15-51 Standard Cost Variance Analysis and Interpretations Glavine & Co. produces a single prod- uct, each unit of which requires three direct labor hours (DLHs). Practical capacity (for setting the factory overhead application rate) is 30,000 DLHs, on an annual basis. The information below per- tains to the most recent year: Standard direct labor hours (DLHs) per unit produced 3.00 Practical capacity, in DLHs (per year) 30,000 Variable Overhead Efficiency Variance $5,000 unfavorable (U) Actual production for the year 9,500 units Budgeted fixed manufacturing overhead $600,000 Standard direct labor wage rate $20.00 per DLH Total overhead cost variance for the year $50,000 favorable (F) Direct Labor Efficiency Variance $10,000 unfavorable (U) Required 1. What was the actual number of direct labor hours (DLHs) worked during the year? (Round answer to nearest whole number.) [Hint: Recall from Chapter 14 that the DL Efficiency Variance = SP × (SQ ? AQ), where SP = standard labor rate per hour, SQ = standard # of DLHs for output produced, and AQ = actual number of DLHs worked.] 2. What was the standard variable overhead rate per DLH during the year? (Round answer to 2 decimal places, e.g., $13.231 = $13.23.) [Hint: Recall that the Variable Overhead Efficiency Variance = SP × (SQ ? AQ), where [assuming variable overhead is applied on the basis of DLHs] SP = standard variable overhead cost per DLH, SQ = standard # of DLHs for output produced, and AQ = actual # of DLHs worked during the period.] 3. What was the total overhead application rate per direct labor hour (DLH) during the year? (Round answer to 2 decimal places, e.g., $15.679 = $15.68.) 4. What was the total actual overhead cost incurred during the year, rounded to the nearest whole dollar? 5. What was the Production Volume Variance (to the nearest whole dollar) for the year? Was this variance favorable (F) or unfavorable (U)? 6. What was the total Overhead Spending Variance (to the nearest whole dollar) for the year? Was this variance favorable (F) or unfavorable (U)?

Case 1:

The following information relates to Chater’s Advertising Services for the accounting period ending December 31, 2018. The company is a leader within your local advertising industry but their accountant resigned just days before the final year end and only the information now presented was made available. The owners have decided to test your groups’ knowledge in accounting having been made aware that you are currently pursuing a course in accounting at the university level. In this regard your group has been approached to use the information presented alongside your knowledge to advise and present the company financial statements for the period.

                Charter’s Advertising Service

                                                       Trial Balance

                                                    December 18, 2018

Later in December, the business completed these transactions, as follows:

Dec. 21 Received $2,500 in advance for advertising service expected to be performed in January 2019.

Dec 21 Paid secretary $500 for the week December 17 to 21.

Dec. 26 Paid $1,000 on account.

Dec 28 Collected $1,200 on account.

Dec 30 Charter withdrew cash of $2,000 for personal use.

Requirements

1. Journalize the transactions of December 21 – 30 and post to the respective T-accounts and key all items by date. Write a brief narration for each journal entry.
2. At December 31, the business gathers the following information for the adjusting journal entries:

1. Accrued service revenue, $600
2. Earned $700 of the service revenue collected in advance on December 21 because of a change in the agreement between client and the company to split the advertising campaign to December 2018 and the remaining balance of $1,800 for January 2019.
3. Supplies on hand, $1,300.
4. Depreciation expense – equipment $260: furniture $600.
5. Accrued $500 expense for secretary’s salary December 24 to 28.

3. After journalizing the transactions in requirement 2, post them to their respective T-accounts. Write a brief narration for each journal entry.
4. Prepare the income statement and the statement of owner’s equity of Charter Advertising Services for the month ended December 31, 2018 and prepare the balance sheet at that date.

Delta Catfish Company has taken a position in its tax return to claim a tax credit of $18 million (direct reduction in taxes payable) and has determined that its sustainability is “more likely than not,” based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes:

Delta’s taxable income is $93 million for the year. Its effective tax rate is 40%. The tax credit would be a direct reduction in current taxes payable.

Required:
1. At what amount would Delta measure the tax benefit in its income statement?
2. Prepare the appropriate journal entry for Delta to record its income taxes for the year.

Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company’s estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in older homes, and nonroutine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: “My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $3.20 to determine the bid price. Since our average cost is only $2.745 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart.”

To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow:

Required:

1. Perform the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system.

a. A routine 1,000-square-foot asbestos removal job.

b. A routine 2,000-square-foot asbestos removal job.

c. A nonroutine 2,000-square-foot asbestos removal job.

Data for the next 2 questions:

Tamara Company sells two types of control systems – Basic and Deluxe - as follows:

Selling price per unit Variable expense per unit

Basic $120 $90

Deluxe $280 $220

Fixed monthly expenses total $300,000. The expected sales mix in units is 60% for product Basic and 40% for Deluxe.

1. How many units of each product must be sold each month in order to breakeven?

2. How many units of each product must be sold each month in order to make $150,000 profit per month?

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Give an example of a company that reports positive accrual-basis net income but at the same time shows negative cash flows from operating activities.

The

Westover

Company manufactures and sells pens. Present sales output is

5,300,000

units per year at a selling price of

$0.50

per unit. Fixed costs are

$910,000

per year. Variable costs are

$0.30

per unit.Required

LOADING...

Requirement 1.​ (a) What is the present operating income for a​ year?

Start by determining the formula to calculate operating income.

The current annual operating income is

​$150000150000.

Requirement 1.​ (b) What is the present breakeven point in​ revenues?

Determine the formula to calculate the breakeven point in revenues.

The present breakeven point in revenues equals

​$22750002275000.

​(Hold all decimals in interim calculations. Round your final answer to the nearest whole​ dollar.)

Requirement 2. Compute the new operating income or loss for cases​ a, b, and c. ​(Use parentheses or a minus sign to show an operating​ loss.)

a. A

$0.05

per unit increase in variable costs results in a new operating income or loss of

​$(115,000)(115,000).

b. A

10​%

increase in fixed costs and a

10​%

increase in units sold results in a new operating income or loss of

​$nothing.

please send me the whole answer

Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $49,000. The machine has an estimated life of five years and an estimated salvage value of $6,700.

Required:

a-1. Calculate the depreciation expense for each year of the asset's life using Straight-line depreciation.

a-2. Calculate the depreciation expense for each year of the asset's life using Double-declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2016, under each method? (Note: The machine will have been used for one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2017, under each method.

If net cash flows from operating activities were $187,000, net income were $50,000, and net sales were $600,000, the cash flow yield would equal (Round to on decimal place)

a.$137,000               

b.$237,000

c.3.7 times

d. $413,000

Use the following information to prepare a multi-step income statement and a balance sheet for Sherman Equipment Co. for Year 2. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) (Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

Why financial statement users generally unfavorably view negative cash flows from operating activities, but may view positively negative cash flows from investing and financing activities

A publically traded company more than doubled its EPS by changing depreciation methods. In justifying the change, management supported the change as follows: In comparison to direct competitors, the previous depreciation method was more conservative and thus had a negative impact on earnings. Although difficult to prove, there is considerable evidence that accounting changes are made for reasons other than improved financial reporting. GAAP are flexible in the initial selection of accounting methods and in making subsequent changes. However, the accounting standards specifically require that only changes to preferable accounting methods be made. Does this violate GAAP? Is this ethical? What would be an alternative course of action?