooking the books to me."

Please explain Why in accounting, there are different methods to value inventory.

King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at last year's volume level of 1,950 bicycles per month are shown in the following table:

KCSB expects to produce and sell 2,350 bicycles per month in the coming year. The bicycles sell for $560 each.

KCSB receives a proposal from an outside contractor who, for $150 per bicycle, will assemble 700 bicycles per month and ship them directly to KCSB's customers as orders are received from KCSB's sales force. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. The variable manufacturing costs would be reduced by 40% for the 700 bicycles assembled by the outside contractor, and variable nonmanufacturing costs for the 700 bicycles would be cut by 55%.

KCSB's marketing manager thinks that it could sell 70 specialty racing bicycles per month for $6,000 each, and its production manager thinks that it could use the idle resources to produce each of these bicycles for variable manufacturing costs of $4,900 per bicycle and variable nonmanufacturing costs of $300 per bicycle.

If KCSB accepts the proposal, it would be able to save $20,280 of fixed manufacturing costs; fixed nonmanufacturing costs would be unchanged.

REQUIRED [Note: Round unit cost computations to the nearest cent]

What is the difference in KCSB's monthly costs between accepting the proposal and rejecting the proposal?   (Note: If the costs of accepting the proposal are less than the costs of rejecting it, enter the difference as a positive number; if the accept costs are more than the reject costs, enter the difference as a negative number.)

The financial records of LeRoi Jones Inc. were destroyed by fire at the end of 2017. Fortunately, the controller had kept certain statistical data related to the income statement as follows.

From the foregoing information prepare an income statement for the year 2017 in single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Question 3 Your audit firm is the auditor of Speighstown Garden Centre, which operates a large centre that sells plants, garden furniture (e.g. outdoor benches) and garden equipment (e.g. lawn mowers). The inventory system is up-to-date; the records are well maintained and the year end quantities are used to determine the inventory value. The inventory count instructions are shown below: (1) The inventory count will supervised by the Financial Controller and will take place on 31 August 2012. The count will begin at 7am. The centre will be closed on the day of the count, but if any of the large customers like hotels require a rush order, they will be accommodated. One member of the Accounts Department will be assigned to each area along with a member of the garden staff. There will be computer produced sheets showing the quantities of each item from the system. The Financial Controller will distribute and collect back the forms at the end of the count. Where the amount observed is different to the amount on the sheet, it will be crossed out and the new amount written in pencil. (111) The Financial Controller will then carry out test counts on five items in each area that has been counted. Where an error is found, the area will be re-counted. (iv) The quantity for any inventory that looks damaged or unsaleable should be crossed out and allotted a quantity of zero. Once all the sheets have been collected and test counts completed, the Financial Controller will manually update the computerised system to reflect the counted quantities. After the system has been updated, the count sheets are discarded. Required: Identify and explain FIVE deficiencies in the inventory counting system that can be highlighted in the instructions from Speighstown Garden Centre. For each deficiency suggest how it could be overcome.

JOHNSTON ENTERPRISES          
BALANCE SHEET          
   31-Dec-17       31-Dec-16
Current Assets:          
Cash   $140,000        $120,000
Accounts Receivable   200,000       300,000
Inventory   400,000       300,000
Total Current Assets   740,000       720,000
Property, Plant, and Equipment   1,241,000       1,122,000
Less: Accumulated Depreciation   -476,000       -442,000
Total Assets   1,505,000       1,400,000
          
Current Liabilities:            
Accounts Payable   $201,000        $130,000
Notes Payable   40,000       60,000
Income Taxes Payable   90,000       70,000
Total Current Liabilities   331,000       260,000
Bonds Payable   300,000       400,000
Total Liabilities   631,000       660,000
          
Stockholders' Equity          
Common Stock   500,000       400,000
Retained Earnings   374,000       340,000
Total Stockholders' Equity   874,000       740,000
Total Liabilities & Stockholders' Equity   1,505,000       1,400,000
          
INCOME STATEMENT          
Sales Revenue   $1,580,000        $1,500,000
Less Cost of Goods Sold   770,000       740,000
Gross Profit Expenses:   810,000       760,000
          
Depreciation Expense   153,000       136,000
Salaries and Wages Expense   350,000       340,000
Interest Expense   41,000       31,000
Loss on Sale of Equipment   12,000       0
Income Before Taxes   254,000       253,000
Less Income Tax Expense   90,000       100,000
Net Income   164,000       153,000
ADDITIONAL INFORMATION          
During the year, Johnston sold equipment. The book value of the equipment          
was comprised of the following amounts:          
Original Cost:   153,000      
Accumulated Deprecation:   119,000      
          
During the year Johnston purchased new equipment as follows:          
Cost of new equipment:   272,000      
          
Dividends were paid during the year.          

Prepare a statement of cash flows for the year ending December 31, 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Weirick, Inc., manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity

  Expected Activity

Activity Cost Pools   Activity Measures Estimated Estimated Cost Product T8   Product P4 Total  

Labor-related   DLHs $127,500 3,600   1,800 5,400

Production orders Orders 60,110 700 400 1,1004

Order size MHs 940,160   4,000 3,100    7,100 Total: $ 1,127,770

The total overhead applied to Product P4 under activity-based costing is closest to

A) $880,050

B) 410,502

C) 474,860

D) 1,000,270

Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $57 per unit and had sales of 24,100 units in the current year, 2018. STI has no inventory on hand at the beginning of 2018 and is projecting sales of 26,300 units in 2019. STI is planning the same production level for 2019 as in 2018, 25,200 units. The variable manufacturing costs for STI are $18, and the variable selling costs are only $0.70 per unit. The fixed manufacturing costs are $201,600 per year, and the fixed selling costs are $520 per year. Required: 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods.

describe managerial accounting and the role of managerial accounting in business.

Briefly explain the operation of the general anti-avoidance provisions and other deductible rule in australian taxation law.

Michele is single with no dependents and earns $23,000 this year. Michele claims sixteen allowances on her Form W-4. Which of the following is correct concerning her Form W-4?

a.Michele may not under any circumstances claim sixteen allowances. b.Michele's employer will require her to verify her right to claim sixteen allowances. c.Michele's employer will submit a copy of her W-4 to the IRS if directed to do so by written notice. d.Michele's employer should ask her to prepare a corrected Form W-4. If Michele is unwilling to update her Form W-4, then her employer should disregard her Form W-4 and withhold at the single taxpayer rate with no allowances. e.None of these choices are correct.

The process for employee withholding involves:

a.the employee provides wage information and the employer completes Form W-4 and withholds based on employee instruction

b.the employee provides filing status and the employer completes the Form W-4 and submits to the IRS for proper withholding

c.the employee completes most of the Form W-4 and the employer submits the form to the IRS and awaits withholding instructions

d.the employee computes the number of allowances on Form W-4 and the employer uses the W-4 information to calculate income tax withholding

STORE 5

NET SALES = ?

COST OF GOODS SOLD = $90.0

GROSS MARGIN-DOLLARS = ?

GROSS MARGIN-PERCENT = ?

EXPENSE-DOLLARS = $41.1

EXPENSE-PERCENT = ?

NET INCOME-DOLLARS = $0.5

NET INCOME-PERCENT = ?

A 20 year loan of $120, 000 at i = 6% is paid off by paying 130% of each year’s interest at the end of each year for the first 12 years, and then for the next 8 years pay off the loan by paying off constant principle at the end of each year. Find the value of the last payment.

On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)

Characteristics of Production Process, Cost Measurement

Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year:

During the year, the following actual amounts were experienced:

Vince Melders, owner of EcoScape, noticed that the watering systems for many houses in a local subdivision had the same layout and required virtually identical amounts of prime cost. Vince met with the subdivision builders and offered to install a basic watering system in each house. The idea was accepted enthusiastically, so Vince created a new company, Irrigation Specialties, to handle the subdivision business. In its first three months in business, Irrigation Specialties experienced the following:

Required:

1. Should Irrigation Specialties use process costing or job-order costing?

2. If Irrigation Specialties uses an actual costing system, what is the cost of a single system installed in June? In July? In August? Round your answers to the nearest dollar.

3. Now assume that Irrigation Specialties uses a normal costing system. Estimated overhead for the year is $47,500, and estimated production is 500 watering systems. What is the predetermined overhead rate per system?

$ per system installed

What is the cost of a single system installed in June? In July? In August?