RTI Company’s master budget calls for production and sale of 19,300 units for $98,430; variable costs of $44,390; and fixed costs of $18,600. During the most recent period, the company incurred $33,300 of variable costs to produce and sell 18,600 units for $86,300. During this same period, the company earned $26,300 of operating income. (Do not round intermediate calculations. Round final answer to the nearest whole dollar.)

iaz Company owns a milling machine that cost $125,400 and has accumulated depreciation of $93,000. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations.

1. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return.
2. Diaz sold the machine for $17,300 cash.
3. Diaz sold the machine for $32,400 cash.
4. Diaz sold the machine for $40,400 cash

At the end of 2017 fiscal year, L&Z Co. has the following information:

Balance Sheets

Current Assets

Accounts receivable, net of allowance of $1,076                               $16,194

a)   During 2018, the company wrote off $200 of specific accounts that were deemed uncollectable. Prepare the journal entry to record the write-off of these accounts receivable. (4 pts)

b) At the end of 2018 (12/31/2018), management estimate 8% of account receivables balance will likely be difficult to collect. The company’s Accounts Receivable has a gross ending balance of $17,600 . Prepare the journal entry to record bad debt expense for 2018 using the percentage of receivables method (the balance sheet approach). (8 pts)

c)  If credit sales for 2018 were $118,000, compute the amount of cash collected from customers in 2018 (note: take into account the event in part a). (6 pts)

d) On Oct 1^st , 2018, the company sold coal to Beta Electric, receiving a 6-month, noninterest-bearing note for $100,000. The effective interest rate on the note is 8%. The company has a fiscal year-end of 12/31. (10 pts)

1. i. Prepare the journal entry to record the sale. (6 pts)

ii. Prepare adjusting journal entries regarding the note receivable on 12/31/2018. (4 pts)

Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow: Percent Complete Units Materials Conversion Work in process inventory, May 1 73,000 85 % 50 % Work in process inventory, May 31 53,000 60 % 30 % Materials cost in work in process inventory, May 1 $ 57,900 Conversion cost in work in process inventory, May 1 $ 17,000 Units started into production 251,200 Units transferred to the next production department 271,200 Materials cost added during May $ 393,570 Conversion cost added during May $ 244,261 Required:

1. Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for May for the first process.

2. Compute the costs per equivalent unit for May for the first process. (Round your answers to 2 decimal places.)

3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in May. (Round your intermediate calculations to 2 decimal places.)

3. McCormick & Company is considering establishing new products in a new factory in Largo, Maryland. Theproject is expected to last for eight years. To determine the right financing option, you need to determine the appropriate discount based on the weighted average cost of capital. The cost of equity is estimated using the capital asset pricing model. Cash flows are assumed to be steady, the nominal risk-free rate for the short-term US government treasury bills is 1.5 percent, the 10-year government bonds rate is 2.5 percent, and the inflation rate is 2.54 percent. What is the real risk-free rate? Then, assume a beta of 1.2 and a market return of 5 percent. What is the cost of equity?

4. McCormick& Company is considering purchasing a new factory in Largo, Maryland. After you and your team have conducted an analysis of alternative investments and cost of capital, McCormick has decided that a risk premium of 13 percent is appropriate for the investment into a new factory. Adding the risk premium to the current risk-free rate of 7 percent, what is the minimum acceptable rate of return?

1.Liz is retiring from the US Postal Service and will turn 70 next year. After 39 years of service, her monthly pension is $7,500.  She does not qualify for Social Security.  Liz has accumulated $700,000 in her thrift savings plan.  The government requires that she convert it to an annuity or move it to a IRA.  All of the money is pretax and tax can be avoided if it is moved to the IRA.  The annuity will be calculated based on her life expectancy of 17.5 years after age 70. The current USTreasury long-term bond rate is 3 percent. How much will she get as an annuity monthly payment?  Should Liz take the annuity or move the money to the IRA? The tax regulations require that she take out 4 percent of the amount each year.

2. Kathy plans to move to Maryland and take a job at McCormick as the assistant director of HR. She and her husband, Stan, plan to buy a house in Garrison, MD, and their budget is $500,000. They have $100,000 for the down payment and McCormick will pay for closing costs. They are considering either a 30-year mortgage at 4.5 percent annual rate or a 15 year mortgage at 4 percent. Calculate the monthly payment for each. Property taxes and insurance will add $1,000 per month to which ever mortgage they choose. What should Kathy and Stan do?

Why is it important to study and understand accounting? Explain the accounting equation and define its terms.

What is a special assessment? How does funding for a special assessment capital improvement differ from that of other capital improvements in a local government?

What is a service concession arrangement, and why might a government choose to enter into such an arrangement? Provide examples of general capital assets that might be subject to service concession arrangements.

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $612,000 of total manufacturing overhead for an estimated activity level of 68,000 machine-hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:

Required:

1. Compute the underapplied or overapplied overhead.

2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. Assume that the company allocates any underapplied or over appliedoverhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

1. Raw materials purchased on account, $210,000.
2. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials).
3. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000.
4. Depreciation recorded on factory equipment, $106,000.
5. Other manufacturing overhead costs accrued during October, $129,000.
6. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,300 machine-hours were used in October.
7. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
8. Jobs that had cost $451,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% above cost.

Required:

1. Prepare journal entries to record the transactions given above.

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $34,000.

Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $34,000.

Manufacturing overhead

Work in process

Product Costing and Decision Analysis for a Service Company

Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month:

Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs:

The size of the company's ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation:

Three recent representative flights have been selected for the profitability study. Their characteristics are as follows:

Required:

1. Determine the fuel, crew, and depreciation cost per mile flown.
$ per mile

2. Determine the cost per arrival or departure by terminal city.

3. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs. Enter all amounts as positive numbers, except for a negative income from operations.

Star Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below.

Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year:

1. Film, costumes, and similar raw materials purchased on account, $229,000.
2. Film, costumes, and other raw materials issued to production, $230,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
3. Utility costs incurred (on account) in the production studio, $92,600.
4. Depreciation recorded on the studio, cameras, and other equipment, $104,400. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.
5. Advertising expense incurred (on account), $143,000.
6. Salaries and wages paid in cash as follows:

7. Prepaid insurance expired during the year, $7,450 (70% related to production of videos, and 30% related to marketing and administrative activities).
8. Miscellaneous marketing and administrative expenses incurred (on account), $13,850.
9. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.
10. Videos that cost $578,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
11. Sales for the year totaled $954,000 and were all on account.
12. The total cost to produce the videos that were sold according to their job cost sheets was $623,910.
13. Collections from customers during the year totaled $904,000.
14. Payments to suppliers on account during the year, $608,000.
15. Underapplied or overapplied overhead $__?__.

Prepare a schedule of cost of goods manufactured for the year.

Prepare a schedule of cost of goods sold for the year.

Prepare an income statement for the year.

Question CT 15.7, Considering Your Costs and Benefits, is the basis for discussion pertaining to chapter 15. What are your thoughts? Would you include charges for those costs, or would you not include them? Please provide support for your view.

CT15.7 After graduating, you might decide to start a small business. As discussed in this chapter, owners of any business need to know how to calculate the cost of their products. In fact, many small businesses fail because they don't accurately calculate their product costs, so they don't know if they are making a profit or losing money—until it's too late.

Suppose that you decide to start a landscape business. You use an old pickup truck that you've fully paid for. You store the truck and other equipment in your parents' barn, and you store trees and shrubs on their land. Your parents will not charge you for the use of these facilities for the first two years, but beginning in the third year they will charge a reasonable rent. Your mother helps you by answering phone calls and providing customers with information. She doesn't charge you for this service, but she plans on doing it for only your first two years in business. In pricing your services, should you include charges for the truck, the barn, the land, and your mother's services when calculating your product cost? The basic arguments for and against are as follows.

• YES: If you don't include charges for these costs, your costs are understated and your profitability is overstated.
• NO: At this point, you are not actually incurring costs related to these activities; therefore, you shouldn't record charges.

Instructions

Write a response indicating your position regarding this situation. Provide support for your view.

Need Help any this and please share your thought about this. Very appreciate who help share their thought. Thank you!!

Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses

Naper Inc. manufactures power equipment. Naper has two primary products—generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31:

The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing.

The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as follows:

The controller determined the following activity-base usage information about each product:

a. Determine the activity cost of each product for sales order processing and post-sale customer service activities.

Feedback

a. Calculate for each product:
Activity-Base Usage x Activity Rate = Activity Cost. Add both costs to obtain the total for each activity.

Learning Objective 5.

b. Use the information in (a) to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to two decimal places. Enter all amounts as positive numbers.

The units of Manganese Plus available for sale during the year were as follows: Mar. 1 Inventory 23 units @ $29 $667 June 16 Purchase 33 units @ $34 1,122 Nov. 28 Purchase 38 units @ $35 1,330 94 units $3,119 There are 16 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems. Enter the answer as a positive number.

Melissa recently paid $760 for round-trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $370 fee to register for the conference, $365 per night for three nights’ lodging, $250 for meals, and $300 for cab fare. (Leave no answers blank. Enter zero if applicable.) (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

A. What amount of the travel costs can Melissa deduct as business expenses?
Deductible Amount:

B. Suppose that while Melissa was on the coast, she also spent two days sightseeing the national parks in the area. To do the sightseeing, she paid $1,710 for transportation, $1,285 for lodging, and $475 for meals during this part of her trip, which she considers personal in nature. What amount of the travel costs can Melissa deduct as business expenses?
Deductible Amount:

C. Suppose that Melissa made the trip to San Francisco primarily to visit the national parks and only attended the business conference as an incidental benefit of being present on the coast at that time. What amount of the airfare can Melissa deduct as a business expense?
Deductible Amount:

D. Suppose that Melissa’s permanent residence and business was located in San Francisco. She attended the conference in San Francisco and paid $370 for the registration fee. She drove 153 miles over the course of three days and paid $190 for parking at the conference hotel. In addition, she spent $430 for breakfast and dinner over the three days of the conference. She bought breakfast on the way to the conference hotel and she bought dinner on her way home each night from the conference. What amount of these costs can Melissa deduct as business expenses? (Use standard mileage rate.)
Deductible Amount: