Desilets Corporation has provided the following data from its activity-based costing accounting system: Supervisory wages $ 85,600 Factory utilities $ 306,000 Distribution of Resource Consumption across Activity Cost Pools: Activity Cost Pools Batch Set-Ups Unit Processing Other Total Supervisory wages 60 % 37 % 3 % 100 % Factory utilities 29 % 63 % 8 % 100 % The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products. Required: a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Unit Processing activity cost pool. b. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. Unassigned Costs Supervisory wages Factory utilities

Q1. Differentiate between fundamental qualities and enhancing qualities for qualitative characteristics of financial information, give examples.

Q2. Both the unadjusted trial balance and adjusted trial balance for Smith Corporation on December 31, 2013, are listed below:

Required: Prepare the five adjusting entries required at December 31, 2013.

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:

During November, the following activity was recorded related to the production of Fludex:

1. Materials purchased, 12,500 ounces at a cost of $305,625.

2. There was no beginning inventory of materials; however, at the end of the month, 2,800 ounces of material remained in ending inventory.

3. The company employs 21 lab technicians to work on the production of Fludex. During November, they each worked an average of 150 hours at an average pay rate of $12.00 per hour.

4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,200.

5. During November, the company produced 4,200 units of Fludex.

Required:

1. For direct materials:

a. Compute the price and quantity variances.

b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract?

2. For direct labor:

a. Compute the rate and efficiency variances.

b. In the past, the 21 technicians employed in the production of Fludex consisted of 4 senior technicians and 17 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued?

3. Compute the variable overhead rate and efficiency variances.

A&K Corporation was established in 2016. A&K has authorized 50,000 shares of common stock, par value $1 per share, and 10,000 authorized shares of 9% preferred stock, par value $20 per share. Net Income for 2016 was $245,000. The following transactions took place during 2016: January 1 Issued 40,000 shares of common stock for cash at $30 per share. February 1 Issued 7,000 shares of preferred stock for cash of $60 per share. June 1 Repurchased 8,000 shares of L&D common stock at $25 per share. August 1 Reissued 1,000 shares of the treasury stock at $26 per share. December 1 Declared cash dividends on Common Stock only totaling $65,000 to be paid on January 15, 2017 to owners on record as of December 31, 2016. Required: Please show calculations a)Prepare journal entries for each of the above transactions. b) Calculate Ending Retained Earnings c.)Prepare the Stockholders' Equity section of the Balance Sheet in good format.

Halogen Laminated Products Company began business on January 1, 2018. During January, the following transactions occurred: Jan. 1 Issued common stock in exchange for $118,000 cash. 2 Purchased inventory on account for $27,000 (the perpetual inventory system is used). 4 Paid an insurance company $1,440 for a one-year insurance policy. 10 Sold merchandise on account for $11,200. The cost of the merchandise was $6,200. 15 Borrowed $22,000 from a local bank and signed a note. Principal and interest at 10% is to be repaid in six months. 20 Paid employees $5,200 salaries and wages for the first half of the month. 22 Sold merchandise for $9,200 cash. The cost of the merchandise was $5,200. 24 Paid $14,200 to suppliers for the merchandise purchased on January 2. 26 Collected $5,600 on account from customers. 28 Paid $1,000 to the local utility company for January gas and electricity. 30 Paid $3,200 rent for the building. $1,600 was for January rent, and $1,600 for February rent. Required: 1. Prepare general journal entries to record each transaction. 2. Post the transactions into the appropriate T-accounts. 3. Prepare an unadjusted trial balance as of January 30, 2018.

Q- Emilie has a maintenance contract with a life insurance company to shovel snow,
mow lawns, and maintain fences. She has agreed to keep the premises neat, in good
repair, and easily accessible for employees and customers. She uses her own small
tools and snow plow, but the lawn mower and snow blower are owned by the
company. She has other contracts with organizations in the same area and, if
necessary, sub-contracts the work out, depending on the weather conditions. Her
contact at the site is the manager of Accounts Payable (AP) and she is paid a fixed
amount each month by cheque, according to the contract she has signed with the
company.

Is Emilie an employee of the life insurance company? Write a memo, in proper
memo format, to the manager of Accounts Payable, explaining your response.

Present Value. Use a calculator for each of these problems.

(a) You are moving to Bozeman and you are going to stay here forever. You would like to find an apartment. You can either buy it or rent it. The monthly rent is $500 and the monthly interest rate is 0.1%. Alternatively, you can purchase the apartment, paying $600,000. How are you going to finance your new accommodation? Argue using the PV formula.

(b) You take a loan to buy a car that costs $4000. What is your monthly payment if you want to pay back the loan after 3 years (36 payments) and the monthly interest rate is 0.5%. (Hint: think annuity)

(c) You are hired by Merrill Lynch to help assess the value of a T-bond (a bond issued by the Treasury Department) with the face value F=$1000, coupon c = $100 (paid anually until T − 1 and face value F paid at time T) and time to maturity equal to T = 10 years. The interest rate is equal to r = 10%. Find the PV of such a bond. Is it a good or bad deal to buy such a bond for $900? Explain.

(d) You want to receive $40,000 per year when retired (you will be retired from 61-80). How much do you have to save between 21-60 years if the interest rate is 5%?

(e) You save $20,000 per year when working and plan to work from 21-60. How much will you consume per year when you retire? Assume you will be retired from 61-80. The interest rate is 5%.

In a page, explain the similarities and differences between job costing and process costing methods in a manufacturing environment, and construct and use operational budgets for a manufacturing company.

Andretti Company has a single product called a Dak. The company normally produces and sells 90,000 Daks each year at a selling price of $54 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 112,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 90,000 units each year if it were willing to increase the fixed selling expenses by $100,000. What is the financial advantage (disadvantage) of investing an additional $100,000 in fixed selling expenses?

1-b. Would the additional investment be justified?

2. Assume again that Andretti Company has sufficient capacity to produce 112,500 Daks each year. A customer in a foreign market wants to purchase 22,500 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $15,750 for permits and licenses. The only selling costs that would be associated with the order would be $2.60 per unit shipping cost. What is the break-even price per unit on this order?

3. The company has 900 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 30% 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 90,000 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?

Starfish Corporation, in preparation of its December 31, 2020, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. 1. As a result of uninsured accidents during the year, personal injury suits for $261,000 and $697,000 have been filed against the company. It is the judgment of Starfish‘s legal counsel that an unfavorable outcome is unlikely in the $261,000 case but that an unfavorable verdict approximating $410,000 will probably result in the $697,000 case. 2. Starfish‘s deep sea exploration division consisting of operations in the Marina Trench is uninsurable because of the special risk of injury to employees and losses due to high pressure. The year 2020 is considered one of tinesafest (luckiest) in the division’s history because no loss due to injury or casualty was suffered. Having suffered an average of two casualties a year during the rest of the past decade (ranging from $25,000 to $1,000,000), management is certain that next year the company will probably not be so fortunate. 3. Starfish Corporation owns a subsidiary in a foreign country that has a book value of $21,600,000 and an estimated fair value of $30,890,000. The foreign government has communicated to Starfish its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, Starfish expects to receive 60% of the fair value of its properties as final settlement.

Exercise 5-10 Lower of cost or market LO P2

Martinez Company's ending inventory includes the following items.

  
Compute the lower of cost or market for ending inventory applied separately to each product.
  

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]
  
Hemming Co. reported the following current-year purchases and sales for its only product.
    

Exercise 5-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1

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.