Hemming Co. reported the following current-year purchases and sales for its only product.
    

Required:
Hemming uses a perpetual inventory system.
  
1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
3. Compute the gross margin for FIFO method and LIFO method.

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Determine the amount of sales (units) that would be necessary under

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 99,900 units at a price of $78 per unit during the current year. Its income statement for the current year is as follows:

The division of costs between fixed and variable is as follows:

Management is considering a plant expansion program that will permit an increase of $702,000 in yearly sales. The expansion will increase fixed costs by $70,200, but will not affect the relationship between sales and variable costs.

Required:

1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places.

3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.
units

4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $96,200 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.
units

6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.
$

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar.
$ Income

8. Based on the data given, would you recommend accepting the proposal?

1. In favor of the proposal because of the reduction in break-even point.
2. In favor of the proposal because of the possibility of increasing income from operations.
3. In favor of the proposal because of the increase in break-even point.
4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Choose the correct answer.
b

Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows. Feb. 1 Grimes and several others invested $600,000 cash in the business in exchange for 30,000 shares of capital stock. Feb. 10 The company purchased office facilities for $360,000, of which $120,000 was applicable to the land and $240,000 to the building. A cash payment of $72,000 was made and a note payable was issued for the balance of the purchase price. Feb. 16 Computer equipment was purchased from PCWorld for $14,400 cash. Feb. 18 Office furnishings were purchased from Hi-Way Furnishings at a cost of $10,800. A $1,200 cash payment was made at the time of purchase, and an agreement was made to pay the remaining balance in two equal installments due March 1 and April 1. Hi-Way Furnishings did not require that Heartland sign a promissory note. Feb. 22 Office supplies were purchased from Office World for $360 cash. Feb. 23 Heartland discovered that it paid too much for a computer printer purchased on February 16. The unit should have cost only $359, but Heartland was charged $395. PCWorld promised to refund the difference within seven days. Feb. 27 Mailed Hi-Way Furnishings the first installment due on the account payable for office furnishings purchased on February 18. Feb. 28 Received $36 from PCWorld in full settlement of the account receivable created on February 23. Required: a. Prepare journal entries to record the above transactions. Select the appropriate account titles from the following chart of accounts: Cash Land Accounts Receivable Office Building Office Supplies Notes Payable Office Furnishings Accounts Payable Computer Systems Capital Stock b. Indicate the effects of each transaction on the company's assets, liabilities, and owners' equity for the month of February. The Feb. 1 transaction is provided for you.

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,200 hours of welding time is available annually on the machine. Because each drum requires 0.8 hours of welding machine time, annual production is limited to 2,750 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums: Selling price per drum $ 177.00 Cost per drum: Direct materials $47.00 Direct labor ($18 per hour) 4.50 Manufacturing overhead 5.65 Selling and administrative expense 17.90 75.05 Margin per drum $ 101.95 Management believes 3,250 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an alternative to adding another welding machine, management has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier of quality products, would be able to provide up to 1,900 WVD-type drums per year at a price of $130 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate relabeling. Megan Flores, TufStuff’s production manager, has suggested that the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.2 hours of welding machine time per frame and yet sell for far more than the drums. Megan believes that TufStuff could sell up to 3,200 bike frames per year to bike manufacturers at a price of $79 each. The accounting department has provided the following data concerning the proposed new product: Bike Frames Selling price per frame $ 79.00 Cost per frame: Direct materials $20.00 Direct labor ($18 per hour) 22.50 Manufacturing overhead 18.25 Selling and administrative expense 9.00 69.75 Margin per frame $ 9.25 The bike frames could be produced with existing equipment and personnel. Manufacturing overhead is allocated to products on the basis of direct labor-hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building, but some of it is variable. The variable manufacturing overhead has been estimated at $1.30 per WVD drum and $3.10 per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier. Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $1.10 per WVD drum whether made or purchased and would be $2.90 per bike frame. All of the company’s employees—direct and indirect—are paid for full 40-hour workweeks and the company has a policy of laying off workers only in major recessions 1. Would you be comfortable relying on the financial data provided by the accounting department for making decisions related to the WVD drums and bike frames? Compute the contribution margin per unit for [assume direct labor is a fixed cost]: (Do not round intermediate calculations. Round your answers to 2 decimal places.) Compute the contribution margin per unit for [assume direct labor is a fixed cost]: (Do not round intermediate calculations. Round your answers to 2 decimal places.) 3. As soon as your analysis was shown to the top management team at TufStuff, several managers got into an argument concerning how direct labor costs should be treated when making this decision. One manager argued that direct labor is always treated as a variable cost in textbooks and in practice and has always been considered a variable cost at TufStuff. After all, “direct” means you can directly trace the cost to products. “If direct labor is not a variable cost, what is?” Another manager argued just as strenuously that direct labor should be considered a fixed cost at TufStuff. No one had been laid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40-hour workweek and overtime has not been necessary since the company adopted Lean Production techniques. Whether the welding machine is used to make drums or frames, the total payroll would be exactly the same. There is enough slack, in the form of idle time, to accommodate any increase in total direct labor time that the bike frames would require. a. Compute the contribution margin per welding hour for [assume direct labor is a fixed cost]: (Round your final answers to 2 decimal places.) b. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. [Assume direct labor is a fixed cost] c. What is the increase in net operating income that would result from this plan over current operations? (Do not round intermediate calculations.) Redo requirements (2) and (3) making the opposite assumption about direct labor from the one you originally made. In other words, if you treated direct labor as a variable cost, redo the analysis treating it as a fixed cost. If you treated direct labor as a fixed cost, redo the analysis treating it as a variable cost. a. Compute the contribution margin per unit for [assume direct labor is a variable cost]: (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the contribution margin per welding hour for [assume direct labor is a variable cost]: (Round your final answers to 2 decimal places.) c. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. [Assume direct labor is a variable cost] d. What is the increase in net operating income that would result from this plan over current operations? (Do not round intermediate calculations.)

A company produces circuit boards used to update outdated computer equipment. The fixed cost is RM 39,000 per month, and variable cost is RM 55 per circuit board. The selling price per unit is p = RM160 – 0.03D.   a) Determine the demand of circuit boards/month. b) Determine the profit or loss   c) Find the volume at which breakeven occurs and the range (domain) of profitable demand.   d) What the range (domain) of profitable demand if the fixed cost are reduced to 10%

Laker Company reported the following January purchases and sales data for its only product.

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 285 units, where 270 are from the January 30 purchase, 5 are from the January 20 purchase, and 10 are from beginning inventory.

Required:
1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification.
2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. The lease agreement for the $4.5 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton’s implicit interest rate was 8%.

1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2018.
2. Prepare an amortization schedule for the four-year term of the lease.
3. & 4. Prepare the appropriate entries related to the lease on December 31, 2018 and 2020.

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 112,000 liters at a budgeted price of $165 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $10) $ 20 Direct labor (0.5 hours @ $36) 18 Variable overhead is applied based on direct labor hours. The variable overhead rate is $80 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $40 per unit. All non-manufacturing costs are fixed and are budgeted at $1.8 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $522,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year. Sales revenue $ 17,738 Less variable costs Direct materials 1,948 Direct labor 1,910 Variable overhead 4,030 Total variable costs $ 7,888 Contribution margin $ 9,850 Less fixed costs Fixed manufacturing overhead 1,110 Non-manufacturing costs 1,290 Total fixed costs $ 2,400 Operating profit $ 7,450 During the year, the company purchased 188,000 pounds of material and employed 46,400 hours of direct labor.

Required: a. Compute the direct material price and efficiency variances.

b. Compute the direct labor price and efficiency variances.

c. Compute the variable overhead price and efficiency variances. (For all requirements, enter your answers in whole dollars. 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.)

The following terms are used to describe various economic characteristics of costs: Opportunity Cost Average Cost Sunk Cost Out-of-pocket Cost Differential Cost Required: Choose one of the preceding terms to characterize each of the amounts described below. Each term may be used only once (5 Points). (1). The cost of merchandise inventory purchased five years ago. The goods are now obsolete. (2). The cost of feeding 300 children in a public school cafeteria is $450 per day, or $1.50 per child per day. What economic term describes this $1.50 cost? (3). The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for $30,000. What economic term describes this $30,000 of lost rental revenue? (4). The cost of building an automated assembly line in a factory is $700,000; a manually operated assembly line would cost $250,000. What economic term is used to describe the $450,000 variation between these two amounts? (5). Refer to the preceding question and assume that the firm is currently building the assembly line for $700,000. What economic term is used to describe the $700,000 construction cost?

FIFO Method, Unit Cost, Valuation of Goods Transferred Out and Ending Work in Process

Dama Company produces women's blouses and uses the FIFO method to account for its manufacturing costs. The product Dama makes passes through two processes: Cutting and Sewing. During April, Dama's controller prepared the following equivalent units schedule for the Cutting Department:

Costs in beginning work in process were direct materials, $25,000; conversion costs, $70,000. Manufacturing costs incurred during April were direct materials, $180,000; conversion costs, $326,400.

Required:

1. Prepare a physical flow schedule for April.

2. Compute the cost per equivalent unit for April. If required, round your answer to the nearest cent.
$ per equivalent unit

3. Determine the cost of ending work in process and the cost of goods transferred out.

4. Prepare the journal entry that transfers the costs from Cutting to Sewing.

Jim is a single dad who lives with and provides 100% of the financial support for his three children. Jim's children were 10, 14 and 19 as of the last day of 2015.

Jim's Adjusted Gross Income (AGI) is $96,000 for the year 2015.

How much Child Credit will Jim get on his 2015 tax return?

A. 1050

B. 950

C. 2000

D. 850

At Hodgson​ Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details​ include: Beginning WIP direct materials ​$35,000 Beginning WIP conversion costs ​$29,250 Costs of materials added ​$389,100 Costs of conversion added ​$275,125 WIP beginning​ (50% for​ conversion) ​21,200 units Units started ​127,500 units Units completed and transferred out ​110,700 units WIP ending​ (60% for​ conversion) ​38,000 units What is the total cost of units remaining in ending​ WIP?

ACCORDING TO 2019 TAX PURPOSES:

Harrison Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received$300,000 of tax-exempt municipal bond interest. The company’s prior-year tax Return showed taxable income of $50,000. Compute the company’s deferred income tax expense or benefit.

A company had the following purchases and sales during its first year of operations:

On December 31, there were 29 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)