Amarillo Corporation has four divisions: the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several departments that are directed by supervisors. The chain of command runs downward from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow.

*Amarillo uses flexible budgets for performance evaluation.

Other pertinent cost data for May follow.

*Amarillo uses flexible budgets for performance evaluation.

Required

1. Prepare a responsibility report for the manager of the processing division.

2. Prepare a responsibility report for the vice president of manufacturing

3. Responsibility Report Vice President of Manufacturing For the Month Ended May 31 Controllable costs Budget Actual Variances Assembly division Fselected answer correct Processing division Uselected answer correct Machining division 580,000selected answer correct 592,800selected answer correct 12,800selected answer correct Uselected answer correct Packing division 829,900selected answer correct 811,400selected answer correct 18,500selected answer correct Fselected answer correct Other costs 256,000selected answer correct 266,120selected answer correct 10,120selected answer correct Uselected answer correct Total $3,235,720selected answer correct $3,229,420selected answer correct Fselected answer correct

Bento Corp took a $500,000 four-year 4% note receivable from a customer in connection with a major sale transaction. The note requires annual blended payment s to be paid at end of each year. The market interest rate is 4%.

1. Calculate the required blended payment. round to the nearest dollar.

2. Prepare a schedule that shows annual interest and the principal portion of the four payments.

3. Prepare journal entries to record the initial sale transaction and each payment.

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following.

(1) Compute the total variable cost per unit.

Compute the total variable cost per unit.

(2) Compute the total fixed costs.

Compute the total fixed costs.

(3) Compute the income from operations for sales volume of 12,000 units.

(4) Compute the income from operations for sales volume of 16,000 units.

Perform a horizontal analysis of the Balance Sheet.

Europa Publications, Inc. specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results of the company’s operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income taxes.)

Required:

1-a. Prepare a traditional income statement for the company.

1-b. Prepare a contribution income statement for the company.

2. What is the firm’s operating leverage for the sales volume generated during the prior year?

3. Suppose sales revenue increases by 12 percent. What will be the percentage increase in net income?

4. Which income statement would an operating manager use to answer requirement (3)?

Req. 1-a.

Req. 1-b.

Req. 2

What is the firm’s operating leverage for the sales volume generated during the prior year? (Round your answer to 2 decimal places.)

Req. 3

Suppose sales revenue increases by 12 percent. What will be the percentage increase in net income? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Req. 4

Which income statement would an operating manager use to answer requirement (3)?

1. List the accounts of a merchandising company which employs a perpetual inventory system that will not appear in the financial statements of a service company. When listing the account names, indicate if it appears on the Income Statement or on the Balance Sheet..
2. Explain what sales discounts and a purchase discounts are. What account will a buyer credit for the amount of the purchase discount.
3. Why would a financial statement user prefer a multiple-step income statement instead of a single-step income statement.
4. Share any struggles you had with this chapter that you would like more clarification on.

Complete problem below and submit to your instructor. Write under the generally accepted auditing standards column the specific standard that was violated and how the action of Jones resulted in a failure to comply with each standard. Organize your answer as shown below; specifically with a column for the standard that was violated and a column for the required action. The paper should be 2-3 pages.

Problem:

John Clinton, owner of Clinton Company, applied for a bank loan and was informed by the banker that audited financial statements of the business had to be submitted before the bank could consider the loan application. Clinton then retained Arthur Jones, CPA, to perform an audit. Clinton informed Jones that audited financial statements were required by the bank and that the audit must be completed within three weeks. Clinton also promised to pay Jones a fixed fee plus a bonus if the bank approved the loan. Jones agreed and accepted the engagement.
The first step taken by Jones was to hire two accounting students to conduct the audit. He spent several hours telling them exactly what to do. Jones told the students not to spend time reviewing controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that support Clinton Company’s financial statements. The students followed Jone’s instructions and after two weeks gave Jones the financial statements, which did not include any notes. Jones reviewed the statements and prepared an unqualified audit report. The report, however, did not refer to generally accepted accounting principles.

How do you see your new knowledge of Excel affecting you? It can be business or personal.

Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a selling price of $56 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 114,750 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 85,000 units each year if it were willing to increase the fixed selling expenses by $120,000. What is the financial advantage (disadvantage) of investing an additional $120,000 in fixed selling expenses?

1-b. Would the additional investment be justified?

2. Assume again that Andretti Company has sufficient capacity to produce 114,750 Daks each year. A customer in a foreign market wants to purchase 29,750 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70per unit and an additional $17,850 for permits and licenses. The only selling costs that would be associated with the order would be $1.50 per unit shipping cost. What is the break-even price per unit on this order?

3. The company has 700 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 is the unit cost figure that is relevant for setting a minimum selling price?

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 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period.

a. How much total contribution margin will Andretti forgo if it closes the plant for two months?

b. How much total fixed cost will the company avoid if it closes the plant for two months?

c. What is the financial advantage (disadvantage) of closing the plant for the two-month period?

d. Should Andretti close the plant for two months?

5. An outside manufacturer has offered to produce 85,000 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. What is Andretti’s avoidable cost per unit that it should compare to the price quoted by the outside manufacturer?

Sterling Products Company uses a job- order costing system. The company incurred the following manufacturing costs during March:

a. Purchased materials on credit,$58,800.

b. Issued materials to production as follows: direct,$51,000; indirect,$111,300.

c. Incurred factory wages,$59,400.

d. Allocated factory wages to production as follows: direct,$45,000;indirect,$14,900.

e. incurred factory overhead costs on account,$2,500.

f. Recognized other factory overhead costs as follows: depreciation of equipment,$4,00; depreciation of building,$5,000;expired insurance,$600; accrued property taxes, $1,800.

g. Applied factory overhead to production,$32,500.

h. completed jobs costing $125,500.

i.    Sold finished goods costing $118,900 to various customer; billed customers for $161,704

( make two entries ).

Required:

Record these summary transactions in general journal form.

Andrew works at a public company called TNN Manufacturing Ltd. He has observed that the company is trying to expand its operation in the market over the past one year. The management has heavily invested in plant and equipment over this period. Considering the high growth potential of the business, Andrew is planning to invest in this company by purchasing shares. He consulted with this friend Peter regarding this plan. After reviewing TNN Manufacturing’s balance sheet for past two years, Peter commented, "While I understand that this company is focusing on growth, they have a taken a risky approach to achieve the growth". Do you agree with Peter's comments? Justify your answer. TNN Manufacturing Ltd Comparative Balance Sheet As at 30th June 2019 and 2020 2019 2020 ASSETS ($) ($) Current Assets Cash at Bank 23,600 6,200 Accounts Receivable 41,800 51,100 Inventory 32,000 40,400 Other current Assets 6,400 5,900 Total Current Assets 103,800 103,600 Non-current Assets Land and Building 54,000 54,000 Plant and Equipment 62,000 190,000 Furniture 5,800 5,300 Long-term investment 9,200 9,000 Total Non-current Assets 131,000 258,300 Total Assets 234,800 361,900 LIABILITIES Current liabilities Accounts Payable 52,400 52,100 Total current-liabilities 52,400 52,100 Non-current liabilities Long-term debt 82,400 208,800 Total non-current liabilities 82,400 208,800 Total Liabilities 134,800 260,900 EQUITY Share Capital 100,000 101,000 Total Equity 100,000 101,000 Total Liability and Equity 234,800 361,900

Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:

The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

Required:

Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)

Caring for lawn (per sq ft of laawn)

Caring for garden bed-low maintenance (per sq ft of low maintenance bed)

Caring for garden bed-high maintenance (per sq ft of high maintenance bed)

Travel to jobs (per mile)

Customer billing service (per customer)

Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:

Distribution of Resource Consumption Across Activity Cost Pools

Required:

a. Assign overhead costs to activity cost pools using activity-based costing.

b. Calculate activity rates for each activity cost pool using activity-based costing.

c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

d. Determine the product margins for each product using activity-based costing.

Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians’ Leasing purchased a lithotripter from Rand for $2,300,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing.

2.Prepare appropriate entries for Mid-South Urologists Group from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.

Journal entry worksheet

3..Prepare appropriate entries for Mid-South Urologists Group from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.)

Journal entry worksheet

4.Prepare appropriate entries for Mid-South Urologists Group from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.