Lindon Company is the exclusive distributor for an automotive product that sells for $24.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $118,800 per year. The company plans to sell 18,100 units this year.

Required:

1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)

2. What is the break-even point in unit sales and in dollar sales?

3. What amount of unit sales and dollar sales is required to attain a target profit of $46,800 per year?

4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2.40 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $46,800?

Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. and would like you to prepare the cash flow statement. The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2023 for the years 2023 and 2022 and the income statement for the year ended October 31, 2023, are presented below.

Additional information:

Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2023, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)Partially correct answer iconYour answer is partially correct.

Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2023, using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

1) ABC Ltd is considering a project which will require the purchase of a machine for RO1,000,000 at time zero, this machine will have a scrap value at the end of its four - year life: this will be equal to its written - down value. (25% declining balance writing - down allowance on the machine each year). Corporation tax, at a rate of 30% of taxable income, is payable. ABC Ltd's required rate of return is 12%. Operating cash flows, excluding depreciation, and before taxation, are forecast to be: Time (year) 1 2 3 4 Cash flows before tax 300,000 500,000 400,000 200,000 Note: All cash flows occur at year ends.

2) XYZ Company is considering the purchase of a new machinery which will result in a capital outlay of RO25,000. The machinery is useful for five years. The expected salvage value at the end of its useful life is RO4,000. It is expected that the machinery will fetch an additional income (Cash flow before tax) of RO5,000 (Year 1), RO7,500 (Year 2), RO10,000 (Year 3). RO5,000 (Year 4) and RO5,000 (Year 5) during the five years. The tax rate is 109. Assume that the company is expecting a minimum rate of return of 12%, Will you recommend the purchase of machinery? (Use NPV Method)
2)

Waiters, Inc. has been manufacturing 10,000 units of part 2050 per month, which is used in manufacturing one of its products. At this level of production, the cost per unit to manufacture part 2050 follows:

                               Direct materials           $10.00

                               Direct labor                    25.00

                               Variable overhead          13.00

                               Fixed overhead               12.00

                               Total                              $60.00

Westbrook Company has offered the sell Waiters 10,000 units of part 2050 for $55 a unit. Waiters has determined that it could use the facilities presently used to manufacture part 2050 to manufacture produce RAC, which would generate an additional contribution margin per month of $50,000. Waiters also has determined that one-third of the fixed overhead will be incurred even if it purchases part 2050 from Westbrook and makes product RAC.

Required:

Determine whether or not Waiters should purchase from Westbrook. Assume that Waiters would take the opportunity to make product RAC.

Goran Grill Company makes a single product - a handmade                                                             specialty barbeque grill that sells for $600. Data for last year’s                                                          operations follow:

                                    Units in beginning inventory                           0

                                    Units produced                                     50,000

                                    Units sold                                                40,000

                                    Variable costs per unit:

                                    Direct materials                                   $      150

                                    Direct labor                                                 120

                                    Variable manufacturing overhead              100

                                    Variable selling and administrative              30

                                    Total variable cost per unit                 $      400

                                    Fixed costs:

                                    Fixed manufacturing overhead        $1,500,000

                                    Fixed selling and administrative         600,000

                                    Total fixed costs                              $2,100,000

                                    Required:

1. Compute the unit product cost for one barbeque grill for absorption costing and variable costing.
2. Prepare an income statement for the year using the absorption costing approach.
3. Prepare an income statement for the year using the variable costing approach.
4. Explain the difference in operating income for the absorption and variable costing approaches.

Struggling with the bolded questions

Matt Holmes recently joined Klax Company as a staff accountant in the controller's office. Klax Company provides warehousing services for companies in several midwestern cities.

The location in Dubuque, Iowa, has not been performing well due to increased competition and the loss of several customers that have recently gone out of business. Matt's department manager suspects that the plant and equipment may be impaired and wonders whether those assets should be written down. Given the company's prior success, this issue has never arisen in the past, and Matt has been asked to conduct some research on this issue.

Instructions

If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses.

a.  

What is the authoritative guidance for asset impairments? Briefly discuss the scope of the standard (i.e., explain the types of transactions to which the standard applies).

360-10-05-4 shows that the authoritative guidance for asset impairments provides guidance for :

-recognition and measurement of the impairment of long-lived assets to be held and used.

-measurements of the long lived-asset to be disposed of by sale

-disclosures about the impairment or disposal of long lived assets and disposals of individually significant components of an entity

b.  

Give several examples of events that would cause an asset to be tested for impairment. Does it appear that Klax should perform an impairment test? Explain.

We can find the reasons that an asset would be tested for impairment in 360-10-35-21. They can be tested if:

-there is a large decrease in the market price of the long-lived asset

- if there is a big adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.

- A large adverse change in legal factors or in the business climate that could affect the value of a long-lived asset , including an adverse action or assessment by a regulator

- An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset

- current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset

- A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.

c.  

What is the best evidence of fair value? Describe alternate methods of estimating fair value.

The best evidence of fair value can be found in 360-10-35-36. This states that long-lived assets that are similar in uncertainties dealing with timing amount, an expected present value technique is typically the appropriate technique to estimate fair value.

Menlo Company distributes a single product. The company’s sales and expenses for last month follow:

Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

2. Without resorting to computations, what is the total contribution margin at the break-even point?

3-a. How many units would have to be sold each month to attain a target profit of $31,800?

3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

5. What is the company’s CM ratio? If sales increase by $90,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

What compensation plans are employed by Yum Brands! Inc,? Do you feel these roles play a strategic role in the success or failure of the company?

Use the May 31 fiscal year-end information from the following ledger accounts (assume that all accounts have normal balances).

1. Prepare closing journal entries from the above ledger accounts.
2. Post the entries from Requirement 1 to the General Ledger accounts below. Use the transaction number from Requirement 1 as the date.

The Justice Corporation mass produces wooden chairs. The standard costs follow:

Plastic                                                  10 pounds at $4.50 per pound.

Molding                                                         3 feet at $3.00 per foot.

Direct labor                                              4 hours at $15.00 per hour.

Variable overhead                                         $3 per direct labor hour.

Fixed overhead                                          $.75 per direct labor hour.

                                  The static budget called for 80,000 direct labor hours in June.

Transactions during June follow:

• Justice purchased 200,000 pounds of plastic at $ 4.45 and issued 185,000 pounds to production.
• Justice purchased 60,000 feet of molding at $3.10 per foot and issued 50,000 feet to production.
• The direct labor payroll was 72,500 hours at $14.50.
• Overhead costs were $275,000 of which $221,125 was variable.
• Justice produced 18,000 chairs during the month.

                  Required:

1. Compute the direct materials, direct labor, variable overhead, and fixed overhead variances that were discussed in class.
2. Discuss the significance of the variances.

What goals are attempted to be accomplished by the presentation of the cash flow statement to investors?

Discuss how the format of the Cash flow statement may have contributed towards meeting its objectives.

Identify the following as an asset, liability, or equity by writing the letter of the correct classification in the space provided.

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.6 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,810 for 7,090 units of direct materials in the production of 2,175 pairs of shoes.

Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance

A variance that occurs when the actual cost is less than standard cost.

, and a positive number for an unfavorable cost variance

A variance that occurs when the actual cost exceeds the standard cost.

.

Points:

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Explanation

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Direct Labor

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.8 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,340 for 7,260 hours of direct labor in the production of 2,100 pairs of shoes.

Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.

The following units and costs of lawnmower Model 200 were available for sale during the year for Craftsman Hardware:

Craftsman has 35 units on hand at the end of the year. What is the dollar amount of cost of goods sold for the year according to the first-in, first-out method?