Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	24			$	12
Direct labor			23				26
Variable manufacturing overhead			22				12
Traceable fixed manufacturing overhead			23				25
Variable selling expenses			19				15
Common fixed expenses			22				17
Total cost per unit		$	133			$	107

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

11. How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?

12. What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)

13. Assume that Cane’s customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the company’s raw material available for production is limited to 168,000 pounds. How many units of each product should Cane produce to maximize its profits?

14. Assume that Cane’s customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the company’s raw material available for production is limited to 168,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?

15. Assume that Cane’s customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the company’s raw material available for production is limited to 168,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

1. On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1?

A) Debit Purchases and credit Accounts Payable for $6,000

B) Debit Inventory and credit Accounts Receivable for $6,000

C) Debit Inventory and credit Accounts Payable for $6,000

D) Debit Cost of Goods Sold and credit Inventory for $4,500

1. On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $1,000, terms 2/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $300. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

A) $680

B) $686

C) $700

D) $1,000

2. Sales revenue equals $367,810, sales returns & allowances are $10,000, and sales discounts total $14,180. The cost of goods sold is $216,490, operating expenses are $28,500, and the company incurs $31,640 of income tax expense. Which of the following statements is correct?

A) Net sales equal $343,630 and gross profit is $98,640.

B) Net sales equal $67,000 and gross profit is $98,640.

C) Net sales equal $343,630 and gross profit is $127,140.

D) Net sales equal $367,810 and gross profit is $67,000.

3. Tony’s Market recorded the following events involving a recent purchase of inventory:

Received goods for $80,000, terms 2/10, n/30.

Returned $1,600 of the shipment for credit.

Paid $400 freight on the shipment.

Paid the invoice within the discount period.

As a result of these events, the company’s inventory

a.   increased by $76,832.

b.   increased by $78,800.

c.   increased by $77,224.

d.   increased by $77,232.

Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	24			$	12
Direct labor			23				26
Variable manufacturing overhead			22				12
Traceable fixed manufacturing overhead			23				25
Variable selling expenses			19				15
Common fixed expenses			22				17
Total cost per unit		$	133			$	107

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

6. Assume that Cane normally produces and sells 97,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

7. Assume that Cane normally produces and sells 47,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

8. Assume that Cane normally produces and sells 67,000 Betas and 87,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?

9. Assume that Cane expects to produce and sell 87,000 Alphas during the current year. A supplier has offered to manufacture and deliver 87,000 Alphas to Cane for a price of $108 per unit. If Cane buys 87,000 units from the supplier instead of making those units, how much will profits increase or decrease?

10. Assume that Cane expects to produce and sell 57,000 Alphas during the current year. A supplier has offered to manufacture and deliver 57,000 Alphas to Cane for a price of $108 per unit. If Cane buys 57,000 units from the supplier instead of making those units, how much will profits increase or decrease?

Coolbrook Company has the following information available for the past year:   

	River Division			Stream Division
Sales revenue	$	1,212,000		$	1,807,000
Cost of goods sold and operating expenses		894,000			1,292,000
Net operating income	$	318,000		$	515,000
Average invested assets	$	1,170,000		$	1,400,000

   
The company’s hurdle rate is 8.01 percent.

Required:
1. Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))



2. Recalculate ROI and residual income for each division for each independent situation that follows: (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

a. Operating income increases by 8 percent.



b. Operating income decreases by 9 percent.



c. The company invests $245,000 in each division, an amount that generates $118,000 additional income per division.



d. Coolbrook changes its hurdle rate to 6.01 percent.

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:

	Cost Formulas
Direct labor	$16.20q
Indirect labor	$4,200 + $1.50q
Utilities	$5,700 + $0.60q
Supplies	$1,800 + $0.30q
Equipment depreciation	$18,500 + $2.80q
Factory rent	$8,500
Property taxes	$2,800
Factory administration	$13,100 + $0.90q

The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the month. Its actual costs incurred in March are listed below:

	Actual Cost Incurred in March
Direct labor	$	69,600
Indirect labor	$	9,980
Utilities	$	8,730
Supplies	$	3,330
Equipment depreciation	$	30,260
Factory rent	$	8,900
Property taxes	$	2,800
Factory administration	$	16,290

Required:

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

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

3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.

Answer the following questions:

The launch of a new product is under consideration. Its unit variable costs will be £30 and it is estimated that incremental fixed costs of £250,000 will be incurred if production is commenced. Forecast sales are 50,000 units. If the actual planned selling price is £48 per unit, what will be the organisation’s margin of safety?

The following information is about two organisations, A and B.

	Organisation A	Organisation B
	£	£
Fixed costs	60,000	12,000
Variable costs per unit	0.20	0.50
Unit selling price	0.60	0.60
Expected sales levels (units)	160,000	160,000

Which firm has higher operating gearing?

Which firm is facing more risk in terms of its current sales predictions?

Be sure to demonstrate your numerical workings. Please explain where possible..

Evelyn Walton started Walton Manufacturing Company to make a universal television remote control device that she had invented. The company’s labor force consisted of part-time employees. The following accounting events affected Walton Manufacturing Company during its first year of operation. (Assume that all transactions are cash transactions unless otherwise stated.)

Transactions for January 2018, First Month of Operation

1. Issued common stock for $10,000.

2. Purchased $410 of direct raw materials and $60 of production supplies.

3. Used $385 of direct raw materials.

4. Used 70 direct labor hours; production workers were paid $9.70 per hour.

5. Expected total overhead costs for the year to be $3,000, and direct labor hours used during the year to be 1,000. Calculate an overhead rate and apply the appropriate amount of overhead costs to Work in Process Inventory.

6. Paid $144 for salaries to administrative and sales staff.

7. Paid $22 for indirect manufacturing labor.

8. Paid $215 for rent and utilities on the manufacturing facilities.

9. Started and completed 100 remote controls during the month; all costs were transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

10. Sold 80 remote controls at a price of $21.4 each.

Transactions for Remainder of 2018

11. Acquired an additional $18,000 by issuing common stock.

12. Purchased $3,910 of direct raw materials and $880 of production supplies.

13. Used $3,000 of direct raw materials.

14. Paid production workers $9.70 per hour for 900 hours of work.

15. Applied the appropriate overhead cost to Work in Process Inventory.

16. Paid $1,559 for salaries of administrative and sales staff.

17. Paid $236 of indirect manufacturing labor cost.

18. Paid $2,390 for rental and utility costs on the manufacturing facilities.

19. Transferred 850 additional remote controls that cost $12.74 each from the Work in Process Inventory account to the Finished Goods Inventory account.

20. Determined that $166 of production supplies was on hand at the end of the accounting period.

21. Sold 840 remote controls for $21.40 each.

22. Determine whether the overhead is over- or underapplied. Close the Manufacturing Overhead account to the Cost of Goods Sold account.

23. Close the revenue and expense accounts.

Required

1. For each of the above transactions, post the effects to the appropriate T-accounts.

2. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2018.

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company charges $20 per delivery.

The controller’s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:

Monthly overhead
=
$
26
,
501
+
$
10.70
 
per delivery
Monthly overhead=$26,501+$10.70 per delivery
Your estimate was based on the following data:

Month Overhead Costs Number of Deliveries
  1 $142,860.                  11,430
  2   151,890                     12,180
  3   192,600.                  15,660
  4   141,030                     11,250
  5   203,490.                   12,780
  6   180,630.                  14,730
  7   159,630                     12,510
  8   183,990                     15,060
  9   194,430.                   15,450
10   150,120                     11,970
11   154,080.                   12,630
12   184,800.                  15,300
13   183,120.                   14,580
The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller’s results.

Required

Analyze the data and your results and state your reasons for supporting or rejecting your cost equation.

Write a report that informs management about the correct volume that will generate $10,000 per month in operating profits before taxes.

1. National Comapny issued 7.5% bonds, dated January 1, with a face amount of $600,000 on January 1, 2017. The bonds mature on December 31, 2023. The market yield for bonds of similar risk and maturity was 5.5%. Interest is made semiannually on June 30 and December 31.

Required:

a. Determine the price of the bonds at January 1, 2017 (be certain to include all of the "given" information)

b. Prepare a bond amortization table using the effective interest method and make certain to obtain totals for the columns of Cash Interest Paid, Interest Expense, and Premium Amortization

c. Prepare the journal entry to record their issuance by National Company on January 1, 2017.

d. Prepare the journal entry recordin gthe first interest payment on June 30, 2017.

e. Prepare the journal entry recording the interest payment on December 31, 2017.

f. Prepare journal entries at maturity on December 31, 2023.

g. Prepare the journal entry to record the retirement of the bond at a call price of $640,000 on January 1, 2020.

h. Instead of retirement of the bond as described in "g" above, assume the bond was retired @108 call price on January 1, 2020.

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,510 for the Sleepeze, 12,120 for the Plushette, and 5,430 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $66,650, a marketing research assistant at $44,000, and an administrative assistant at $23,900) are budgeted for $134,550 next year.
2. Depreciation on the offices and equipment is $17,800 per year.
3. Office supplies and other expenses total $20,600 per year.
4. Advertising has been steady at $19,450 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 6 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $50 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

	Pessimistic			Expected			Optimistic
	Price	Quantity		Price	Quantity		Price	Quantity
Sleepeze	$174	12,800		$189	15,510		$189	18,010
Plushette	300	10,290		351	12,120		366	13,880
Ultima	860	1,820		960	5,430		1,140	5,430

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads—placing print and television ads for the Sleepeze and Plushette lines

Ultima ads—choosing and working with the advertising agency on the Ultima account

Office management—operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

	Gene		Research Assistant		Administrative Assistant
Research	-		75	%	-
Shipping	30	%	-		20	%
Jobbers	20		15		20
Basic ads	-		10		35
Ultima ads	25		-		5
Office management	25		-		20

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $20,600 for office supplies and other expenses, $5,200 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,300 per year is attributable to Internet connections and fees, and the bulk of these costs (75 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

Olympus, Inc.
Activity-Based Budget
For Next Year
Research:
	$
		$
Shipping:
	$
Jobbers:
	$
Basic ads:
	$
Ultima ads:
	$
Office management:
	$
Total			$

2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

Why should companies have strong policies in place to protect personally identifying information?

Use the following information for the Problems below. Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow. GOLDEN CORPORATION Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash $ 170,000 $ 113,600 Accounts receivable 92,000 77,000 Inventory 610,000 532,000 Total current assets 872,000 722,600 Equipment 351,100 305,000 Accum. depreciation—Equipment (161,000 ) (107,000 ) Total assets $ 1,062,100 $ 920,600 Liabilities and Equity Accounts payable $ 99,000 $ 77,000 Income taxes payable 34,000 28,100 Total current liabilities 133,000 105,100 Equity Common stock, $2 par value 604,000 574,000 Paid-in capital in excess of par value, common stock 202,000 169,000 Retained earnings 123,100 72,500 Total liabilities and equity $ 1,062,100 $ 920,600 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 1,822,000 Cost of goods sold 1,092,000 Gross profit 730,000 Operating expenses Depreciation expense $ 54,000 Other expenses 500,000 554,000 Income before taxes 176,000 Income taxes expense 30,400 Net income $ 145,600 Problem 16-6A Indirect: Statement of cash flows LO P1, P2, P3 Additional Information on Year 2017 Transactions Purchased equipment for $46,100 cash. Issued 12,600 shares of common stock for $5 cash per share. Declared and paid $95,000 in cash dividends. Required: Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

The Blending Department of Luongo Company has the following cost and production data for the month of April. Costs: Work in process, April 1 Direct materials: 100% complete $118,000 Conversion costs: 20% complete 82,600 Cost of work in process, April 1 $200,600 Costs incurred during production in April Direct materials $944,000 Conversion costs 430,700 Costs incurred in April $1,374,700 Units transferred out totaled 20,060. Ending work in process was 1,180 units that are 100% complete as to materials and 40% complete as to conversion costs. Collapse question part (a) Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April. Materials Conversion Costs The equivalent units of production?

why is it important to have software vendors (such as SAP, Oracle,etc.) use the audit data standards?

I am looking to see how to determine the disposal of noncash assets. They were disposed of for $160,000. The balance before was $150,000. If I am doing a Proposal of Scheduled Liquidation - Subsequent Save House Capital balances would I be putting $10,000 under cash, decrease noncash assets by $150,000 and allocation the difference of $10,000 to the partners?