Questions
Chapter 8: Applying Excel: Exercise (Part 2 of 2) Requirement 2: The company has just hired...

Chapter 8: Applying Excel: Exercise (Part 2 of 2)

Requirement 2:

The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget:

Year 2 Quarter

Year 3 Quarter

Data 1 2 3 4 1 2
Budgeted unit sales 50,000 65,000 115,000 75,000 80,000 95,000
Selling price per unit $7

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Chapter 8: Applying Excel
Data Year 3 Quarter
1 2 3 4 1 2
Budgeted unit sales 50,000 65,000 115,000 75,000 80,000 95,000
• Selling price per unit $7 per unit
• Accounts receivable, beginning balance $65,000
• Sales collected in the quarter sales are made 75%
• Sales collected in the quarter after sales are made 25%
• Desired ending finished goods inventory is 30% of the budgeted unit sales of the next quarter
• Finished goods inventory, beginning 12,000 units
• Raw materials required to produce one unit 5 pounds
• Desired ending inventory of raw materials is 10% of the next quarter's production needs
• Raw materials inventory, beginning 23,000 pounds
• Raw material costs $0.80 per pound
• Raw materials purchases are paid 60% in the quarter the purchases are made
and 40% in the quarter following purchase
• Accounts payable for raw materials, beginning balance $81,500

a. What are the total expected cash collections for the year under this revised budget?

b. What is the total required production for the year under this revised budget?

c. What is the total cost of raw materials to be purchased for the year under this revised budget?

d. What are the total expected cash disbursements for raw materials for the year under this revised budget?

In: Accounting

Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use...

Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations.

Standard

Custom

Direct labor costs $ 50,000 $ 100,000
Machine hours 1,500 1,200
Setup hours 120 420


Total estimated overhead costs are $ 297,000. Overhead cost allocated to the machining activity cost pool is $ 189,000, and $ 108,000 is allocated to the machine setup activity cost pool.

Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.)

Predetermined overhead rate

enter the overhead rate as percentage of direct labor cost rounded to 2 decimal places

% of direct labor cost

eTextbook and Media

Compute the overhead rates using the activity-based costing approach.

Machining

$ enter a dollar amount per machine hour

per machine hour
Machine setup

$ enter a dollar amount per setup hour

per setup hour

eTextbook and Media

Determine the difference in allocation between the two approaches.

Traditional costing
Standard

$ enter a dollar amount

Custom

$ enter a dollar amount

Activity-based costing
Standard

$ enter a dollar amount

Custom

$ enter a dollar amount

In: Accounting

3) Webb Corporation's trial balance for July 31, the end of its fiscal year, included the...

3) Webb Corporation's trial balance for July 31, the end of its fiscal year, included the following accounts:

Accounts Receivable $35,000

Inventories 50,000 Franchise

35,000 Investments

50,000 Prepaid Insurance

5,000 Note Receivable 90,000

Cash in Bank 8,000

The investment account consists of marketable securities of which management plans to sell half of by December 31. Prepaid insurance is a two year policy that was purchased on July 31. The note receivable is an installment note that will be paid in three equal installments on December 31 of each year.

The amount that should be classified as current assets in the July 31 balance sheet is ________.

A) $150,500

B) $153,000

C) $175,500

D) $210,500

In: Accounting

Dusty Jones is 23 years old and has accumulated $4,000 in her self-directed defined contribution pension...

Dusty Jones is 23 years old and has accumulated $4,000 in her self-directed defined contribution pension plan. Each year she contributes $2,000 to the plan, and her employer contributes an equal amount. Dusty thinks she will retire at age 67 and figures she will live to age 81. The plan allows for two types of investments. One offers a 3.5% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 23%. Dusty now has 5% of her money in the risk-free investment and 95% in the risky investment. She plans to continue saving at the same rate and keep the same proportions invested in each of the investments. Her salary will grow at the same rate as inflation. How much can Dusty be sure of having in the safe account at retirement?

A: 37,221

B: 16,423

C: 11,856

D: 21,156

E: 49,219

In: Accounting

Please let your classmates know about some of the advantages of reporting cash flows from operating...

Please let your classmates know about some of the advantages of reporting cash flows from operating activities by the indirect method on the Statement of Cash Flows.

In: Accounting

Audit Overtime. The performance evaluation of all accountants is based in part on their ability to...

Audit Overtime. The performance evaluation of all accountants is based in part on their ability to do audit work efficiently and within the time budget planned for the engagement. New staff accountants, in particular, usually have some early difficulty learning speedy work habits, which demand that no time be wasted. Cynthia Elizabeth started work for Julie and Jacob CPAs in September. After attending the staff training school, she was assigned to the Rising Sun Company audit. Her first work assignment was to complete the extensive recalculation of the inventory compilation using the audit test counts and audited unit prices for several hundred inventory items. Her time budget for the work was six hours. She started at 4 p.m. and was not finished when everyone left the office at 6 p.m. Not wanting to stay Page 674downtown alone, she took all necessary audit documentation home. She resumed work at 8 p.m. and finished at 3 a.m. The next day, she returned to the CPA offices, put the completed documentation in the file, and recorded six hours in the time budget/actual schedule. Her supervisor was pleased, especially about her diligence in taking the work home.

Questions:

1. What do you think about Elizabeth’s diligence and her understatement of the time she took to finish the work?

2. What would you think of the case if she had received help at home from her husband Paul?

3. What would you think of the case if she had been unable to finish and had left the work at home for her husband to finish?

In: Accounting

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical...

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 5,600 units of product were as follows:

Standard Costs Actual Costs
Direct materials 7,300 lb. at $5.50 7,200 lb. at $5.40
Direct labor 1,400 hrs. at $18.60 1,430 hrs. at $18.80
Factory overhead Rates per direct labor hr.,
based on 100% of normal
capacity of 1,460 direct
labor hrs.:
Variable cost, $3.20 $4,440 variable cost
Fixed cost, $5.10 $7,446 fixed cost

Each unit requires 0.25 hour of direct labor.

Required:

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials price variance $
Direct materials quantity variance
Total direct materials cost variance $

b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct labor rate variance $
Direct labor time variance
Total direct labor cost variance $

c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variable factory overhead controllable variance $
Fixed factory overhead volume variance
Total factory overhead cost variance $

In: Accounting

Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating...

Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow:

Product

Weedban Greengrow
Selling price per unit $ 11.00 $ 39.00
Variable expenses per unit $ 2.40 $ 14.00
Traceable fixed expenses per year $ 129,000 $ 39,000

Common fixed expenses in the company total $111,000 annually. Last year the company produced and sold 39,000 units of Weedban and 17,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

In: Accounting

Yahoo Gold Mining Company (YGMC) mines coal, puts it through a one-step crushing process, and loads...

Yahoo Gold Mining Company (YGMC) mines coal, puts it through a one-step crushing process, and loads the bulk raw coal onto river barges for shipment to customers.
YGMC’s management is currently evaluating the possibility of further processing the raw coal by sizing and cleaning it and selling it to an expanded set of customers at higher prices. The option of building a new sizing and cleaning plant is ruled out as being financially infeasible. Instead, Darrell Cornwall, a mining engineer, is asked to explore outside contracting arrangements for the cleaning and sizing process.

Darrell puts together the following summary:
Selling price of raw coal = $27 per tonne
Cost of producing raw coal = $22 per tonne
Selling price of sized and cleaned coal = $36 per tonne
Annual raw coal output = 10,000,000 tonnes
Percentage of material weight loss in sizing/cleaning coal = 6%


Incremental Costs of Sizing and Cleaning Processes
Direct labour = $800,000 per year
Supervisory personnel = 200,000 per year
Heavy equipment: rental, operating, maintenance costs = 25,000 per month
Contract sizing and cleaning = 3.50 per tonne of raw coal
Outbound rail freight = 240 per 60-tonne rail car


Darrell also learns that 75% of the material loss that occurs in the cleaning and sizing process can be salvaged as coal fines, which can be sold to steel manufacturers for their furnaces. The sale of coal fines is erratic and YGMC may need to stockpile it in a protected area for up to one year. The selling price of coal fines ranges from $15 to $24 per tonne and costs of preparing coal fines for sale range from $2 to $4 per tonne.

Required
1) Prepare an analysis to show whether it is more profitable for YGMC to continue selling raw bulk coal or to process it further through sizing and cleaning. (Ignore coal fines in your analysis.)
2) How would your analysis be affected if the cost of producing raw coal could be held down to $20 per tonne?
3) Now consider the potential value of the coal fines and prepare an addendum that shows how their value affects the results of your analysis prepared in requirement 1.

In: Accounting

Describe types and sources of data and information required for preparing your budget and forecast. Please...

Describe types and sources of data and information required for preparing your budget and forecast. Please include examples with your answer

In: Accounting

On July 1, 2010, ABC co. had a cash balance of $10 000.During July the following...

On July 1, 2010, ABC co. had a cash balance of $10 000.During July the following summary transactions were completed.

1.Received $1,200 cash from customers on account.

2.Received $2,400 cash for services performed in July.

3.Purchased store equipment on account $3,000.

4.Paid cash $ 2000 for a one – year insurance policy.

5.Purchased supplies on account $1,200.

6.Paid creditors $4,400 on account.

7.Performed services on account and billed customers for services provided $1,500.

8.Signed a contract with Alex company to buy furniture of $2 000 next month.

9.Received $800 from customers for future service.

10.Paid salaries of $ 5 000.

11.Rent of $400 was unpaid at July 31.

Required:

(a) Journalize the transactions.

(b) Post to the cash ledger account.

In: Accounting

The general ledger of Zips Storage at January 1, 2021, includes the following account balances: Accounts...

The general ledger of Zips Storage at January 1, 2021, includes the following account balances:

Accounts Debits Credits
Cash $ 25,700
Accounts Receivable 16,500
Prepaid Insurance 14,200
Land 159,000   
Accounts Payable $ 7,800
Deferred Revenue 6,900
Common Stock 154,000
Retained Earnings 46,700
Totals $ 215,400 $ 215,400

The following is a summary of the transactions for the year:

1. January 9 Provide storage services for cash, $145,100, and on account, $57,700.
2. February 12 Collect on accounts receivable, $52,600.
3. April 25 Receive cash in advance from customers, $14,000.
4. May 6 Purchase supplies on account, $11,400.
5. July 15 Pay property taxes, $9,600.
6. September 10 Pay on accounts payable, $12,500.
7. October 31 Pay salaries, $134,600.
8. November 20 Issue shares of common stock in exchange for $38,000 cash.
9. December 30 Pay $3,900 cash dividends to stockholders.

2. Prepare a post-closing trial balance. (Hint: The balance of Retained Earnings will be the amount shown in the balance sheet.)

4. Prepare an unadjusted trial balance

7. Prepare an adjusted trial balance

8-a. Prepare the income statement for the year ended December 31, 2021.

8-b. Prepare the classified balance sheet for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

9. Record closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

1. 3. 6. & 10. Post the transactions, adjusting entries and closing entries to the T-accounts. Be sure to include beginning balances.

In: Accounting

Thornton Manufacturing Company was started on January 1, 2018, when it acquired $86,000 cash by issuing...

Thornton Manufacturing Company was started on January 1, 2018, when it acquired $86,000 cash by issuing common stock. Thornton immediately purchased office furniture and manufacturing equipment costing $7,700 and $35,500, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,500 salvage value and an expected useful life of four years. The company paid $11,900 for salaries of administrative personnel and $15,100 for wages to production personnel. Finally, the company paid $10,010 for raw materials that were used to make inventory. All inventory was started and completed during the year. Thornton completed production on 4,300 units of product and sold 3,340 units at a price of $14 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

  1. Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

  2. Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

  3. Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

  4. Determine the amount of net income that would appear on the 2018 income statement.

  5. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.

  6. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.

In: Accounting

Jordan Inc. makes a smartphone case that includes a battery that extends the operating life of...

Jordan Inc. makes a smartphone case that includes a battery that extends the operating life of an iPhone. The manufacturing costs per unit include $14 direct materials, $16 direct labor and $8 manufacturing overhead. These costs are based on a production and sales volume of 4,000 units. Advertising costs amounted to $24,000. Research and development cost for the materials used in the phone cases amounted $27,000. Companywide administrative costs amounted to $44,000. Fashion design costs amounted to $29,000. Jordan’s management team established the sales price at 150 percent of GAAP-defined product cost.

Required

  1. Determine the total amount of upstream costs.

  2. Determine the total amount of downstream cost.

  3. Determine the total amount of midstream cost.

  4. Determine the sales price per unit.

  5. Prepare a GAAP-based income statement.

In: Accounting

Are there other ways to measure productivity increases besides amount produced each year per hours of...

Are there other ways to measure productivity increases besides amount produced each year per hours of work?

In: Accounting