2.

A Plus Company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

Which of the following statements is true regarding this company's activity rates?

Multiple Choice

• The activity rate under the activity-based costing system for Activity 2 is $2.81.

• The activity rate under the activity-based costing system for Activity 2 is $16.00.

• The activity rate under the activity-based costing system for Activity 2 is $19.50.

• The activity rate under the activity-based costing system for Activity 2 is $1.50.

• The activity rate under the activity-based costing system for Activity 2 is $2.00.

Determine the amount of sales (units) that would be necessary under

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 98,550 units at a price of $117 per unit during the current year. Its income statement for the current year is as follows:

The division of costs between fixed and variable is as follows:

Management is considering a plant expansion program that will permit an increase of $936,000 in yearly sales. The expansion will increase fixed costs by $93,600, but will not affect the relationship between sales and variable costs.

Required:

4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $142,350 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.
units

6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.
$

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar.
$ Income

8. Based on the data given, would you recommend accepting the proposal?

1. In favor of the proposal because of the reduction in break-even point.
2. In favor of the proposal because of the possibility of increasing income from operations.
3. In favor of the proposal because of the increase in break-even point.
4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Choose the correct answer.
b

Please explain how you get each answer

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Exercise 8-12

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $350,000, $370,000, $360,000, and $380,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $46,000. Each month $7,000 of this total amount is depreciation expense and the remaining $39,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement that computes net operating income for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

What can we say about the limitations involved in the assessment of ROE for analyzing the profitability of a company?Please give an understandable explanation

1. What is Kaizen and how is it related with lean maufacturing?

          2. What are the Kaizen practices that MARS had implemented in their plant and what are their results? Give as

              many as possible as mentioned the article. Explain further your answers.

          3. One of the Kaizen practices at Mars is people empowerment. It is mentioned in the article that every associate

              has the authority to stop the line if they see a serious safety or quality issue. In your own opinion, what does

              this mean? Explain your answer, you can cite examples if needed.

An explanation of one area of enterprise risk management (4-5) sentences.

1.) When is it appropriate to use the income approach?

2.) What are the pros and cons of using the income approach?

3.) Describe what pre-tax and after-tax information is.

4.) What is the capitalization of benefits method?

5.) What is the discounted future benefits method?

6.) What is the excess earnings method?

Prepare all the necessary journal entries for the transactions listed above for Parker Corporation.

5. On December 1, 2018, Folks Wagon Company adopted a stock-option plan that granted options

to key executives to purchase 50,000 shares of the company’s $10 par value common stock. The

options were granted on January 1, 2019, and were exercisable 3 years after the date of grant if the

grantee was still an employee of the company. The options expired 5 years from the date of grant.

The option price was set at $35, and the fair value option-pricing model determines the total

compensation expense to be $450,000.

All of the options were exercised during the year 2022: 20,000 on February 23 when the market

price was $46, and 30,000 on August 8 when the market price was $85 a share.

a. Prepare the journal entries relating to the stock option plan for the years 2019, 2020, and 2021.

Assume that the employee performs services equally in 2019, 2020, and 2021.

b. Prepare the journal entries that record the two events of exercising the options in 2022

Consider the case of Mike. He is just about to turn 62 years of age and he has come to you to

help him determine if/when he can retire. Mike has provided you with the following

information:

His current earnings are $100,000 annually

He used a “Top Down” retirement assessment and determined that his retirement cash needs

would be equal to his annual earnings less his FICA tax, his mortgage of $1320/month, and

$5,000 per year of business/work related expense.

He does estimate that each year he waits to retire, his cash flow needs will increase by 2%.

Once he is retired, he should experience stable cash flows.

He currently has $425,000 in his retirement account.

He believes he should be able to earn a 6% rate of return on his retirement account.

His Social Security statement indicates he should receive a payment of $2,685 per month at his

full retirement age (FRA) of 67. He is aware that his social security payments are reduced if he

starts taking payments early, and they will increase if he defers taking social security payments

after age 67.

Mike expects to live until age 95.

He is interested in using an annuity method of capital needs analysis.

Considering this fact pattern, Mike wants to know the following:

1.

Can he afford to retire now, at age 62, based on his current retirement account value,

reduced social security and cash flow needs?

2.

Can he afford to retire at his FRA of 67? If he is short of capital, how much would he

have to save each year to meet his goal?

3.

Can he afford to retire if he waits until age 70? If so, how much cash flow could he have

if he used a Capital Preservation strategy and assumed his 6% rate of return is

sustainable

14. Emily, who lives in Indiana, volunteered to travel to Louisiana in March to work on a home-building project for
Habitat for Humanity (a qualified charitable organization). She was in Louisiana for three weeks. She normally
makes $500 per week as a carpenter’s assistant and plans to deduct $1,500 as a charitable contribution. In addition,
she incurred the following costs in connection with the trip: $600 for transportation, $1,200 for lodging, and $400 for
meals. What is Emily’s deduction associated with this charitable activity?

In 2018, Joanne invested $90,000 for a 20% interest in a limited liability company (LLC) in which she is a material
participant. The LLC reported losses of $340,000 in 2018 and $180,000 in 2019. Joanne’s share of the LLC’s losses
was $68,000 in 2018 and $36,000 in 2019. How much of these losses can Joanne deduct?

Rex and Dena are married and have two children, Michelle (age 7) and Nancy (age 5). During 2018, Rex earned a
salary of $24,500, received interest income of $300, and filed a joint income tax return with Dena. Dena had $0 gross
income. Their earned income credit for the year is:

Backus, Inc., makes and sells many consumer products. The firm’s average contribution margin ratio is 25%. Management is considering adding a new product that will require an additional $11,000 per month of fixed expenses and will have variable expenses of $5.5 per unit.

Required:

a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%. (Round your answer to 2 decimal places.)

b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $10,000. (Do not round intermediate calculations.)

Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $46 per unit. The company’s unit costs at this level of activity are given below:

A number of questions relating to the production and sale of Daks follow. Each question is independent.

Required:

1-a. Assume that Andretti Company has sufficient capacity to produce 116,100 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 35% above the present 86,000 units each year if it were willing to increase the fixed selling expenses by $150,000. Calculate the incremental net operating income. (Round your answers to the nearest whole number.)

1-b. Would the increased fixed selling expenses be justified?

2. Assume again that Andretti Company has sufficient capacity to produce 116,100 Daks each year. A customer in a foreign market wants to purchase 30,100 Daks. Import duties on the Daks would be $2.70 per unit, and costs for permits and licenses would be $21,070. The only selling costs that would be associated with the order would be $1.50 per unit shipping cost. Compute the per unit break-even price on this order. (Round your answers to 2 decimal places.)

3. The company has 500 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.)

4. Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 40% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20%. What would be the impact on profits of closing the plant for the two-month period? (Any losses should be indicated by a minus sign. Round all calculations (intermediate and final) to whole numbers. Round unit calculations to whole numbers.)

5. An outside manufacturer has offered to produce Daks and ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. Compute the unit cost that can be avoided if purchased from the outside manufacturer. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

We have learned about Standard costs and associated variances in this chapter. Can a favorable variance be a bad thing? Describe a realistic scenario where a favorable variance could be detrimental(have unwanted consequences elsewhere in the business).

Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31:

Record these transactions on page 11:

n January 1, 2020, Crane Corp., which uses IFRS, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement.

Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

Assume that Crane’s fiscal year end is May 31. Prepare the journal entries on Crane Corp.’s books to reflect the signing of the lease agreement and to record payments and expenses related to this lease for the calendar years 2020 and 2021. Crane does not prepare reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 2 decimal places, e.g. 52.75.)