Variable Costs, Contribution Margin, Contribution Margin Ratio

Super-Tees Company plans to sell 13,000 T-shirts at $16 each in the coming year. Product costs include:

Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $14,000.

Required:

1. Calculate the following values:
Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).

2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.

3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate new values for the following:
Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):

Please Show calculations and work

Company has budgeted the following unit sales:

                           2019                                     Units  

                        January                                      10,000

                        February                                      8,000

                        March                                         9,000

                        April                                          11,000

                        May                                          15,000

The finished goods units on hand on December 31, 2018, was 2,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 5,760 pounds of raw materials on hand at December 31, 2018.

1. Prepare a production budget for January and February.

2. Prepare a direct materials budget for January and February

Net Present Value Method, Internal Rate of Return Method, and Analysis

The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:

The radio station requires an investment of $819,990, while the TV station requires an investment of $1,627,350. No residual value is expected from either project.

Required:

1a. Compute the net present value for each project. Use a rate of 10% and the present value of an annuity of $1 in the table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest whole dollar.

1b. Compute a present value index for each project. If required, round your answers to two decimal places.

2. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest whole percent.

3. The net present value, present value index, and internal rate of return all indicate that the   is a better financial opportunity compared to the  , although both investments meet the minimum return criterion of 10%.

A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $11.92 million. The following information is given:

Required:

What is the cost allocation if fixed computer costs of $9.46 million are allocated on the basis of number of consultants and the remaining costs (all variable) are allocated on the basis of the number of gigabytes of storage used by the department? (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:

Additional information about the company follows:

1. Hubs require $35 in direct materials per unit, and Sprockets require $17.

2. The direct labor wage rate is $13 per hour.

3. Hubs require special equipment and are more complex to manufacture than Sprockets.

4. The ABC system has the following activity cost pools:

Required:

1. Compute the activity rate for each activity cost pool.

2. Determine the unit product cost of each product according to the ABC system.

Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow:

Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 32,000 tons of pulp per year from a supplier at a cost of $24 per ton, less a 10% purchase discount. Hrubec’s president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out.

Required:

For (1) and (2) below, assume the Pulp Division can sell all of its pulp to outside customers for $24 per ton.

1. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 32,000 tons of pulp next year?

2. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 32,000 tons of pulp to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole?

For (3)–(5) below, assume that the Pulp Division is currently selling only 58,000 tons of pulp each year to outside customers at the stated $24 price.

3. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 32,000 tons of pulp next year?

4. If the Pulp Division does not meet the $20 price, what will be the effect on the profits of the company as a whole?

5. Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 32,000 tons of pulp each year from the Pulp Division at $24 per ton. What will be the effect on the profits of the company as a whole?

The concept of accounting infrastructure, which encompasses the various environmental factors affecting the issues concerning auditing in a particular country. Required: Explain the environmental factors that affect the issues concerning auditing in India

Lafleur Corporation needs to set a target price for its newly designed product, M14-M16. The following data relate to it:

These costs are based on a budgeted volume of 297,000 units produced and sold each year. Lafleur uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 40%.

Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14-M16.

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Question Part Score

--/3

Calculate the desired markup per unit for M14-M16. (Round answer to 2 decimal places, e.g. 15.25.)

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Question Part Score

--/2

Calculate the target selling price for M14-M16. (Round answer to 2 decimal places, e.g. 15.25.)

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Question Part Score

--/2

Assuming that 237,600 M14-M16s are produced during the year, calculate the variable cost per unit, fixed cost per unit, and total cost per unit. (Round answers to 2 decimal places, e.g. 15.25.)

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Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:

The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

Required:

Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.

On December 1, 2021, Liang Chemical provides services to a customer for $86,000. In payment for the services, the customer signs a three-year, 12% note. The face amount is due at the end of the third year, while annual interest is due each December 1.

Required:

1. Record the acceptance of the note on December 1, 2021.
2. Record the interest collected on December 1 for 2022 and 2023, and the adjustment for interest revenue on December 31 for 2021, 2022, and 2023.
3. Record the cash collection on December 1, 2024.

Prepare the journal entries for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Problem 8-19 Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-10]

Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:

The company is in the process of preparing a budget for May and has assembled the following data:

1. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May.

2. Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May.

3. The May 31 inventory balance is budgeted at $40,000.

4. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.

5. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.)

6. New refrigerating equipment costing $6,500 will be purchased for cash during May.

7. During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Required:

1. Calculate the expected cash collections from customers for May.

2. Calculate the expected cash disbursements for merchandise purchases for May.

3. Prepare a cash budget for May.

4. Prepare a budgeted income statement for May.

5. Prepare a budgeted balance sheet as of May 31.

Cyclops Company has its own research department. However, the company purchases patents from time to time. The following is a summary of transactions involving patents now owned by the company.

• During 2014 and 2015, Cyclops spent a total of P459,000 in developing a new process that was patented (Patent A) on April 1, 2016; additional legal and other costs of P50,000 were incurred.

• A patent (Patent B) developed by Nanette Inventor, an inventor, was purchased for P187,500 on December 1, 2017, on which date it had an estimated useful life of 12 ½ years.

• During 2016, 2017 and 2018, research and development activities cost P510,000. No additional patents resulted from these activities.

• A patent infringement suit brought by the company against a competitor because of the manufacture of articles infringing on Patent B was successfully prosecuted at a cost of P42,600. A decision in the case was rendered in June 2018.

• On July 1, 2019, Patent C was purchased for P172,800. This patent had 16 years yet to run.

• During 2020, Cyclops experienced P180,000 on patent development. However, the company is still undecided as to how the patent, if approved by the Bureau of Patents, will generate probable future economic benefits.

Assume that the legal life of each patent is also its useful life.

Required:

1. Prepare the journal entries for the above transactions and related amortization from 2014 to 2020.
2. Determine the following:

1. Patent A’s carrying amount on December 31, 2020
2. Patent B’s carrying amount on December 31, 2020
3. Patent C’s carrying amount on December 31, 2020

Total amortization expense for the year ended December 31, 2020

these are all the information given.

AOCI 703

APIC 40,570

Change in foreign currency translation net of tax 566

Change in unrealized gain/loss on available for sale investments net (90)

Common Stock 14

Cost of revenue 5,454

Dividends 3,614

General and administrative 2,517

Interest and other income (expense), net 391

Marketing and sales 4,725

Net income attributable to noncontrolling int 14

Provision for income taxes 4,660

Research and development 7,754

Retained Earnings 21,670

Revenue $ 40,653

Weighted average shares used to compute earnings per share attributable to common stockholders: 2,901

Requirement 1 Using the partial trial balance (will not balance) given above, create an income statement, statement of comprehensive income and statement of changes stockholders equity

Requirement 2 Please describe what would change on the statements you prepared if there was an unrealized loss on an available for sale security that was discovered and not included in the trial balance given. Please explain all the changes that will be needed to correct the financial statements prepared.