Comprehensive Problem 5 Part A: Note: You must complete part A before completing parts B and C. Genuine Spice Inc. began operations on January 1, 2016. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows: DIRECT MATERIALS Cost Behavior Units per Case Cost per Unit Direct Materials Cost per Case Cream base Variable 100 ozs. $0.02 $2.00 Natural oils Variable 30 ozs. 0.30 9.00 Bottle (8-oz.) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case Mixing Variable 20 min. $18.00 $6.00 Filling Variable 5 14.40 1.20 25 min. $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $600 Facility lease Fixed 14,000 Equipment depreciation Fixed 4,300 Supplies Fixed 660 $19,560 Part A—Break-Even Analysis The management of Genuine Spice Inc. wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost: 2016 Case Production Utility Total Cost January 500 $600 February 800 660 March 1,200 740 April 1,100 720 May 950 690 June 1,025 705 Required: 1. Determine the fixed and variable portion of the utility cost using the high-low method. Round the per unit cost to the nearest cent. At High Point At Low Point Variable cost per unit $ $ Total fixed cost $ $ Total cost $ $ 2. Determine the contribution margin per case. Enter your answer to the nearest cent. Contribution margin per case $ 3. Determine the fixed costs per month, including the utility fixed cost from part (1). Utilities cost (from part 1) $ Facility lease $ Equipment depreciation $ Supplies $ Total fixed costs $ 4. Determine the break-even number of cases per month. cases

On November 1, 2020, Victorious, Inc. lends $40,000 to one of its executives in exchange for a 6%, 8-month note receivable. Victorious properly accrued interest on the note at its year-end, December 31, 2020. the journal entries to record the collection of the note principle and interest on the July 1, 2021 maturity date will include a:

Multiple Choice

• credit to Interest Revenue of $1,800

• debit to Note Receivable for $40,000

• credit to Interest Revenue of $1,600

• debit to Cash of $1,200

• credit to Interest Receivable for $400

You are to prepare a cost estimate for producing 1000 assemblies. Each assembly consists of a cylindrical tube, two identical end covers, and a purchased bracket. The brackets cost $8.25 each. Each tube costs $180 for the casting and requires 2.5 standard hours of machining. It requires 12 hours to set up the machining operations and a setup is good for the machining of 500 castings. The end covers are produced on a punch press that requires 1.2 hours per cover of run time and 4.0 hours for press setup. Press setup is good for producing 400 pieces. Material costs per cover is $.50. The direct labor rate is $16.00 per hour. Manufacturing overhead is 150 percent of direct manufacturing labor. Material overhead is 3 percent of the total material and subcontract amount. General and administrative costs are 15 percent of labor and material with appropriate overhead.

What is the calculated unit cost through general and administrative costs? Show your calculations

You are to prepare a bid for producing 100 brackets. The brackets are made on a punch press and screen printed with a part number. All screen printing is done at one time, but the brackets are made in batches of 40. Punch press set up time is 2 hours per setup and .05 hour per print. Screen printing required is 6 minutes per bracket. Assume no attrition or learning curve on either process. Material cost is $.50 per piece. Direct labor rate is $15.00 and overhead is 200 percent of direct labor. G&A is 30 percent of total material, labor, and overhead costs. A 10 percent profit is expected.

                What is your total bid price for the 100 brackets? Show your calculations.

The John Day Company proposed a general and administrative (G&A) rate of 16.8 percent of total manufacturing costs on a 20x8 proposal. The contractor provided the following data upon the request of the contract negotiator who desired to analyze the rate.

1. Does the proposed 20x8 G&A rate appear to be reasonable for the estimated total manufacturing group? Include your rationale.
2. If not, based on historical information above, what G&A rate appears reasonable? Explain.

Budgeted Income Statement and Supporting Budgets The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for December 2016: Estimated sales for December: Bird house 3,200 units at $50 per unit Bird feeder 3,000 units at $70 per unit Estimated inventories at December 1: Direct materials: Wood 200 ft. Plastic 240 lbs. Finished products: Bird house 320 units at $27 per unit Bird feeder 270 units at $40 per unit Desired inventories at December 31: Direct materials: Wood 220 ft. Plastic 200 lbs. Finished products: Bird house 290 units at $27 per unit Bird feeder 250 units at $41 per unit Direct materials used in production: In manufacture of Bird House: Wood 0.80 ft. per unit of product Plastic 0.50 lb. per unit of product In manufacture of Bird Feeder: Wood 1.20 ft. per unit of product Plastic 0.75 lb. per unit of product Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood $7.00 per ft. Plastic $1.00 per lb. Direct labor requirements: Bird House: Fabrication Department 0.20 hr. at $16 per hr. Assembly Department 0.30 hr. at $12 per hr. Bird Feeder: Fabrication Department 0.40 hr. at $16 per hr. Assembly Department 0.35 hr. at $12 per hr. Estimated factory overhead costs for December: Indirect factory wages $75,000 Depreciation of plant and equipment 23,000 Power and light $6,000 Insurance and property tax 5,000 Estimated operating expenses for December: Sales salaries expense $70,000 Advertising expense 18,000 Office salaries expense 21,000 Depreciation expense—office equipment 600 Telephone expense—selling 550 Telephone expense—administrative 250 Travel expense—selling 4,000 Office supplies expense 200 Miscellaneous administrative expense 400 Estimated other income and expense for December: Interest revenue $200 Interest expense 122 Estimated tax rate: 30% Required: 1. Prepare a sales budget for December. Feathered Friends Inc. Sales Budget For the Month Ending December 31, 2016 Unit Sales Volume Unit Selling Price Total Sales Bird house Bird feeder Total revenue from sales 2. Prepare a production budget for December. Feathered Friends Inc. Production Budget For the Month Ending December 31, 2016 Units Bird House Bird Feeder Expected units to be sold Plus desired inventory, December 31, 2016 Total Less estimated inventory, December 1, 2016 Total units to be produced 3. Prepare a direct materials purchases budget for December. Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31, 2016 Wood Plastic Total Required units for production: Bird house Bird feeder Plus desired units of inventory, December 31, 2016 Total Less estimated units of inventory, December 1, 2016 Total units to be purchased Unit price Total direct materials to be purchased 4. Prepare a direct labor cost budget for December. Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31, 2016 Fabrication Department Assembly Department Total Hours required for production: Bird house Bird feeder Total Hourly rate Total direct labor cost 5. Prepare a factory overhead cost budget for December. Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31, 2016 Indirect factory wages Depreciation of plant and equipment Power and light Insurance and property tax Total 6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400. Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31, 2016 Direct materials: Cost of direct materials available for use Cost of direct materials placed in production Total manufacturing costs Total work in process during the period Cost of goods manufactured Cost of finished goods available for sale Cost of goods sold 7. Prepare a selling and administrative expenses budget for December. Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31, 2016 Selling expenses: Sales salaries expense Advertising expense Telephone expense—selling Travel expense—selling Total selling expenses Administrative expenses: Office salaries expense Depreciation expense—office equipment Telephone expense—administrative Office supplies expense Miscellaneous administrative expense Total administrative expenses Total operating expenses 8. Prepare a budgeted income statement for December. Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31, 2016 Operating expenses: Total operating expenses Other income: Other expenses:

Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The company has performed marketing and cost studies that revealed the following information:

1. New equipment would have to be acquired to produce the device. The equipment would cost $180,000 and have a six-year useful life. After six years, it would have a salvage value of about $18,000.
2. Sales in units over the next six years are projected to be as follows:

3. Production and sales of the device would require working capital of $50,000 to finance accounts receivable, inventories, and day-to-day cash needs. This working capital would be released at the end of the project’s life.
4. The devices would sell for $40 each; variable costs for production, administration, and sales would be $25 per unit.
5. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the equipment would total $125,000 per year. (Depreciation is based on cost less salvage value.)
6. To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be:

7. The company’s required rate of return is 13%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. Compute the net cash inflow (incremental contribution margin minus incremental fixed expenses) anticipated from sale of the device for each year over the next six years.

2-a. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment.

2-b. Would you recommend that Matheson accept the device as a new product?

Write an essay to compare the division of responsibilities of CRA, Service Canada and HRSDC for Payroll functions

Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August.
2. Direct materials and conversion costs per equivalent unit for August.
3. Cost of goods finished during August.
4. Cost of work in process at August 31.

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Feedback

a. How much more (percentage amount) needed to be done to the beginning work in process units to make the units to complete to transfer to the next department? Did these units require more material cost or more conversion cost? How much, in terms of cost, had been done to these units in the prior period? In order for units to be transferred to the next department, the units have to be complete with respect to both materials and conversion. When are materials added in the process? How complete are the units in ending inventory with respect to materials? How compete are the units in ending inventory with respect to conversion? Materials and conversion cost needs to be allocated among the equivalent units. Are the number of equivalent units the same for materials and conversion?

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Cost per equivalent units of $1.50 for Direct Materials and $2.00 for Conversion Costs.

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

Physical Units Method

Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows:

At the split-off point, a batch yields 1,104 barlon, 2,809 selene, 2,608 plicene, and 3,511 corsol. All products are sold at the split-off point: barlon sells for $13 per unit, selene sells for $21 per unit, plicene sells for $28 per unit, and corsol sells for $33 per unit.

Required:

1. Allocate the joint costs using the physical units method. If required, round your percentage allocation to four decimal places and round allocated costs to the nearest dollar. Note: The total of the allocated cost does not equal to the one provided in the question data due to rounding error.

2. Suppose that the products are weighted as shown below:

Allocate the joint costs using the weighted average method. If required, round your percentage allocation to four decimal places and round allocated costs to the nearest dollar.

Janie graduates from highschool in 2019 and enrolls in college in the fall. Her parents (who file a joint return) pay $12,225 for her tuition and fees.

Assuming Janie's parents have AGI of $172,600, what is the American Opportunity tax credit they can claim for Janie?

Part 1) Please indicate which section of the statement of cash flows should contain each of the following items, and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing. (30 points) (a) Increase in accounts receivable (b) Purchase of a factory with cash (c) Depreciation of a building (d) Retirement of bonds with cash (e) Receipt of cash dividends Part 2) Explain how to calculate free cash flow and the importance of free cash flow to investors.

Financial Statements

The following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y7. Padget Home Services began its operations on January 1, 20Y7.

2. Prepare a statement of stockholders’ equity for the year ending December 31, 20Y7. If your answer is zero enter "0".

Flip Flop Inc. (FFI) has a capacity to manufacture up to 100,000 flip flops annually in Canada. For next year, expected production and sales are 80,000 units with sale price of $10 per unit. The following costs are expected:

FFI received the following offers:

1.              Africa Imports (AI) would like to purchase 10,000 units for $8.70 $ sale price per unit.

2.              China Imports (CI) would like to purchase 20,000 units for $6.60 sale price per unit.

There will be no selling expenses on AI and CI orders. There will be no impact on regular sales in Canada.

a)              Calculate the impact on FFI operating income if AI order is accepted.

b)              Calculate the impact on FFI operating income if CI order is accepted.

c)              Which offer should FFI accept? Why?

d)              For the offer you recommend in c) above, mention and explain two qualitative factors FFI should consider before making the final decision.

1. Manufacturing Income Statement, Statement of Cost of Goods Manufactured

   Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

   	On Company		Off Company
   Materials inventory, December 1	$76,840		$102,970
   Materials inventory, December 31	(a)		116,360
   Materials purchased	195,170		(a)
   Cost of direct materials used in production	205,930		(b)
   Direct labor	289,690		231,680
   Factory overhead	89,900		115,330
   Total manufacturing costs incurred in December	(b)		666,220
   Total manufacturing costs	733,050		914,380
   Work in process inventory, December 1	147,530		248,160
   Work in process inventory, December 31	124,480		(c)
   Cost of goods manufactured	(c)		660,040
   Finished goods inventory, December 1	129,860		115,330
   Finished goods inventory, December 31	136,010		(d)
   Sales	1,132,620		1,029,700
   Cost of goods sold	(d)		666,220
   Gross profit	(e)		(e)
   Operating expenses	147,530		(f)
   Net income	(f)		228,590

   Required:

   1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

   Letter	On Company	Off Company
   a.	$fill in the blank 33b330f92fb1072_1	$fill in the blank 33b330f92fb1072_2
   b.	$fill in the blank 33b330f92fb1072_3	$fill in the blank 33b330f92fb1072_4
   c.	$fill in the blank 33b330f92fb1072_5	$fill in the blank 33b330f92fb1072_6
   d.	$fill in the blank 33b330f92fb1072_7	$fill in the blank 33b330f92fb1072_8
   e.	$fill in the blank 33b330f92fb1072_9	$fill in the blank 33b330f92fb1072_10
   f.	$fill in the blank 33b330f92fb1072_11	$fill in the blank 33b330f92fb1072_12

   2. Prepare On Company's statement of cost of goods manufactured for December.

   On Company
   Statement of Cost of Goods Manufactured
   For the Month Ended December 31
   			$fill in the blank e2405308c076f99_2
   Direct materials:
   	$fill in the blank e2405308c076f99_4
   	fill in the blank e2405308c076f99_6
   	$fill in the blank e2405308c076f99_8
   	fill in the blank e2405308c076f99_10
   		$fill in the blank e2405308c076f99_12
   		fill in the blank e2405308c076f99_14
   		fill in the blank e2405308c076f99_16
   Total manufacturing costs incurred			fill in the blank e2405308c076f99_17
   Total manufacturing costs			$fill in the blank e2405308c076f99_18
   			fill in the blank e2405308c076f99_20
   			$fill in the blank e2405308c076f99_22

   3. Prepare On Company's income statement for December.

   On Company
   Income Statement
   For the Month Ended December 31
   		$fill in the blank a97bcefff044f83_2
   Cost of goods sold:
   	$fill in the blank a97bcefff044f83_4
   	fill in the blank a97bcefff044f83_6
   	$fill in the blank a97bcefff044f83_8
   	fill in the blank a97bcefff044f83_10
   		fill in the blank a97bcefff044f83_12
   		$fill in the blank a97bcefff044f83_14
   		fill in the blank a97bcefff044f83_16
   		$fill in the blank a97bcefff044f83_18