Acme Company Balance Sheet As of January 5, 2019 (amounts in thousands)

Cash 9,100                                              Accounts Payable 1,900

Accounts Receivable 4,400                        Debt 2,400

Inventory 4,800                                         Other Liabilities 600

Property Plant & Equipment 15,600            Total Liabilities 4,900

Other Assets 2,600                                  Paid-In Capital 6,900

                                                               Retained Earnings 24,700

                                                              Total Equity 31,600

Total Assets 36,500                                 Total Liabilities & Equity 36,500

Update the balance sheet above to reflect the transactions below, which occur on January 6, 2019

1. Sell product for $25,000 with historical cost of $20,000

2. Sell product for $30,000 with historical cost of $24,000

3. Sell product for $40,000 with historical cost of $32,000

What is the final amount in Retained Earnings?

Please specify your answer in the same units as the balance sheet.

Ahmed’s income statement is as follows:

1. If Sales increase by $10,000, what is the new operating income?
2. Calculate the Break-even point in units for Herman.
3. Herman wants to earn operating income of $20,000. What amount of sales dollars will he need in to accomplish this goal?
4. Herman wants to earn net income (after taxes) of $35,000 and his tax rate is 30%. What amount of sales dollars will he need to accomplish this goal?

Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2021, year-end balance sheet:

Additional Information:

1. The notes receivable account consists of two notes, a $100,000 note and a $270,000 note. The $100,000 note is dated October 31, 2021, with principal and interest payable on October 31, 2022. The $270,000 note is dated June 30, 2021, with principal and 6% interest payable on June 30, 2022.
2. During 2022, sales revenue totaled $1,450,000, $1,335,000 cash was collected from customers, and $33,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.
3. On March 31, 2022, the $270,000 note receivable was discounted at the Bank of Commerce. The bank's discount rate is 10%. Chamberlain accounts for the discounting as a sale.

Required:
In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2022 income statement?
What amounts will appear in the 2022 year-end balance sheet for accounts receivable and Calculate the receivables turnover ratio for 2022.

Square Manufacturing is considering investing in a robotics manufacturing line. Installation of the line will cost an estimated $10.5 million. This amount must be paid immediately even though construction will take three years to complete (years 0, 1, and 2). Year 3 will be spent testing the production line and, hence, it will not yield any positive cash flows. If the operation is very successful, the company can expect after-tax cash savings of $7.5 million per year in each of years 4 through 7. After reviewing the use of these systems with the management of other companies, Square’s controller has concluded that the operation will most probably result in annual savings of $4.9 million per year for each of years 4 through 7. However, it is entirely possible that the savings could be as low as $3.3 million per year for each of years 4 through 7. The company uses a 14 percent discount rate. Use Exhibit A.8.

Required:

Compute the NPV under the three scenarios. (Round PV factor to 3 decimal places. Enter your answers in thousands of dollars. Negative amounts should be indicated by a minus sign.)

Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $28,000 of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 32 percent this year and will be 35 percent next year, and that he can earn an after-tax rate of return of 12 percent on his investments. Use Exhibit 3.1.

a. What is the after-tax income if Hank sends his client the bill in December?

b. What is the after-tax income if Hank sends his client the bill in January? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return
4%   5%   6%   7%   8%   9%   10%   11%   12%
Year 1   .962   .952   .943   .935   .926   .917   .909   .901   .893
Year 2   .925   .907   .890   .873   .857   .842   .826   .812   .797
Year 3   .889   .864   .840   .816   .794   .772   .751   .731   .712
Year 4   .855   .823   .792   .763   .735   .708   .683   .659   .636
Year 5   .822   .784   .747   .713   .681   .650   .621   .593   .567
Year 6   .790   .746   .705   .666   .630   .596   .564   .535   .507
Year 7   .760   .711   .665   .623   .583   .547   .513   .482   .452
Year 8   .731   .677   .627   .582   .540   .502   .467   .434   .404
Year 9   .703   .645   .592   .544   .500   .460   .424   .391   .361
Year 10   .676   .614   .558   .508   .463   .422   .386   .352   .322
Year 11   .650   .585   .527   .475   .429   .388   .350   .317   .287
Year 12   .625   .557   .497   .444   .397   .356   .319   .286   .257
Year 13   .601   .530   .469   .415   .368   .326   .290   .258   .229
Year 14   .577   .505   .442   .388   .340   .299   .263   .232   .205
Year 15   .555   .481   .417   .362   .315   .275   .239   .209   .183

c. Should Hank send his client the bill in December or January?

• December

• January

d. What is the after-tax income if Hank expects his marginal tax rate to be 24 percent next year and sends his client the bill in January? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

e. Should Hank send his client the bill in December or January if he expects his marginal tax rate to be 32 percent this year and 24 percent next year?

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 5,200 units of product were as follows:

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.

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.

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.

take the role of mentor to a new project manager within your organization. This assignment focuses on guidance the mentor provides the new project manager regarding cost.

Cost serves several purposes for an organization: (1) planning and budgeting, (2) assisting in decision making, (3) comparing actual to budget (control), and (4) calculating income generated from operations and projects (score-keeping). Select one these areas and prepare a short document outlining the following items:

• Identify one of the cost purposes listed above.
• Select two of the five cost classifications described in the text: financial statement presentation (cost function): cost behavior, assigning costs to products and services, costs for decision making, and cost of quality (see page 75).
• Describe how knowledge of cost, as described within its classification, is needed to effectively manage costs and improve the success of a project for the stated purpose.

The total factory overhead for Diva-nation is budgeted for the year at $169,465, divided into four activities: cutting, $18,130; sewing, $34,121; setup, $87,055; and inspection, $30,159. Diva-nation manufactures two types of men’s pants: jeans and khakis. The activity-base usage quantities for each product by each activity are as follows:

Each product is budgeted for 20,000 units of production for the year.

Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are:

During August, the factory worked only 1,050 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month:

At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production.

Required:

1. Compute the materials price and quantity variances for August.

2. Compute the labor rate and efficiency variances for August.

3. Compute the variable overhead rate and efficiency variances for August.

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

QUESTIONS TO ANSWER:

1. Materials Price Variance

Materials Quantity Variance

2. Labor Rate Variance

Labor Efficiency Variance

3. Variable Overhead Rate Variance

Variable Overhead Efficiency Variance

Computer Gaming Industries has just started business as a computer-based gaming company. Knowing that small computer businesses rarely remain in business longer than five years, Computer Gaming depreciates all its assets for five years. The assets include a building, integrated circuit shaper, and vehicles. Is this ethical? What impact will its action have on the net income? What, if any, is the correct action?

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

   
Additional production information concerning its two product lines follows.

  
Required:
1. Using ABC, compute the overhead cost per unit for each product line.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $190 for Model 145 and $116 for Model 212.
3. If the market price for Model 145 is $821.61 and the market price for Model 212 is $498.56, determine the profit or loss per unit for each model.

Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.)

Required 1:

Required 2:

Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $190 for Model 145 and $116 for Model 212. (Round your final answers to 2 decimal places.)

Required 3:

If the market price for Model 145 is $821.61 and the market price for Model 212 is $498.56, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.)

Profit Center Responsibility Reporting

XSport Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

The bases to be used in allocating expenses, together with other essential information, are as follows:

1. Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $508,000; Summer Sports Division, $574,000.
2. Transportation expense—charged back to divisions at a charge rate of $15 per bill of lading: Winter Sports Division, 14,200 bills of lading; Summer Sports Division, 15,600 bills of lading.
3. Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $8 per invoice: Winter Sports Division, 13,200 sales invoices; Summer Sports Division, 15,400 sales invoices.
4. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 120,000 square feet; Summer Sports Division, 160,000 square feet.

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.

Provide supporting schedules for determining service department charges. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Summarize the case- "Tesco: From Troubles to Turnaround". Explain what other companies should learn from Tesco's mistakes?

The balance sheet shows your assets, liabilities, and equity of the business and is a key financial statement to analyze. If a business had cash of $200,000, accounts receivable of $500,000, a loan payable of $1,000,000, and equity of -$300,000, then what would this indicate about the business? What would be your overall thoughts on the health of this company and how could you improve its financial health? Would you want to invest in this company? Lead this company? Why or why not?

The net income of Thomas & Sons, a landscaping company, decreased sharply during 2018. The owner of the company, Jerry Thomas, anticipates the need for a bank loan in 2019. Late in 2018, Jerry instructs the company’s accountant to record $2,000 service revenue for landscape services for the McGrath family, even though the services will not be performed until January 2019. Jerry also tells the accountant not to make the following December 31, 2018 adjusting entries: Salaries owed to employees $900 Prepaid insurance that has expired $400

Requirements:

1) Calculate the total dollar amount of the affect on net income for the three suggested actions. Be detailed in your response so that we can follow how you calculated the total and why the amounts included in your total impact net income.

2) Of the four financial statements, which are impacted by the suggestions and where in the statement? Be specific and provide sufficient detail to suport your answer.