The Territory Holiday Extravaganza Company Ltd had a bad year in 2016 when it suffered a net loss. Some of the measures of return deteriorated due to the loss. The management of the company are wondering how they can improve their ratios for the following year to keep their jobs and the banks and the shareholders happy. They have come up with the following ideas.

1 Borrow $100 million on long-term debt.
2 Buy back shares for $500 million cash.
3 Expense one-quarter of the goodwill carried on the books.
4 Create a new holiday planning division at a cash cost of $300 million.
5 Purchase a new travel app from “Where do we holiday now?” Ltd, paying $20 million cash.

Requirement
Write a short report to the management showing whether the ideas that they have suggested will cause the current ratio, the debt ratio and the rate of return on ordinary shareholders' equity to either increase, decrease or have no effect, giving your reasons for your decision.

Current ratio = current assets / current liabilities, Debt ratio = total liabilities / total assets Rate of return on ordinary shareholders' equity = net income / ordinary shareholders' equity.

Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $42 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 113,400 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 40% above the present 81,000 units each year if it were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in fixed selling expenses?

1-b. Would the additional investment be justified?

2. Assume again that Andretti Company has sufficient capacity to produce 113,400 Daks each year. A customer in a foreign market wants to purchase 32,400 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and an additional $29,160 for permits and licenses. The only selling costs that would be associated with the order would be $1.70 per unit shipping cost. What is the break-even price per unit on this order?

3. The company has 500 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 35% 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 81,000 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?

Research a U.S.-based company that operates globally.

• Explain the key elements of the company’s operations, business structure, and market position.
• Illustrate specific microeconomic, macroeconomic, and international economic factors that influence the management’s strategies and drive the company’s success.

Baird Company has provided the following 2018 data: Budget Sales $ 517,000 Variable product costs 186,000 Variable selling expense 48,000 Other variable expenses 2,700 Fixed product costs 15,800 Fixed selling expense 24,300 Other fixed expenses 2,000 Interest expense 620 Variances Sales 8,300 U Variable product costs 4,100 F Variable selling expense 2,100 U Other variable expenses 1,200 U Fixed product costs 300 F Fixed selling expense 440 F Other fixed expenses 170 U Interest expense 150 F Required a. & b. Prepare a budgeted and actual income statement for internal use. Separate operating income from net income in the statements. Calculate variances and identify them as favorable (F) or unfavorable (U) by comparing the budgeted and actual amounts determined. (Select "None" if there is no effect (i.e., zero variance).)

1. In order to produce the production cost report,equivalent units are calculated. What are equivalent units of production and why is it necessary to calculate Equivalent units of production?

2. Which costing system is more appropriate for a service company to use and please explain why

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 154,100 units at a price of $66 per unit during the current year. Its income statement is as follows:

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

Management is considering a plant expansion program for the following year that will permit an increase of $924,000 in yearly sales. The expansion will increase fixed costs by $123,200, 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.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.

3. Compute the break-even sales (units) for the current year.
units

4. Compute the break-even sales (units) under the proposed program for the following year.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $3,680,600 of income from operations that was earned in the current year.
units

6. Determine the maximum income from operations possible with the expanded plant.
$

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?
$  

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.

The income statement of Oriole Company for the month of July shows net income of $3,490 based on Service Revenue $7,630, Salaries and Wages Expense $2,370, Supplies Expense $980, and Utilities Expense $790. In reviewing the statement, you discover the following: 1. Insurance expired during July of $550 was omitted. 2. Supplies expense includes $410 of supplies that are still on hand at July 31. 3. Depreciation on equipment of $290 was omitted. 4. Accrued but unpaid wages at July 31 of $440 were not included. 5. Service performed but unrecorded totaled $740. Prepare a correct income statement for July 2022.

In your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Last year's sales = S0 $200,000 Last year's accounts payable $50,000 Sales growth rate = g 40% Last year's notes payable $15,000 Last year's total assets = A0* $102,500 Last year's accruals $102,500 Last year's profit margin = PM 20.0% Target payout ratio 25.0%

Business Ethics: Do you think these codes are effective?

The Distance Plus partnership has the following capital balances at the beginning of the current year:

Each of the following questions should be viewed independently.

1. If Sergio invests $60,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.

2. If Sergio invests $40,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.

3. If Sergio invests $50,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill method is used.

Note: there is one JE for A to record the admission of new partner under bonus method, one JE for B, to record the admission of new partner under bonus method, and 2 JE's for C, the first to record the entry for goodwill allocation, during the admission of a new partner and the second to record the investment made by the new partner in the business.

Discuss property the importance of earnings management, and the role that ethics plays in its reporting. What policies and internal procedures would you consider being the minimum necessary to instill confidence in earnings reports? How and why would you supplement those?

Matthias Corp. had the following foreign currency transactions during 2017: Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $59,300 and paid the invoice on April 20 at the U.S. dollar equivalent of $51,200. On September 1, borrowed the U.S. dollar equivalent of $308,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $321,000. In Matthias's 2017 income statement, what amount should be included as a net foreign exchange gain or loss?