Menlo Company distributes a single product. The company’s sales and expenses for last month follow:

Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

2. Without resorting to computations, what is the total contribution margin at the break-even point?

3-a. How many units would have to be sold each month to attain a target profit of $40,800?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

5. What is the company’s CM ratio? If sales increase by $88,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Lindon Company is the exclusive distributor for an automotive product that sells for $32.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $177,600 per year. The company plans to sell 20,900 units this year.

Required:

1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)

2. What is the break-even point in unit sales and in dollar sales?

3. What amount of unit sales and dollar sales is required to attain a target profit of $81,600 per year?

4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.20 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $81,600?

Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.40 per unit. Enough capacity exists in the company’s plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.14, and fixed expenses associated with the toy would total $56,578 per month.

The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,829 per month. Variable expenses in the rented facility would total $2.38 per unit, due to somewhat less efficient operations than in the main plant.

Required:

1. What is the monthly break-even point for the new toy in unit sales and dollar sales.

2. How many units must be sold each month to attain a target profit of $12,546 per month?

3. If the sales manager receives a bonus of 15 cents for each unit sold in excess of the break-even point, how many units must be sold each month to attain a target profit that equals a 28% return on the monthly investment in fixed expenses?

(For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.)

Question One.
The costs incurred by Noriega Company to acquire land and construct a building
were as follows:

Requirements:
a. Determine the cost of land
b. Determine the cost of the building ( 3 Marks)
c. Assuming the residue value of the building is K60,000,000 and that the
economic life is Ten years, compute Noriega LTD Company’s depreciation
expense for Year 1, Year 2, Year 3 under the following methods
i. Straight line Method
ii. Double Declining Method
iii. The Sum of Years Digit (SYD) Method ( 2 Marks)
d. At the beginning of Year 4, Noriega LTD Company incurred an additional
Cost of K10, 000,000 in order to add a new wing to the building; as a result
the salvage value of the building is increased by k5, 000,000 and also
increased the remaining life of the building by 2 years.

i. Re- Calculate the depreciation for the next two years using the straight
line method. ( 3 Marks)

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold.

Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows:

*Primarily depreciation on storage facilities.

As Barbara handed the statement to Karl Vecci, Pittman’s president, she commented, “I went ahead and used the agents’ 15% commission rate in completing these statements, but we’ve just learned that they refuse to handle our products next year unless we increase the commission rate to 20%.”

“That’s the last straw,” Karl replied angrily. “Those agents have been demanding more and more, and this time they’ve gone too far. How can they possibly defend a 20% commission rate?”

“They claim that after paying for advertising, travel, and the other costs of promotion, there’s nothing left over for profit,” replied Barbara.

“I say it’s just plain robbery,” retorted Karl. “And I also say it’s time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?”

“We’ve already worked them up,” said Barbara. “Several companies we know about pay a 7.5% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $3,000,000 per year, but that would be more than offset by the $4,000,000 (20% × $20,000,000) that we would avoid on agents’ commissions.”

The breakdown of the $3,000,000 cost follows:

“Super,” replied Karl. “And I noticed that the $3,000,000 equals what we’re paying the agents under the old 15% commission rate.”

“It’s even better than that,” explained Barbara. “We can actually save $92,000 a year because that’s what we’re paying our auditors to check out the agents’ reports. So our overall administrative expenses would be less.”

“Pull all of these numbers together and we’ll show them to the executive committee tomorrow,” said Karl. “With the approval of the committee, we can move on the matter immediately.”

Required:

1. Compute Pittman Company’s break-even point in dollar sales for next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.

2. Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year.

3. Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force.

4. Compute the degree of operating leverage that the company would expect to have at the end of next year assuming:

a. The agents’ commission rate remains unchanged at 15%.

b. The agents’ commission rate is increased to 20%.

c. The company employs its own sales force.

Use income before income taxes in your operating leverage computation.

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,900 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $87,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $36,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.80 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $51,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,300 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,300)?

Governmental Accounting is different than financial accounting. What are some differences?

So, how does governmental accounting relate to other business areas?

Why is it important that businesses be aware of how government does their accounting, or is it important to businesses?

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.75 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:  

The total cost of operating the company for the year is $333,000 which includes the following costs:  

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 59-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $136.50 (600 square feet @ $22.75 per hundred square feet). Calculate the customer margin earned on this job.

Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.)

Required:

a. Assume that only one product is being sold in each of the four following case situations:

b. Assume that more than one product is being sold in each of the four following case situations:

(For all requirements, Loss amounts should be indicated by a minus sign.)

Assume that only one product is being sold in each of the four following case situations:

required A

required B

Mittler & Sons Inc. had the following purchases and sales transactions during the month of April 2019. Mittler uses the perpetual inventory method to account for inventory.

Date Activities Units Acquired at Cost Units Sold at Retail Apr. 1 Beginning inventory 20 units @ $3,000 per unit Apr. 6 Purchase 30 units @ $3,500 per unit Apr. 9 Sales 35 units @ $12,000 per unit Apr. 17 Purchase 5 units @ $4,500 per unit Apr. 25 Purchase 10 units @ $4,800 per unit Apr. 30 Sales 25 units @ $14,000 per unit Total 65 units 60 units Required

1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) LIFO, and (b) weighted average (round amounts to two decimals, If needed)

4. Compute gross profit earned by the company for both costing methods in part 3.
Reminder: Continue using the excel HW policies for preparing your solutions to the above questions, including the standard four line heading. (Please send through a memory card chip)(don't forget to use excel)

Sales Budget

FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following:

Required:

1. Construct a sales budget for FlashKick for the first three months of the coming year. Show total sales for each product line by month and in total for the first quarter. If required, round your answers to the nearest cent.

2. What if FlashKick added a third line—tournament quality soccer balls that were expected to take 40 percent of the units sold of the match balls and would have a selling price of $42 each in January and February, and $45 each in March? Prepare a sales budget for FlashKick for the first three months of the coming year. Show total sales for each product line by month and in total for the first quarter. If required, round your answers to the nearest cent.

QUESTION 21

1. Alpha Company has purchased 10,000 shares of stock of Beta Company for $50,000,000. This represents 20% ownership. What journal entry, if any would Alpha make in the following situation:

   Beta declares and immediately pays a dividend of $1 per share. Assume Alpha uses the equity  method of accounting for its investment? (3 points)

2. Refer to the same facts as the previous problem.  

   What would be the journal entry be if Alpha learns that the value of Beta’s stock has increased by $2 per share, and Alpha uses the equity method of accounting for this investment? (3 points)

3. Use the same facts as the prior problems. What journal entry, if any, would make in this situation?

   Alpha learns that Beta had a loss of $1 million. Assume Alpha uses the fair value method of accounting for its investment. (3 points)

4. 
   

Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)): Cash NGN 16,830 Notes payable NGN 20,460 Inventory 12,300 Common stock 22,700 Land 4,230 Retained earnings 11,350 Building 42,300 Accumulated depreciation (21,150 ) NGN 54,510 NGN 54,510 The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place: 2017 Feb. 1 Paid 8,230,000 NGN on the note payable. May 1 Sold entire inventory for 18,300,000 NGN on account. June 1 Sold land for 6,230,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept.1 Signed long-term note to receive 8,230,000 NGN cash. Oct. 1 Bought inventory for 20,230,000 NGN cash. Nov. 1 Bought land for 3,230,000 NGN on account. Dec. 1 Declared and paid 3,230,000 NGN cash dividend to parent. Dec. 31 Recorded depreciation for the entire year of 2,115,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: 2008 NGN 1 = $ 0.0071 2010 1 = 0.0065 August 1, 2016 1 = 0.0085 December 31, 2016 1 = 0.0087 February 1, 2017 1 = 0.0089 May 1, 2017 1 = 0.0091 June 1, 2017 1 = 0.0093 August 1, 2017 1 = 0.0097 September 1, 2017 1 = 0.0099 October 1, 2017 1 = 0.0101 November 1, 2017 1 = 0.0103 December 1, 2017 1 = 0.0105 December 31, 2017 1 = 0.0130 Average for 2017 1 = 0.0120 Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017? Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017? (Input all amounts as positive. Enter amounts in whole dollars.) Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)): Cash NGN 16,830 Notes payable NGN 20,460 Inventory 12,300 Common stock 22,700 Land 4,230 Retained earnings 11,350 Building 42,300 Accumulated depreciation (21,150 ) NGN 54,510 NGN 54,510 The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place: 2017 Feb. 1 Paid 8,230,000 NGN on the note payable. May 1 Sold entire inventory for 18,300,000 NGN on account. June 1 Sold land for 6,230,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept.1 Signed long-term note to receive 8,230,000 NGN cash. Oct. 1 Bought inventory for 20,230,000 NGN cash. Nov. 1 Bought land for 3,230,000 NGN on account. Dec. 1 Declared and paid 3,230,000 NGN cash dividend to parent. Dec. 31 Recorded depreciation for the entire year of 2,115,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: 2008 NGN 1 = $ 0.0071 2010 1 = 0.0065 August 1, 2016 1 = 0.0085 December 31, 2016 1 = 0.0087 February 1, 2017 1 = 0.0089 May 1, 2017 1 = 0.0091 June 1, 2017 1 = 0.0093 August 1, 2017 1 = 0.0097 September 1, 2017 1 = 0.0099 October 1, 2017 1 = 0.0101 November 1, 2017 1 = 0.0103 December 1, 2017 1 = 0.0105 December 31, 2017 1 = 0.0130 Average for 2017 1 = 0.0120 Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017? Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017? (Input all amounts as positive. Enter amounts in whole dollars.) Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000's)): Cash NGN 16,830 Notes payable NGN 20,460 Inventory 12,300 Common stock 22,700 Land 4,230 Retained earnings 11,350 Building 42,300 Accumulated depreciation (21,150 ) NGN 54,510 NGN 54,510 The subsidiary acquired the inventory on August 1, 2016, and the land and building in 2010. It issued the common stock in 2008. During 2017, the following transactions took place: 2017 Feb. 1 Paid 8,230,000 NGN on the note payable. May 1 Sold entire inventory for 18,300,000 NGN on account. June 1 Sold land for 6,230,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept.1 Signed long-term note to receive 8,230,000 NGN cash. Oct. 1 Bought inventory for 20,230,000 NGN cash. Nov. 1 Bought land for 3,230,000 NGN on account. Dec. 1 Declared and paid 3,230,000 NGN cash dividend to parent. Dec. 31 Recorded depreciation for the entire year of 2,115,000 NGN. The U.S dollar ($) exchange rates for 1 NGN are as follows: 2008 NGN 1 = $ 0.0071 2010 1 = 0.0065 August 1, 2016 1 = 0.0085 December 31, 2016 1 = 0.0087 February 1, 2017 1 = 0.0089 May 1, 2017 1 = 0.0091 June 1, 2017 1 = 0.0093 August 1, 2017 1 = 0.0097 September 1, 2017 1 = 0.0099 October 1, 2017 1 = 0.0101 November 1, 2017 1 = 0.0103 December 1, 2017 1 = 0.0105 December 31, 2017 1 = 0.0130 Average for 2017 1 = 0.0120 Assuming the NGN is the subsidiary's functional currency, what is the translation adjustment determined solely for 2017? Assuming the U.S.$ is the subsidiary's functional currency, what is the remeasurement gain or loss determined solely for 2017? (Input all amounts as positive. Enter amounts in whole dollars.)

Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information.

The total budgeted material-handling cost is $61,440.  

Required:

1. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount?
2. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one mirror would be what amount?
3. Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver for the material-handling activity is the number of material moves.
4. Under activity-based costing (ABC), the material-handling costs allocated to one mirror would be what amount? The cost driver for the material-handling activity is the number of material moves.

(For all requirements, Do not round your intermediate calculations.)