On August 3, Cinco Construction purchased special-purpose equipment at a cost of $7,377,200. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $10,940.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

Corrigan’s selling price is $64 per unit for the universal gismo, which is subject to a 5 percent sales commission. (In the following requirements, ignore income taxes.)

1. How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer up to nearest whole number.)

2-a. Calculate the net income of the two systems if sales and production are expected to average 41,000 units per year.


2-b. Which of the two systems would be more profitable?

multiple choice

• Model No. 6754

• Model No. 4399

3. Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $450,000 and will be depreciated over a five-year life by the straight-line method. How many units must Corrigan sell to earn $974,000 of income if Model 4399 is selected? As in requirement 2, sales and production are expected to average 41,000 units per year. (Do not round intermediate calculations and round your final answer up to nearest whole number.)

4. Ignoring the information presented in part 3, at what volume level will the annual total cost of each system be equal? (Do not round intermediate calculations and round your final answer up to nearest whole number.)

1. Timothy Company employs standard costing. The standards and actual operating data for the month are as follows:
   

   Standards
   Direct materials	3.0 pounds per unit @ $4.50 per pound
   Direct labor	5.0 hours per unit @ $10.25 per hour
   Standard quantity allowed	10,500 pounds
   Standard hours allowed	17,500 hours

   Actual
   Direct materials purchased	11,000 pounds @ $4.25 per pound
   Direct materials used	10,700 pounds
   Direct labor	17,300 hours @ $10.20 per hour

   
   The labor efficiency variance is:

   	A.	none of these
   	B.	$2,040 F
   	C.	$2,040 UF
   	D.	$2,050 F
   	E.	$2050 UF

QUESTION 21

1. Timothy Company employs standard costing. The standards and actual operating data for the month are as follows:
   

   Standards
   Direct materials	3.0 pounds per unit @ $4.50 per pound
   Direct labor	5.0 hours per unit @ $10.25 per hour
   Standard quantity allowed	10,500 pounds
   Standard hours allowed	17,500 hours

   Actual
   Direct materials purchased	11,000 pounds @ $4.25 per pound
   Direct materials used	10,700 pounds
   Direct labor	17,300 hours @ $10.20 per hour

   
   The overall direct materials variance is:

   	A.	$500 UF
   	B.	$1,775 F
   	C.	$1,775 UF
   	D.	none of these
   	E.	$500 F

A wholly-owned subsidiary declares and pays a cash dividend. What effect does the dividend have on the consolidated balance sheet?

A. Increases cash and decreases retained earnings.

B. No effect on cash and decreases retained earnings.

C. Decreases cash and decreases retained earnings.

D. No effect on the consolidated balance sheet.

The chief accountant for Eliana City needed to make adjusting entries before preparing the city’s financial statements for calendar year 2019. She wrote a brief paragraph to guide her assistant in making the adjusting entries for the General Fund and then gave her assistant data regarding the accounts that might be affected by the adjustments. Use the following information to make the year-end adjusting journal entries, if needed. Identify the expenditure accounts at the object-of-expenditure level. 1. At December 31, the Property taxes receivable account showed a balance of $420,000, all of which was considered to be collectible. She estimated that $315,000 of that amount would be collected in the first 60 days of 2020. 2. The Health Department has a state grant that requires it to incur expenditures before the city can bill for the grant. The Department incurred $45,000 of expenditures under the grant during the last quarter of 2019 and sent a billing to the state, but the billing has not been recorded. 3. During the last week in December, Eliana’s employees earned $80,000. They will be paid with the first paycheck in 2020. 4. The city received an invoice for $15,000 from its Electricity Proprietary Fund for December electricity services. The invoice, which has not yet been entered in the records, will be paid in early February. 5. City employees are allowed to accumulate up to 30 days’ vacation leave and to get cash for unused leave when they are terminated or retire. The total liability to city employees for earned, but unused, vacation leave increased from $1,210,000 to $1,290,000 during 2019. Two employees retired during the last week of December and will be paid $22,000 for unused leave with their final paychecks in January. 6. Numerous claims have been filed against the city for incidents attributed to several of its departments. Discussions with city attorneys who have been handling the cases indicate that the city could ultimately pay out $1,850,000 in judgments or settlements, an increase of $100,000 over last year’s estimate. As of December 31, settlements amounting to $35,000 were reached with two claimants. They will be paid in January. 7. The city operates a Pension Trust Fund to pay employee benefits. The plan has assets sufficient to pay for 75 percent of its pension liabilities. The city actuary recommended that the city contribute $950,000 to the Trust Fund in 2019. However, the city council appropriated only $300,000. That amount was paid to the Trust Fund in October, and the council made no further appropriation for the year. 8. The city Health Department has a state grant that must be used for a specific purpose, but there are no requirements as to when the grant resources may be used. At December 31, 2019, the unspent balance of the grant was $54,000. NOTE: If no adjusting entry is required for a transaction, select No entry as your answers and leave the Debit and Credit answer blank (zero)

1) Which one of the following would most likely be allocated to products using ABC by McDonald's?

A) Cost of plastic gloves worn by the burger cooks

B) Cost of employees who chop lettuce

C) Cost of tomatoes added to burgers

D) Cost of cups for soft drinks

2) Fixed costs.....

A) increase per unit as total production decreases

B) increase in total as total production increases

C) decrease in total as total production decreases

D) decrease per unit as total production decreases

3) Variable costs...

A) remain constant per unit

B) will stay the same in total

C) increase per unit

D) decrease in total

Excel HW 4: Fox Lake Networking Template

Objective: Create a template to estimate the cost of networking Fox Lake Country Club.

Skills: IF, AND, OR, COUNT, COUNTA, and COUNTIF and Conditional formatting

For the past year, members at Fox Lake Country Club have been complaining about not being able to access the Internet or slow data transmission speeds while at the club. Given your knowledge of spreadsheets, Jeff Lewis, business manager at Fox Lake, has asked you to create an Excel template for estimating the cost of rewiring the club’s facilities. Jeff wants the worksheet to contain some basic input information and automatically calculate an estimated price, so that he can quickly estimate the cost of rewiring Fox Lake’s facilities. The variables to be considered are as follows:

• The dimensions of the building to be networked – length in linear feet
• The condition of existing network equipment, where 0 represents none, where 1 represents excellent, 2 represents reasonable but would consider upgrading, and 3 represents poor condition with immediate updates required.
• Whether or not the facility has existing network equipment (YES or NO)
• Speed of network required

Complete the following:

1. Open a new workbook and save it as “yourlastname”_CostOfNetwork.xlsx. Create a worksheet with the columns and data shown in the table below (see page 2 for the complete table with column headings). Also, include a meaningful title at the top of your worksheet. Ultimately, this worksheet will be used as a template to evaluate competing bids. List all other inputs that are needed for subsequent calculations below the following table.

Fill in the cost per building. Enter all formulas so they can be copied down the column. Remember, your formulas will need to work when new quantities are substituted into the data entry area. Hint: create input cells and reference those cells in your formulas.

2. To the right of the Speed of Network Required column, calculate the cost of new network equipment. Only the buildings with an Existing Equipment value of “No” will require networking equipment. The cost is $40.00 per foot. If no networking equipment is required, a value of $0 should be displayed. Title this column “Cost of New Cable.”

3. In an adjacent column, calculate the additional cost of networking equipment based on the following criteria:
   1. If the Condition of Network Equipment is 0 or 3, then computer equipment (e.g. router, backups, etc) are needed at a cost of $5.00 per foot.
   2. If the Condition of Network Equipment is 2, then computer equipment (e.g. new cables) are needed at a cost of $3.50 per foot.
   3. Otherwise, no new equipment is needed and a value of $0 should be displayed.
   4. Title this column “Additional Equipment Cost.”
4. In an adjacent column, calculate the cost adjustment for the Condition of the Network Equipment based on the following criteria:
   1. If the Speed of Network Required is equal to “1 Gbs” and the Condition of the Network Equipment is a 0, then the additional cost of networking is $4.50 per foot, otherwise there is no additional cost and a value of $0 should be displayed.
   2. Title this column “High-Speed Cost Adjustment.”
5. In an adjacent column, calculate the estimated cost to network each building by summing the values resulting from your previous cost calculations (steps 2-4 in the instructions). Title this column “Estimated Cost of Network before Discount.”
6. Insert a column to the immediate right of the column titled, “Speed of Network Required?.” Enter a formula that determines if (TRUE, FALSE) this is a high-priced facility. A high-priced facility is one that has an Estimated Cost of Network before Discount greater or equal to $6,000. Title this column “High Priced Facility?.”
7. Because larger jobs have certain economies of scale in setup and cleanup, a discount is given based on these estimated values to jobs based on their total size. To the right of “Estimated Cost of Network before Discount,” determine the total discounted price, of the job based on the following:
   1. If the Estimated Cost of Network before Discount is less than $6,000, then there is no discount.
   2. If the Estimated Cost of Network before Discount is at least $6,000 but less than $17,000, then a 7% discount will be given (Hint: multiply the discount % times the Estimated Cost of Network before Discount amount, which is Column J).
   3. If the Estimated Cost of Network before Discount is at least $17,000, then a 10% discount will be given (Hint: multiply the discount % times the Estimated Cost of Network before Discount amount, which is Column J).
   4. Title this column “Discount.”
8. To the right of Discount, calculate the total estimated cost of the network for each building. (Hint: you are subtracting the Discount from the Estimated Cost of Network before Discount). Title this column “Total Estimated Cost of Network.”
9. In the row below your calculations, insert a function that counts the number of facilities.
10. In the next row, insert a function that counts the number of facilities that received a discount.
11. To the right of these two functions enter the text: “Number of Facilities” and “Number of Facilities Receiving a Discount,” respectively.
12. Format your worksheet so that it is easy to read and the information is clearly identifiable.
13. Be sure to set up your worksheet to include data inputs, so that your results can be changed quickly when an input is altered. For example, if the discount percent changes from 5% to 7%, your results automatically adjust by this change.

Log into Blackboard and Click on Assessments/Lab Assignment 5: Fox Lake Networking. Use your completed spreadsheet to answer the following 10 questions:

1. How many buildings are considered "High Priced?"

2. What is the Cost of New Cable for the Dining Hall?

3. What is the Total Estimated Cost of Network for all buildings combined?

4. What is the total Discount given for all buildings combined?

5. Which building had the highest Additional Equipment Cost?

6. Which building received the largest discount?

7. How many buildings have a Total Estimated Cost of Network = $0.00?

8. Currently, the cost for not having Existing Equipment is $40. What does it need to be for the Total Estimated Cost of Network for all buildings combined to equal $45,000?

9. What would be the Total Estimated Cost of Network for all buildings combined if, in Step 2, the cost for not having network equipment is decreased to $35.00 per foot?

10. With the cost for not having Existing Equipment changed back to $40, what is the total Discount for all buildings combined if the discount % dropped from 10% to 8.5% for all buildings that had an Estimated Cost of Network before Discount >= $17000?

Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $139,107. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1, 2019. Edison’s fiscal year ends December 31.

1. 1/1/2018 Record the lease.

2. 1/1/2018 Record cash received

3. 4/1/2018 Record cash received.

4. 7/1/2018 Record cash received.

5. 10/1/2018 Record cash received.

6. 12/31/2018 Record interest receivable.

7. 1/1/2019 Record cash received.

Perez Bike Company makes the frames used to build its bicycles. During 2018, Perez made 24,000 frames; the costs incurred follow:

Perez has an opportunity to purchase frames for $118 each.

Additional Information

1. The manufacturing equipment, which originally cost $570,000, has a book value of $460,000, a remaining useful life of five years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $69,000 per year.

2. Perez has the opportunity to purchase for $920,000 new manufacturing equipment that will have an expected useful life of five years and a salvage value of $71,000. This equipment will increase productivity substantially, reducing unit-level labor costs by 60 percent. Assume that Perez will continue to produce and sell 24,000 frames per year in the future.

3. If Perez outsources the frames, the company can eliminate 80 percent of the inventory holding costs.

Required

1. Determine the avoidable cost per unit of making the bike frames, assuming that Perez is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Perez outsource the bike frames?

2. Assuming that Perez is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.

3. Assuming that Perez is considering whether to either purchase the new equipment or outsource the bike frame, calculate.

DO IT! 6.2 (LO 2) The accounting records of Americo Electronics show the following data.

Compute cost of goods sold under different cost flow methods.

Determine cost of goods sold during the period under a periodic inventory system using (a) the FIFO method, (b) the LIFO method, and (c) the average-cost method. (Round unit cost to nearest tenth of a cent.)

On December 31, 2017, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

16. A developer of video game software has seven proposals for new games. Unfortunately,
the company cannot develop all the proposals because its budget for new projects
is limited to $950,000, and it has only 20 programmers to assign to new projects.
The financial requirements, returns, and the number of programmers required by each project are summarized in the following table. Projects 2 and 6 require specialized
programming knowledge that only one of the programmers has. Both of these
projects cannot be selected because the programmer with the necessary skills can be
assigned to only one of the projects. (Note: All dollar amounts represent thousands.)
Project Programmers Required Capital Required Estimated NPV
1 7 $250 $650
2 6 $175 $550
3 9 $300 $600
4 5 $150 $450
5 6 $145 $375
6 4 $160 $525
7 8 $325 $750
a. Formulate an ILP model for this problem.
b. Create a spreadsheet model for this problem and solve it.
c. What is the optimal solution?

1) Bakerston Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year:

• Raw materials were purchased, $315,000.

• Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect).

• The following employee costs were incurred: direct labour, $377,000; indirect labour, $96,000; and administrative salaries, $172,000.

• Selling costs, $147,000.

• Factory utility costs, $10,000.                                                                    

• Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling and administrative activities.

• Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours.

• Sales for the year totalled $1,253,000.

Required:

a. Prepare a schedule of cost of goods manufactured in good form.

b. Was the overhead underapplied or overapplied and by how much?

c. Prepare an income statement for the year in good form.

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 4,400,000 Fixed overhead $ 6,600,000 Selling and administrative costs for the year Variable $ 750,000 Fixed $ 4,250,000 Production and sales for the year Units produced 110,000 units Units sold 80,000 units Sales price per unit $ 350 per unit

1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. 3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Exact Photo Service purchased a new color printer at the beginning of Year 1 for $38,600. The printer is expected to have a four-year useful life and a $3,400 salvage value. The expected print production is estimated at $1,788,000 pages. Actual print production for the four years was as follows:

The printer was sold at the end of Year 4 for $3,550.

Required
a. Compute the depreciation expense for each of the four years, using double-declining-balance depreciation.