ABC Company produces Product X, Product Y, and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 2,130 hours per month. ABC Company wants to determine the product mix that should be achieved to meet the high demand for each product and provide the maximum profit. Following is information about each product: Product X Product Y Product Z Selling price $ 149 $ 121 $ 35 Variable costs 104 60 27 Machine time per unit 3 hours 3 hours 1 hour Monthly demand (units) 430 280 755

Determine how the 2,130 hours of machine time should be allocated to the three products to provide the most profitable product mix. (Do not round intermediate calculations.)

Toxaway Company is a merchandiser that segments its business into two divisions—Commercial and Residential. The company’s accounting intern was asked to prepare segmented income statements that the company’s divisional managers could use to calculate their break-even points and make decisions. She took the prior month’s companywide income statement and prepared the absorption format segmented income statement shown below:

In preparing these statements, the intern determined that Toxaway’s only variable selling and administrative expense is a 10% sales commission on all sales. The company’s total fixed expenses include $75,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $66,000 of fixed expenses that would be avoided if the Commercial segment is dropped, and $44,000 of fixed expenses that would be avoided if the Residential segment is dropped.

Required:

1. Do you agree with the intern’s decision to use an absorption format for her segmented income statement?

2. Based on a review of the intern’s segmented income statement:

a. How much of the company’s common fixed expenses did she allocate to the Commercial and Residential segments?

b. Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial and Residential segments: (a) sales, (b) cost of goods sold, or (c) gross margin?

3. Do you agree with the intern’s decision to allocate the common fixed expenses to the Commercial and Residential segments?

4. Redo the intern’s segmented income statement using the contribution format.

5. Compute the companywide break-even point in dollar sales.

6. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division.

7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new break-even point in dollar sales for the Commercial Division and the Residential Division.

Jen & Berry’s sold 100,000 pints of ice cream last month according to the following contribution format income statement

Total Per Unit

SALES    $330,000    $3.30

VARIABLE COSTS 200,000 2.00

CONTRIBUTION MARGIN $ 130,000 $ 1.30

FIXED COSTS 50,000

NET INCOME $ 80,000

A competing company, Un-Friendly’s, also sold 100,000 pints of ice cream last month according to the following contribution format income statement:

Total Per Unit

SALES $255,000 $2.55

VARIABLE COSTS 100,000 1.00

CONTRIBUTION MARGIN $ 155,000 $ 1.55

FIXED COSTS 75,000

NET INCOME $ 80,000

Both companies sold the same amount of ice cream and had the same Net Income but have different price and cost structures. Jen & Berry’s uses higher quality ingredients (variable cost) and charges a higher price than its competitor. Un-Friendly’s spends more on advertising (fixed cost) and sells at a lower price than Jen & Berry’s.

5.Using last month’s income statements on page 2, calculate the safety margin in units (pints of ice cream) for each company.

6.Jen & Berry’s is considering two options to increase sales next month (and hopefully profit):

Option #1:

Double the pints sold next month by decreasing the price by 15 cents to $3.15.

Option #2:

Double the pints sold next month by spending an additional $20,000 next month

(fixed cost) on advertising. Price of ice cream remains at $3.30 per pint.

Which option should Jen & Berry’s choose?? Explain your answer by showing calculations for both options.

7.Un-Friendly’s is considering the same two options to increase sales next month (and hopefully profit):

Option #1:

Double the pints sold next month by decreasing the price by 15 cents to $2.40.

Option #2:

Double the pints sold next month by spending an additional $20,000 next month

(fixed cost) on advertising. Price of ice cream remains at $2.55 per pint.

Which option should Un-Friendly’s choose?? Explain your answer by showing calculations for both options.

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 53 on December 31, 20Y2.

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

Cost of goods sold $223,110 Salaries and wages expense $55,720 Delivery expense 6,320 Sales discounts 7,320 Insurance expense 12,760 Sales returns and allowances 11,820 Rent expense 18,640 Sales revenue 366,400 Prepare the necessary closing entries. (Credit account titles are automatically indented when 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.

Selected information for Muffin’s Muffins Inc. for 2018 is presented below. All amounts are pretax. The effective tax rate is 30%.

Loss from operations of discontinued line of business                                   $   420,000

Inventory                                                                                                         3,185,000

Administrative expenses                                                                                      479,000

Retained earnings, beg balance                                                                     2,749,600

Interest expense                                                                                                  101,600     

Accounts receivable, net                                                                                     573,200

Unrealized holding loss on available-for-sales securities                                  118,800     

Dividends declared and paid                                                                                241,750

Cumulative decrease in income for change in depreciation method                  197,000

Bonds Payable                                                                                               1,380,000

Gain on disposal of discontinued line of business                                             174,000

Sales                                                                                                                4,700,000

Loss due to flooding                                                                                           319,200

Accumulated depreciation                                                                              2,943,700

Cumulative decrease in income of change from FIFO to weighted average       87,900

Gain on sale of land                                                                                             267,000

Cumulative increase in income for reduced estimate for bad debts

     from 4% to 2.5%                                                                                               81,000

Selling expenses                                                                                                  326,700

Foreign currency translation gain                                                                        103,900

Common stock, 240,000 shares                                                                     8,641,000     

Accumulated other comprehensive income, beg balance (CR)                       693,470

Failed to recognize interest on investment in 2017                                             136,000

Dividend Income                                                                                                    91,000

Cost of goods sold                                                                                          2,745,000

Based on the above information, answer the following questions.

(HINT: Prepare a multi-step income statement and retained earnings statement

1. What amount would be reported for operating income?
2. What amount would be reported in a 2018 income statement for income tax?

Fast forward a few months...Your friend asks you how your business is doing and you are unsure how exactly to answer. In fact, you are not necessarily sure how your business is going since you are so new to this! This part will help you organize your thoughts and come up with a more formalized process and financial reporting can help you demonstrate your success (or lack thereof!).

For your cart, come up with a way to determine profit and financial position. Expand your Excel spreadsheet from part 1 by adding an additional tab. There is no specific format for this. Data should be reasonable based on your projections from Part 1 and include all expenses. Your grade is not dependent on whether you are making a profit.

Use the momentum from the discussion forums from week's 6-7 where we collectively brainstormed methods of (a) if the business was profitable and (b) how to measure profitability in a professional format.

Include an analysis that summarizes your findings in a professional manner.

This part of the project should be approximately 2 - 4 pages including the financials.

French Press Coffee Inc. (HFC) processes and distributes a variety of coffees. HFC buys coffee beans from around the world and roasts, blends, and packages them for resale. HFC sells one-pound bags of coffee throughout a series of gourmet shops. the company has low direct labor costs but very high factory overhead.

Data for the 2018 budget includes factory overhead of $2,393,500, which is currently being allocated based on direct labor cost. Budgeted direct labor is $100000.

The budgeted direct costs for a one pound bag of the two most popular coffee blends are as follows:

The controller believed the current costing system generates misleading information. She has developed the following details:

Total Budgeted cost- $2,392,500

Additional information:

Required: 1. Assuming manufacturing overhead is allocated based on direct labor costs, calculate the cost per unit of Presque isle blend and mentor headlands blend.

2. Assuming the company uses Activity based costing, calculate the cost per unit of Presque Isle Blend and Mentor Headlands Blend.

3. Calculate Gross Profit for each method of costing.

Frank is going to pursue additional financing from the local bank. The bank will require some insight into how Frank's business will be successful and sustainable.

Prepare a short write up (approximately 1 page) explaining to the bank why your (Frank's) business will be viable. Submission could include (but are not limited to) location, time of year, target consumer, pricing, anticipated sales volume, and what makes your hot dogs special.

Your write-up should ask for an amount of cash from the bank that covers the assets you could not buy, as listed in the prompt (and remember there was a $50K equity infusion already), and should give some buffer for some additional cash to keep on hand.

Prepare DRAFT estimated financial statements for the bank to consider.  

The financial statements are going to be basic and will build on your fundamental knowledge from the first three chapters of the book. You will provide

1. A balance sheet that includes the assets discussed in the announcement only, as well as equity (the amount invested which there are no plans to repay - from the announcement), and the liabilities (amounts expected to be repaid in cash to the bank). While we're not that far into debt/equity, the primary difference is whether the Company is expected to repay in cash.

You can use the discussion as finalized in the announcement for the assets, liabilities, and equity you will expect to see on the balance sheet. The write up to the bank should be professional and request an amount of money which is sensible based upon the needs of the business, with some cash buffer to have cash on hand. Please see earlier discussions and announcements.

Jerrison Company operates a wholesale hardware business. The following balance sheet accounts and balances are available for Jerrison at December 31, 2019.

Required:

1. Prepare a classified balance sheet for Jerrison at December 31, 2019.

2.Compute Jerrison's working capital and current ratio at December 31, 2019. Round the current ratio answer to two decimal places.

A Belgium subsidiary's beginning and ending trial balances appear below:

Exchange rates ($/€) are:

The subsidiary was acquired at the beginning of the year. Its sales, inventory purchases, and out-of-pocket selling and administrative expenses occurred evenly during the year. Equipment was purchased for €10,000 when the exchange rate was $1.23. Depreciation for the year includes €200 related to the equipment purchased during the year. The ending inventory was purchased at the end of the year, and the beginning inventory was purchased at the end of the previous year.

If the subsidiary's functional currency is the euro, what is the translation gain or loss for the year?

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$16 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $5.00 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $21,000 in new equipment during May and $50,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $22,500 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $60,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $60,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $60,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

Problem 1-24 Different Cost Classifications for Different Purposes [LO1-1, LO1-2, LO1-3, LO1-4, LO1-5] Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month: Direct materials $ 83,000 Direct labor $ 42,000 Variable manufacturing overhead $ 20,600 Fixed manufacturing overhead 32,200 Total manufacturing overhead $ 52,800 Variable selling expense $ 14,800 Fixed selling expense 23,600 Total selling expense $ 38,400 Variable administrative expense $ 5,400 Fixed administrative expense 27,800 Total administrative expense $ 33,200 Required: 1. With respect to cost classifications for preparing financial statements: a. What is the total product cost? b. What is the total period cost? 2. With respect to cost classifications for assigning costs to cost objects: a. What is total direct manufacturing cost? b. What is the total indirect manufacturing cost? 3. With respect to cost classifications for manufacturers: a. What is the total manufacturing cost? b. What is the total nonmanufacturing cost? c. What is the total conversion cost and prime cost? 4. With respect to cost classifications for predicting cost behavior: a. What is the total variable manufacturing cost? b. What is the total fixed cost for the company as a whole? c. What is the variable cost per unit produced and sold? 5. With respect to cost classifications for decision making: a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:

Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 10% return on invested assets.

1. Determine the amount of desired profit from the production and sale of flat panel displays.

2. Assuming that the product cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.

3. (Appendix) Assuming that the total cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.

6a. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required.

Emmar Co. purchased a machine on January 1, 2013 at a cost of 240000. The machine had been estimated eight year life with no residual value. Emmar uses straight line depreciation. At december 31, 2016. Emmar estimated that the machine would have only two more years of remaining life with no residual value. For 2016, Emmar would report delectation expense of