The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 90 units from beginning inventory and 220 units from the March 5 purchase; the March 29 sale consisted of 70 units from the March 18 purchase and 110 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Splish Company sells one product. Presented below is information for January for Splish Company.

Splish uses the FIFO cost flow assumption. All purchases and sales are on account.

Assume Splish uses a perpetual system. Prepare all necessary journal entries. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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List of Accounts

Compute gross profit using the perpetual system.

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Olin Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The forecast income statement for the year ending December 31, 2020, is as follows:

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur fixed costs of $7,050,150.

Under the current policy of using a network of sales agents, calculate Olin Beauty Corporation’s break-even point in sales dollars for the year 2020.

Calculate the company's break-even point in sales dollars for the year 2020 if it hires its own sales force to replace the network of agents. (Round answer to the nearest whole dollar, e.g. 5,275.)

1. On the basis of the following data for Breach Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method. Assume that equipment costing $25,000 was purchased for cash and no long-term assets were sold during the period.

   Stock was issued for cash-3,200 shares at par.
   Net income for the current year was $76,000.
   Cash dividends declared and paid were $13,000.
   

   	Current Year	Prior Year
   Assets
   Cash	$ 170,000	$74,000
   Accounts Receivable (net)	78,000	85,000
   Inventories	106,500	90,000
   Equipment	395,000	370,000
   Accumulated Depreciation	(195,000)	(158,000)
   Total assets	$ 554,500	$461,000
   Liabilities and stockholders' equity
   Accounts Payable (merchandise creditors)	$51,000	$50,000
   Taxes Payable	2,500	5,000
   Common Stock, $10 par	262,000	230,000
   Retained Earnings	239,000	176,000
   Total Liabilities and Stockholders' Equity	$ 554,500	$461,000

   Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

   Breach Co.
   Statement of Cash Flows
   For Year Ended December 31
   Cash flows from operating activities:
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Decrease in inventories Net income	$
   Adjustments to reconcile net income to net cash flow from operating activities:
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Depreciation Decrease in inventories
   Changes in current operating assets and liabilities:
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Decrease in accounts receivable Increase in taxes payable
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Decrease in accounts payable Increase in accounts payable
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Decrease in inventories Increase in inventories
   Cash paid for dividends Cash paid for purchase of equipment Cash received from sale of common stock Decrease in taxes payable Increase in taxes payable
   Net cash flow from operating activities		$
   Cash flows from investing activities:
   Cash paid for purchase of equipment Decrease in accounts receivable Decrease in taxes payable Decrease in inventories Depreciation	$
   Net cash flow used for investing activities
   Cash flows from financing activities:
   Cash received from sale of common stock Decrease in accounts receivable Decrease in taxes payable Decrease in inventories Depreciation	$
   Cash paid for dividends Increase in accounts payable Increase in accounts receivable Increase in inventories Net income
   Net cash flow provided by financing activities
   Decrease in cash Increase in cash		$
   Cash at the beginning of the year
   Cash at the end of the year		$

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation: Beginning inventory 0 Units produced 44,000 Units sold 39,000 Selling price per unit $ 80 Selling and administrative expenses: Variable per unit $ 2 Fixed (per month) $ 566,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 9 Variable manufacturing overhead cost per unit $ 3 Fixed manufacturing overhead cost (per month) $ 748,000 Management is anxious to assess the profitability of the new camp cot during the month of May.

Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May.

2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May.

    Sales price$12per unitVariable costs 2per unitFixed costs 40,000per month

You have the following information regarding AJH Company:

Sales 25,000 units per year at $45 per unit

Production 30,000 units in 2004

At the beginning of 2004 there was no inventory.

Direct Materials are $12.00 per unit

Direct labor is $10.00 per unit

Variable manufacturing overhead costs are $8.00 per unit

Fixed manufacturing overhead costs are $150,000 per year

Marketing costs are all variable at $3.00 per unit

Administrative costs are all fixed at $75,000 per year

Required:

(a.) Prepare an income statement under absorption costing for 2004

(b.) Prepare an income statement under variable costing for 2004

(c.) Prepare an income statement under throughput costing for 2004.

A CPA has been asked to audit the financial statements of a publicly held company for the first time. All preliminary verbal discussions and inquiries among the CPA, the company, the predecessor auditor, and all other necessary parties have been com- pleted. The CPA is now preparing an engagement letter.

Recording Transactions (Including Adjusting and Closing Entries), Preparing Financial Statements, and Performing Ratio Analysis Ben and Kelly Perry began operations of their Roof repair company (Perry Roofing, Inc.) on January 1, 2015. The annual reporting period ends December 31. The trial balance on January 1, 2016, was as follows:

Transactions during 2016 follow:

a. Borrowed $28,000 cash on July 1, 2016, signing a one-year, 10 percent note payable.

b. Purchased equipment for $18,000 cash on July 1, 2016.

c. Sold 10,000 additional shares of capital stock for cash at $0.50 market value per share at the beginning of the year.

d. Earned $75,000 in revenues for 2016, including $16,000 on credit and the rest in cash.

e. Incurred remaining expenses of $35,000 for 2016, including $7,000 on credit and the rest paid with cash.

f. Purchased $3,000 of supplies on cash.

g. Collected accounts receivable, $8,000.

h. Paid accounts payable, $11,000.

i. Purchased $10,000 of supplies on account.

j. Received a $3,000 deposit on work to start January 15, 2017.

k. Declared and paid a cash dividend, $10,000.

Data for adjusting entries:

l. Supplies of $9,000 were counted on December 31, 2016.

m. Depreciation for 2016, $2,000.

n. Interest accrued on notes payable (to be computed).

o. Wages earned since the December 24 payroll but not yet paid, $3,000.

p. Income tax expense was $4,000, payable in 2017.

QUESTIONS TO ANSWER:

1. Set up T-accounts for the accounts on the trial balance and enter beginning balances.

2. Prepare journal entries for transactions (a) through (k) and post them to the T-accounts.

3. Journalize and post the adjusting entries (l) through (p).

4. Prepare an income statement (including earnings per share), statement of stockholders' equity, and balance sheet.

5. Identify the type of transaction for (a) through (k) for the statement of cash flows (O for operating, I for investing, F for financing), and the direction and amount of the effect.

6. Journalize and post the closing entry.

7. Compute the following ratios for 2016 and explain what the results suggest about the company:

a. Current ratio

b. Total asset turnover

c. Net profit margin

Select a product with which you are familiar. Describe what types of standard (direct material and direct labor) might be in effect for the product wherever it is produced. For each of these standards, discuss how those standards may become outdated. How frequently would you think the company need to evaluate each of the standards? **Please use different example of the ones we have here

Sailing Voyages Inc. is a company operated by an individual as a summer tourist attraction on the Great Lakes. It operates a sailing schooner offering day cruises for individuals and groups. Over the last few years, the average number of tourists per cruise was 30. The average charge per person for the cruise including group discounts was $100. The company operates from mid-May until mid-September. On average, the ship sails 100 days during this period. ‘The Canadian’ (the name of the schooner) requires a crew of 6, and is captained by the owner of the company. University students with extensive sailing experience have been willing to work on a per diem basis of $100. They are paid only if the ship is cruising. The ship provides non-alcoholic refreshments and a light lunch. These are acquired daily from a local delicatessen and cost, on average, $25 per person. The daily operating expenses fuel and miscellaneous supplies average $50 per cruise. The company has a variety of annual expenses including: maintenance, depreciation, marketing, licenses, etc., totaling approximately $85,000. Required: Prepare an Excel Workbook to answer the following questions in a professional manner. Ensure that you are utilizing Excel features (including links between spreadsheets, formulas, formatting, graphing).

1. Compute the revenue and variable costs for each cruise. Use this to compute the contribution margin per cruise.

2. Compute the number of cruises that ‘Canadian’ must have each year to break-even. Use your knowledge gained in this course to show the different formulas, graphs etc for break-even analysis.

3. The owner expects a total return on capital and remuneration of $125,000. Using the concept of ‘contribution margin’, cost-volume-profit, and target profit calculations, estimate how many cruises the Canadian needs to make to reach this objective. Is this a realistic expectation? Add your thoughts, proposals, and recommendations.

4. Prepare a contribution margin income statement for Sailing Voyages Inc. If the owner wishes to adjust or achieve his income goal, what changes can he make? How can these changes be easily estimated and projected to show how these changes affect net income. Use your imagination, and your knowledge of cost-volume-profit analysis. Highlight your ideas by utilizing the various graphing tools in Excel.

Exercise 5-12 Equivalent Units; Assigning Costs; Cost Reconciliation-Weighted-Average Method [LO5-2, LO5-4, LO5-5]

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,200 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $760,760 in total. The ending work in process inventory in January consisted of 4,000 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Novak Company’s record of transactions for the month of April was as follows.

Assuming that periodic inventory records are kept in units only, calculate the average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

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Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)

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Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, e.g. 2,760.)

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Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, e.g. 2,760.)

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In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?

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