Internal Rate of Return Method—Two Projects

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $48,601.8 and could be used to deliver an additional 54,000 bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $0.38. The delivery truck operating expenses, excluding depreciation, are $0.52 per mile for 18,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $46,248.75. The new machine would require three fewer hours of direct labor per day. Direct labor is $15 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have six-year lives. The minimum rate of return is 11%. However, Munch N’ Crunch has funds to invest in only one of the projects.

a. Compute the internal rate of return for each investment. Use the above table of present value of an annuity of $1. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest percent.

b. The bagging machine rate of return was less  than the minimum rate of return requirement of 11% while the delivery truck rate of return was greater  than the minimum rate of return requirement of 11%. Therefore the recommendation is to invest in the delivery truck .

Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

a. For each alternative project compute the net present value.
b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?

Usefulness of income statement and cash flow statement for the invsetors

Define organizational culture, observable culture, and core culture

The following is an actual headline that was recently reported in the media about the New Zealand company Sky TV:

“Sky TV’s profit dropped 20.9 per cent in the year to the end of June. The pay TV company released its full-year results today, which showed a net profit of more than $116.3 million, down from $147.1 million the previous year.”

(a). Discuss the key findings of the Ball and Brown (1968) study and explain how the above earnings announcement might affect Sky TV’s share price.

What if Leaders Institute appointed a Chief Communications Manager (CCM) who will be responsible for identifying, developing and monitoring all the communication channels within the organisation? Please provide detailed answer on this question. 1000 word essay

Part 2: Cameron Company is interested in establishing the relationship between utility costs and machine hours. Data has been collected and a regression analysis prepared using Excel. The monthly data and the regression output follow:

Required:
a. Using Excel, perform a regression analysis on the above data and generate a summary output.  

b. What is the equation for utility costs using the regression analysis?

c. Prepare an estimate of utility costs for a month when 3,000 machine hours are worked.

Developing accounting standards is challenging and requires coordinated efforts among various parties to successfully execute. If you were given complete authority in this matter, how would you propose that GAAP should be developed and enforced? What process would you put in place to protect all parties that are impacted?

Required information Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2 [The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product. Direct materials (6 Ibs. @ $5 per Ib.) $ 30 Direct labor (2 hrs. @ $17 per hr.) 34 Overhead (2 hrs. @ $18.50 per hr.) 37 Total standard cost $ 101 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 45,000 Indirect labor 180,000 Power 45,000 Repairs and maintenance 90,000 Total variable overhead costs $ 360,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 80,000 Taxes and insurance 12,000 Supervision 79,000 Total fixed overhead costs 195,000 Total overhead costs $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (91,000 Ibs. @ $5.10 per lb.) $ 464,100 Direct labor (30,500 hrs. @ $17.25 per hr.) 526,125 Overhead costs Indirect materials $ 44,250 Indirect labor 177,750 Power 43,000 Repairs and maintenance 96,000 Depreciation—Building 24,000 Depreciation—Machinery 75,000 Taxes and insurance 11,500 Supervision 89,000 560,500 Total costs $ 1,550,725 Problem 21-3A Part 1&2 Required: 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year:

The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:

The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been significantly less than the monthly static budget of 1,006,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places.

b. Compare the flexible budget with the actual expenditures for the first three months.

What does this comparison suggest?

Please show work for each step.

Why deferrals are reported in government financial statements separately?

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.

At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:

Required:

1. Complete the following:

a. Compute the unit product cost under absorption costing.

b. What is the company’s absorption costing net operating income (loss) for the quarter?

c. Reconcile the variable and absorption costing net operating income (loss) figures.

3. During the second quarter of operations, the company again produced 31,500 units but sold 34,500 units. (Assume no change in total fixed costs.)

a. What is the company’s variable costing net operating income (loss) for the second quarter?

b. What is the company’s absorption costing net operating income (loss) for the second quarter?

c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

You oversee the $250 petty cash for your company. When an employee needs a special item that is not in inventory, you take money from petty cash to purchase that item.

One day, you are short on cash for lunch. You decide to borrow $10 each day for the next 3 days until payday for a total of $30 from petty cash. After payday, you do not have enough to repay petty cash, so you decide to record a cash short/over expense of $30.

Since this is the first time you have ever done this, is this a problem? If so, what steps should be taken to fix this problem? If not, why not?

Define in own words

CHAPTER 5 – Accounting Systems

1. Accounting system
2. Accounts payable subsidiary ledger
3. Accounts receivable subsidiary ledger
4. Cash payments journal
5. Cash receipts journal
6. Controlling account
7. e-Commerce
8. General journal
9. General ledger
10. Internal controls
11. Invoice
12. Purchases journal
13. Revenue journal
14. Special journals
15. Subsidiary ledger

Baltic Limited is a listed company based in California. On January 1, 2019, the company granted 10,000 share units to its vice president. Each share unit has a contractual service period of five years and a vesting condition based on market performance.

Each share unit is convertible into ordinary shares of Baltic Limited as follows:

• If the company’s share price increases by more than the Nasdaq Composite index over the five years, each share unit converts into 5 shares.
• If the company’s share price increases by less than or equal to the Nasdaq Composite index over the five years, each share unit converts into 1 share.

On the grant date, the company’s ordinary shares have a fair value of $10 per share.

Management believes the probability of the above scenarios occurring are 40% and 60%, and uses this information to calculate the fair value of the share unit award.

The company’s accountant has asked for your help to calculate compensation costs for these share units so that the appropriate journal entry can be recorded in 2019.

Ignore the effects of taxes.

Provide the journal entries and calculations to answer this question.