Required information

[The following information applies to the questions displayed below.]

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:

During the year, The Shirt Shop sold 1,200 T-shirts for $24 each.

c. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.

Perdon Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.

The total estimated manufacturing overhead was $ 276,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.)

The total estimated manufacturing overhead of $ 276,000 was comprised of $ 176,000 for materials handling costs and $ 100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.)

What amount of materials handling costs are assigned to:

The total estimated manufacturing overhead of $ 276,000 was comprised of $ 176,000 for materials handling costs and $ 100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.)

What amount of purchasing activity costs are assigned to:

*already answered the above problems- need help with this part:

Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.)

Applying Factory Overhead

Darling Company estimates that total factory overhead costs will be $493,000 for the year. Direct labor hours are estimated to be 29,000.

a. For Darling Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.
$ per direct labor hour

b. During May, Darling Company accumulated 640 hours of direct labor costs on Job 200 and 890 hours on Job 305. Determine the amount of factory overhead applied to Jobs 200 and 305 in May.
$

c. Prepare the journal entry to apply factory overhead to both jobs in May according to the predetermined overhead rate.

1. The following selected transactions were completed during February of the current year:

1. Billed customers for fees earned, $41,730.
2. Purchased supplies on account, $1,800.
3. Received cash from customers on account, $39,150
4. Paid Creditors on account, $1,100.
5. Owner withdrew $12,000 for personal use
6. Paid $500 for this month Rent.
7. Paid $100 for this month Utility bill.
8. Paid Salary to employees $3,000
9. Purchase Equipment for Cash $5,000
10. Received Cash $2,500 for services performed.
11. Owner invested $75,000 in business

1. Prepare Journal accounts.
2. Prepare T-Account.
3. Prepare a trial balance

2. Indicate how each account should be classified in Paul’s Balance sheet and which account should be excluded from his balance sheet using the letters below;

Asset, Liability, Stockholders’ Equity, Exclude from, & Balance Sheet?

1. Equipment used in the business _______
2. Amounts owed to suppliers _______
3. Mortgage on Paul’s home ______
4. Sound equipment used in the reception area of Paul’s office ____
5. Amounts owed by client _____
6. Amounts due to suppliers for the purchase of office equipment ______
7. Paul’s original investment in the business _____
8. Amounts owed employees _______
1. Office buildings and land _________
10. Cleaning supplies used in Paul’s home ________
11. Golf clubs (kept in Paul’s office) _______

3. Match the following financial statement categories with the accounts listed.

Asset, Liability, Stockholders’ Equity, Revenue, & Expense.

1. Cost of Goods Sold _____
2. Accounts Receivable ___________
3. Land __________
4. Equipment ______
5. Supplies ________
6. Taxes Payable ________
7. Delivery Truck ______
8. Salary expense ________

4. The amount of assets created through performance of business operations is referred to as ______?
5. Which of the following represent categories which appear on the income statement?

1. Expenses, revenues, net income
2. Assets, liabilities, revenues, expenses
3. Revenues, expenses, liabilities, retained earnings
4. Retained earnings, net income, assets, liabilities
5. Liabilities, revenues, income taxes

Mini-bus Rentals Ltd has a fleet of 36 mini-buses that customers can hire for self- drive tours and other transportation needs. The mini-buses cost between $120 000 and $160 000 each and have a useful life of 12 years. Tyres are replaced after 40 000 km, which is approximately every two years for most vehicles in the fleet. The cost of replacing tyres is $2 000 per vehicle.

The bookkeeper had been studying accrual accounting and though it would be a good idea to accrue maintenance expenses for the replacement of tyres. On 30 June 20X6 he observed that the tyres on 9 vehicles were due for replacement, which was expected to occur within six months after the reporting period.

Required

1. 1. Identify the main accounting policy issue(s) in relation to the replacement of tyres in preparing the financial statements for the year ended 30 June 20X6?
2. 2. escribe two principles or rules from Accounting Standards or the Conceptual Framework that are relevant to the accounting policy issue.
3. 3. The bookkeeper proposed to recognise a provision for maintenance and corresponding maintenance expense of $18 000 at 30 June 20X6, and disclose in the notes that the tyres are expected to be replaced within six months after the end of the reporting period.
   4. Describe a different policy (i.e., different from the bookkeeper’s suggestion) to account for the anticipated replacement of tyres in preparing the financial statements for the year ended 30 June 20X6. Please do NOT attempt to justify the policy.
4. 4. Evaluate the bookkeeper’s policy with reference to the principles identified in part b), if applicable. You may also draw on other principles in your evaluation.

Don’t Cry Over Spilled Milk, Inc., a manufacturer of mops, uses the weighted average method in its processing costing system. The company uses a departmental costing system to allocate manufacturing overhead (MOH) to production. Production in the company's first processing department, Machining, is highly automated. As such, machine hours are used as the allocation base in the department.

At the beginning of the year, the company estimated that its total MOH would be $400,000; 87.5% of which was expected to be generated in the Machining department. The Machining department was expected to log 100,000 machine hours during the year. The following data related to the operations in Machining during June 2018:

During June, 8,500 actual machine hours were logged during production.

The cost to assemble one mop in June was

A.

​$19.87       

B.

​$13.80

C.

​$19.67

D.

​$11.78

E.

​$13.77

On May 7, Roy, a minor, a resident of Smithton, purchased an automobile from Royal Motors, Inc., for $18,750 in cash. On the same day, he bought a motor scooter from Marks, also a minor, for $750 and paid him in full. On June 5, two days before attaining his majority, Roy disaffirmed the contracts and offered to return the car and the motor scooter to the respective sellers. Royal Motors and Marks each refused the offers. On June 16, Roy brought separate appropriate actions against Royal Motors and Marks to recover the purchase price of the car and the motor scooter. By agreement on July 30, Royal Motors accepted the automobile. Royal then filed a counterclaim against Roy for the reasonable rental value of the car between June 5 and July 30. The car was not damaged during this period. Royal knew that Roy lived twenty-five miles from his place of employment in Smithton and that he would probably drive the car, as he did, to provide himself transportation. Decision as to

1. Roy's action against Royal Motors, Inc., and its counterclaim against Roy; and

2. Roy's action against Marks?

Exercise 17-8 Using departmental overhead rates to assess prices LO P2 Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. Process Activity Overhead Cost Driver Quantity Components Changeover $ 452,000 Number of batches 790 Machining 313,000 Machine hours 7,920 Setups 226,000 Number of setups 100 $ 991,000 Finishing Welding $ 184,000 Welding hours 4,400 Inspecting 230,000 Number of inspections 900 Rework 64,500 Rework orders 210 $ 478,500 Support Purchasing $ 143,000 Purchase orders 477 Providing space 32,500 Number of units 5,170 Providing utilities 67,000 Number of units 5,170 $ 242,500 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 2,100 3,070 Welding hours 1,000 3,400 Batches 395 395 Number of inspections 520 380 Machine hours 2,650 5,270 Setups 50 50 Rework orders 150 60 Purchase orders 318 159 Required: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $230 for Model 145 and $120 for Model 212. 3. If the market price for Model 145 is $1,175 and the market price for Model 212 is $290, determine the profit or loss per unit for each model.

Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below:

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 80,000 units of Alpha and 60,000 units of Beta. Also assume that the company’s raw material available for production is limited to 160,000 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 80,000 units of Alpha and 60,000 units of Beta. Also assume that the company’s raw material available for production is limited to 160,000 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 80,000 units of Alpha and 60,000 units of Beta. Also assume that the company’s raw material available for production is limited to 160,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

answer all the question

1. How does an auditor decide on the timing of control tests?

Understanding the difference between a cash taxable allowance, a cash taxable benefit and a non-cash taxable benefit is critical when explaining the calculation of net pay to an employee. In your own words, explain whether each allowance and benefit is or is not subject to Canada/Québec Pension Plan (C/QPP) contributions, Employment Insurance (EI) premiums, Québec Parental Insurance Plan premiums and income tax. Provide an example of a cash taxable allowance, a cash taxable benefit and a non-cash taxable benefit.

Referring to information in Brief Exercise 14-18, assume that Henry Inc. sold its holdings of Container Corpora-tion bonds on July 2, 2020, for $4,800. Record the sale of the debt investment, eliminating the Fair Value Adjust-ment account upon sale.

brief 14-18 Henry Inc. purchased $5,000 of Container Corporation’s 5% bonds at par. The purchase is made on January 1,

2020, and the investment is classified as a trading security. At June 30, 2020, Henry Inc. received semiannual

interest of $125, and the fair value of the bonds was $4,800. Prepare Henry’s journal entries for (a) the purchase

of the investment, (b) the interest received, and (c) the fair value adjustment.

On January 1, 2020, Sharp Company purchased $50,000 of Sox Company 6% bonds, at a time when the market rate was 5%. The bonds mature on December 31, 2024, and pay interest annually on December 31. Sharp plans to and has the ability to hold the bonds until maturity. Assume that Sharp uses the effective interest method to amortize any premium or discount on investments in bonds. At December 31, 2020, the bonds are quoted at 98. a. Prepare the entry for the purchase of the debt investment on January 1, 2020. b. Prepare the entry for the receipt of interest on December 31, 2020. c. Record the entry to adjust the investment to fair value on December 31, 2020, if applicable

Case - PCB Electronics

PCB Electronics is a contract manufacturer of printed circuit board assemblies that specializes in manufacturing and test engineering support of complex printed circuit boards for companies in the defense and medical instruments industries. The assembly process begins with raw printed circuit boards, into which preprogrammed robotic machines insert various integrated circuits and other components, and then these parts are soldered onto the board. The board is then tested before shipment to the customer.

Four separate assembly lines, each with roughly the same type of equipment, are used to assemble the circuit boards. Before running a particular board assembly, the insertion equipment must be loaded with the correct components, and the equipment programmed and tested before production begins. Setup time varies between 3 to 6 hours depending on the complexity of the board being assembled. Setup labor costs PCB $40 per hour, and technicians assembling and testing the completed boards cost $28 per hour. Not every assembly line can manufacture every type of board. Some lines have older insertion and testing equipment inappropriate for more complex assemblies. The assignment of boards to assembly lines depends on the number and complexity of the component insertions, the type of soldering to be applied, and the testing required.

Each assembly line has an hourly cost consisting of the accounting depreciation on the equipment (straight line) and occupancy costs (factory depreciation, taxes, insurance, and utilities). Occupancy costs are fixed with respect to volume changes. Direct labor to set up and test the line as well as the direct labor to manufacture the complete board assemblies and the testing of each board is tracked separately to each batch of boards. The following table summarizes the costs of operating each line and the annual number of hours each line is expected to run assembling boards (excluding setup and testing time).

The equipment depreciation cost varies widely across the two lines because some of the lines (especially Line III) have older machines, some of which are fully depreciated.

Required:

What factors do you think that managers should consider when choosing a new AIS?