Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 4,300 pounds. The standard quantity of materials required in the process is 4,300 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $9,013 per batch. The additional processing also causes a 5% loss of product due to evaporation. a. Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 Sell Regular Columbian (Alternative 1) Process Further into Decaf Columbian (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $ $ $ Costs Income (Loss) $ $ $ b. Should Abica sell Columbian coffee or process further and sell Decaf Columbian? c. Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian. Round your answer to two decimal places. $ per pound

Kiss the sky enterprises has bonds on th market making annual payments, with 11 years to maturity and selling for 790. At this price, the bonds yield 10 percent. What must the coupon rate be on the bonds 6.77 6.87 13.53 10.00 8.57

Complete the problems below on variance analysis.

Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Data for the Assembly Department for August 2017 are:
Work in process, beginning inventory: 2600 units
Direct materials (100% complete)
Conversion costs (35% complete)

Units started during August 715 units

Work in process, ending inventory: 520 units
Direct materials (100% complete)
Conversion costs (55% complete)

Costs for August:
Standard costs for Assembly:
Direct materials $18 per unit
Conversion costs $35.50 per unit

Work in process, beginning inventory:
Direct materials $12,600
Conversion costs $8250

Part 2A: Variance Problem
Castleton Corporation manufactured 36,000 units during March. The following fixed overhead data relates to March:
Actual Static Budget
Production 36,000 units 34,000 units
Machine-hours 6,960 hours 6,800 hours
Fixed overhead costs for March $164,700 $156,400
Compute the fixed overhead variances.

Part 2B: Variance Problem
Russo Corporation manufactured 21,000 air conditioners during November. The overhead cost-allocation base is $34.50 per machine-hour. The following variable overhead data pertain to November:

Actual Budgeted
Production 21,000 units 23,000 units
Machine-hours 12,700 hours 13,800 hours
Variable overhead cost per machine-hour:
$34.00 $34.50
Compute the variable overhead variances.

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016: Common stock—$25 par value, 50,000 shares authorized, 33,000 shares issued and outstanding $ 825,000 Paid-in capital in excess of par value, common stock 66,000 Retained earnings 350,000 Total stockholders’ equity $ 1,241,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 3,300 shares of its own stock at $25 cash per share. Jan. 7 Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record. Feb. 28 Paid the dividend declared on January 7. July 9 Sold 1,320 of its treasury shares at $30 cash per share. Aug. 27 Sold 1,650 of its treasury shares at $20 cash per share. Sept. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. Oct. 22 Paid the dividend declared on September 9. Dec. 31 Closed the $55,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required: 1. Prepare journal entries to record each of these transactions for 2017. 2. Prepare a statement of retained earnings for the year ended December 31, 2017. 3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017.

The following information is provided to assist you in evaluating the performance of the production operations of Studio Company: Units produced (actual) 57,000 Master production budget Direct materials $127,380 Direct labor 108,080 Overhead 167,910 Standard costs per unit Direct materials $1.65 × 2 gallons per unit of output Direct labor $14 per hour × 0.2 hour per unit Variable overhead $12.50 per direct labor-hour Actual costs Direct materials purchased and used $150,960 (81,600 gallons) Direct labor 134,231 (9,980 hours) Overhead 177,200 (61% is variable) Variable overhead is applied on the basis of direct labor-hours. Required: Calculate all variable production cost price and efficiency variances and fixed production cost price and production volume variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Required information

Problem 3-4A Weighted average: Process cost summary, equivalent units, cost estimates LO C2, C3, P4

[The following information applies to the questions displayed below.]

Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 22,700 units of product to finished goods inventory. Its 3,100 units of beginning work in process consisted of $19,900 of direct materials and $226,440 of conversion costs. It has 2,450 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $483,100 of direct material costs and $1,992,960 of conversion costs were charged to production.

​(Weighted average cost of​ capital)  Crypton Electronics has a capital structure consisting of

3939

percent common stock and

6161

percent debt. A debt issue of

​$1 comma 0001,000

par​ value,

6.36.3

percent bonds that mature in

1515

years and pay annual interest will sell for

​$974974.

Common stock of the firm is currently selling for

​$29.8429.84

per share and the firm expects to pay a

​$2.252.25

dividend next year. Dividends have grown at the rate of

4.94.9

percent per year and are expected to continue to do so for the foreseeable future. What is​ Crypton's cost of capital where the​ firm's tax rate is

3030

​percent?

a. The​ after-tax cost of debt is

​(Round to two decimal​ places.)

b.  The cost of common equity is

​(Round to two decimal​ places.)

c. ​ Crypton's cost of capital is

​(Round to three decimal​ places.)

​(Individual or component costs of​ capital)  Compute the cost of capital for the firm for the​ following:

a.  Currently bonds with a similar credit rating and maturity as the​ firm's outstanding debt are selling to yield

7.237.23

percent while the borrowing​ firm's corporate tax rate is

3434

percent.

b.  Common stock for a firm that paid a

​$1.041.04

dividend last year. The dividends are expected to grow at a rate of

5.75.7

percent per year into the foreseeable future. The price of this stock is now

​$24.5824.58.

c.  A bond that has a

​$1 comma 0001,000

par value and a coupon interest rate of

11.411.4

percent with interest paid semiannually. A new issue would sell for

​$1 comma 1491,149

per bond and mature in

2020

years. The​ firm's tax rate is

3434

percent.

d.  A preferred stock paying a dividend of

7.47.4

percent on a

​$9090

par value. If a new issue is​ offered, the shares would sell for

​$83.0783.07

per share.

What are the four ways to test internal Controls?

Imperial Jewelers manufactures and sells a gold bracelet for $405.00. The company’s accounting system says that the unit product cost for this bracelet is $261.00 as shown below:

The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $365.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $454 and that would increase the direct materials cost per bracelet by $11. The special tool would have no other use once the special order is completed.

To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $12.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party’s order using its existing manufacturing capacity.

Required:

1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party?

2. Should the company accept the special order?

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Related to Checkpoint​ 13.5) ​ (Real options and capital​ budgeting)  You are considering introducing a new​ Tex-Mex-Thai fusion restaurant. The initial outlay on this new restaurant is

​$6.96.9

million and the present value of the free cash flows​ (excluding the initial​ outlay) is

​$5.35.3

​million, such that the project has a negative expected NPV of

​$1.61.6

million. Upon closer​ examination, you find that there is a

5555

percent chance that this new restaurant will be well received and will produce annual cash flows of

​$805 comma 000805,000

per year forever​ (a perpetuity), while there is a

4545

percent chance of it producing a cash flow of only

​$199 comma 000199,000

per year forever​ (a perpetuity) if it​ isn't received well. The required rate of return you use to discount the project cash flows is

10.110.1

percnet. ​ However, if the new restaurant is​ successful, you will be able to build

1515

more of them and they will have costs and cash flows similar to the successful​ restaurant's costs and cash flows.

a.  In spite of the fact that the first restaurant has a negative​ NPV, should you build it​ anyway? Why or why​ not?

b.  What is the expected NPV for this project if only one restaurant is built but​ isn't well​ received? What is the expected NPV for this project assuming

1515

more are built if the first restaurant is well​ received? ​ (Ignore the fact that there would be a time delay in building additional new​ restaurants.)

The Shareholders’ Equity section of Hamilton Design Company’s December 31, 2019, balance sheet appeared as follows:

During 2020, the company entered into the following transactions affecting shareholders’ equity:

1. Issued 250 shares of preferred stock at $160 per share.

2. Issued 3,000 shares of common stock at $16 per share.

3. Declared and issued a 15% stock dividend. On the date of declaration, the market price of the shares was $19 per share.

4. Reacquired 200 of its own common shares as treasury stock for $15 per share.

5. Reissued 250 shares of treasury stock at $17 per share (FIFO basis).

6. Net income for 2020 was $70,400. Dividends of $25,000 were distributed.

Instructions: Prepare a statement of stockholders’ equity for the year ended December 31, 2020, for Hamilton. Use the “columnar format” show in your textbook.

***Please show all supporting calculations.

What are the four main steps in doing a business strategy analysis using financial statements? Why, at each step, is analysis in a cross-border context more difficult than a single-country analysis?