Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

The Production Department planned to work 4,500 labor-hours in March; however, it actually worked 4,300 labor-hours during the month. Its actual costs incurred in March are listed below:

Required:

1. Prepare the Production Department’s planning budget for the month.

2. Prepare the Production Department’s flexible budget for the month.

3. Calculate the spending variances for all expense items.

1. Tropical ltd produces powder soap for households use. The standard direct costs per carton containing 20 packets of one kg each is as follows:

Raw materials

15 kgs of tallons @ sh 10 per kg

10 kgs of caustic soda @ sh 16 per kg

Labour 20 hours @ 5 per hour

Packed materials

20 packets @ 50 cents each

1 carton @ sh 5 each

The monthly budget is per 1,000 cartons. The overhead expenses which are all Fixed are budgeted at sh 40,000 and selling price per 1kg packet of soap is sh 25. the following details relate to October 2007 when 1,200 cartons of soap

            Were produced and sold

                                                                                                            Ksh

                        Sales 1,200 cartons                                                 552,000

                        Raw materials:

                                    Tallow 10,800 kgs                                       129,600

                                    Caustic soda 13200 kgs                             198,000

                                    Labour; 26,400 hours                                 145,200

                                    Fixed overhead expenditure                    42,000

            REQUIRED: calculate

1. Price and usage variances each raw materials.                
2. Labour rate and efficiency variances.                                 
3. Sales price and volume variances.                                       
4. Overhead expenditure variances.                                        

Is it necessary to do a physical count of inventory if the company is using a perpetual system? Why or why not? What sort of company would likely use a perpetual system? What sort of company would likely use a periodic system? (Provide specific examples).

Departmental Income Statement
The following information was obtained from the ledger of Woodfield Candies, Inc., at the end of 2016

Woodfield analyzes its operating expenses at the end of each period in order to prepare an income statement that will exhibit departmental contribution to common expenses. From payroll records, advertising copy, and other records, the following tabulation was obtained:

Prepare a departmental income statement for Woodfield Candies, Inc., showing departmental contribution to common expenses, assuming an overall income tax rate of 35%.

Do not use negative signs with your answers below.

Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

The beginning work in process inventory was 85% complete with respect to materials and 70% complete with respect to labor and overhead. The ending work in process inventory was 65% complete with respect to materials and 25% complete with respect to labor and overhead.

Required:

Assume that the company uses the FIFO method in its process costing system.

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Compute the first department's cost per equivalent unit for materials, labor, overhead, and in total for the month. (Round your answers to 2 decimal places.)

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances:

The following is a summary of the transactions for the year:

1. Service revenue, $134,000, of which $40,200 was on account and the balance was received in cash.
2. Collected on accounts receivable, $26,800.
3. Issued shares of common stock in exchange for $16,000 in cash.
4. Paid salaries, $49,000 (of which $10,000 was for salaries payable at the end of the prior year).
5. Paid miscellaneous expense for various items, $26,400.
6. Purchased equipment for $18,500 in cash.
7. Paid $3,250 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $980.
2. Depreciation for the year on the equipment is $3,100.

Required:
a. Prepare an income statement for 2021.
b. Prepare a balance sheet as of December 31, 2021.

Departmental Income Statement
Elgin Flooring Company sells floor coverings through two departments, carpeting and hard covering (tile and linoleum). Operating information for 2016 appears below.

Common operating expenses of the firm were $120,000.

a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 35%. Elgin uses a periodic inventory system.

Do not use negative signs with any of your answers below.

b. Calculate the gross profit percentage for each department.

Round to the nearest whole percentage.

Carpeting department

Answer%

Hard Covering department

Answer%

c. If the common expenses were allocated 70% to the carpeting department and 30% to the hard covering department, what would the net income be for each department?

Do not use negative signs with any of your answers below.

Sanders acquired 100% of Clinton on January 1, 2017. The transaction was not a bargain purchase. On the date of the acquisition, Clinton's Building account had a net book value of 3,338,416 and a fair value of 3,981,039. As of 1/1/2017, Clinton's buildings have a remaining life of 10 years and are depreciated on a straight-line basis with no salvage value.

When preparing Sanders' consolidated financial statements for 2017, what AAP adjustment must be made for Depreciation expense?

A company purchases an asset that costs $46,000. This asset qualifies as three-year property under MACRS. The company uses an after-tax discount rate of 12% and faces a 31% income tax rate. (Use Table 1, Table 2 and Exhibit 12.4.)

1. Demonstrate that the PV of the depreciation deductions, when the income tax rate is 31%, is $11,472.
2. Given an after-tax discount rate of 12%, what tax rate would be needed in order for the PV of the depreciation deductions to equal $14,260? Use the Goal Seek function of Excel.

Selzik Company makes super-premium cake mixes that go through two processing departments—Blending and Packaging. The following activity was recorded in the Blending Department during July:

All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its process costing system.

Required:

1. Calculate the Blending Department's equivalent units of production for materials and conversion for July.

2. Calculate the Blending Department's cost per equivalent unit for materials and conversion for July.

3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July.

4. Calculate the Blending Department's cost of units transferred out to the next department for materials, conversion, and in total for July.

5. Prepare a cost reconciliation report for the Blending Department for July.

On 1/1/2001, ABC Co. issued $1,000,000 5-year bonds with a market rate of 8%. Interests are paid annually on 12/31. The coupon rate is 6%. Answer the following questions assuming that the company uses the effective interest method of amortization. Show your calculations. 1. Determine the selling price of the bond on the issue date. Is it issued at a premium or discount? 2. Give the journal entry to record the bond issuance above. 3. How much is the interest expense for ABC Co. for the fiscal year that ended 12/31/2001? Give the journal entry to record the interest expense. 4 . On 1/1/2003, ABC Co. found itself with a lot of excess cash and it will be best for them to buy back their bonds from the open market and retire them so as to avoid future interest payments. The market interest rate on 1/1/2003 is 9%. Calculate: (i) the cash amount that ABC has to pay to retire the bond (ii) the book value (i.e., net borrowing) of the bonds on 1/1/2003 (iii) gain/loss from the retirement (iv) provide the journal entry for the early retirement of bonds.

MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $19 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment outlay for the facility. Net cash inflows are expected to increase to $3.0 million in each of years 2 and 3; $2.5 million in year 4; and $3.0 million in each of years 5 through 10. The lease agreement for the facility will expire at the end of year 10, and MaxiCare expects the cost to close a facility will pretty much exhaust all cash proceeds from the disposal. Cost of capital for MaxiCare is estimated as 12%. Assume that all cash flows occur at year end.

Required:

1. Compute (using the built-in NPV function in Excel) the net present value (NPV) the proposed investment. (Negative amount should be indicated by a minus sign. Enter your answer in whole dollars, not in millions, rounded to nearest whole dollar.)

2. Compute (using the built-in IRR function in Excel) the internal rate of return (IRR) for the proposed investment. (Round your final answer 2 decimal places. (i.e. .1234 = 12.34%))

3. What is the breakeven selling price for this investment, that is, the price that would yield an NPV of $0? (Use the Goal Seek function in Excel to determine the breakeven selling price. The following online tutorial may be helpful to you: Goal Seek Tutorial.) (Enter your answer in whole dollars, not in millions, rounded to nearest whole dollar.)

Return on Investment and Residual Income
Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets:

a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI.

Round ROI to the nearest whole percentage.

b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income.

Single Plantwide Factory Overhead Rate

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,710,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboat and bass boat each require four direct labor hours for manufacture. Each product is budgeted for 9,000 units of production for the year.

When required, round all per unit answers to the nearest cent.

a. Determine the total number of budgeted direct labor hours for the year.
direct labor hours

b. Determine the single plantwide factory overhead rate.
$ per dlh

c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate.